News InLiberty Completes Feasibility Study on McWatters Nickel Deposit
EDMONTON, ALBERTA, Apr 2, 2008 (Marketwire via COMTEX News Network) --
Liberty Mines Inc. (TSX:LBE) ("Liberty or the Corporation") is pleased to announce the results of a feasibility study completed for its McWatters Nickel Project based on an independent NI43-101 compliant mineral resource model completed by SRK Consulting (Canada) Inc. ("SRK"). The SRK resource estimate has upgraded the level of confidence of the previous resource estimate produced in October 2005, partly due to infill drilling completed by Liberty in 2007.
The feasibility study demonstrates that the project has a potential mine life of 28 months, achieving full production by month 12. Full production is targeted at 36,000 tonnes per month (tpm) or 1,200 tonnes per day (tpd). Development is scheduled for the first 11 months, producing pre-production ore by month 6 at an average pre-production rate of 7,900 tpm. Month 1 of the schedule commenced January of 2008.
Other highlights include:
- Updated NI43-101 compliant indicated mineral resource of 714,870 tonnes of ore grading an average 0.94% Ni (reported at a 0.5% Ni cut-off grade), representing a 32% tonnage increase from the previous estimate.
- From this resource a diluted mineable reserve of 596,797 tonnes at an average grade of 0.92% Ni has been identified, using a 0.6% Ni mining cut-off grade.
- Two underground mining methods are to be employed: longhole stoping and longwall panel mining. Longhole stoping generates 83% of the total tonnes, longwall panel mining generates 7% of the total tonnes and development comprises the remainder.
- Unconsolidated backfill is used in the longhole stopes after mining is completed to stabilize the ground.
- The total cost per tonne for the project is $89.21; total mine operating costs are approximately $40 per tonne.
- The total cost per pound of nickel is $5.56 (after smelting charges); average operating costs per pound of nickel are approximately $2.52.
- Total payable metal production of 9.6 million pounds of nickel over the stated mine life. Other metal credits have not been factored in.
- Pre-production capital cost of $19 million, including all underground development, equipment, and surface infrastructure. This figure is offset by approximately $6.0 million of revenue generated by pre-production ore from development. To date, approximately 35% of this work, and 73% of construction work, has been completed, all under budget.
- Cumulative cash-flow for the project is $53.9 million.
- Pre-tax Net Present Value (NPV) of $46.2 million at a 5% discount rate.
- 385% Internal Rate of Return (IRR).
- Economics based on an average US$12.50/lb of Ni, and $1CDN:$0.98US.
- All figures in canadian dollars, unless otherwise stated.
- NPV sensitivity analysis (figures in millions of dollars):
Discount Rate
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Ni Price / lb 2.5% 5.0% 7.5%
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US$12.50 49.9 46.2 42.8
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US$15.25 71.8 66.7 62.0
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US$18.00 93.8 87.2 81.2
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Mineral Resource Estimate
The January 28, 2008 SRK Mineral Resource Statement for the McWatters Nickel
Deposit is summarized in Table 1.
Table 1: McWatters Mineral Resources Statement, SRK Consulting as at 28
January 2008
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Zone Tonnes Ni Contained Ni
(%) tonnes lbs
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Indicated(1)
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Upper Zone 665,308 0.72 4,790 10,557,640
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Lower Zone 49,592 3.93 1,948 4,292,922
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Sub-total 714,870 0.94 6,738 14,850,562
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Inferred(1)
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Upper Zone - - - -
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Lower Zone 13,829 3.39 469 1,033,242
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Sub-total 13,829 3.39 469 1,033,242
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(1) Mineral Resources are not Mineral Reserves and do not have demonstrated
economic viability. Resources are reported at a cut off grade of 0.5%
Ni.
The independent mineral resource estimate prepared by SRK is reported in accordance with Canadian Securities Administrators' National Instrument 43-101 and conforms to generally accepted Canadian Institute of Mining ("CIM") "Estimation of Mineral Resources and Mineral Reserves Best Practices" guidelines. A complete National Instrument 43-101 Technical Report, which will incorporate the resource and reserve estimation, will be filed on Sedar within 45 days of release of this press release.
Nickel mineralization is broadly confined to a higher grade lower massive zone and to lower grade overlaying disseminated zone. The resource estimate is based on a domainal three dimensional (3-D) geological interpretation of the mineralization that integrated information from a total of one hundred and fifty three diamond drill holes largely drilled on twenty five metre centres. Drill data was appropriately composited and capped prior to grade estimation.
The McWatters block model was created using Datamine using a 2.5x2.5x2.5m block size. Block grades were estimated using ordinary kriging methodology. Resource blocks situated within the primary ranges defined by variography are assigned to the Indicated classification; all other resource blocks within four times the primary variography ranges are assigned an Inferred classification.
The resource model and NI43-101 mineral resource estimation, was completed by Mr. Glen Cole, P. Geo., Principal Resource Geologist, of SRK Consulting (Canada) Inc., Toronto, Ontario. By virtue of his background and professional experience, Mr. Cole is a "Qualified Person" as defined by NI43-101.
Mineral Reserve
The conversion of indicated resources to probable reserves at McWatters was based on the stope outlines and dimensions for resources at or above a diluted 0.6% Ni cutoff grade. Where development warranted, an incremental cut-off of 0.5% Ni was employed. A minor component of inferred resources was also incorporated into the mineable reserves. The McWatters reserve estimate eliminated those resources contained within the presently unrecoverable portions of the crown, sill and rib pillars and incorporates planned and unplanned dilution, as well as production losses. The total probable reserve for the McWatters deposit is 596,797 tonnes at an average grade of 0.92% Ni.
The NI43-101 mineral reserve estimation using stope shapes, tonnes, grades, and costing information as provided by Liberty, was completed by Mr. Alan Linden, Principal Consultant and reviewed by Ms. Christine Linden, P. Eng., Senior Consultant, of SRK Consulting (Canada) Inc., Sudbury, Ontario. By virtue of her background and professional experience, Ms. Linden is a "Qualified Person" as defined by NI43-101.
Mining, Processing and Production
The McWatters deposit is hosted by a subvertical ultramafic body, and consists of a relatively large disseminated sulphide zone underlain by a sub-horizontal high grade, massive sulphide zone. Two distinct mining methods are utilized for the McWatters project in order to maximize recovery of both these zones. The main method is longhole stoping which generates 83% of the ore tonnes, and accounts for 66% of the total recoverable Ni. Longhole stoping uses large blasthole stopes with minimal development. Mining recoveries are 90% for primary stopes and 75% for rib pillars. The dilution is estimated at 15% for primary stope and 20% for pillars.
Longwall panel mining is used in the basal low angle, higher grade areas. A total of 7% of the ore tonnes and 27% of the total recoverable nickel are produced via this method. This method utilizes jacklegs and slushers and is fairly labor intensive. Recovery for this mining method is 80% for uniform panels and 60% for irregular panels. Dilution for all panels is 5%.
The remaining 10% of the ore tonnes, and 7% of the total recoverable Ni, are generated during development within the orebody.
Unconsolidated backfill is used in the longhole stopes after mining is completed to help stabilize the ground. This backfill will be development waste from the McWatters and Redstone Mines, and the nearby Hart Mine to be in development in 2009 . Any potentially acid generating material from Hart will also be used as backfill. This will also help reduce overall closure costs for the three operations.
Ore will be trucked to the nearby concentrator at the Redstone Mine site. Nickel recoveries are projected to range from 70% to 91% according to ore grade, and are based on current mill recoveries, test work, and future upgrades. The average Ni recovery for the life of mine is 88%.
All permitting has been completed, as has most of the surface infrastructure. Ramp development is currently at 185 metres of advance, which is consistent with the schedule set out in the present scoping study.
All closure and environmental costs have been absorbed by this project, even though these costs will be shared with the Hart mine as the plan is to share existing facilities. This will lower the expenditures for the Hart mine plan.
The future
Upon completion of underground excavations and advanced geotechnical testwork, the stability of the crown pillar will be re-assessed. If considered safe, further ore recovery from this portion of the deposit may occur, extending the mine life and increasing the mined tonnes. At present 91,755 tonnes at an average grade of 0.57% Ni lie within the projected crown pillar.
It is the company's intention to bring the Hart Project into production or pre-production by the end of the McWatters life of mine, scheduled for February, 2010. The initial resource estimate for the Hart Project is expected towards the end of Q2 2008, subject to completion of the current drill program.
It is Liberty's intention to maintain mill feed at capacity after December, 2008 by streamlining Hart and sustaining Redstone production at 200 tpd. Additionally, an active exploration program is planned for the remainder of 2008.
About Liberty Mines Inc.
Liberty Mines Inc. is a producer of nickel and is focused on the exploration, development and production of nickel, copper, cobalt and platinum group metals from its properties in Ontario, Canada.
CAUTIONARY STATEMENT
No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. This News Release includes certain "forward looking statements". All statements other than statements of historical fact included in this release, without limitation, statements regarding potential mineralization and reserves, exploration results, and future plans and objectives of Liberty, are forward looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Liberty's expectations are exploration risks, commodity prices, assumed startup and operating costs detailed herein and from time to time in the filings made by Liberty with securities regulators.
SOURCE: Liberty Mines Inc.