Mr. Luquman Shaheen reports
PANORO REPORTS POSITIVE PRELIMINARY ECONOMIC ASSESSMENT FOR ANTILLA COPPER PROJECT HEAP LEACH & SX/EW OPERATION
Panoro Minerals Ltd. has received the results of an independent preliminary economic assessment (PEA) of the company's 100-per-cent-owned Antilla project in Peru. The Antilla project is a copper-molybdenum porphyry deposit, located 140 kilometres southwest of the city of Cuzco in the Apurimac region in southern Peru.
Highlights:
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Pretax estimates:
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Net present value (7.5 per cent) of $519.8-million (U.S.);
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Internal rate of return of 34.7 per cent;
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Payback of 2.6 years;
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After-tax estimates:
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Net present value (7.5 per cent) of $305.4-million (U.S.);
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Internal rate of return of 25.9 per cent;
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Payback of 3.0 years;
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Conventional open-pit mine focused on supergene copper sulphides;
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Heap-leach and solvent extraction electrowinning (SX/EW) process;
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Design throughput of 20,000 tonnes per day with an operational mine life of 17 years;
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Low waste-to-mill-feed ratio of 1.38:1;
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Average annual payable copper of 46.3 million pounds as cathodes;
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Average direct cash costs (C1) of $1.51 (U.S.) per pound of payable copper;
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Initial project capital costs of $250.4-million (U.S.), including contingencies;
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Good potential for discovery of additional supergene mineralization adjacent to the current mineral resource area.
Having completed the optimization of the Antilla project, the company will be completing a strategic review of the development and financing plans to put the Antilla project on the road to development.
The PEA was prepared by Moose Mountain Technical Services Ltd. (MMTS) in accordance with the definitions in National Instrument 43-101. The PEA is based on a mineral resource estimate completed by Tetra Tech Inc. in December, 2013, based on 2,919 metres of drilling from legacy campaigns (2003 to 2005), 9,130 metres of drilling by Panoro (2008) and 2,242 metres of drilling during a joint venture agreement with Chancadora Centauro SA (CHC) in 2010. The mineral resource estimate includes primary and supergene sulphides, as well as mixed hypogene and supergene copper mineralization.
The PEA is considered preliminary in nature. The mine plan of the PEA includes 113.3 million tonnes of indicated mineral resources and 5.4 million tonnes of inferred mineral resources. Inferred mineral resources are considered too speculative to have the economic considerations applied that would enable classification as mineral reserves. There is no certainty that the conclusions within the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Luquman Shaheen, president and chief executive officer of Panoro Minerals, stated: "The redesign of the Antilla project has resulted in significantly improved project economics. The mine plan has focused on the higher-grade, near-surface secondary sulphides, which are amenable to processing through heap leaching, solvent extraction and electrowinning (LIX/SX/EW). As a result, the initial capital costs have been reduced by 59 per cent, the C1 cash costs reduced by 18 per cent, the C2 cash costs by 23 per cent and the sustaining capital required for a tailings facility has been eliminated. The base-case, after-tax NPV (7.5 per cent) has increased 36 per cent, the IRR has increased 11 per cent, and the payback period has been reduced by 27 per cent. Over 95 per cent of the mineralized material contained in the mine plan is classified as indicated. The improved Antilla project is now near the lower quartile of new copper projects in terms of both cash costs and capital intensity. The much-reduced $250-million initial capital cost will facilitate a broader range of strategic financing and/or development approaches to advancing the Antilla project through feasibility studies and into development and operation. We are very pleased to have achieved the objective of optimizing the Antilla project and look forward to advancing our strategic plan. We continue focusing on our flagship Cotabambas project, where our investment programs for 2018 and 2019 are focusing on enhancing the project economics and growth profile through exploration success."
Economics
The attached table summarizes base-case economic metrics for the project as well as its sensitivity to the price of copper.
SUMMARY OF PEA ESTIMATES OF NPV, IRR AND PAYBACK
Before tax*
Copper NPV 5% NPV 7.5% NPV 10% IRR Payback
price (millions (millions (millions (%) (years)
(US$/lb) USD) USD) USD)
2.75 $ 487 $ 383 $ 301 28.8 2.9
3.05 $ 648 $ 520 $ 419 34.7 2.6
3.25 $ 755 $ 611 $ 497 38.4 2.5
After tax
Copper NPV 5% NPV 7.5% NPV 10% IRR Payback
price (millions (millions (millions (%) (years)
(US$/lb) USD) USD) USD)
2.75 $ 232 $ 169 $ 118 18.7 3.6
3.05 $ 394 $ 305 $ 236 25.9 3.0
3.25 $ 501 $ 397 $ 314 30.3 2.7
* Excluding Peru statutory charges (such as profit
sharing, regulatory fees, mining royalty, special
mining tax and income tax).
** The economic results are based on the heap-leach
tonnages in the selected ultimate pit. The heap-leach
tonnages include inferred resources. The reader is
cautioned that inferred resources are considered too
speculative geologically to have the economic
considerations applied to them that would enable
categorization as mineral reserves. Mineral resources
that are not mineral reserves do not have demonstrated
economic viability.
Note: The base case is at a long-term copper price
of $3.05 (U.S.) per pound.
Project economics were estimated on the basis of long-term copper price of $3.05 (U.S.) per pound. The long-term forecasts were derived from prices periodically published by large banking and financial institutions and were applied to years 4 to 17 of the mine life. Shorter-term copper price estimates were used for years 1 to 3 of the mine life, reflecting higher price forecasts in the shorter term. For the base case, years 1 to 3 of the mine life used estimated copper prices of $3.20, $3.15 and $3.10, respectively. Molybdenum is not included in the proposed process recovery and not included in the project economics.
Mineral resources
The PEA was based on a mineral resource model prepared by Tetra Tech, which is documented in a technical report filed on SEDAR, dated Dec. 16, 2013.
Mineral resources were estimated by qualified person Paul Daigle, PGeo (APGO No. 1592). A block model was generated with grade estimation constrained by modelled mineralization wire frames. Mineralization is mined from an open pit and treated using a conventional hydrometallurgical flow sheet. Copper equivalent cut-offs were used to report the mineral resource. Metal prices used were $3.25 (U.S.) per pound for copper and $9 (U.S.) per pound for molybdenum, and metallurgical recoveries of 90 per cent for copper and 80 per cent for molybdenum were applied in the equivalency calculation.
The mineral resource has an effective date of Oct. 19, 2015, and is shown in the attached table.
MINERAL RESOURCE STATEMENT*, ANTILLA PROJECT,
PERU, TETRA TECH INC., OCT. 19, 2015
Domain Quantity Grade
(000s tonnes) Cu Mo CuEq
(%) (%) (%)
Indicated
Overburden/cover 5,600 0.25 0.01 0.28
Leach cap 13,400 0.25 0.01 0.27
Supergene 168,900 0.41 0.01 0.42
Primary sulphides 103,900 0.24 0.01 0.26
Total indicated 291,800 0.34 0.01 0.36
Inferred
Overburden/cover 500 0.22 0.009 0.24
Leach cap 13,400 0.21 0.008 0.22
Supergene 25,900 0.34 0.008 0.36
Primary sulphides 50,700 0.24 0.007 0.25
Total inferred 90,500 0.26 0.007 0.28
* Mineral resources are not mineral reserves and have not
demonstrated economic viability. All figures have been rounded
to reflect the relative accuracy of the estimates. Amounts are
reported at a cut-off grade of 0.175 per cent copper equivalent,
assuming an open-pit extraction scenario, a copper of
$3.25 (U.S.) per pound and a molybdenum price of $9 (U.S.)
per pound, and metallurgical recoveries of 90 per cent for
copper and 80 per cent for molybdenum.
Mining and processing
The PEA incorporates an open-pit mining operation using conventional truck-and-shovel methods, delivering mineralized material to the heap-leach pad. Mining will be done using contractors. The estimated 17-year life of mine includes 118.7 million tonnes of mineralized leach pad feed plus 163.4 million tonnes of waste rock, resulting in an average waste-to-process-feed ratio of 1.38:1. The average life-of-mine leach pad head grade is 0.43 per cent copper. The leach material placement is planned at an average rate of 20,000 tonnes per day. The waste rock will be placed in a storage area to the west of the pit in between the pit and the leach pad.
Of the 118.7 million tonnes of leach material mined from the open pit, 117.1 million tonnes are classified as supergene-enriched material, with the balance of the 1.6 million tonnes being classified as overburden, leach cap or primary sulphides.
The subset of the mineral resources contained within the ultimate pit and included in the mine plan is 113.3 million tonnes averaging 0.45 per cent copper classified as indicated resources and 5.4 million tonnes averaging 0.26 per cent copper classified as inferred resources. The reader is cautioned that the inferred resources included in the mine plan are considered too speculative geologically to have economic considerations applied to them that would enable categorization as mineral reserves. There is no certainty that inferred resources will be upgraded to reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
The attached table summarizes the production parameters.
PROJECTED PRODUCTION SUMMARY
Total mill feed material* 118.7 million tonnes**
Average placement rate 20,000 tonnes per day
Life-of-mine (LOM) strip ratio 1.37
Copper
Average mill feed grade 0.43%
Average leaching recoveries 71.9%
* The leach material in the mine plan includes
inferred resources. The reader is cautioned that
inferred resources are considered too speculative
geologically to have economic considerations applied
to them that would enable categorization as mineral
reserves. There is no certainty that inferred
resources will be upgraded to reserves. Mineral
resources that are not mineral reserves do not
have demonstrated economic viability.
** The cut-off grade used to calculate the leach
material is NSR greater or equal to $8.10. NSR is
calculated using the following formula:
NSR equals (copper grade (per cent) multiplied by
copper leach recovery (per cent) multiplied by 57.76).
Haul trucks will deliver the run-of-mine mineralized material to a two-stage crushing plant. The product from the primary crusher will feed a secondary crushing station, whose product will then be stored in a crushed ore stockpile. The crushed material will be loaded to trucks and delivered to the synthetic lined valley-fill heap-leach facility for irrigation with sulphuric acid and ferric solutions. The pregnant leach solution (PLS) will be recovered from the heap-leach operation and piped to a conventional solvent extraction and electrowinning (SX/EW) plant to produce Grade A copper cathodes. The copper-stripped solution generated in the SX plant (raffinate) will be conditioned with sulphuric acid and fresh water and then recycled to the heap-leaching operation to irrigate more mineralized material.
Preliminary metallurgical characterization test work was completed on samples of mineralogical materials from the Antilla project in 2017. An extended test work program was initiated at Aminpro Laboratories in March, 2018, under the direction of Tetra Tech Mining and Minerals. Aminpro Laboratories are fully certified under both ISO 9001 and 1400. The test work program comprises quantitative mineralogical analysis, sulphuric acid and ferric sulphate bottle-roll predictor tests and column-leach tests aimed at characterizing the copper leaching characteristics of supergene mineralogical materials. Results from the predictor tests indicate secondary copper minerals are available for extraction with close to theoretical copper extractions being achieved. The column tests remain under leach and are estimated to be completed by September, 2018. The results from the column leach program will be incorporated in subsequent technical studies. No test work has been conducted on the cover, cap and primary sulphide domains as these constitute only minor portions of the deposit.
The attached table summarizes the expected recoveries of the four mineralized domains, with cover and leach cap performance assumed to follow the main domains based on similar copper mineralogy/speciation.
SUMMARY OF METALLURGICAL
RECOVERIES ESTIMATED IN THE PEA
Mineralized domain Cu recovery
Cover* 31.1%
Leach cap* 38.0%
Supergene 72.5%
Primary sulphide* 21.2%
* These are qualified person estimates;
no supporting test work was completed.
Projected production of payable metals is summarized in the attached table.
SUMMARY OF ANNUAL AVERAGE AND
LIFE-OF-MINE PAYABLE METALS
Annual average Life of mine
Copper (Mlb) 46.3 787.5
Capital and operating costs
The projected capital and operating costs for Antilla over a 1.5-year construction period and 17-year operating mine life are summarized in the attached tables.
SUMMARY OF ANTILLA
INITIAL CAPITAL COST ESTIMATES
(in millions of U.S. dollars)
Item Cost
Mine equipment $ 1.3
Mine development 41.1
Crushing, SX and EW plants 94.7
Infrastructure 42.4
Subtotal 179.5
Owner cost 7.8
Indirect costs 13.7
Subtotal 201.0
Contingencies 49.4
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Total initial capital cost $250.4
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Power will be supplied through a 10-kilometre-long power line connected to the existing national grid connecting the Las Bambas mine to the Cotaruse substation in the district of Chalhuanca. This power line passes by the south part of Antilla property.
Grade A copper cathodes produced by Antilla project will be trucked by a contractor from the mine site to the port of Marcona, in Nazca province, along existing road networks.
ANTILLA ON-SITE OPERATING COSTS
(in U.S. dollars per tonne milled)
Item Cost
Mining cost $1.63
Processing cost (including crushing) 3.85
Leach material haulage cost (average) 0.81
G&A costs 0.75
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Total on-site operating cost $7.04
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C1 and C2 cash costs, as defined by Brook Hunt, per pound of payable copper are listed in the attached table.
ANTILLA AVERAGE CASH COSTS
(in U.S. dollars per pound payable copper)
Item Cost
C1 -- direct cash cost $1.51
C2 -- production cost $1.82
Opportunities for project growth and enhanced economics
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Tetra Tech recommends that further investigation of the Antilla deposit is warranted and necessary. There is potential to add new mineral resources at depth and in the northeast and southeast sides of the pit shell. Tetra Tech recommends that additional drilling be carried out to reduce the drill spacing in those zones with copper mineralization, where drill spacing is greater than 100 metres. Additional drilling will determine, with greater confidence, both the continuity and extents of copper mineralization within and outside of the known deposit.
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Tetra Tech recommends an extension of the current exploration grid to include the West Block, North Block, Middle Block and Chabuca exploration targets. Tetra Tech recommends continued geochemical sampling and geophysical surveys over these areas located next to the current mineral resources.
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Considering the preliminary metallurgical test work undertaken on the project to date, there is potential to increase recoveries with additional metallurgical testing.
Future work
Further work leading to a prefeasibility or feasibiilty study is recommended and will include drilling, mineral resource modeling, metallurgical test work, engineering and marketing studies, hydrological and geotechnical analysis, as well as various baseline environmental and archeological studies. In addition, exploration work will be recommended over the other targets in the vicinity of the known deposits.
Environment and permitting
Existing environmental liabilities associated with the project are restricted to those expected to be associated with an exploration-stage project and include drill sites and access roads. Additional environmental baseline studies should be conducted to collect site data, including surface water quality, archeology, aquatic and terrestrial biology, flora, fauna, and additional geochemical characterization of mine waste materials. This information will inform a comprehensive environmental impact study.
Technical reporting
The complete technical report documenting the PEA will be filed within 45 days of this news release and will be available on Panoro's website and on SEDAR. The technical report will be written by qualified persons.
Information in this news release, which is derived from the PEA, has been reviewed by the qualified persons of Tetra Tech, Moose Mountain Technical Services and Panoro.
About Panoro Minerals Ltd.
Panoro Minerals is a uniquely positioned Peru-focused copper exploration and development company. The company is advancing its flagship project, the Cotabambas copper-gold-silver project, and its Antilla copper-molybdenum project, both located in the strategically important area of southern Peru.
We seek Safe Harbor.
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