Auriga Gold Announces Positive Preliminary Economic Assessment for Open Pit Mining and Milling at Its Maverick Gold Project
(firmenpresse) - TORONTO, ONTARIO -- (Marketwire) -- 10/31/11 -- Auriga Gold Corp. (TSX VENTURE: AIA) ("Auriga Gold" or the "Company") is pleased to report that it has received a positive preliminary economic assessment ("PEA") of the proposed open pit mining and milling operation at its Maverick Gold Project located 65 km northeast of Flin Flon, Manitoba.
The proposed operation involves initial phase open pit test mining and the milling of 530,000 tonnes of near surface mineralization. The PEA for the proposed program was completed by ACA Howe International Limited (Howe) based on the mineral resource estimate (see August 4, 2011 news release) prepared by P&E Mining Consultants Inc. Currencies reported below are in Canadian dollars unless otherwise specified.
Highlights:
The proposed initial open pit test operation includes the mining of 380,000 tonnes of Indicated resources and 150,000 tonnes of Inferred resources. On August 4, 2011 Auriga Gold announced its initial resource estimate for the Maverick Gold Project which assumed that the resources would be mined by open pit and underground methods at a rate of 1,000 tpd. Given the existing underground resource and the potential to extend the life of the proposed project by adding an underground mining phase to the Project, Auriga Gold plans to assess the potential economic viability of underground mining. The Company has commissioned Howe to immediately prepare an updated PEA to evaluate the open pit plus underground operation.
Dr. Richard Sutcliffe, Auriga Gold's President and CEO stated, "The proposed open pit operation provides the Company with an opportunity to refurbish the existing mill and demonstrate its performance whilst also reaching payback and earning a respectable return on investment in a very short period. We are currently looking at ways to extend the life of the Project using the significant underground mineral resources and add value using a combined open pit and underground operation."
Proposed first phase open pit test mining operation:
The Puffy Lake mill ceased operations in 1989 due to insufficient mine planning and development that led to underground mining problems, excessive ore dilution and difficulties in maintaining the feed rate to the mill. The proposed project involves open pit mining and conventional milling, and provides an opportunity to test and possibly improve gold recovery under mill design throughput conditions. The possibility of using a combined open pit and underground mining approach is currently being assessed in an updated PEA.
The mineral resources contained in the proposed open pits are summarized in Table 1. Approximately 70% of those resources are classified Indicated, with the remaining 30% classified as Inferred. The mineral resources disclosed on Aug 4, 2011 are summarized in Table 2. Mineral Resources which are not mineral reserves do not have demonstrated economic viability.
The projected capital cost to ready the mill for operation is $15.6M. This cost includes $7M for mill refurbishment, $1.3M for power line refurbishment, $4M for pre-stripping, $0.25M for tailings and water management improvements, and engineering, hiring, safety, camp, and project environmental costs. The mill refurbishment cost is based on a cost estimate prepared by AECOM. Auriga Gold obtained the power transmission line cost estimate from Manitoba Hydro.
The PEA assumes that the mill will be readied for production over a 10 month time line and that 60 kt of mineralization will be mined and processed in the following two months. The expenditures included in the cashflow model in the pre-production year (Year -1) include $15.6 M of capital costs, a $3.1M capital contingency, and operating costs of $2M. These pre-production year costs would be partially offset by gold sales revenues of $10.5M.
The PEA assumes that the open pits would be mined by a contractor and that the mill and infrastructure would be operated and maintained by Auriga Gold. The estimated unit operating costs used in the cashflow model are summarized in Table 3.
Economic Analysis:
The potential economic viability of the proposed operation was assessed using a pre-tax cashflow model and projected production parameters, estimated annual gold sales revenue, and estimated annual capital and operating costs. The results of the economic analysis of the proposed operation are shown in Table 4.
The PEA also assesses the potential economic viability of the project assuming recent gold spot prices. The gold spot price scenario presented in the PEA is based on a gold price of US$1,715 / Au oz which approximates the London P.M. fix gold spot price (US$1,718/ Au oz) on October 27, 2011 and an assumed US$1=CAD$1 conversion rate. In the gold spot price scenario presented in the PEA, the estimated pre-tax NPV(8%) is $37.8M, the pre-tax IRR is 440%, the pre-tax undiscounted cashflow totals $45.7M, and the payback is projected to be 15 months.
The PEA includes a recommendation to carry out further metallurgical testing on the anticipated higher grade mill feed to identify possible mill process and flotation improvements that may increase gold recovery to in excess of 85%. Historical mill production records indicate that the mill gold recovery fluctuated with changing head grade and throughput and was as high as 89.2%. The Base Case cashflow model indicates that if the gold recovery could be increased from 85% to 88%, as a hypothetical example, the projected pre-tax NPV(8%) would increase from $20.8M to $23.8M.
The PEA includes a sensitivity analysis which shows that the project is sensitive, in decreasing order, to changes in the gold price, operating costs and capital costs.
Environmental and Social:
Auriga Gold is in the early stages of community engagement and is reviewing environmental permitting requirements with the applicable regulatory authorities.
It is estimated that permitting renewal, the updated PEA, recommended assessments, and project implementation planning can be completed by mid to late 2012 but this could take longer if unforeseen issues arise. The outcome of the updated PEA being prepared for a contemplated combined open pit and underground operation may extend the operating life and value of the proposed open pit operation however this is not a certainty.
Qualified Persons:
The PEA for the proposed open pit mining and milling operation summarized here will be posted on SEDAR within 45 days of the date of this news release.
The projections, forecasts, and estimates in the PEA constitute forward-looking statements, and readers are urged not to place undue reliance on such statements. Additional cautionary and forward-looking statement information is provided at the end of this news release.
The Qualified Persons for the purposes of National Instrument 43-101 "Standards of Disclosure for Mineral Projects" for the PEA are listed in Table 5.
The Qualified Persons for the PEA have reviewed this news release and consented to the inclusion of the data and the form and context in which it appears insofar as their individual contributions are concerned.
About Auriga Gold
Auriga Gold Corp. is a Canadian mining company focused on developing the Puffy Lake Mine and expanding gold resources on its Puffy Lake and Nokomis properties (the "Maverick Gold Project"). The Company plans to upgrade and expand the resources at the Maverick Gold Project, initiate test mining, complete feasibility studies of mineral reserves, and bring the Puffy Lake Mine back into production. The Puffy Lake Mine includes a 1,000 tpd flotation mill, a developed underground ramp to 135 metres depth, is fully road accessible and close to existing mining infrastructure. The Maverick Gold Project is located in the Flin Flon Greenstone Belt of Central Manitoba.
Certain information regarding the Company including management's assessment of future plans and operations, may constitute forward looking statements under applicable securities laws and necessarily involve risks associated with mining exploration and development, volatility of prices, currency fluctuations, imprecision of resource estimates, environmental and permitting risks, access to labour and services, competition from other companies and ability to access sufficient capital. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. A feasibility study has not been completed and there is no certainty the disclosed targets will be achieved nor that the proposed operations will be economically viable. This press release is not and is not to be construed as an offer to buy or sell securities in the United States.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Contacts:
Auriga Gold Corp.
Dr. Richard H. Sutcliffe
President and CEO
(416) 214-2785
Auriga Gold Corp.
Alison Tullis
Manager, Investor Relations
(416) 214-2785
OR
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Datum: 31.10.2011 - 13:19 Uhr
Sprache: Deutsch
News-ID 81884
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