Pele Mountain (TSXV:GEM) Announces Preliminary Economic Assessment for Eco Ridge Mine Rare Earths and Uranium Project with $1.31-Billion Pre-Tax Cash Flow
(Thomson Reuters ONE) -
Vancouver, British Columbia, July 6, 2011 - Pele Mountain Resources Inc.
(TSXV:GEM) (OTCQX: GOLDF) has achieved a major milestone with today's
announcement of a very positive NI 43-101 Preliminary Economic Assessment on the
company's Eco Ridge Mine Rare Earths and Uranium Project, located in Elliot
Lake, Ontario.
A video based on this information is available for viewing here. If this link is
not enabled, please enter this URL:
http://www.youtube.com/pelemountainresource
The Preliminary Economic Assessment was prepared by Roscoe Postle Associates and
demonstrates that Eco Ridge has potential to become a profitable producer of
rare earth oxides and uranium oxide.
Highlights from Pele Mountain's July 5(th) news release:
The Project is located in Elliot Lake, Ontario, the only Canadian mining camp to
ever achieve commercial rare earth oxide production and a historically important
source of "Heavy" rare earth oxides in North America. Recent market
developments, sparked by China's reduction of export quotas, have resulted in
sharply higher prices, inciting a rush to find and bring to production new
sources outside of China. With well-understood geology, excellent regional
infrastructure, and strong local support, Eco Ridge is an ideal location for a
safe, secure, and reliable long-term supply of rare earth oxides and uranium
oxide. Pele is focused on transitioning Eco Ridge into the feasibility and
licensing stages as it advances the Project toward development and production.
Highlights of the Preliminary Economic Assessment include:
* 9,400-tonne per day operation with life-of-mine production of 10.7-million
pounds of total rare earth oxides and 24.9-million pounds of uranium oxide
over a 14-year mine life.
* Cumulative operating cash flow of US$1.72-billion; Cumulative pre-tax cash
flow of US$1.31-billion.
* Positive net present value of $662-million, discount at a 7.5% discount
rate; internal rate of return of 47-percent.
* Operating cash cost of $16 per pound U(3)O(8), net of rare earth oxide
credits.
* Start-up capital cost of $212-million; Sustaining capital cost of $195-
million.
* Life-of-mine production includes 430,000 pounds of dysprosium oxide
(Dy(2)O(3)), 1.28-million pounds of neodymium oxide (Nd(2)O(3)), 2.08-
million pounds of yttrium oxide (Y(2)O(3)), and 67,000 pounds of scandium
oxide (Sc(2)O(3)).
Two-thirds of rare earth oxide revenue is from Heavy rare earth oxides
(including yttrium and scandium oxides) many of which are forecast to be in
particularly short supply in the years ahead while demand continues to rise
sharply.
Opportunities for improvement of project economics include improved rare earth
oxide and U(3)O(8) recoveries, and increased resources and production rate.
Pele President and CEO Al Shefsky, stated: "We are extremely pleased with this
Preliminary Economic Assessment of our Eco Ridge Mine Project. The Preliminary
Economic Assessment confirms our long-standing belief that Eco Ridge can be an
important future source of rare earths and uranium, perhaps most critically as a
secure and reliable long-term source of Heavy REO outside of China. Our project
economics are robust and compelling and we are already planning next steps to
rapidly advance towards development and production. The Eco Ridge Preliminary
Economic Assessment forecasts pre-tax cash-flow exceeding $7.00 per fully
diluted Pele share. We do not believe that our stock price currently reflects
the value of this important asset."
The 14-year production plan calls for a 9,400-tonne per day operation with
average annual production of 708,000 pounds of Total REO and 2.07-million pounds
of U(3)O(8.) Underground development has been designed to be developed within
the mineralized beds. This development muck, plus approximately 40-percent of
the material broken in stopes will be brought to surface and processed on the
Heap Leach Facility ("HLF"). The remaining material will be bioleached
underground with leach solutions circulated in closed systems within each stope.
Leach solutions from both surface and underground will go through a solvent
extraction plant designed to recover U(3)O(8). The effluent from the U(3)O(8)
recovery plant will go through a secondary solvent extraction plant to recover
the REO. The Preliminary Economic Assessment is based on mining and processing
plans designed by engineers who have direct experience with commercial
production in the Elliot Lake camp. The mining and processing methods utilized
in the Preliminary Economic Assessment have been successfully used in past
commercial production at other mines in the area.
Mr. Shefsky continued, "Light REO at Eco Ridge occur primarily in the mineral
monazite and would likely require a different processing circuit to achieve
significantly better recoveries than the range reported today. Economic trade
off studies will be undertaken to determine if this approach is advisable.
However, several of the Heavy REO at Eco Ridge occur within uranium minerals
together with U(3)O(8). Based on metallurgical and mineralogical studies to
date, we believe there are excellent prospects for improving Heavy REO
recoveries from the 34-percent average we are reporting today. Increased
recoveries of Heavy REO (and U(3)O(8)) present an important opportunity to
enhance the economics at Eco Ridge."
Estimated mineral recoveries used in the Preliminary Economic Assessment are
based on historic operations in Elliot Lake for underground recovery of U(3)O(8)
and on extrapolations of time recovery curves from preliminary metallurgical
testing at SGS Canada Ltd. for REO. Assumed recoveries of individual oxides,
along with forecast production and revenue contributions are posted on the
company's website.
The Project has no known environmental liabilities and enjoys strong local
support. The Province of Ontario has recently granted two renewable 21-year
mining leases at Eco Ridge, giving Pele the exclusive right to mine in the
leased areas. The Mining Leases also include surface rights except for an area
covered by surface patents owned by the City of Elliot Lake. The City has also
granted Pele a renewable 21-year lease with a conditional option to purchase the
City's surface patents. Both the Mining Leases and the City Lease allow for
siting of project infrastructure like mine portals and processing facilities.
Pele places great value on community relations and has maintained friendly and
productive dialogue with local First Nations and the City of Elliot Lake since
the inception of the Eco Ridge Mine project. The Company's approach to
sustainable development and operations at Eco Ridge is set out in a Project
Description, which was filed with the Canadian Federal Government's Office of
Major Projects Management and the Canadian Nuclear Safety Commission in
September 2008.
Pele recently announced the commencement of a 7,000-metre drill program. As the
mineralized reefs of the Elliot Lake mining camp are well known for their
consistency and size, the mineral resources at Eco Ridge have excellent
potential for improvement of classification and expansion. The program will
include in-fill drilling within the existing Resource Wireframe with an
objective of upgrading up to 5-million tonnes of Inferred Resources into the
Indicated category. Indicated Resources may be converted to Mineral Reserves
during the feasibility process, while Inferred Resources may not. The program
will also include step-out drilling to the north of the Resource Wireframe with
an objective of bringing up to 10-million additional tonnes of the mineralized
reef into the Inferred Resource category.
For further information please contact Al Shefsky at 800-315-7353 or visit
Pele's website at www.pelemountain.com.
CONTACT:
Pele Mountain Resources
www.pelemountain.com
800-315-7353
InvestmentPitch.com
Barry Morgan, CFO
bmorgan(at)investmentpitch.com
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: InvestmentPitch via Thomson Reuters ONE
[HUG#1528981]
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Datum: 06.07.2011 - 17:52 Uhr
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News-ID 56186
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