news 2/8/2012 9:02:00 AM - News Release
Mr. Mike Willett reports
TAMERLANE ANNOUNCES 12 MILLION TONNES OF ADDITIONAL RESERVES AS A RESULT OF A NI 43-101 TECHNICAL REPORT ON THE N-204 DEPOSIT; N-204 LEAD/ZINC DEPOSIT TO BE MINED WITH SURFACE MINING METHODS, MORE THAN DOUBLING CURRENT RESERVES TO 21 MILLION TONNES, EXTENDING PINE POINT MINE LIFE
Tamerlane Ventures Inc. has provided the results of its NI 43-101 technical report for the N-204 surface deposit at the company's Pine Point project, located in Canada's Northwest Territories. The N-204 deposit is located 60 kilometres to the northeast of the R-190 mill site.
The technical report was undertaken by third party consultants MineTech International Ltd. The NI 43-101 report was completed by Douglas Roy, MASc, PEng, Ian M. Flint, PhD, PEng, Patrick Hannon, MASc, PEng, and Bradford Ernst, PEng, qualified persons with MineTech International Ltd., an independent mining and geological engineering consulting firm.
The report shows the N-204 deposit at the Pine Point project is feasible with an internal rate of return (IRR) of 90 per cent, and the company has already begun the permitting process for this deposit. The cash cost (average over mine life) of zinc production from the N-204 deposit is projected to be
.47 per pound. The N-204 in-pit mineral resources were converted from Indicated resources to diluted probable reserves. The mineral inventory includes diluted probable reserves of 12.8 million tonnes at a grade of 0.70 per cent lead and 2.60 per cent zinc, and diluted in-pit inferred resources of 1.5 million tonnes at a grade of 0.6 per cent lead and 2.3 per cent zinc, at a cut-off grade of 1.1 per cent combined zinc plus lead.
The deposit will be developed using sequential surface panel mining whereby the ore will be taken in panels using conventional surface mining methods and the waste will be backfilled as the panels are mined. A dense media separation (DMS) plant will be constructed at the N-204 site and the DMS pre-concentrated ore will be transported to the already permitted R-190 milling facility. The technical report covers all aspects of infrastructure, development, mining and processing. The basis for the technical report assumes that the N-204 deposit will be mined over a period of 5 years as a stand-alone operation with the DMS concentrate filling the R-190 mill. This deposit may also be mined to provide supplemental ore in parallel with ore from the existing underground reserves in the R-190 area at any time over the first several years of mine life.
Highlights from the N-204 technical report and feasibility study:
Diluted Probable reserves 12.8 million tonnes (2.6 per cent Zn, 0.7 per cent Pb) Additional In-pit Inferred resources: 1.5 million tonnes (2.3 per cent Zn, 0.6 per cent Pb) Capital cost: $32.2 million Internal rate of return (IRR) 90 per cent Net present value (after tax) $54.2 million (@ 10 per cent discount rate) Cash cost zinc production:
.47/lb. 1. Reserves and Resources
The N-204 deposit will provide an additional 5 years of mine life to the existing 8 years the Pine Point project has currently, and is considered strategic because it may be mined using surface mining methods. This diversified mining approach will provide a second source of ore for the mill at R-190, significantly de-risking the project from an operational standpoint.
Reserves and resources have been calculated and are shown in Table 1-1.
Table 1-1 Pine Point Current Mineral Inventory --------------------------------------------------------------------------- Tonnes Open Pit (MM) Pb per cent Zn per cent --------------------------------------------------------------------------- N-204 Diluted Probable Reserve 12.8 0.70 2.60 ----------------------------------------------------------------- Diluted In-pit Inferred Resources 1.5 0.60 2.30 --------------------------------------------------------------------------- --------------------------------------------------------------------------- Tonnes Underground (MM) Pb per cent Zn per cent --------------------------------------------------------------------------- R-190 Diluted Proven & Probable Reserves 7.8 3.01 6.16 Area ----------------------------------------------------------------- Measured & Indicated Resources 8.0 1.13 2.26 --------------------------------------------------------------------------- ----------------------------------------------------------------- Tonnes (MM) Pb per cent Zn per cent Remaining Historical Resources(i) ------------------------------ 34.2 1.40 4.40 -----------------------------------------------------------------
(i) The historical estimates presented above are not in accordance with the mineral resources or mineral reserves classifications contained in the CIM Definition Standards on Mineral Resources and Mineral Reserves, as required by National Instrument 43-101 ("NI 43-101"). Accordingly, the company is not treating these historical estimates as current mineral resources or mineral reserves as defined in NI 43-101 and such historical estimates should not be relied upon. A qualified person has not done sufficient work to date to classify the historical estimates as current mineral resources or mineral reserves.
The Mineral Resources are reported in accordance with Canadian National Instrument 43-101 (NI 43-101) and have been estimated in conformity with the generally accepted, "Estimation of Mineral Resource and Mineral Reserves Best Practices guidelines of the Canadian Institute of Mining, Metallurgy and Petroleum."
See notes at the end of this press release for the primary parametres used by MineTech in calculating N-204 diluted probable reserves and diluted in-pit inferred resources. 2. Concentrate production from N-204
The dense media product will be transported to and processed in the R-190 mill with the same flow sheet as ore from the R-190 deposit. A small regrind circuit may be installed to enhance concentrate grades. The following table shows forecasted concentrate production and grades based on metallurgical work completed to date.
Table 2-1 Anticipated Concentrate Production -------------------------------------------------------------------------- Forecast Annual Concentrate Zn Con. Pb Con. Zinc Lead Production Tonnes Tonnes Grade Grade -------------------------------------------------------------------------- Year 1 93,100 24,200 58.0 per cent 60.0 per cent -------------------------------------------------------------------------- Year 2 93,100 21,800 58.0 per cent 60.0 per cent -------------------------------------------------------------------------- Year 3 89,500 20,400 58.0 per cent 60.0 per cent -------------------------------------------------------------------------- Year 4 83,900 18,800 58.0 per cent 60.0 per cent -------------------------------------------------------------------------- Year 5 72,900 16,300 58.0 per cent 60.0 per cent -------------------------------------------------------------------------- Total by Year 5 432,500 101,500 58.0 per cent 60.0 per cent -------------------------------------------------------------------------- 3. N-204 Capital Costs
The total capital cost is estimated to be $32.2 million. The largest capital items are pre-production stripping and mining ($6.4 million) and the DMS plant and building ($6 million). A 20 per cent miscellaneous/contingency factor was included. The study assumes mobile mining equipment will be leased. Mill capital (for the R190 mill site) was not considered when calculating capital costs for N-204 because it is assumed that Tamerlane will have constructed, and will be operating the mill for its other underground deposits.
4. N-204 Operating Costs
The operating costs for the N-204 deposit have been calculated based on actual quotations where possible, and from other similar scale projects in Canada. A summary of operating costs are broken down annually as shown in Tables 4-1.
Table 4-1 Annual Operating Cost Summary (US$: millions) -------------------------------------------------------------------------- Activity Y1 Y2 Y3 Y4 Y5 TOTAL -------------------------------------------------------------------------- Mining 26.8 27.3 27.3 27.4 24.4 133.2 -------------------------------------------------------------------------- Transportation 8.3 8.3 8.3 8.3 8.3 41.5 -------------------------------------------------------------------------- Processing 15.9 15.9 15.9 15.9 16.1 79.7 -------------------------------------------------------------------------- Overhead and other 6.4 6.4 6.4 6.4 6.2 31.8 -------------------------------------------------------------------------- Cost per pound (US$)(zinc and zinc equivalent)
.43
.44
.46
.49
.54
.47 --------------------------------------------------------------------------
Financial Analysis
For the base case scenario, the after-tax NPV (@ 10 per cent discount rate) was $54 million. The internal rate of return was 90 per cent and the payback period was less than one year. The profitability of the N-204 deposit is most sensitive to metal prices. Operating costs represent the next-most-sensitive parametre. The following table shows after-tax NPV (@ 10 per cent discount rate) and other discount rates.
Table 5-1 NPV Analysis ------------------------------------------------------------ Pre-Tax After-Tax ------------------------------------------------------------ NPV8 per cent $ 98,800,000 $ 58,900,000 ------------------------------------------------------------ NPV10 per cent $ 91,200,000 $ 54,200,000 ------------------------------------------------------------ NPV15 per cent $ 75,300,000 $ 44,100,000 ------------------------------------------------------------ NPV20 per cent $ 62,500,000 $ 36,100,000 ------------------------------------------------------------ IRR 123 per cent 90 per cent ------------------------------------------------------------
Metals prices of $1.10 zinc, and $1.10 lead were used for baseline calculations. Based on various reports and data from such sources as the International Lead Zinc Study Group (ILZSG), the London Metals Exchange (LME) and the International Monetary Fund (IMF), the company expects positive movement in metals pricing over the next several years. Indications are that both lead and zinc metal supplies are heading into a deficit position in the near future, due to numerous major producers shutting down because of reserves being exhausted. In addition, worldwide consumption of metals is increasing on an annual basis. Specifically, growth is expected to continue in China, with additional demand due to further urbanization in India. These indications suggest that the Pine Point project will be entering into the market at a time when both metals produced will be in high demand. Metal prices selected are in the low range of expected metal prices, and allow for upside for the project with expected higher prices for both zinc and lead from 2014 onward.
Mike Willett, CEO, commented, "We are excited to report such positive results for the N-204 deposit. Sequential surface panel mining is a conventional mining method, and is well suited to the deposit shape. This method will also allow the company to backfill as mining progresses. This is an environmentally friendly approach because the majority of the waste and tailings are put back into the pit. The paved highway between the N-204 and R-190 deposits is cleared year-round and allows for easy transportation between the deposits. We also have the options of mining the N-204 deposit as supplemental material to the underground mining operations, or mining the N-204 as a stand-alone operation upon permitting. This greatly de-risks the existing project and adds another 5 years to the mine life. Environmental background data has already been collected and we will be submitting information necessary for permitting in the near future. We expect that this deposit could be permitted by the time the R-190 mill starts up in 2014.
The company has 35 other deposits containing an aggregate historical(i) resource of 34.2 million tonnes. We expect several of these deposits to also be economic similar to N-204. In a recent news release we announced that we would be drilling several of the near-surface deposits located on our Pine Point property. The W-85 deposit, which the company intends to mine using surface mining methods, has been drilled and assayed, and resource modeling is currently being completed. We expect this resource estimate to be released later this year. With over 13 years of NI 43-101 reserves on our books, and the Pine Point project able to produce some of the finest lead zinc concentrates in the world, Tamerlane has positioned itself to quickly become a mid-tier base metal producer."
The information in this press release was prepared under the guidance of Mr. Ross F. Burns, P.Geo., LG., who is designated as a Qualified Person with the ability and authority to verify the authenticity and validity of the data and independent technical reports.
Notes Parametres Used by MineTech in the Feasibility Study 1. Current mineral reserve estimate prepared by Doug Roy, M.A.Sc., P.Eng., MineTech International Limited, using the digital block model that Pincock, Allen and Holt (PAH) created for their March, 2011 mineral resource estimate. 2. PAH (2011) used top-cut values of 25 per cent for zinc and 6.5 per cent for lead during block grade estimation of mineral resources. 3. PAH (2011) outlined the mineralised zones using a 0.9 per cent zinc-equivalent cut-off grade. 4. PAH (2011) estimated block grades using inverse distance weighting (power of two). 5. For the current mineral reserve study, one pound of lead was determined to be equivalent to 1.12 pounds of zinc using the following parametres:
------------------------------------------------------------------------ Parametre Zinc Lead ------------------------------------------------------------------------ Price ($US per lb) $1.10 $1.10 ------------------------------------------------------------------------ Overall Milling Recovery 78.2 per cent 72.5 per cent ------------------------------------------------------------------------ Concentrate Grade 58 per cent 60 per cent ------------------------------------------------------------------------ Smelter Treatment Charges (per lb)
.16
.12 ------------------------------------------------------------------------ Concentrate Shipping and Handling (per lb)
.12
.13 ------------------------------------------------------------------------ Smelter Return 85 per cent 95 per cent ------------------------------------------------------------------------ 6. The SG values were calculated for each block based on the metal content and the estimated void content. 7. Dilution and mining recovery were estimated to be 15 per cent and 95 per cent, respectively. 8. The diluted stripping ratio, by volume, was 5:1. 9. All figures were rounded to reflect the accuracy of the estimates. About Tamerlane Ventures Inc.
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