NI 43-101 reportTamerlane's Pine Point start-up at $118-million (U.S.) 2013-09-04 16:49 ET - News Release
Mr. John Key reports
TAMERLANE RECEIVES POSITIVE NI 43-101 SUMMARY TECHNICAL REPORT FOR A NEW OPERATING SCENARIO AT THE COMPANY'S PINE POINT PROJECT
Tamerlane Ventures Inc. has received and will file on SEDAR later this week a National Instrument 43-101 summary technical report for development of its Pine Point project in the Northwest Territories, Canada. This positive technical report was prepared by Albert Siega, PEng, MBA, an independent engineering and project consultant.
Tamerlane has taken the positive feasibility reports for the Pine Point project prepared in 2012 for the R-190 and N-204 deposits and has combined these results with the upgraded measured and indicated resources of seven Main trend deposits and two North trend deposits referred to as the cluster pits. This technical report encompasses an operating scenario that begins operations with mining of the high-grade, fully permitted R-190 underground deposit after a two-year construction window. The Cluster pits are mined in series in years two through seven, followed by five years of mining from the reserves at N-204. In total, the technical report covers a 12-year mine plan. The plan for the cluster pits calls for a centralized dense media separation plant to produce a preconcentrate that will be trucked for final processing at the R-190 facility.
Highlights from the summary technical report
The summary technical report reserves and resources are presented in the attached reserves and resources table. The attached summary of cash flow showing sensitivities to discount rate table provides the highlights from the summary technical report. The attached summary of cash costs table provides a summary of cash costs for the base case (95 cents zinc and $1 lead).
RESERVES AND RESOURCES Classification Deposit (diluted and recovered) Tonnes %Zn %Pb R-190 Reserve 1,050,000 10.08 4.85 J-68 Resource 268,296 5.76 2.66 HZ Resource 1,685,396 3.67 2.69 W-85 Resource 3,452,112 4.11 2.38 X-65 Resource 2,510,470 3.65 1.45 M-67 Resource 683,884 4.76 1.21 K-68 Resource 1,031,926 2.78 0.84 M-62/63 Resource 974,040 2.29 0.93 O-53 Resource 274,812 2.71 0.83 N-204 Reserve 12,800,000 2.60 0.70
SUMMARY OF CASH FLOW SHOWING SENSITIVITIES TO DISCOUNT RATE Base case After tax Pretax ($000 (U.S.)) ($000 (U.S.)) Cumulative net cash flow (undiscounted) $221,559 $374,249 Discounted at 5% 144,653 220,185 Discounted at 8% 111,681 175,919 Discounted at 10% 93,837 151,808 Internal rate of return 35% 48% Payback period (years) 2.2 1.7 Total start-up capital 118,000 118,000 Total life-of-mine capital 167,000 167,000 Projected life of mine 12 12
SUMMARY OF CASH COSTS -- BASE CASE (in U.S. dollars) Cost per pound Cost per zinc and lead LOM total tonne mined payable ($000) ($/t mined) ($/lb) Payable metal cash cost Mining $373,390 $15.31 $0.19 Processing 270,674 11.47 0.15 G&A 68,160 2.79 0.03 Treatment charges and transportation 558,870 22.92 0.28 Royalties (NWT plus Karst) 88,870 3.64 0.05 Total 1,368,864 56.13 0.70
Assumptions:
- Zinc price is 95 U.S. cents per pound, and lead price is $1 (U.S.) per pound base case over the life of mine.
- Metal prices are based on a three-year trailing average price. Many studies show zinc prices peaking to over $1.25 from 2017 to 2022. Delays in financing and in production may increase the risk of not realizing the benefits of forecasted high metal prices.
- Net present value is as of 2014. A 20-per-cent contingency has been applied to the capital expenditure direct estimates for the cluster pits and N-204. A 10-per-cent contingency has been applied to the capital expenditure direct estimates for R-190. Corporate income tax rate is 26.5 per cent (combined federal and territorial).
- No contaminant penalties were charged for the lead and zinc concentrates.
- Cash cost per pound of zinc and zinc equivalent represents a finished metal basis covering all operating costs, taxes, royalties, transportation, smelting and selling costs.
- A 10-per-cent contingency has been applied to all direct mining and processing costs of the project.
- R-190 will be mined by an independent mining contractor.
- All mining equipment for the open-pit deposits will be leased.
Pine Point project
The Pine Point project is designed to start with the fully permitted and high-grade underground R-190 deposit. R-190 will be accessed by ramp to the bottom of the deposit at the 170-metre level. The orebody will be extracted using an open-stope long-hole cut-and-fill mining method. Ore will be trucked to surface, crushed and run through a dense media separation plant. The preconcentrate will be processed through a conventional lead-zinc concentrator to produce a 62-per-cent-zinc concentrate and a 72-per-cent-lead concentrate. Mine tonnage will be 2,800 tonnes per day, producing a mill feed of 1,800 tonnes per day. Due to water conditions in the R-190 area, the mine will be developed inside a freeze ring. Tamerlane anticipates mining the R-190 deposit using a contract mining service.
Upon commencement of underground production, the first cluster pit open-pit deposit is scheduled to be permitted and prestripped, providing a second feed source for the R-190 concentrator. The cluster pit deposits will be preconcentrated through a centrally placed dense media separation plant to be located 37 kilometres from the R-190 concentrator. Upon completion of the R-190 underground mine, the cluster pits will provide six years of mill feed through the 6,000-tonne-per-day crushing and dense media separation facility.
In year eight, Tamerlane will move the dense media separation facility from the cluster pit location to N-204. The dense media separation facility will be upgraded to process 7,000 tonnes per day. The N-204 reserves will support five years of additional operations, bringing the total mine life to 12 years. Additional underground reserves and historic open-pit resources are available for supplementing production or extending the mine life.
Zinc and lead concentrates produced at the R-190 concentrator will be trucked to the Hay River, NWT, rail load-out facility. Concentrates can be moved from Hay River to the west coast of Canada or east coast of Canada for ocean transport to any smelting location in Asia or Europe. The railway also provides access to other smelting locations in North America.
Pine Point is also a premier exploration location. The zinc- and lead-mineralized trends run for over 65 kilometres through the Pine Point project. Many areas of the mineralized trends are underexplored due to their excessive haulage distance from the previous Pine Point concentrator, which was located at the former town of Pine Point. In 2006, Tamerlane conducted geophysical studies that identified an additional 34 geophysical anomalies that will be explored once the operation is producing. In the main trend and to the northwest of the underground reserve deposit at G-03, there is a 15-kilometre stretch of ground that is virtually unexplored. As Pine Point hosts a deposit on average every 1.5 kilometres throughout the Main trend, additional deposits are anticipated through this stretch of land, which is within reasonable haulage distance to R-190.
The Pine Point project is a brownfield project. After operating for more than 20 years, Pine Point Mines Ltd. (Cominco) closed its operation in 1987 due to low metal prices, long haul distances and the cost of supporting the town of Pine Point. Tamerlane has no plans for a new town due to the close proximity of Hay River to the R-190 mine and concentrator. Long haul distances are no longer an issue because of preconcentration at the mine site using the dense media separation plant, resulting in the haulage of a significantly higher-grade material to the centralized milling facility.
Additional reserves not included for mining in this study
Six underground deposits were classified as reserves in a technical report in 2008 (PAH, 2008). Of the six deposits, only R-190 has been included in this summary technical report. The remaining underground reserves are included in the attached underground reserves not included for mining in this study table.
UNDERGROUND RESERVES NOT INCLUDED FOR MINING IN THIS STUDY Deposit Tonnes %Zn %Pb X-25 2,108,000 6.73 2.32 P-499 892,000 5.87 2.68 O-556 1,030,000 3.67 2.68 Z-155 775,000 5.02 2.73 G-03 1,980,000 4.97 3.03 Total 6,785,000 5.44 2.68
ADDITIONAL HISTORICAL RESOURCES (i) NOT INCLUDED FOR MINING IN THIS STUDY AND HISTORICAL RESOURCES NOT IN TAMERLANE RESERVES AND RESOURCES Resource type Tonnes Zn% Pb% Indicated (i) -- prismatic open pit 1,446,010 6.25 2.39 Indicated (i) -- tabular open pit 7,686,980 4.13 1.29 Indicated (i) -- underground 2,050,660 8.02 3.71 Inferred (i) -- prismatic open pit 5,379,700 3.20 1.1 Inferred (i) -- tabular open pit 5,310,000 4.01 1.30 Inferred (i) -- underground 6,883,900 2.82 0.88 Total 28,757,250 4.00 1.39 (i) This is historical nomenclature and is not NI 43-101 qualified. The historical estimates presented in the table are not in accordance with the mineral resources or mineral reserves classifications contained in the Canadian Institute of Mining, Metallurgy and Petroleum definition standards on mineral resources and mineral reserves, as required by National Instrument 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 NI 43-101 summary technical report will be filed on SEDAR by Sept. 6, 2013. The NI 43-101 summary technical report was authored by Mr. Siega, PEng, MBA. Mr. Siega has verified the data in the news release that pertain to the summary technical report.
Readers are cautioned that the conclusions, projections and estimates set out in this press release are subject to important qualifications, assumptions and exclusions, all of which are detailed in the summary technical report. To fully understand the summary information set out herein, the summary technical report that is filed on SEDAR should be read in its entirety.
Ross Burns, PGeo, director of Tamerlane, has reviewed the information contained in this news release and is a qualified person as defined under National Instrument 43-101.
John Key, president and chief executive officer of Tamerlane, commented: "I am pleased with the results of the NI 43-101 study and technical report. The restart of the Pine Point mining operation is extremely low risk. The capital costs for the project are well defined, and, with 23 years of past production to rely upon, there is very little operational risk. Many studies by re*****ble research firms are showing future zinc prices at $1.25 per pound and lead over $1 per pound. Lead is already trading at this target price. We are hopeful that, with PricewaterhouseCoopers, our financial adviser in our restructuring process, a partner/investor and/or purchaser will be identified that will assist the company in executing on the opportunities reflected in the NI 43-101 report."
We seek Safe Harbor.