Orvana Announces Prefeasibility Study Results for
Orvana Announces Prefeasibility Study Results for Copperwood Project, Upper Peninsula, Michigan, USA
6/24/2011 8:46:22 AM - Market Wire
TORONTO, ONTARIO, Jun 24, 2011 (MARKETWIRE via COMTEX News Network) --
OrvanaMinerals Corp. (TSX: ORV), through its wholly-owned subsidiary, OrvanaResources US Corp ("Orvana USA"), announces today the highlights oftheir 43-101-compliant Prefeasibility Study for the Copperwood copperproject, Upper Peninsula, Michigan, USA. The study contemplates a14-year underground operation that applies both conventionaldrill-and-blast and mechanized methods to room-and-pillar mining anddevelops a detailed mine plan for each. The fully-diluted mineablereserves using conventional drill-and-blast methods with 50% pillarrecovery, which is considered the base case, are 24.9 million short tonsof 1.37% copper and 4.2 ppm silver proven and 5.1 million short tons of1.11% copper and 2.8 ppm silver probable, for a total of 30.0 millionshort tons of 1.33% copper (798 million pounds) and 3.9 ppm silver (3.46million ounces). The table below is a summary of the financial results.
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Summary of Key Financial Parameters (Drill-and-Blast Case)
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Copper Price (US$)/Silver Price (US$)
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2.25 / 2.50 / 3.00 / 3.50 / 4.00 /
22.50 25.00 30.00 35.00 40.00
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NPV(8), (000's) -1,015 59,302 176,993 287,558 391,538
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IRR (After Corporate
Taxes) -23.1% 15.7% 27.2% 36.1% 43.6%
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Payback, yrs 6.1 5.1 4.1 3.5 3.1
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Note: Property tax liabilities are not included since no assessment has
been completed
Themine plan resulting from the use of a continuous miner projectsslightly higher copper production, a longer mine life, and greaterafter-tax cash flow mostly due to projected lower operating costs (seetable below). Furthermore, it mitigates risk at lower copper prices.Orvana USA will continue to evaluate this innovative method for coppermining in order to reduce associated risks and maximise the economics.
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Summary of Key Financial Parameters (Continuous Miner Case)
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Copper Price (US$)/Silver Price (US$)
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2.25 / 2.50 / 3.00 / 3.50 / 4.00 /
22.50 25.00 30.00 35.00 40.00
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NPV(8), (000's) 22,537 80,601 194,489 298,755 400,027
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IRR (After Corporate
Taxes) 10.8% 16.9% 26.4% 33.9% 40.4%
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Payback, yrs 6.4 5.5 4.5 3.8 3.4
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Note: Property tax liabilities are not included since no assessment has
been completed
"Thisprefeasibility study provides a baseline from which we can improve uponthe designs and costs related to this proposed operation," said BillWilliams, President of Orvana USA. "It is believed that the use of acontinuous miner would greatly improve the economics of the project andstudies to minimize the risk of applying it to the Copperwood depositare ongoing. We plan to complete the mine-permit application forsubmittal this summer. We gratefully acknowledge the overwhelmingsupport of the communities and their representatives and will continueour efforts to make a copper mine a reality in this part of Michigan'sUpper Peninsula."
Both mine plans call for the development of aramp and box cut to access the ore bed. All development will be focusedon the ore bed and virtually no waste rock will be handled. Averageproduction for the drill-and-blast case over the 14-year mine life willbe about 24,000 short tons of copper per year and peak productionreaches 38,000 short tons of copper during the fourth year whenthroughput is at the 7,500 short tons of ore per day capacity. The mineplan calls for 50% of pillar recovery on retreat. Copper will beextracted by conventional flotation. Life-of-mine direct cash costs are$1.16 per pound net of the silver credit.
Base-case operational parameters for the drill-and-blast case with 50% pillar recovery are as follows:
Minable Reserve: 30,038,000 short tons
Copper grade: 1.33%
Silver grade: 3.95 ppm
Throughput: 2,620,000 short tons/year
(reached after 4 years)
Avg. Annual Production (LOM): 23,900 short tons per year Cu
111,200 ounces per year Ag
Copper recovery: 87%
Copper concentrate grade: 23%
Silver grade in concentrate: 40 ppm (average)
Key financial input parameters are (all values in US dollars):
Pre-production capital (including contingencies): $198,505,000
Working & sustaining capital (LOM): $212,504,000
Mine operating cost (LOM) $13.51 per short ton ore
Processing cost (at 7,500 short tons per day): $12.21 per short ton ore
G&A: $1.11 per short ton ore
Anetsmelter return royalty, which will be determined quarterly, ranges from2% to 4% on a sliding scale based on inflation-adjusted copper prices.
Theprefeasibility study identifies various opportunities whereby theproject's economics could be improved. These include the reduction ofdilution, additional metallurgical testing to improve recoveries andconcentrate grade, refinement of the design and reduction of the costsof the tailings facility, and, most importantly, continued vigorousstudy of the application of a continuous miner. KD Engineering ofTucson, Arizona has been retained to supervise the pursuit of theseopportunities and to move the project forward to construction.
Copperwoodis a stratiform copper deposit hosted by the shales and siltstones ofthe lowermost Nonesuch Formation along the shallow-dipping southern limbof the westward-plunging Western Syncline. Copper occurs as veryfine-grained chalcocite. Orvana has options to lease mineral rights onthe other stratiform copper deposits within the Western Syncline andrecently announced 43-101-compliant resources therein (see 14 December2010 press release).
On 1 April 2011, Jim Jacques became Directorof Mining and Engineering for the Copperwood Project. He joins DaveAnderson, Director of Health, Safety, & Environment and PublicRelations, and Tom Repaal, Sr. Environmental Engineer, in the Orvana USAIronwood, Michigan office. These employees have the needed expertiserequired for and are the key drivers to the success of the Copperwoodproject.
The information presented herein was completed by orunder the supervision of Joseph M. Keane, P.E., Lynn Partington, P.E.,and Thomas Kerr, P.E., Independent Qualified Persons for the purposes ofNI 43-101. A summary report will be made available on the Company'swebsite, www.orvana.com, and on SEDAR, www.sedar.com within 45 days.