Rainy River Resources' Preliminary Economic Assessment Anticipates 329,000 Ounces of Gold Annually Over 13+ Years at the Rainy River Gold Project
(firmenpresse) - TORONTO, ONTARIO -- (Marketwire) -- 11/09/11 -- Rainy River Resources Ltd. ("Rainy River" or the "Company") (TSX: RR) is pleased to announce receipt of a positive Preliminary Economic Assessment ("PEA") for its 100% owned Rainy River Gold Project ("RRGP") in northwest Ontario, Canada. The information presented below summarizes the results of a conceptual mine and processing scenario based on the June 29, 2011 NI 43-101 mineral resource estimate, which includes assay data up to February 27, 2011. All currency amounts in this press release are denominated in Canadian dollars ($) unless otherwise noted.
HIGHLIGHTS OF THE PRELIMINARY ECONOMIC ASSESSMENT
Raymond Threlkeld, Rainy River's President and CEO, stated, "We are very pleased to have completed this important milestone in the development of the Rainy River Gold Project, which is located in a mining-friendly jurisdiction with locally available infrastructure. The study is a snapshot in time, based on data from early 2011, and shows that the project has the potential to become a significant gold producer with cash costs in line with our peer group. The first four years of mining contemplated in the study are stellar, with average cash costs of US$417 per ounce, generating over $800 million in free cash flow. At current prices, the free cash flow in the first four years would be over $1.6 billion. With the results of drilling we have seen in 2011 and the addition of this data to an updated mineral resource and PEA, we expect the project to get even better as we move toward the Feasibility Study stage. At current gold prices, RRGP has a pre-tax NPV of $2.5 billion and IRR of 42.5%.
"Rainy River has made significant progress in a year, defining the deposit and making several new discoveries in 2011, including the Western Area, 17 Zone Eastern Extension and the Pinewood South nickel-copper-PGM massive sulphide horizon. Our aggressive exploration program has been a success to-date, and continues with 12 drill rigs and a planned resource estimate update in early 2012."
AREAS OF UPSIDE POTENTIAL FOR PROJECT METRICS
RAINY RIVER GOLD PROJECT - PRELIMINARY ECONOMIC ASSESSMENT
Contributors
The independent PEA was prepared through the collaboration of a number of industry-recognized consulting firms, including BBA Inc. ("BBA", Montreal, QC), Golder Associates ("Golder", Vancouver, BC), AMEC Environmental & Infrastructure ("AMEC", Mississauga, ON) and SRK Consulting (Canada) Inc. ("SRK", Toronto, ON). These firms provided resource estimates, design parameters and cost estimates for mine operations, process facilities, major equipment, waste storage, reclamation, permitting and operating and capital expenditures. A summary of contributors to the PEA is included in Table 2 below.
Mineral Resources
The study assumes both open pit and underground mining methods would be used for resource extraction. Table 3 summarizes the June 29, 2011 mineral resource estimate, which forms the basis of the PEA.
The above table summarizes mineral resources and excludes the impact of mining dilution, which is the incidence of waste rock extracted together with mineralized material.
For the PEA, open pit mining dilution is calculated as 14% at 0.15 g/t gold and 0.78 g/t silver. Underground mining dilution is calculated as 10% at 0.32 g/t gold and 0.81 g/t silver. Open pit resources have been calculated assuming a material loss of 4%. Underground resources have been calculated assuming a material loss of 5%. With an open pit cut-off grade of 0.30 g/t, and an underground cut-off grade of 2.0 g/t, the resulting tonnages and grades for the open pit and underground mine plans are shown in Table 4:
Mining
The PEA assumes the processing of an average 31,340 tpd of material from a combination of open pit and underground operations.
The open pit mine plan is split into two phases: Phase 1 focuses on a higher grade 'starter pit' from Year 1 to Year 4, mined to a depth of 275 metres, while Phase 2 comprises the 'final pit' from Year 5 to Year 14, mined to a depth of 500 metres. The RRGP open pit is designed as a conventional surface mining operation producing mill feed at a rate of 30,000 tonnes per day. The primary equipment fleet will consist mainly of three 35 m3 wire rope shovels, one 25 m3 hydraulic excavator, one 30 m3 wheel loader, and 225 tonne-class haul trucks and a fleet of support equipment. Production drilling will be carried out by diesel-powered track-mounted units. Operating bench heights of 10 metres have been assumed for mining operations. Over the life of the mine, a total of 586 million tonnes of waste rock and 91 million tonnes of overburden material will be moved. During the pre-production period, 24 million tonnes of overburden and 9.8 million tonnes of waste rock will be removed as part of development work, with overburden stripping completed within the first 6 years. Waste rock-to-mill feed operating strip ratios average 2.9 during the first four years of operations, and average 3.3 over the life-of-mine. One hundred and thirteen million tonnes of waste rock are accounted for in sustaining capital ($195 million). Mined waste rock and overburden material would be stored in nearby stockpiles or used in dyke construction activities associate with tailings impoundments.
Underground mining will be conducted with an overhand cut-and-fill method with 5 metre high lifts, designed to deliver 2,000 tonnes per day of feed to the processing plant. Underground workings will be developed from a primary 5-by-5 metre ramp access and, over time, from the open pit, as the pit deepens. A fleet of 6 m3 scooptrams and 50-tonne trucks will load and haul the material to surface. Development of the underground mine would start in Year 1 of open pit mine operations, commence small scale production by Year 3 and begin producing at full rates by Year 5.
Both mine areas would deliver material to a central gyratory crusher for primary reduction and delivery to the processing plant.
Metallurgy and Processing
Metallurgical testing has been conducted over the last two years at SGS Canada Inc. in Lakefield, Ontario. Based on the results, BBA developed a conventional flow sheet including:
Major equipment for the processing facility includes a gyratory crusher sized for 35,000 tpd, a semi-autogenous ("SAG") mill and a ball mill. Mill feed would be ground to a P80 size of 150 microns before entering a flotation circuit. Flotation concentrate would be re-ground to P80 10-15 microns using ultra-fine grinding mills, before entering a carbon-in-pulp ("CIP") leaching circuit for final metal recovery.
Metallurgical recoveries for gold and silver are expected to average 88.5% and 65.0% respectively. The current flow sheet does not include a gravity circuit as more testing is required to determine if this step is warranted. Two tailings ponds are envisioned for both flotation and concentrate tailings products.
Infrastructure
The RRGP benefits from world-class infrastructure, services and labour in the immediate area. The project site is located only 65 km from the town of Fort Frances (population 8,000) and is accessible year-round by a network of sealed provincial highways.
Infrastructure is anticipated to include:
Operating and Capital Costs
Total operating costs for the RRGP are summarized in Table 5 as follows:
The breakdown of open pit and underground pre-production and sustaining capital costs is supplied in Table 6 and 7, respectively.
Open pit pre-production capital costs include overburden stripping, which is necessary to expose the material to be mined, as well as waste stripping. Open pit sustaining capital costs include the construction of a tailings dam and certain waste rock removal.
Environment
The environmental baseline assessment was initiated in 2008 and was followed by extensive annual regional field assessments.
AMEC's environmental study to-date suggests that 'no fatal flaws' are indicated for the RRGP.
Community
The Company is an active member of the community with local offices situated both near the project site in the town of Emo, as well as in Thunder Bay. Regular public information meetings combined with site tours are some of the ways the Company has continued to engage and inform the local population as to the project's progress. In support of Aboriginal engagement, the Company signed a Memorandum of Understanding ("MOU") with the Fort Frances Chiefs Secretariat First Nations in May 2010, and has held discussions with the First Nations over the course of 2011, developing a Participation Agreement which is projected to be formally signed in Q1-2012.
The peak construction workforce will total 675 during the 20-month construction period. Employment levels at the RRGP during operations will vary according to production requirements but will average 618 including 153 salaried staff and 465 hourly employees.
Project Economics
Life-of-mine cash costs, net of silver credits, are calculated to be US$553 per ounce of gold. This average places the project within the second quartile of global gold projects, based on published industry cost curves. In the first four years of production, cash costs are US$417 per ounce of gold, net of silver credits, placing the RRGP within the first quartile of global gold projects.
Production volumes and cash costs are shown in Tables 8 and 9 below.
The PEA base-case scenario suggests a 19.4% IRR and an NPV of $786 M, at a 5% discount rate on a pre-tax basis. Parameters are provided in Table 10 below, with sensitivities in Table 11. Additional assumptions applied in developing the project economics for this PEA include capital costs commencing upon initiation of construction.
All scenarios in the Preliminary Economic Assessment are preliminary in nature and include both Indicated and Inferred Mineral Resources. Inferred Mineral Resources are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves. There is no certainty that the Preliminary Economic Assessment will be realized.
Opportunities and Risks
Opportunities to improve RRGP project economics include the following:
Risks requiring mitigation strategies include:
Next Steps
Technical:
Exploration
Community and Environment:
The full NI 43-101 Technical Report for the PEA will be filed on SEDAR within 45 days, and will be posted to Rainy River Resources' website at at that time.
Rainy River will hold a conference call on Thursday November 10, 2011 at 10 a.m. Eastern Standard Time. During the call, senior management will be available to discuss the study and respond to questions from analysts and investors. To join the call, please dial:
The conference call will be recorded and available until Nov 20, 2011. Playback details are as follows:
Independent Qualified Persons ("QPs")
QPs from BBA, Golder, AMEC and SRK who have prepared or supervised the preparation of the technical information relating to the Preliminary Economic Assessment include:
The mineral resource statement was prepared by Dorota El-Rassi, P.Eng. (APEO #100012348) and Glen Cole, P.Geo (APGO #1416), of SRK, both "independent qualified persons" as that term is defined in National Instrument 43-101.
Forward-Looking Statements
This press release contains "forward-looking information" as defined in applicable securities laws (referred to herein as "forward-looking statements"). Forward looking statements include, but are not limited to, statements with respect to the cost and timing of the development of the Rainy River project, including the exercise of the economic parameters of the project; the success and continuation of exploration activities; estimates of mineral resources; acquisitions of additional mineral properties; the future price of gold; government regulations and permitting timelines; estimates of reclamation obligations that may be assumed in connection with the exercise of the economic parameters of the project; requirements for additional capital; environmental risks; and general business and economic conditions. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "suggests", "continues", "forecasts", "projects", "predicts", "intends", "anticipates" or "believes", or variations of, or the negatives of, such words and phrases, or statements that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. Inherent in forward-looking statements are risks, uncertainties and other factors beyond the Company's ability to predict or control. These risks, uncertainties and other factors include, but are not limited to, the assumptions underlying the Preliminary Economic Assessment not being realized, future gold prices, changes in cost of labour, supplies, fuel and equipment, changes in equity markets, actual results of current exploration, changes in project parameters, exchange rate fluctuations, title risks, regulatory risks and uncertainties with respect to obtaining necessary surface rights and permits or delays in obtaining same, and other risks involved in the gold exploration and development industry, as well as those risk factors discussed in the section entitled "Description of Business-Risk Factors" in Rainy River's 2011 Annual Information Form.
Forward-looking statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to, the availability of financing for the Company's exploration and development activities; the timelines for the Company's exploration and development activities on the Rainy River Property; the availability of certain consumables and services; assumptions made in mineral resource estimates, including geological interpretation grade, recovery rates, and operational costs; and general business and economic conditions. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements to be materially different from any of its future results, performance or achievements expressed or implied by forward-looking statements. All forward-looking statements herein are qualified by this cautionary statement. Accordingly, readers should not place undue reliance on forward-looking statements. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements whether as a result of new information or future events or otherwise, except as may be required by law.
This new release uses the terms "measured resources", "indicated resources" and "inferred resources". The Company advises readers that although these terms are recognized and required by Canadian regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI43-101")), the United States Securities and Exchange Commission does not recognize them. Readers are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted in to reserves. In addition, "inferred resources" have a great amount of uncertainty as to their existence, and economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, or economic studies, except for a Preliminary Assessment as defined under NI43-101. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.
Non-GAAP Measures
Cash cost per ounce is a non-GAAP measure and has no standardized meaning under Canadian GAAP or IFRS.
About Rainy River
Rainy River is a Canadian precious metals exploration company whose key asset is the Rainy River Gold Project. With over $105 million in cash and securities, the Company is well funded to conduct a dual-focused drilling program consisting of: 1) definition diamond drilling of the main gold resources in preparation for scoping and prefeasibility studies, and 2) selective diamond drill testing of high-priority gold targets defined primarily by RC drilling within the large gold system centred in Richardson Township. The Company's property is very well located in the southwestern corner of Northern Ontario near the U.S. border. It is accessed by a network of roads and is close to hydro-electric infrastructure. The Rainy River district has a skilled labour force and is one of the lowest-cost areas for mineral exploration and development in Canada. The Company is also working to advance the early-stage discoveries at its TPK Joint Venture Property, also in Ontario, where it can earn a 51% interest in the property from Northern Superior Resources. Ontario has low political risk and, according to the annual Fraser Institute global survey of the mining industry, has consistently ranked as one of the top jurisdictions embracing mineral development.
RAINY RIVER RESOURCES LTD.
Raymond Threlkeld, President & CEO
Contacts:
Rainy River Resources Ltd.
Indi Gopinathan
Director of Investor Relations
416-645-7289
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Datum: 10.11.2011 - 02:55 Uhr
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