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Post by Franko10 ™ on Oct 16, 2005 17:55:55 GMT -5
Morgain Minerals Inc.: El Cairo Potentially Economically Viable; Feasibility Should be Completed as Expeditiously as Possible
Business Wire, Oct 21, 2002
TORONTO--(BUSINESS WIRE)--Oct. 21, 2002
Morgain Minerals Inc. (TSX VENTURE:MGM): The Company is pleased to announce the results of a pre-feasibility study, dated September 16, 2002, completed by A.C.A. Howe International Limited ("Howe"), as prescribed by N143-101, on its 25 hectare El Cairo gold project located in the State of Durango, Mexico. With the recent acquisition of the adjacent 192 hectares from other parties, the terms of which will be announced at a later date, Morgain now holds 217 hectares of land that cover the mining rights to 100% of the known El Cairo gold deposit. Surface rights will have to be leased or purchased from local landowners.
Howe is an international geological and mining consulting firm located in Toronto, Ontario, Canada. In addition Howe retained the services of Kappes, Cassidy and Associates of Reno, Nevada to evaluate the metallurgical test work on the project and to provide their opinion with regard to additional test work required to bring the project data base to the feasibility study stage. Howe performed resource and reserve modeling. The Whittle 4X pit optimization program was used to determine optimum open pit reserves over a range of gold prices for two operating scenarios. Measured and indicated resources make up over 96% of the resource base. The U.S. dollar is used throughout the study and this release.
Howe performed resource and reserve modeling with Gemcom and Whittle software. Based on the Gemcom resource estimate, pre-feasibility quality operating and capital cost estimates, and Whittle open pit optimization work completed by Howe, Howe concludes that "the El Cairo gold project has the potential to be economically viable under a number of foreseeable operating scenarios. Howe concludes that the feasibility study should be completed as expeditiously as possible in order to take advantage of what appears to be strong rebound in the price of gold."
Howe estimates the total oxide resource is 38.3 million tonnes grading 0.71 grams gold per tonne at a cut-off grade of 0.35 grams gold per tonne including 25.3 million tonnes of measured oxide resource grading 0.74 grams per tonne, 12.0 million tonnes of indicated oxide resource grading 0.64 grams per tonne, and 1 million tonnes of inferred oxide resource grading 0.58 grams per tonne. Howe has estimated pre-feasibility capital and operating costs to determine the reserve potential of the project under two operating scenarios. The base case scenario assumes that run-of-mine material can be delivered to the heap leach pads with no crushing or agglomeration required. The other higher cost scenario assumes that crushing and agglomeration of 30% of the run of mine material will be required prior to stacking the ore on the heap leach pads. Both scenarios include delivery of run-of-mine sub-ore grade (cut-off grade 0.2 grams gold per tonne) waste rock to the leach pads at an incremental processing cost.
Base case capital costs are estimated to be $15 million excluding working capital and replacement capital and operating costs estimated at mining $0.75 per tonne of material moved, ore processing at $2.80 per tonne ore and an incremental $1.10 per tonne of sub-ore, plus land reclamation and closure costs of $0.50 per tonne of material delivered to the pads.
Higher cost scenario capital costs are estimated to be $22 million excluding working capital and replacement capital and operating costs estimated at mining $0.75 per tonne of material moved, ore processing at $3.40 per tonne for ore and an incremental $1.10 per tonne of sub-ore, plus land reclamation and closure costs of $0.50 per tonne of material delivered to the pads.
Howe has assumed an average gold recovery of 75% for the heap leach operation based on the limited metallurgical testwork that was completed by Battle Mountain. Howe is of the opinion that ultimate gold recoveries should exceed 80% based on Hecla's experience with the La Choya oxide gold deposit in Mexico which had ore very similar to that at El Cairo and achieved an average gold recovery of 82%.
Based on Whittle open pit optimizations, reserves were estimated for the base case and higher cost scenarios at gold prices of $325, $350 and $375 per ounce. The reserves can be summarized as follows:
Run-of-Mine Estimated Higher Cost Estimated
Base Case Scenario
Proven plus Recoverable Proven plus Recoverable
Probable Probable
Au Price Tonnes g Au/t oz. Au tonnes g Au/t oz. Au
--------------------------------------------------------------------
$325
--------------------------------------------------------------------
Ore 17,656,184 0.88 374,661 13,750,611 0.99 328,259
Sub-Ore 8,970,650 0.27 58,405 9,834,520 0.30 71,143
--------------------------------------------------------------------
Total 26,626,834 433,066 23,585,131 399,402
$350
--------------------------------------------------------------------
Ore 20,877,945 0.82 412,820 15,789,477 0.93 354,087
Sub-Ore 8,655,590 0.26 54,266 9,773,784 0.29 68,347
--------------------------------------------------------------------
Total 29,533,535 467,086 25,563,261 422,434
$375
--------------------------------------------------------------------
Ore 24,238,017 0.77 450,036 17,789,477 0.89 381,779
Sub-Ore 8,586,640 0.26 53,834 9,949,472 0.28 67,176
--------------------------------------------------------------------
Total 32,824,657 503,869 27,738,99 448,956
The base case scenario at a gold price of $325 per ounce is economically viable with an after tax DCF-ROR of 55%. At a gold price of $350 the reserve base increases and the after tax DCF-ROR increases to 70% and to 78% at a gold price of $375 per ounce. The break-even gold price is $223 per ounce (break-even including recovery of capital costs).
The higher cost scenario at a gold price of $325 per ounce has an after tax DCF-ROR of 19%. At a gold price of $350, the reserve base increases and the after tax DCF-ROR increased to 35% and to 46% at a gold price of $375 per ounce. The break-even gold price is $275 per ounce.
Howe also concludes that the results to date of limited twinning of reverse circulation holes with core holes suggests that the reverse circulation data has underestimated the grade of the deposit by 30 to 40%. Also, the silver content (1.56 to 1.73 grams silver per tonne) of the deposit at current silver prices of $4.50 per ounce will provide an additional $0.15 of revenue per tonne of ore which at the proposed production rates of 4 million tonnes of ore per year which would add an additional $600,000 per year to the cash flow.
In preparation for a feasibility study Howe recommends that a two phase program of detailed metallurgical test work, additional core drilling, and preliminary environmental permitting work is warranted.
Phase 1 would involve metallurgical column tests estimated to cost $182,000. Phase 2 estimated at $283,000 would involve additional core drilling to twin existing reverse circulation holes providing additional indications of the grade of the resource as the 6 twinned core holes completed to date by Battle Mountain provided indication of 30 to 40% higher grades than their corresponding reverse circulation holes. The new core drilling will also provide additional metallurgical samples and provide rock quality data (RQD). Preliminary work will be completed on the environmental permitting that will be required at the feasibility study stage.
The total cost to complete the pre-feasibility work upon which a full feasibility study could be based is approximately $465,000. Howe estimates that a full feasibility study could be prepared for an additional $120,000 to $300,000 once the Phase 1 and Phase 2 programs are completed.
The information contained herein was authorized for media release by The Board of Directors. "The TSX-Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release."
COPYRIGHT 2002 Business Wire
Business Wire, Oct 21, 2002
TORONTO--(BUSINESS WIRE)--Oct. 21, 2002
Morgain Minerals Inc. (TSX VENTURE:MGM): The Company is pleased to announce the results of a pre-feasibility study, dated September 16, 2002, completed by A.C.A. Howe International Limited ("Howe"), as prescribed by N143-101, on its 25 hectare El Cairo gold project located in the State of Durango, Mexico. With the recent acquisition of the adjacent 192 hectares from other parties, the terms of which will be announced at a later date, Morgain now holds 217 hectares of land that cover the mining rights to 100% of the known El Cairo gold deposit. Surface rights will have to be leased or purchased from local landowners.
Howe is an international geological and mining consulting firm located in Toronto, Ontario, Canada. In addition Howe retained the services of Kappes, Cassidy and Associates of Reno, Nevada to evaluate the metallurgical test work on the project and to provide their opinion with regard to additional test work required to bring the project data base to the feasibility study stage. Howe performed resource and reserve modeling. The Whittle 4X pit optimization program was used to determine optimum open pit reserves over a range of gold prices for two operating scenarios. Measured and indicated resources make up over 96% of the resource base. The U.S. dollar is used throughout the study and this release.
Howe performed resource and reserve modeling with Gemcom and Whittle software. Based on the Gemcom resource estimate, pre-feasibility quality operating and capital cost estimates, and Whittle open pit optimization work completed by Howe, Howe concludes that "the El Cairo gold project has the potential to be economically viable under a number of foreseeable operating scenarios. Howe concludes that the feasibility study should be completed as expeditiously as possible in order to take advantage of what appears to be strong rebound in the price of gold."
Howe estimates the total oxide resource is 38.3 million tonnes grading 0.71 grams gold per tonne at a cut-off grade of 0.35 grams gold per tonne including 25.3 million tonnes of measured oxide resource grading 0.74 grams per tonne, 12.0 million tonnes of indicated oxide resource grading 0.64 grams per tonne, and 1 million tonnes of inferred oxide resource grading 0.58 grams per tonne. Howe has estimated pre-feasibility capital and operating costs to determine the reserve potential of the project under two operating scenarios. The base case scenario assumes that run-of-mine material can be delivered to the heap leach pads with no crushing or agglomeration required. The other higher cost scenario assumes that crushing and agglomeration of 30% of the run of mine material will be required prior to stacking the ore on the heap leach pads. Both scenarios include delivery of run-of-mine sub-ore grade (cut-off grade 0.2 grams gold per tonne) waste rock to the leach pads at an incremental processing cost.
Base case capital costs are estimated to be $15 million excluding working capital and replacement capital and operating costs estimated at mining $0.75 per tonne of material moved, ore processing at $2.80 per tonne ore and an incremental $1.10 per tonne of sub-ore, plus land reclamation and closure costs of $0.50 per tonne of material delivered to the pads.
Higher cost scenario capital costs are estimated to be $22 million excluding working capital and replacement capital and operating costs estimated at mining $0.75 per tonne of material moved, ore processing at $3.40 per tonne for ore and an incremental $1.10 per tonne of sub-ore, plus land reclamation and closure costs of $0.50 per tonne of material delivered to the pads.
Howe has assumed an average gold recovery of 75% for the heap leach operation based on the limited metallurgical testwork that was completed by Battle Mountain. Howe is of the opinion that ultimate gold recoveries should exceed 80% based on Hecla's experience with the La Choya oxide gold deposit in Mexico which had ore very similar to that at El Cairo and achieved an average gold recovery of 82%.
Based on Whittle open pit optimizations, reserves were estimated for the base case and higher cost scenarios at gold prices of $325, $350 and $375 per ounce. The reserves can be summarized as follows:
Run-of-Mine Estimated Higher Cost Estimated
Base Case Scenario
Proven plus Recoverable Proven plus Recoverable
Probable Probable
Au Price Tonnes g Au/t oz. Au tonnes g Au/t oz. Au
--------------------------------------------------------------------
$325
--------------------------------------------------------------------
Ore 17,656,184 0.88 374,661 13,750,611 0.99 328,259
Sub-Ore 8,970,650 0.27 58,405 9,834,520 0.30 71,143
--------------------------------------------------------------------
Total 26,626,834 433,066 23,585,131 399,402
$350
--------------------------------------------------------------------
Ore 20,877,945 0.82 412,820 15,789,477 0.93 354,087
Sub-Ore 8,655,590 0.26 54,266 9,773,784 0.29 68,347
--------------------------------------------------------------------
Total 29,533,535 467,086 25,563,261 422,434
$375
--------------------------------------------------------------------
Ore 24,238,017 0.77 450,036 17,789,477 0.89 381,779
Sub-Ore 8,586,640 0.26 53,834 9,949,472 0.28 67,176
--------------------------------------------------------------------
Total 32,824,657 503,869 27,738,99 448,956
The base case scenario at a gold price of $325 per ounce is economically viable with an after tax DCF-ROR of 55%. At a gold price of $350 the reserve base increases and the after tax DCF-ROR increases to 70% and to 78% at a gold price of $375 per ounce. The break-even gold price is $223 per ounce (break-even including recovery of capital costs).
The higher cost scenario at a gold price of $325 per ounce has an after tax DCF-ROR of 19%. At a gold price of $350, the reserve base increases and the after tax DCF-ROR increased to 35% and to 46% at a gold price of $375 per ounce. The break-even gold price is $275 per ounce.
Howe also concludes that the results to date of limited twinning of reverse circulation holes with core holes suggests that the reverse circulation data has underestimated the grade of the deposit by 30 to 40%. Also, the silver content (1.56 to 1.73 grams silver per tonne) of the deposit at current silver prices of $4.50 per ounce will provide an additional $0.15 of revenue per tonne of ore which at the proposed production rates of 4 million tonnes of ore per year which would add an additional $600,000 per year to the cash flow.
In preparation for a feasibility study Howe recommends that a two phase program of detailed metallurgical test work, additional core drilling, and preliminary environmental permitting work is warranted.
Phase 1 would involve metallurgical column tests estimated to cost $182,000. Phase 2 estimated at $283,000 would involve additional core drilling to twin existing reverse circulation holes providing additional indications of the grade of the resource as the 6 twinned core holes completed to date by Battle Mountain provided indication of 30 to 40% higher grades than their corresponding reverse circulation holes. The new core drilling will also provide additional metallurgical samples and provide rock quality data (RQD). Preliminary work will be completed on the environmental permitting that will be required at the feasibility study stage.
The total cost to complete the pre-feasibility work upon which a full feasibility study could be based is approximately $465,000. Howe estimates that a full feasibility study could be prepared for an additional $120,000 to $300,000 once the Phase 1 and Phase 2 programs are completed.
The information contained herein was authorized for media release by The Board of Directors. "The TSX-Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release."
COPYRIGHT 2002 Business Wire
