News 2/17/2012 8:51:00 AM - News Release
Mr. Michael Willett reports
TAMERLANE ANNOUNCES UPDATED NI 43-101 TECHNICAL REPORT ON THE R-190 AND FIVE OTHER DEPOSITS AT PINE POINT; UPDATED TECHNICAL REPORT CONFIRMS VIABILITY OF ALL ASPECTS OF PINE POINT PROJECT
Tamerlane Ventures Inc. has provided the results of its updated NI 43-101 technical report for the R-190 area, which includes the R-190, P-499, O-556, X-25, Z-155 and G-03 underground carbonate hosted lead zinc deposits at the company's Pine Point project, located in Canada's Northwest Territories.
The technical report announced today was undertaken by third party consultants MineTech International Ltd (MineTech). The NI 43-101 report was completed by Patrick Hannon M.A.Sc., P.Eng., Mr. Douglas Roy, MASc, PEng, Ian M. Flint, PhD, PEng, and Bradford Ernst, PEng, qualified persons with MineTech International Limited, an Independent mining and geological engineering consulting firm.
The updated technical report covers all aspects of construction, development and mining, and confirms that the Pine Point project is economically feasible.
Mineral Reserves for the six deposits were based on a feasibility study announced in September, 2008, which anticipated shaft access to the underground workings. A NI 43-101 Technical Report, issued in 2008(1), confirmed that it was economically feasible to mine the six deposits.
In 2011 Tamerlane incorporated a decline access method in its mining plans as part of continuing activities to enhance the profitability and overall economics of the Pine Point Project. Tamerlane then updated its original feasibility study on the six Pine Point project deposits to reflect this change in plans from shaft access to decline access, and updated all project economics. MineTech has worked with Tamerlane to review and audit the mine plans, economic models and all associated work for the six deposits using a decline for access.
The 2008 NI 43-101 technical report for R-190, P-499, O-556, X-25, Z-155 and G-03 was based on a zinc cutoff grade of 2%, which provided the maximum net present value with deposit continuity for mining layouts. The estimated proven and probable reserves are 7.8 million tonnes at 3.01% Pb and 6.16% Zn. The reserves for the six deposits have not changed as a result of the change from shaft access to decline access.
In addition to mineral reserves, there are an estimated 8.0 million tonnes at 1.13% Pb and 2.26% Zn measured and indicated mineral resources. These resources are exclusive of (i.e. in addition to) mineral reserves. Resources were estimated using a cutoff grade of 1.0% zinc.
(1) Collins, S.E., P.E.J. Ross Conner, C.F. Horlacher, D.M. Larson and B.G. Stone,, "Pine Point Project; Northwest Territories, Canada", Prepared by Pincock, Allen & Holt, Prepared for Tamerlane Ventures Inc., dated July 30, 2008
1. Significant project investments in 2011
Over the past year, Tamerlane has spent over $7 million developing and preparing the Pine Point Project for the construction phase, including $4.7-million on engineering and drilling and $1 million on mill equipment.
Notable project advancements during 2011 include completion of the following:
- -- Surface infrastructure and concentrator design/layout;
- -- Freeze wall design and engineering;
- -- Portal/decline design;
- -- Geotechnical studies on R-190 deposit;
- -- Geotechnical drilling of freeze wall holes for R-190;
- -- Equipment sourcing, buildings, support infrastructure, electrical and other designs.
As a result of these significant investments in the Pine Point Project and the results of the new technical report covering the initial eight years of mining operations, Tamerlane is in a position to begin construction immediately upon completion of project financing.
2. Production Forecast
The planned mine production rate for the Pine Point Project will be approximately 3,000 tpd, as shown in the following table. The initial R-190 deposit has been designed to be mined at a rate of 2,800 tonnes per day.
Tonnes per year Tonnes per day Year ore ore Deposit-----------------------------------------------------------------1 Construction and development (18 months) -----------------------------------------------------------------2 380,000 2,300 R-190-----------------------------------------------------------------3 1,060,000 2,900 R-190, X-25-----------------------------------------------------------------4 1,100,000 3,000 X-25-----------------------------------------------------------------5 1,100,000 3,000 X-25, P-499-----------------------------------------------------------------6 1,100,000 3,000 P-499, O-556-----------------------------------------------------------------7 1,100,000 3,000 O-556, Z-155-----------------------------------------------------------------8 1,100,000 3,000 G-03-----------------------------------------------------------------9 870,000 3,000 G-03-----------------------------------------------------------------
3. Concentrate Production and Grades
Pine Point produces some of the cleanest lead and zinc concentrates in the world. The following table shows the scheduled yearly concentrate production and grade.
Dry Metric Tonnes Concentrate ----------------------------------------------Year Pb (grade=71.8%) Zn (grade=61.8%)----------------------------------------------------------1 Construction and Mine Development (18 months)----------------------------------------------------------2 24,900 62,600----------------------------------------------------------3 53,100 146,300----------------------------------------------------------4 31,700 112,300----------------------------------------------------------5 34,000 105,500----------------------------------------------------------6 36,600 73,700----------------------------------------------------------7 37,100 77,500----------------------------------------------------------8 41,400 83,000----------------------------------------------------------9 33,000 66,100----------------------------------------------------------
The following table shows the representative concentrate grades produced from bench scale test work:
Table 3-2 ------------------------------------------------------------------- Pb Zn Pb Zn Element Units conc. conc. Element Units conc. conc. ------------------------------------------------------------------- Lead % 71.3 0.81 Fluorine g/t less less than than 0.01 0.01 ------------------------------------------------------------------- Zinc % 1.81 60 Mercury g/t less less than than 0.3 0.3 ------------------------------------------------------------------- Copper % 0.013 0.038 Gold g/t 0.06 0.03 ------------------------------------------------------------------- Iron % 2.24 1.42 Silver g/t less less than than 0.5 0.5 ------------------------------------------------------------------- Arsenic % less less Silica g/t 970 1,700 than than 0.001 0.001 ------------------------------------------------------------------- Antimony % less less Sulphur % 17.3 30.7 than than 10 10 ------------------------------------------------------------------
4. Capital Costs
Capital costs(2) for the Pine Point Project have been updated using current prices and actual quotes, where possible. The change from shaft to decline allowed for some capital savings, which were offset by normal inflationary increases. The summary of pre-production capital costs is shown below:
Table 4-1 -------------------------------------------------------- Pre-Production Capital (US$ millions) -------------------------------------------------------- Freeze Perimeter Construction 23.4 -------------------------------------------------------- Portal/ UG Development/ Vent Raise 12.4 -------------------------------------------------------- Buildings, Plant and equipment 65.2 -------------------------------------------------------- Site Power 4.6 -------------------------------------------------------- Miscellaneous 5.1 -------------------------------------------------------- Sub-total 110.7 -------------------------------------------------------- 10% Contingency 11.1 -------------------------------------------------------- Total 121.8 --------------------------------------------------------
(2) United States dollars at par with Canadian dollars.
The five deposits outside of the main R-190 site will require sustaining capital during the initial 8 years of operation. Sustaining capital requirements are summarized in the table below.
Table 4-2 ------------------------------------------------------------ Sustaining Capital Deposit (US$ millions) ------------------------------------------------------------ X-25 41.7 ------------------------------------------------------------ P-499 29.2 ------------------------------------------------------------ O-556 21.6 ------------------------------------------------------------ Z-155 28.5 ------------------------------------------------------------ G-03 20.7 ------------------------------------------------------------
5. Operating Costs
The following table shows the operating costs per tonne for R-190 and the other five deposits. The operating costs have been calculated based on actual quotations where possible, and from other similar scale projects in Canada.
Table 5-1 ------------------------------------------------------------- Cost Operating Cost (US$/tonne) ------------------------------------------------------------- Mining 32.4 ------------------------------------------------------------- General and Administrative 3.4 ------------------------------------------------------------- Processing 18.3 ------------------------------------------------------------- Miscellaneous - Fuels, Lubes, Utilities, etc 10.8 ------------------------------------------------------------- Total 64.9 ------------------------------------------------------------- ------------------------------------------------------------- Overall zinc cash cost per pound of production for first 6 underground deposits(i)
.20/lb ------------------------------------------------------------- (i) Assumes lead sold at $1.10/lb and lead revenue credited against operating costs.
6. Environmental Permitting
Previously, the Company completed a full environmental assessment and received all necessary land and water permits to commence construction of the mill and mine infrastructure, and to bring the R-190 deposit into production. The permits were issued in 2008 for a duration of 5 years; the permits remain current. The Company has submitted an application to amend the Water License for the change of the access from a shaft to a decline. This will also allow for reissuance of the Land Use Permit, with the result that both the Water License and the Land Use Permit will be available for the full maximum term of 5 years. The Company expects that the final approvals for this change will be forthcoming by the end of the first quarter, 2012 and at that point construction can begin immediately if financing is in place.
Baseline work has been substantially completed for the X-25, P-499, O-556, Z-155 and G-03 deposits, as well as the N-204 deposit. It is expected that the baseline reports will be completed by early April. The mining plans will be submitted to the Mackenzie Valley Environmental Review Board, who will provide the terms for Environmental Assessment Report. It is expected that the permitting process will be completed for the other 5 deposits, as well as the surface N-204(3) deposit within the next 28-30 months or about the time the R-190 mill starts up if financing is closed in late summer.
(3) See February 8, 2012 Press Release "ZINC-LEAD STUDY: Pine Point N-204 reserves reach 12.8-M tonnes"
7. Financial Analysis
The report shows the R-190 and five other deposits are economically feasible with an internal rate of return (IRR) of 31% before, and 25% after taxes. The after-tax NPV (@ 8% discount rate, excluding interest expense) is $79.6 million.
NPV Analysis (US$ millions) ------------------------------------ Before taxes After taxes------------------------------------------------------------NPV @ 8% 114.3 79.6------------------------------------------------------------NPV @ 10% 95.9 64.5
8. SEDAR Filing
The completed technical report will be filed on SEDAR (https://sedar.com/) within 45 days of the date of this press release.
Mike Willett, CEO, commented, "We are very pleased with the results of the updated technical report for R-190 and the other five deposits covering the initial 8 years of mining at Pine Point. In 2011, we spent a significant amount of time and money reviewing all aspects of the project, including the access method for the underground deposits. As a result, we determined that the portal/decline method will significantly lower the technical complexity of the project, in addition to providing various cost savings and logistical benefits. Today's report not only confirms the benefits of the portal/decline access method, but also verifies the overall economic feasibility of the Pine Point Project, using current quotes, cost estimates and other critical inputs.
Tamerlane is currently discussing alternatives for a comprehensive project financing package with prospective investors based on the robust economics of R-190, the other initial five deposits, and the recently announced N-204 study. We now have a mine life at Pine Point of more than 13 years, based on proven and probable reserves only."
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.
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