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Abcourt Mines Inc
Symbol C : ABI
Shares Issued 288,703,070
Recent Sedar Documents

Abcourt FS on Abcourt-Barvue shows cost reduction

2019-02-08 11:08 ET - News Release

Mr. Renaud Hinse reports

THE UPDATE ON THE ABCOURT-BARVUE FEASIBILITY STUDY IS POSITIVE

Abcourt Mines Inc. has provided positive results for the feasibility study update on the Abcourt-Barvue project, with a major reduction in the initial capital cost.

The Abcourt-Barvue property was in production by an open pit and an underground mine during two different periods. The project comprises three open pits, namely Barvue, Abcourt East and Abcourt West, and the development of an underground mine to produce a zinc-silver concentrate.

This National Instrument 43-101 technical report on the Abcourt-Barvue project was prepared to present the findings of an update to the technical feasibility study report on the Abcourt-Barvue deposit dated Feb. 15, 2007, prepared by Genivar and Bumigene and filed on SEDAR.

The Abcourt-Barvue project is located in the Abitibi area, northwestern Quebec, Canada, 60 kilometres north of the town of Val d'Or. The project is located on an existing mine site with several readily useable infrastructures, in a very easily accessible area where all services may be obtained at competitive prices.

Abcourt commissioned PRB Mining Services Inc. and Bumigeme Inc. to update the 2007 feasibility study using current economic parameters, the Genivar 2007 pit design and modifying the process flowsheet to eliminate the silver cyanidation circuit and to produce only a zinc-silver concentrate by flotation.

History

The zinc-silver mineralization was discovered in 1950. The Abcourt-Barvue deposit was in operation during two periods: between 1952 and 1957 by Barvue Mines Ltd. and between 1985 and 1990 by Abcourt. In all, 5,002,190 metric tonnes, grading 38.74 g/t silver and 2.98 per cent zinc, were mined from the Barvue open pit and 632,319 metric tonnes, grading 131.65 g/t silver and 5.04 per cent zinc, were mined from underground production. The old Barvue tailings pond was recently rehabilitated by the Ministry of Natural Resources of the province of Quebec. Abcourt retained the mining concessions and surrounding cells to this day.

Mineral resources

A mineral resource estimate was produced by Jean-Pierre Berube in 2014, titled NI 43-101 (Mineral Resources Report for the Abcourt-Barvue Property). The estimate returned measured and indicated resources for the Abcourt-Barvue deposit totalling 8,086,000 tonnes, grading 3.06 per cent zinc and 55.38 g/t silver. These resources were used as a basis for the current update of the 2007 feasibility study.

Attached is a comparative table of resources in all categories.

                            RESOURCES OF ALL CATEGORIES

                                  2006 estimate                        2014 estimate
Category           Tonnes        Ag          Zn          Tonnes        Ag         Zn
                       (t)     (g/t)         (%)             (t)     (g/t)        (%)

Measured        6,516,000     58.32        3.33       6,284,000     43.98       3.09
Indicated         503,000     98.35        3.44       1,799,000     95.51       2.94
Measured
and indicated   7,019,000     61.19        3.33       8,083,000     55.45       3.06
Inferred        1,506,000    120.53        2.98       2,037,000    114.16       2.89

The measured resources are generally extending from surface to a maximum depth of 165 metres. The indicated resources are generally located in the immediate extensions of the measured blocks from elevation minus 125 to minus 300 metres.

The Berube report was filed on SEDAR and is available for additional information.

Mineral reserve estimate

The 2018 mineral reserve estimate, including dilution, is presented in an attached table in comparison with the 2007 estimate.

                                                MINERAL RESERVES

                                                                   2007 estimate                        2018 estimate

Method of
mining                    Classification      Tonnage        Ag      Zn     ZnEq     Tonnage       Ag      Zn    ZnEq
                                                   (t)     (g/t)     (%)      (%)         (t)    (g/t)     (%)     (%)

Open pit         Proven mineral reserves    5,338,731     44.79    3.15     4.03   6,180,510    39.72    2.83    3.61
               Probable mineral reserves          nil       nil     nil      nil     408,851    43.01    2.36    3.20
                          Total open pit    5,338,731     44.79    3.15     4.03   6,589,361    39.93    2.80    3.58
Underground      Proven mineral reserves    1,169,662    105.19    2.87     4.93   1,169,662   105.19    2.87    4.93
               Probable mineral reserves      315,139    101.61    3.23     5.22     315,139   101.61    3.23    5.22
                       Total underground    1,484,801    104.43    2.95     5.00   1,484,801   104.43    2.95    4.99
                 Proven mineral reserves    6,508,393     55.64    3.10     4.19   7,350,172    50.14    2.84    3.82
Open pit and
underground    Probable mineral reserves      315,139    101.61    3.23     5.22     723,990    68.52    2.74    4.08
                                   Total    6,823,532     57.76    3.11     4.24   8,074,162    51.79    2.83    3.84

ZnEq grades are calculated with 2018 parameters for this table.
Silver-zinc equivalence is 0.61 per cent zinc per ounce silver.

Mining plan

A mine plan was developed for the 2018 mineral reserves using the Genivar (now WSP Canada) 2007 pit design and underground mine design. The 2014 mineral resource diluted, recovered and produced a total of 8,074,162 tonnes of mill feed, grading 2.83 per cent zinc and 51.79 g/t silver, of which 6,589,361 tonnes (81.6 per cent) will be produced in open-pit operations and 1,484,801 tonnes (18.4 per cent) will be produced in underground operations. The life of mine is 13 years. There are good possibilities of increasing the life of mine by converting inferred resources into proven and probable reserves and by finding new reserves with additional exploration.

The open-pit operation comprises the expansion and deepening of the Barvue pit and the excavation of the Abcourt East and the Abcourt West pits over a period of 13 years. The pits will be excavated to a depth of 166 metres, 72 metres and 42 metres respectively. The underground operations comprise the mining of stopes from a depth varying from 150 metres to 200 metres below surface to the pit bottoms using the Avoca method. The underground work areas will be accessed by excavating declines.

Mineral processing

Historical mineral recoveries during the Barvue production period were over 90 per cent for zinc and 77 per cent for silver. In 2017, metallurgical tests were performed in several laboratories. The cyclic flotation tests realized on the ore of Abcourt Barvue have shown the possibility to recover 97.5 per cent of the zinc and 77.8 per cent of the silver in a zinc-silver concentrate assaying 53.4 per cent zinc and 740.6 g/t silver.

The processing plant remains at a mill capacity of 650,000 tonnes per year but the circuit was modified by eliminating the cyanidation circuits to produce only a zinc-silver concentrate. Minor changes were brought to the surface infrastructure, such as the installation of a new 25-kilovolt power line on the site and the relocation of the waste rock stockpiles.

An average of 32,000 tonnes of zinc-silver concentrate, grading 52.7 per cent zinc and 768 g/t silver, will be produced annually.

Economic analysis

The project preproduction capital cost is estimated to $41.3-million, including a working capital of $4-million, and the sustaining capital cost is estimated to $18.1-million. The average operating cost is estimated to $39.94-million. Closure costs are estimated at $3.7-million.

A reduction in the initial capital cost, including working capital, from $71.26-million in 2007 to $41.3-million in 2018 was possible after the purchase during the past few years of mill equipment, now on the site, and the rental of pit equipment in 2018 instead of the purchase in 2007.

Attached is a table comparing the results of the 2018 with the 2007 economic analysis for the Abcourt-Barvue silver-zinc project.

                COMPARISON OF THE RESULTS OF THE 2018
          WITH THE 2017 ECONOMIC ANALYSIS FOR ABCOURT-BARVUE
                     (in millions of dollars)

For 100-per-cent equity financing                   2007            2018
                                                                      
Operating profit                                  $234.3          $225.4
Pretax cash flow                                  $138.7          $170.0
After tax cash flow                                $87.9          $106.7
Pretax internal rate of return                      27.1%           26.1%
After tax internal rate of return                   21.4%           20.5%
Pretax net present value 5 per cent                $87.6          $100.4
After tax net present value 5 per cent             $53.2           $59.8

In 2018, project revenues were estimated using $1.10 (U.S.) per pound of zinc, $16.50 (U.S.) per of ounce silver, an exchange rate of $1.25 per United States dollar, and smelting and refining terms. The average net value of the ore is $67.86 per tonne.

In 2007, project revenues were estimated using $1.15 (U.S.) per pound zinc, $9.54 (U.S.) per ounce silver, an exchange rate of $1.15 per United States dollar. The average net value of the ore was $67.51 per tonne.

The 2018 economic analysis, with metal prices and the rate of exchange indicated previously assuming 100-per-cent equity financing, results in a pretax cash flow of $170-million and $106.7-million after taxes. The pretax rate of return (IRR) is 26.1 per cent and 20.5 per cent after taxes. The pretax net present value (NPV) is $100.4-million, $59.9-million after taxes, using a 5-per-cent discount rate. The pretax payback period is 4.9 years. A sensitivity analysis on revenue, capital cost and operating cost shows the project is most sensitive to total revenue (price of zinc and rate of exchange), followed by operating costs.

In comparison, the Genivar 2007 study's economic analysis, assuming 100-per-cent equity financing, returned a pretax cash flow of $138.7-million, $87.9-million after taxes. The pretax IRR is 27.1 per cent, 21.4 per cent after taxes and a pretax NPV at 5-per-cent discount rate of $87.6-million, $53.2-million after taxes.

This report will be filed on SEDAR within 45 days of this press release.

Strategy and outlook

Currently, the company is focusing on stabilizing and increasing the Elder mine production. The company's objective is to produce 12,500 tonnes per month of gold mineralization.

The company wishes to use the full capacity of the Sleeping Giant mill by treating custom ore, to reduce the operating cost per tonne treated.

For the long-term growth in the gold sector, the company has started a drilling program on the Discovery and Flordin gold properties, where substantial gold mineralization is found.

For the long term in the zinc sector, various plans are being considered.

This press release was prepared by Renaud Hinse, engineer and president of Abcourt. Mr. Hinse is a qualified person under the terms of NI 43-101. Mr. Hinse has approved the scientific and technical disclosure.

About Abcourt Mines Inc.

Abcourt is a gold producer and a Canadian exploration company with strategically located properties in northwestern Quebec, Canada. The Elder property has gold resources (2018) and a positive preliminary economic assessment study (2012).

The Abcourt-Barvue property has silver zinc reserves (2019). A feasibility study was completed in 2007 by Roche/Genivar, with an update completed in January, 2019.

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