Virgin Metals' New Los Verdes Preliminary Economic Assessment Benefits from Heightened Technical Detail and Added Resource Potential at Potreritos
(firmenpresse) - TORONTO, ONTARIO -- (Marketwire) -- 01/10/12 -- Virgin Metals Inc. (TSX VENTURE: VGM) today released the results of a Preliminary Economic Assessment on its 100% owned Los Verdes Project in Sonora Mexico including a financial analysis of the impact of Virgin's recent Potreritos acquisition.
"Over the past year we have been able to re-cast our resource estimate, successfully optimize the metal processing recoveries, complete a detailed metallurgical simulation and re-engineer the operational plant and facilities at the Los Verdes project" said Chris Frostad, President & CEO. "These results not only demonstrate significant economic improvement and clarity over the 2008 Pre-Feasibility, but new opportunity for additional cost savings and significant project growth. We are especially excited to see that the Potreritos acquisition has added the potential for 10's of millions of dollars to the value of the project."
In September 2011, Virgin Metals acquired the Potreritos projects area which is located approximately 2 km north of the Los Verdes property limits. Historic estimates for the Potreritos deposit include 1.4 MM tonnes of indicated resources (0.47% Cu / 0.12% Mo) and 0.8 MM tonnes of inferred resources (0.22% Cu / 0.033% Mo) - see Virgin Metals news release dated October 27, 2011. As the historic resource estimates are not NI 43-101 compliant they have been excluded from the current Los Verdes PEA study. Management considers that should the historic estimates be upgraded to current resources the close proximity of the two projects would allow for the Potreritos resources to be incorporated into the mining plans for the Los Verdes deposit. As part of the PEA economic model sensitivity analysis the impact of increased resources on the overall Los Verdes project are illustrated in the PEA Economic Highlights summary. The remainder of the sensitivity analysis results are summarized later in the news release.
Exploration Potential at Potreritos
In addition to the mineralization already identified, the geology of the Potreritos deposit is such that it allows for the existence of similar bodies in areas not yet explored. Exploration work completed in 2007/8 in conjunction with the SGM (Servico Geologico Mexicano) has identified a number of other occurrences within the Potreritos claim area with indications of copper/molybdenum mineralization.
Los Verdes Deposit PEA
The Los Verdes deposit PEA is based on an updated resource estimate completed by Golder Associates which contains a total resource (measured + indicated) of 7.7MM tonnes - 0.64% copper, 0.12% molybdenum, 0.07% tungsten, 4.75 g/t silver (see Los Verdes Resource Estimate section for details). The study envisions the construction of a new mine and processing facility with an average annual production rate of approximately 1 MM tonnes over a 7-year mine life. Highlights from the study are as follows:
The initial capital cost estimate of $92 MM includes the construction of a stand-alone processing facility, mine pre-stripping, phase 1 of the tailings storage facilities and all necessary site infrastructure to bring the mine into production. A conservative 30% contingency has been included with the process facility estimate to account for requirements that are not detailed in the current study. The largest components of the sustaining capital estimate of $18 MM is the construction of a tungsten processing facility in the second year of production and a phase 2 expansion of the tailings facilities in year 4. In order to conserve capital a decision was made to utilize contractors for all mining and crushing activities.
The average life-of-mine (LOM) unit operating costs for the project are estimated at $35/ tonne. This figure is broken down as follows:
Based on metallurgical testwork completed to date a conservative metal recovery of 85% to concentrates has been assumed for copper, molybdenum and silver. The current metallurgical flowsheet has been able to demonstrate that salable quality concentrates can be produced for all of these components (note - silver reports to copper concentrate). A preliminary allowance of 50% for tungsten recovery has been included in the current study. Additional metallurgical work is required to determine whether the recovery of tungsten to a salable concentrate is a viable option for the Los Verdes deposit. "Typical" concentrate treatment terms and conditions have been utilized for all economic analyses.
A number of opportunities were identified in the PEA study to further enhance the Los Verdes project development plan and economics. These include:
Sensitivity Analyses
The results of a sensitivity analysis performed on the Los Verdes deposit base case economic model are shown in the table below. The sensitivity modeling demonstrates that the project economics are most impacted by variations in metal prices and mined grades and least impacted by capital requirements and operating costs.
The Company acquired the Potreritos deposit in September 2011 with a view towards providing the potential for increased resources at the overall Los Verdes project. The sensitivity analysis in the following table examines the impact of potential increases in resources on the base case PEA results. Other parameters utilized in the economic model to calculate the NPV and IRR remain the same as the base case with the following exceptions:
Los Verdes Resource Estimate
The Los Verdes deposit PEA is based on an updated resource estimate completed by Greg Greenough, P.Geo. of Golder Associates, using block model estimation techniques.
Wire frame domains of Supergene and Oxide zones noted in the drill data were constructed and used as constraints throughout the resource estimation process. An unfolding technique was used to provide a more robust estimate which takes into account undulations and irregularities in the deposit shape. With drill spacing at approximately 50 m, a block size of 15 x 15 x 5 m was chosen. Variogram analysis of Cu, Mo, W, and Ag on the 1 m composites (in unfolded space) provided the variogram models used in Ordinary Kriged estimates, and also for determining the estimation search volumes. Validation of the Kriged estimate included visual checks and global comparisons to Nearest Neighbour (de-clustered data) estimates. Reported resources are restricted to the Supergene domain.
The new estimates (see below) are not significantly different with respect to copper and molybdenum versus those utilized for the previous pre-feasibility study completed by MQES (September 3, 2008). The main difference in the current estimates is the inclusion of silver and tungsten which were excluded from the previous figures. A summary of the current resources is shown in the table below.
Los Verdes
The Los Verdes property is a historic molybdenum producer, which was extensively drilled in the 1970s. Repetition and expansion of that drilling by Virgin in 2006 and 2007 resulted in the completion of a pre-feasibility study in 2008. That pre-feasibility study demonstrated, in considerable detail, a robust project based on molybdenum and copper recovery only; with upside existing in tungsten and silver recovery as well as improvements in copper and molybdenum recoveries. The Los Verdes resource comprises a modest sized, compact zone of molybdenum, copper and tungsten mineralization located at the crest of a steep ridge. The geometry of the deposit is ideal for low cost open pit mining.
In September 2011, the neighbouring Potreritos property was acquired and added to the project. Potreritos contains the workings of two historic mining operations (Buenavista and La Providencia) and is in close proximity to Virgin Metals Los Verdes project. During the 1960's and 1970's the Buenavista and Tres Piedras (now La Providencia) deposits were operated by Minera Galaviz, SA de CV which constructed a flotation plant in the area to recover copper and molybdenum. The two deposits are located in close proximity to each other (approx. 200 m) and may be part of the same geological system. Historical copper and molybdenum concentrations in the rock from the deposits at Potreritos are similar to those expected at Los Verdes.
The Los Verdes/Potreritos project is made up of 17 titled exploration concessions, covering 6,629 hectares. It lies within what could be considered the southerly extension of the Basin and Range province of the southwestern USA, near the boundary with the Sierra Madre Occidental province.
PEA Study Development Methodology
The general methodology utilized for the development of the PEA study was:
About Virgin Metals
Virgin Metals is a junior exploration and development company; its projects include two copper-molybdenum porphyry properties in Sonora, northern Mexico. One of these, Los Verdes, is currently the subject of a pre-feasibility study while the other, Cuatro Hermanos, is the focus of ongoing exploration efforts.
The PEA has been prepared by the Virgin Metals technical group in accordance with Canadian Securities Administration National Instrument 43-101 ("NI 43-101") requirements and CIM standards. Technical information related to the PEA and this news release has been reviewed and approved by Darren Koningen, P. Eng., a Qualified Person as defined by NI 43-101, with the ability and authority to verify the authenticity and validity of this data. Greg Greenough, P.Geo., of Golder Associates Ltd., has also reviewed and approved this press release, and is the Qualified Person responsible for the preparation of the resource estimates.
The NI 43-101 Technical Report on the PEA for the Los Verdes Deposit will be filed on SEDAR within 45 days of this news release.
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Contacts:
Virgin Metals Inc.
Chris Frostad
(416) 306-0990
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Datum: 10.01.2012 - 14:42 Uhr
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