NewsScoping Study Confirms Economic Potential on the Division Mountain Coal Project for Cash Minerals
08:00 EDT Monday, April 18, 2005
TORONTO, ONTARIO--(CCNMatthews - April 18, 2005) - CASH MINERALS LTD. (TSX VENTURE:CHX) is pleased to announce that it has received the "Division Mountain Scoping Study", dated April 13, 2005, which supports the potential for the economic development of an open pit mine based on the annual production of approximately 1.375 million tonnes of saleable coal. The Scoping Study is based on measured and indicated resources of 51.5 million tonnes as defined by Norwest Corporation in its "Geologic Evaluation and Resources Calculation on the Division Mountain Property, Yukon Territory" dated March 9, 2005 (see Cash Minerals press release dated March 31, 2005) and was completed by Norwest Corporation, a leading North American coal and engineering consultancy. Norwest notes that the measured and indicated resources included in the study is on less than 5% of the entire property and could be increased substantially with additional drilling.
According to the study, approximately 900,000 tonnes of Bituminous "B" coal on an annual basis could be available for sale to the thermal market within the Pacific Rim; an additional 300,000 tonnes could be offered for Pulverized Coal Injection (PCI); and, 175,000 tonnes could be available for sale for a proposed mine mouth 40 MW generating market located on or near the property. The Division Mountain coal displays excellent metallurgical grade properties to that of similar coals sold into India, Japan and South Korea markets. Further tests and ash analysis studies are under way to determine the extent of this potential and could further increase the percentage of PCI/metallurgical coal from Division Mountain.
Norwest Corporation developed preliminary mine plans and a mining cost estimate to exploit the project resources over a 22-year open pit mine life. The study's authors estimated capital costs to develop the mine of CDN$31.9 million, an internal rate of return (IRR) of 59.6 percent and a Net Present Value (NPV) of Cdn$74.8 million.
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Economic Results - Base Case
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Category C$ Million
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Startup Capital 31.9
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Replacement Capital 7.0
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Average Annual Revenue 103.8
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Average Annual Cash Costs 69.8
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Average Annual Non-Cash Costs 2.3
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Average Annual Pre Tax Cash Flow 34.0
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Net Present Value - NPV 74.8
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Internal Rate of Return - IRR 59.6%
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"These figures are very positive and will support a solid base to move on to feasibility," said Bill Clarke, President, Cash Minerals. "This study also takes us a long step closer to achieving our vision of becoming a producing, energy resource company with excellent near and long-term potential."
The potential exists to further expand the volume of sales from Division Mountain to Pacific Rim markets. Preliminary market studies have indicated a chronic shortage of metallurgical, thermal and PCI coal into these markets. Cash Minerals has implemented market studies in Japan and South Korea and has already opened up preliminary talks with potential buyers in India. The port of Skagway is well equipped to handle any excess export capacity.
Clean Coal Analysis
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Wash plant Residual Ash Volatile Fixed Sulphur Calorific
Recovery Moisture % Matter Carbon Total Value
% % % % % cal/g
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60 1.28 10.65 30.98 57.09 0.58 6795
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The Division Mountain project under study is owned 100% by Cash Minerals Ltd and consists of five Coal leases measuring 776.4 hectares and 22 Territorial Coal Exploration licenses covering 360,000 hectares. The exploration area covers 4,017 square kilometres of coal bearing stratigraphy.
At this time less than 5% of the property has been fully explored. Coal has been mined in areas going back to the early 1900's and used to power river boats on the Yukon River. There are open outcrops of coal and signs of coal where gopher holes have burrowed into the sides of mountains. An enormous potential exists to add significantly to our current and indicated resources over time.
Norwest conducted sensitivity tests on the economic model to determine the impact of changes in coal price, (Power Plant C$45 per tonne ex mine, Export Thermal Coal C$59 F.O.B Skagway, PCI Coal C$130 F.O.B Skagway) transportation costs, total cash mining costs, capital expenditures and port costs. The table below shows the impact of changes in these categories.
Sensitivity Analysis
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Cost Category Change NPV $M IRR%
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Coal Prices - 15% 26.0 33.0
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Transportation Cost +25% 53.7 48.7
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Mining Costs +25% 51.4% 47.6%
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Capital Investment +15% 70.4 52.6
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Port Costs +25% 72.3 58.4
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Sell Only 15% as PCI Coal -10% 47.0 45.1
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Net present value (NPV) was calculated on after-tax cash flows using
a 15% discount rate. Operating costs include:
Overburden removal of C$2.00 per M3
Coal Production $1.60/tonne
Coal preparation of $5.15 /tonne
Reclamation costs of $0.15/tonne
Transportation by truck to the port of Skagway C$21.50/tonne
Environmental studies of approximately C$300,000 are included in the initial capital assumptions.
Key factors supporting the development of Cash's Division Mountain project include soaring coal prices and supply shortages, which are widely expected to continue for some time into the future. Further, ongoing growth and development in the Yukon Territory have pushed the local electrical power grid close to capacity and pressure is building to find new generation sources. For example, there are a number of potential new mine openings scheduled in Yukon, and two established mines that closed due to low ore prices in the mid-1990's are also being considered for re-opening. The thermal generating station proposed for construction near the Division Mountain mine mouth is believed to offer a viable and cost-effective solution to meet this rising demand.
According to the Scoping Study, the Division Mountain coal could be shipped out of Skagway, an all season port in Alaska, where a bulk storage and loading facility already exists. Shipping coal from this facility to South Korea and Japan saves two and one half sailing days compared with traditional west coast ports.
This Scoping Study follows the release of a 43-101 Report on the Division Mountain property (see Cash Minerals Press Release of March 31, 2005) that outlined a resource of 51.6 million tonnes of high Volatile Bituminous "B" coal and noted significant potential for expansion.
The table below is reproduced from the 43-101 report prepared by Norwest Corporation.
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Measured Tonnes Indicated Tonnes Total Tonnes
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38,553,505 13,041,449 51,594,954
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The Scoping Study was prepared by Gary Stubblefield, P.E. of Norwest Corporation and the 43-101 Report was prepared by T.C. Becker, B.Sc., P. Geo., a qualified person under NI 43-101, also of Norwest.
The Division Mountain Coal Project is located approximately 90 km northwest of Whitehorse, the capital and largest community in Yukon Territory. According to the Scoping Study, the deposit has the potential to be economically developed to support coal sales to a proposed mine-mouth 40MW electric generating station, as well as for export to Pacific Rim markets.
Significant quantities of cement grade limestone abundant on the property within a few kilometers of the coal source also bear further investigation. This occurrence is considered extremely fortuitous since limestone and coal represent the key components in the manufacturing of Portland cement. Having both resources so close together provides the potential to dramatically reduce transportation costs, particularly in the event that a cement plant were to be built in the vicinity of the deposits.
"We are extremely pleased that Norwest and its experts recognize the potential that we have in the Division Mountain area and we look forward to moving ahead quickly with further technical evaluations, including a Feasibility Study, on this project," said Bill Clarke.
Based upon their investigation, Norwest's conclusions and recommendations include:
"The Scoping Study shows a positive rate of return on the Division Mountain Project, thus it bears looking into at a greater level of accuracy. Norwest recommends that Cash conduct a full feasibility study to analyze resources, revenues and costs in significantly greater detail."
CAUTION
This study by Norwest Corporation is not adequate to definitively confirm the economics of the Division Mountain Coal Project presented in this press release.
The Division Mountain Coal Project.
The deposit lies 20 km west of Highway 2 and Yukon's main power grid, and 300 km from the closest tidewater port at Skagway, Alaska. In addition to the exploration work, geologic and economic studies that have been conducted on the project, the Company has also carried out wide ranging environmental surveys in anticipation of application for mining permits as well as extensive consultation with local communities in the region including Champagne and Aishihik First Nations whereby both parties have agreed to consider possible joint venture projects (Division Mountain coal property borders with that of Champagne and Aishihik), municipal, territorial and federal levels of Government.
Cash Minerals - An Emerging Energy Resource Company
Cash Minerals Ltd., (CHX-TSX Venture Exchange) is an emerging energy resource company with coal assets and uranium exploration properties in The Yukon Territory.
In addition to the Division Mountain Coal Project, the Company has a right to earn an interest in six significant Uranium projects in Yukon Territory, including four in the Wernecke Mountain area of northeastern Yukon and hosted in Proterozoic age iron-oxide rich breccia bodies that share numerous textural and mineralogical similarities to the IOCG deposit (Iron-Oxide- Copper-Gold) model, which include Olympic Dam, Ernest Henry and Candelaria. The other two uranium properties, (one in west-central and one in southeastern Yukon), are both hosted in Cretaceous granitic intrusions. These prospects are best viewed as bulk tonnage uranium targets, modeled on the Rossing Deposit in Southern Africa. All of the projects host uranium showings that were aggressively explored by majors in the late 1970s and early 1980s before uranium prices dropped. A National Instrument 43-101 report is near completion on all properties.
FOR FURTHER INFORMATION PLEASE CONTACT:
Cash Minerals Ltd.
Basil Botha
Vice President, Business Development
1-604-552-3506
or
Cash Minerals Ltd.
David Meyer
Business Consultant
1-416-861-5891
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