Mr. George Ogilvie reports
RAMBLER ANNOUNCES POSITIVE PEA FOR THE MING MINE'S LFZ
Rambler Metals and Mining PLC has completed a preliminary economic assessment to include the Lower Footwall zone (LFZ) mineralization in its mine plan at the Ming copper-gold mine, in Newfoundland, Canada. This assessment has evaluated the potential for an expansion program to first optimize then transition the Ming mine into a bulk-tonnage operation.
The results show positive economics, good internal rate of return and significant cash flow in addition to numerous areas of opportunities which can only further improve the findings in future studies.
Summary
- The PEA is based on an optimization of the current high-grade operation
at the Ming mine and Nugget Pond milling facility followed by a
transition into a plus-20-year bulk-tonnage mine based on the anticipated
ramp-up schedule:
-
Current production: 630 thousand tonnes per day (year one);
-
Years two and three: 1,000 mtpd (optimization of existing
infrastructure);
-
Years four to end of mine: up to 3,500 mtpd (bulk-tonnage operation);
-
Also in year four and five the Nugget Pond hydrometallurgical
facility will process all remaining gold ore from the 1806 zone
within the Ming mine.
- Numerous opportunities exist to improve the business case. It is these
areas that future optimization and engineering studies will focus on to
ensure that if or when the decision is made to proceed with the
expansion, the project will benefit from the upside of the existing
operation. These opportunities include:
-
A reduction of upfront capital requirements by advancing synergies
with current operations;
-
Additional resource growth through continuing exploration;
-
Further utilization of the Nugget Pond facility with new feed
sources from other regional copper and gold plays.
-
Project before tax net present value of $251-million with an internal
rate of return of 18 per cent based on trending copper and gold prices
(1);
-
Pretax cash flow from operations of $861-million undiscounted;
-
Initial capex requirement of $231-million estimated for the entire ramp-up of
the project. Includes a significant expansion to the mining fleet, a
newly built 3,500 mtpd copper concentrator, new production hoist, a
backfill plant and fresh air intake/exhaust raises;
-
During the life of mine, after milling and recovery, approximately 980,000
tonnes of copper concentrate (616 million pounds of copper) will be produced with
193,000 ounces of gold and 851,000 ounces of silver;
-
Average annual cash operating cost of $1.94 per equivalent pound copper.
George Ogilvie, president and chief executive officer of Rambler, commented:
"We are pleased with the results of the PEA that has confirmed our belief that the Lower Footwall zone can provide a profitable mine life in excess of 20 years. The study now shows the expansion of the Ming mine over a three- to four-year period, however more importantly the work has also uncovered some of the projects opportunities and challenges. It is these areas that we must now focus on over the coming months in various optimization studies so that the external risk factors can be minimized allowing the Lower Footwall zone to remain profitable over varying degrees of price commodity conditions.
"We have steadily moved this mine towards production over the last five years and we believe that we have built a core asset that will ensure the company's growth regardless of whether we are in a booming market or working out of a recession. We intend to maximize the return on investment for our shareholders by first delivering on our existing mine plan through mining the known high-grade massive sulphides. The eventual expansion into the footwall zone has great potential and it is important to continue with the engineering work now so that when long-term market conditions are favourable, our company is ready for the transition."
The PEA will see the underground mining of all available material within the Ming mine, including the Lower Footwall zone, and represents the first time the entire deposit has been considered and evaluated as a potential mining target. The prior feasibility study released in Aug. 26, 2010, considered the mining of the massive sulphide zones only. With the current operation constructed on this basis any possible expansion into the Lower Footwall zone is preliminary in nature.
The PEA has been developed through three independent consultants; the Stantec office out of Sudbury and New Brunswick was responsible for the mining, environmental and project economics; Thibault and Associates Inc. out of New Brunswick was responsible for all processing aspects of the project; while James Weick, a professional geologist based out of Newfoundland, has reviewed the procedures used for the resource estimation and found them consistent with CIM best practices and in compliance with NI 43-101 guidelines. Much of the operational input gained from the continuing mining and milling at the Ming mine was made available for review and inclusion in the report.
An NI 43-101 technical report for the PEA will be filed on SEDAR before the end of April, 2012.
As part of the economic assessment a new geological resource and reserve has been estimated for the project. The attached tables outline the results of this updated estimate which will also be detailed in the technical report filed with SEDAR at April-end. This PEA includes some inferred mineralization, approximately 7 per cent of the reserve estimate, which is considered speculative geologically and there is no certainty that the preliminary economic assessment for these resources will be realized and eventually moved into any reserve category.
RESOURCE ESTIMATE FOR ALL ZONES WITHIN THE MING COPPER-GOLD MINE
Resource
classification Cut-off Quantity Grades
Copper Gold Silver Zinc
(000s t) % g/t g/t %
Measured
MMS (copper) 1.00 % Cu 1,016 2.46 1.99 8.88 0.56
1.25 g/t
MMS (gold) Au 267 0.56 4.31 32.15 1.31
Total massive sulphides 1,283 2.07 2.47 13.72 0.71
Total stringer 1.00 % Cu - - - - -
Combined total 1,283 2.07 2.47 13.72 0.71
Indicated
MMS (copper) 1.00 % Cu 1,088 1.99 2.00 8.74 0.48
1.25 g/t
MMS (gold) Au 83 0.74 2.83 13.86 0.70
Total massive sulphides 1,171 1.90 2.06 9.14 0.50
Total stringer 1.00 % Cu 18,306 1.43 0.09 1.35 0.01
Combined total 19,477 1.46 0.21 1.77 0.04
Combined measured and indicated
MMS (copper) 1.00 % Cu 2,105 2.22 2.00 8.29 0.49
1.25 g/t
MMS (gold) Au 349 0.60 3.96 27.82 1.16
Total massive sulphides 2,454 1.99 2.28 11.07 0.59
Total stringer 1.00 % Cu 18,306 1.43 0.09 1.35 0.01
Combined total 20,760 1.49 0.35 2.51 0.08
Inferred
MMS (copper) 1.00 % Cu 1,711 2.01 1.81 8.87 0.66
1.25 g/t
MMS (gold) Au 136 0.73 1.97 8.29 0.60
Total massive sulphides 1,847 1.91 1.83 8.82 0.66
Total stringer 1.00 % Cu 17 1.19 0.09 1.00 0.01
Combined total 1,863 1.91 1.81 8.74 0.65
RESOURCE ESTIMATE FOR ALL ZONES WITHIN THE MING COPPER-GOLD MINE
Resource
classification Contained metal
Copper Gold Silver Zinc
tonnes oz oz tonnes
Measured
MMS (copper) 25,029 65,155 290,192 5,642
MMS (gold) 1,494 36,919 275,644 3,489
Total massive
sulphides 26,524 102,074 565,836 9,131
Total stringer - - - -
Combined total 26,524 102,074 565,836 9,131
Indicated
MMS (copper) 21,656 70,151 270,713 4,672
MMS (gold) 616 7,545 36,881 580
Total massive
sulphides 22,271 77,695 307,594 5,252
Total stringer 261,258 52,015 794,102 2,603
Combined total 283,530 129,710 1,101,697 7,854
Combined measured
and indicated
MMS (copper) 46,685 135,306 560,904 10,314
MMS (gold) 2,110 44,464 312,526 4,068
Total massive
sulphides 48,795 179,770 873,430 14,383
Total stringer 261,258 52,015 794,102 2,603
Combined total 310,053 231,784 1,667,533 16,985
Inferred
MMS (copper) 34,362 99,832 409,823 9,499
MMS (gold) 993 8,589 36,138 814
Total massive
sulphides 35,355 108,421 445,961 10,313
Total stringer 196 50 531 2
Combined total 35,552 108,471 446,491 10,314
(i) Mineral resources are not mineral reserves and have
not demonstrated economic viability. All figures are
rounded to reflect the accuracy of the estimate. Cut-off
grades of 1.0 per cent copper for the massive sulphides,
1.25 grams per tonne gold for the 1806 zone, 1.00 per
cent copper for the stringer sulphides have been used in
the estimate. Cut-offs are based on an NSR model and long-
term metal prices of $3.45 (U.S.) per pound copper and
$1,200 (U.S.) per ounce gold and $21.96 (U.S.) per ounce
silver. Zinc does not contribute to the revenues.
MINABLE RESERVE ESTIMATE FOR THE MING COPPER-GOLD MINE
Classification Quantity Grades
Copper Gold Silver Zinc
(000s t) % g/t g/t %
Proven reserve 17,206 1.33 0.22 1.96 0.06
Probable reserve 2,899 1.34 0.67 3.44 0.16
Combined total 20,105 1.33 0.28 2.17 0.07
Estimated minable
resource (after
dilution/recovery)
(i) 1,553 1.40 1.43 7.65 0.59
MINABLE RESERVE ESTIMATE FOR THE MING COPPER-GOLD MINE
Classification Contained metal
Copper Gold Silver Zinc
tonnes oz oz tonnes
Proven reserve 229,449 122,364 1,083,343 9,967
Probable reserve 38,752 62,711 320,778 4,746
Combined total 268,201 185,075 1,404,121 14,713
Estimated minable
resource (after
dilution/recovery)
(i) 21,672 71,514 381,884 9,213
(i) A portion of the mine plan utilizes inferred mineralization
which cannot be characterized into any reserve classification.
The 1.6 million tonnes of minable inferred mineralization,
which represents 7 per cent of the total reserve estimate, is
classified as an estimated minable resource and cannot be
carried into an NI 43-101 technical report.
This PEA does not include any of the exploration potential at
the Ming mine and has only used the drill-defined resources
and reserves.
Highlights and assumptions of the PEA
-
As with all mining and exploration projects this expansion carries with
it some risk but significant upside potential under the right
conditions. The attached table summarizes the sensitivities associated with
head grade, commodity pricing, currency rate, project opex and capex.
Variable -15% Base NPV 15% Range
Grade to mill $53.21 $251.49 $449.78 $396.57
Metal price $37.38 $251.49 $465.61 $428.23
Currency $85.16 $251.49 $417.85 $332.70
OPEX $133.93 $251.49 $369.06 $235.14
CAPEX $209.56 $251.49 $293.42 $83.86
Note: Discounted NPV before tax (millions of dollars)
- Basic assumptions used for the compilation of this economic assessment:
-
Average copper price of $3.53 per pound, gold price of $1,320 per
ounce and silver of $24.16 per ounce (2);
-
United States to Canada exchange rate of 1:0.97;
-
Project discount rate of 5 per cent;
-
Mill recoveries for year one are based on current operations at
Nugget Pond; then expansion and optimizing of the Nugget Pond copper
and gold circuits during years two and three; finally for years four
to 20 a new copper concentrating facility constructed at the
Ming mine site, optimized for the lower footwall material with an
overall recovery of 97 per cent.
Opportunities
-
The project capital is $231-million excluding contingency and sustaining
capital which envisions a significant expansion to the mining fleet, a
newly built 3,500 mtpd copper concentrator, new production hoist, a
backfill plant and fresh air intake/exhaust raises; all required in the
first three years of the project. Besides focusing on ways to reduce
these expenditures, with an operating mine and mill already in place,
Rambler possess the ability to finance some of the expansion through its
current operations over a three- to five-year period. This of course
would mean that new resources and reserves would be required to replace
those mined during that period.
-
The construction of a backfill plant will allow some of the historical
pillars left over from mining operations in 1982 to be mined. This
mineralization has been verified and included in two separate resource
categories. The first in developed but unmined areas with an indicated
resource of 125,000 tonnes grading 2.43 per cent copper and 1.99 grams per tonne gold; the
second under an inferred category of 274,000 tonnes grading 3.94 per cent copper
and 2.00 g/t gold. Further engineering work may allow these resources to
be converted and included in the reserve statement.
-
The Nugget Pond milling complex (500 mtpd gold hydromet and 1,000 mtpd
copper concentrator) is not being utilized beyond year five of the
project after the remaining resources from the 1806 gold zone have been
processed. With any expansion of Rambler's gold resources or
participation in another copper or gold play near to the Nugget Pond
property, this facility could take advantage of any deposit outside the
Ming mine area and operate independently.
-
The Ming mine orebodies remain open in all directions and have been
proven to return significant copper and gold intersections with continuing
diamond drill delineation and exploration programs. By expanding on
these programs the company is confident that new resources and reserves
maybe added.
The PEA envisions that massive sulphide ore will be trucked from the mine to the Nugget Pond copper concentrator, 40 kilometres away, over the first three years whereupon the 1806 zone (gold zone) will be treated at the facility from years four through five. Beyond year five additional 1806 zone material could be supplied if the company's exploration program is successful or from an external satellite deposit. In the interim a new 3,500 mtpd mill would be constructed next to the existing Ming mine shaft to be available from year four to end of mine. This concept allows the company to realize revenue streams from both copper and gold simultaneously.
There will be production increases from the existing 630 mtpd, to 1,000 mtpd (years two and three) and 3,500 mtpd from year four to year 20. Once in steady state production approximately 90 per cent of the planned tonnage will come from a long-hole bulk mining method which can reduce the operating unit costs from current levels of $115 per tonne to $60 per tonne. Hydraulic backfill augmented with waste rock from underground development will be the primary filling mechanism with access to each of the zones made possible through extensions of the existing ramps and raises. Due to the significant increase in production a supplemental ventilation and power system will have to be installed.
The capital requirement for the mine over the first six years is estimated to be $172-million; mill $45-million over the first three years and tailings $14-million over the life of mine giving a total requirement of $231-million excluding contingency and sustaining capital. Production, mine development and construction activities have been identified for the entire 20 years of operation and have been linked through schedules based on current performance parameters.
(1) Unless otherwise noted all figures are quoted in U.S. dollars.
(2): Commodity pricing for years one and two are reflective of Macquarie's
published forecast report, November, 2011. Long-term pricing
beyond year five is trending to $3.45 per pound copper, $1,200 per
ounce gold and $21.96 per ounce silver. For the life of mine the
average copper price is $3.53 per pound, gold price is $1,320 per
ounce and silver price is $24.16 per ounce.
Larry Pilgrim, PGeo, is the qualified person responsible for the technical content of this release and has reviewed and approved it accordingly. Mr. Pilgrim is an independent consultant contracted by Rambler Metals and Mining.
All tonnes reported are dry metric tonnes unless otherwise indicated.
The NI 43-101 technical report has been complied by a number of independent,
third party, consultants including:
-
George Darling, PEng, Stantec: reserve estimate, mining methodology and
project economics;
-
James Weick, PGeo: resource estimate and regional geology;
-
Dean Thibault, PEng, Thibault and Associates Inc.: metallurgical
processing;
-
Peter Pheeney, PEng, Stantec: environmental.
We seek Safe Harbor.
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