TORONTO, Sept. 16, 2013 /CNW/ - Roxgold Inc. ("Roxgold" or "the
Company") (TSXV: ROG) is pleased to announce the results of its
Preliminary Economic Assessment ("PEA") prepared pursuant to National
Instrument 43-101 ("NI 43-101") for the 55 Zone on its 100% owned
Yaramoko exploration permit in Burkina Faso.
Roxgold will be hosting a conference call and webcast presentation at
11:00 a.m. E.T. on September 16, 2013 to discuss these results.
Details are provided at the end of this release.
HIGHLIGHTS: (all amounts in US dollars unless otherwise indicated)
Base case is stated assuming 100% basis and a gold price of $1,300/oz
-
Pre-tax IRRof 59.2% with a 1.2 year payback on initial capital
-
After-tax IRRof 47.7% with a 1.4 year payback on initial capital
-
Pre-tax NPV5% of $250 million
-
After-tax NPV5% of $192 million
-
Estimated average annual gold production of 98,300 ounces for the first
five years
-
Current study mine life of 10 years
-
Average metallurgical recoveries of 96% gold
-
Average total cash costs of $455/oz (including royalties) for the first
5 years of production
-
Average total cash costs of $530/oz (including royalties) for Life of
Mine ("LOM")
-
Estimated all-in sustaining costs of $681/oz for first 5 years
-
Pre-Production capital of $93.8 million
The PEA is preliminary in nature and it includes inferred mineral
resources that are considered too speculative geologically to have the
economic considerations applied to them that would enable them to be
categorized as mineral reserves. There is no certainty that the
conclusions reached in the PEA will be realized. Mineral resources that
are not mineral reserves do not have demonstrated economic viability.
Although no production decision has been reached for the Yaramoko Gold
Project ("YGP"), Roxgold believes that the conceptual economic case
presented in the PEA coupled with the straightforward nature of the
project in terms of geology, geometry and processing merit the
advancement of the project directly to a FS level of study.
"The Preliminary Economic Assessment on Yaramoko's 55 Zone marks a
turning point for Roxgold from being an explorer to a development
focused company. The conceptual economics outlined in the PEA,
particularly for the first 5 years, are encouraging. The start-up
capital costs estimated in the PEA would be manageable for a company of
our size which supports our belief that Yaramoko has potential to
continue towards development. We feel that the first five years provide
a strong start to this project, and with the deposit still open below,
the 55 Zone has the potential to increase its existing resources and
improve the project economics through drilling from underground."
commented John Dorward, President and Chief Executive Officer.
"Roxgold will now be focusing on our upcoming Feasibility Study ("FS"),
which will expand upon the PEA and examine areas where there are
opportunities for optimization. Additionally, we continue to pursue a
targeted exploration program on areas such as Bagassi South, where we
recently saw very encouraging drill results, as we search for the next
resource on the Yaramoko Permit."
ECONOMIC SUMMARY
|
Pre - tax
|
$1,100/oz
|
$1,300/oz
|
$1,500/oz
|
|
NPV5% ($M)
|
$144
|
$250
|
$348
|
|
IRR (%)
|
39.8%
|
59.2%
|
75.2%
|
|
Payback (Years)
|
1.6
|
1.2
|
0.9
|
|
After - tax
|
$1,100/oz
|
$1,300/oz
|
$1,500/oz
|
|
NPV5% ($M)
|
$104
|
$192
|
$273
|
|
IRR (%)
|
30.8%
|
47.7%
|
61.6%
|
|
Payback (Years)
|
2.0
|
1.4
|
1.1
|
MINING AND PROCESSING
A summary of the capital costs, production and operating metrics from
the PEA are summarized below:
|
Capital Costs
|
Pre-Production
($ million)
|
Year 1-5
($ million)
|
Year 6-10
($ million)
|
LOM
($ million)
|
|
Underground Mine
|
$37.7
|
$88.9
|
$10.5
|
$136.9
|
|
Processing Plant
|
$24.2
|
$2.8
|
$0.1
|
$27.1
|
|
Infrastructure
|
$14.4
|
$0.8
|
$0.5
|
$15.6
|
|
Environmental
|
-
|
-
|
$5.0
|
$5.0
|
|
Owner's Costs
|
$7.1
|
-
|
-
|
$7.1
|
|
Contingency
|
$10.4
|
10.4
|
$1.9
|
$22.7
|
|
Capital Cost
|
$93.8
|
$102.7
|
$18.0
|
$214.5
|
|
PEA baseline metrics
|
Year 1-5
|
Year 6-10
|
LOM
|
|
Average mine production (tpd)
|
740
|
540
|
640
|
|
Average annual gold production(oz)
|
98,300
|
49,400
|
73,900
|
|
Average mill feed grade (g/t)
|
11.9
|
8.5
|
10.2
|
|
Tonnes Processed (t)
|
1,342,500
|
994,700
|
2,337,200
|
|
Average gold recoveries (%Au)
|
96%
|
96%
|
96%
|
|
Total Gold Recovered (oz)
|
491,600
|
246,900
|
738,500
|
|
Cash Cost Summary
|
Year 1-5
($/oz)
|
Year 1-5
($/tonne)
|
Year 6-10
($/oz)
|
Year 6-10
($/tonne)
|
LOM
($/oz)
|
LOM
($/tonne)
|
|
Mining
|
$245
|
$89
|
$401
|
$99
|
$297
|
$94
|
|
Processing
|
$76
|
$27
|
$111
|
$27
|
$87
|
$27
|
|
G & A
|
$72
|
$26
|
$108
|
$27
|
$84
|
$26
|
|
Refining
|
$10
|
$4
|
$10
|
$2
|
$10
|
$3
|
|
Cash operating Cost
|
$403
|
$146
|
$630
|
$155
|
$478
|
$150
|
|
Royalties
|
$52
|
$19
|
$52
|
$13
|
$52
|
$16
|
|
Total Cash Costs
|
$455
|
$165
|
$682
|
$168
|
$530
|
$166
|
|
Sustaining Costs(1)
|
$226
|
$82
|
$92
|
$23
|
$182
|
$58
|
|
All-in Sustaining Cost (2)
|
$681
|
$247
|
$774
|
$191
|
$712
|
$224
|
|
(1)
|
Sustaining Costs include sustaining Capital and Corporate G&A
|
|
(2)
|
Quoted All-in Sustaining Costs are presented as defined by the World
Gold Council ("WGC").
|
ECONOMIC SUMMARY AND SENSITIVITY TO GOLD PRICE AND DISCOUNT RATE
NPV (Millions)
Discount rate
|
Pre - Tax
|
Post - Tax
|
|
5%
|
7.5%
|
10%
|
5%
|
7.5%
|
10%
|
|
Gold Price
|
$ 1,000
|
$ 96
|
$ 78
|
$ 62
|
$ 65
|
$ 50
|
$38
|
|
$ 1,100
|
$ 144
|
$ 120
|
$ 99
|
$ 104
|
$ 85
|
$68
|
|
$ 1,200
|
$ 197
|
$ 166
|
$ 141
|
$ 148
|
$ 123
|
$102
|
|
$ 1,300
|
$ 250
|
$ 213
|
$ 182
|
$ 192
|
$ 162
|
$136
|
|
$ 1,400
|
$ 295
|
$ 253
|
$ 217
|
$ 230
|
$ 195
|
$166
|
|
$ 1,500
|
$ 348
|
$ 299
|
$ 258
|
$ 273
|
$ 233
|
$199
|
|
$ 1,600
|
$ 400
|
$ 345
|
$ 299
|
$ 317
|
$ 271
|
$233
|
STUDY DESCRIPTION
An underground operation is envisioned in the PEA that will be scheduled
to run for 10 years and average 98,300 ounces of gold production for
the first 5 years. The PEA is based on upon a mining contractor
approach, utilizing a long hole open stope mining method which is
estimated to recover approximately 738,500 ounces of gold. Over the
life of mine the average production rate is estimated at approximately
74,000 ounces per year. Total cash costs per ounce sold including
royalties are estimated to be $455 for the first 5 years and $530 for
the life of mine. An average life of mine dilution (waste tonnes/mill
feed tonnes) of 21% (including development material) is assumed in the
PEA. This is a key area for optimization in subsequent studies.
The processing facility will be sized for 740 tonnes per day ("tpd")
throughput and will include two-stage crushing, grinding, gravity
recovery, leaching circuits and thickening. Average recoveries are
estimated to be 96% based on two rounds of metallurgical test work.
Material milled is estimated to be of a moderate hardness with a Bond
Ball Work Index of 13.8 kWh/t.
Pre-production capital costs are estimated to total $93.8 million
including $10.4 million in contingency capital. This figure includes
$37.7 million in underground development which includes the development
of an underground decline to the 5134 Level (182 metres vertical depth)
as well as 9 levels of lateral development designed to open up multiple
working faces and allow flexibility within the conceptual mine plan.
Surface and processing infrastructure are estimated to total $45.6
million of the $93.8 million in pre-production capital and includes all
roads, tailings and water storage facilities, as well as all processing
facilities and a 300 person camp.
Of note is that an estimated 28,000 ounces of gold (in 77,000 tonnes
grading 11.2 g/t) in the indicated category and 99,000 ounces of gold
(in 256,600 tonnes grading 11.9g/t) in the inferred were not considered
within the conceptual mine plan.
Management believes that with additional drilling from underground there
is an opportunity to firstly optimize the mine plan and secondly to
potentially add more ounces to the resource base. However there is no
certainty that additional drilling would result in all or any such
ounces being included in a mine plan.
Roxgold has not yet completed a Pre-Feasibility Study or a FS to
demonstrate the economic viability of the YGP. Furthermore, no mineral
reserves have been established on the YGP. Any statements regarding
planned production rates, projected cash flows, payback period, IRR,
NPV assume that Roxgold is or will be able to complete all of the
required steps to bring the YGP into commercial production including
the completion of a FS to demonstrate the economic viability of the
YGP, the completion of the environmental assessment process, the
successful granting of relevant permits, and that Roxgold obtains the
necessary project financing to pay for the capital costs to develop and
construct a mine at the YGP. There is no certainty that Roxgold will be
able to complete any or all of these steps.
OPPORTUNITIES TO OPTIMIZE PROJECT IN FUTURE STUDIES
Roxgold believes that while presenting a credible and positive
conceptual development case, the PEA is preliminary in nature and the
FS that the Company will be completing will build on and optimize the
results from the PEA, as outlined below:
-
A detailed geotechnical drilling and testing investigation as well as a
mining method optimisation study, including backfill could potentially
realise the benefits of a reduction in waste and lateral development
which could reduce capital and operating costs and maximize mining
recoveries and reduce dilution.
-
Detailed metallurgical test work to optimize flow sheet and provide
engineering inputs for design and construction.
-
In terms of resource recoveries, it should be noted that as currently
defined, an estimated 139,000 ounces of gold (in 435,000 tonnes with a
grade of 9.9 g/t) estimated in the indicated category and
approximately, 42,000 ounces of gold (in 169,000 tonnes with a grade of
7.7 g/t) in the inferred category remain in pillars. As part of the FS,
consideration will be given to optimizing the mining method in order to
maximize indicated resource recoveries.
-
An estimated 28,000 ounces of gold (in 77,000 tonnes grading 11.2 g/t)
of indicated resource and 99,000 ounces of inferred resource (in
256,600 tonnes grading 11.9g/t) are excluded from the conceptual mine
plan. Management believes that with further drilling from underground
and subsequent mine optimization, that there may be an opportunity for
Roxgold to increase its resource estimate and optimize the mine plan.
There is no certainty however that any additional drilling will result
in all or any of such indicated ounces being included in an optimized
mine plan.
MINERAL RESOURCE ESTIMATE:
The PEA is based on the updated mineral resource estimate as at August
27, 2013* of 850,000 gold ("Au") ounces using a 3.0 g/t cut-off grade
in the Indicated Resource category, and 273,000 gold ounces using a 3.0
g/t cut-off grade in the Inferred category.
The resource estimate presented below is based on 99,077 metres of
drilling and was prepared by AGP Mining Consultants Inc. ("AGP") in
accordance with NI 43-101.
*Please refer to the Company's disclosure on its August 27, 2013 press
release outlining the mineral resource estimate for further details.
|
Cut -off
|
Resource(2)
|
Grade (capped)
|
Metal
|
|
|
Category
|
Tonnes
|
Au g/t
|
Au Oz
|
|
>5.0g/t
|
Indicated
|
1,433,000
|
17.15
|
790,000
|
|
|
Inferred
|
675,000
|
11.50
|
250,000
|
|
|
|
|
|
|
|
>3.0g/t(1)
|
Indicated
|
1,904,000
|
13.88
|
850,000
|
|
|
Inferred
|
860,000
|
9.88
|
273,000
|
|
|
|
|
|
|
|
> 2.0g/t
|
Indicated
|
2,213,000
|
12.29
|
874,000
|
|
|
Inferred
|
980,000
|
8.97
|
283,000
|
|
(1)
|
43-101 resource estimate published at a 3.0 g/t cut-off
|
|
(2)
|
It should be noted that mineral resources that are not mineral reserves
do not have demonstrated economic viability; there are no known legal,
political, environmental or other risks that could materially affect
the potential development of the mineral resources.
|
NEAR TERM DEVELOPMENT PLANS AND ONGOING EXPLORATION:
Roxgold has commenced a FS which has been awarded to SRK Consulting of
Toronto and Mintrex of Perth, Australia. This FS study will build on
and optimize the results from the PEA and is expected to be completed
in Q2 2014. Future work will include detailed geotechnical drilling,
geochemical sampling, further metallurgical test work and hydrology
studies as well as tendering of operating and capital costs. Detailed
work on surface infrastructure design and layout are also being
undertaken and will form part of Roxgold's Environmental and Social
Impact Assessment ("ESIA"). Roxgold Intends to complete an ESIA by the
end of 2013 which will form the basis of an application for an
Exploitation Permit. If granted, Roxgold will become a 90% owner of the
YGP in Partnership with the Government of Burkina Faso which will have
a 10% carried interest in the Project.
The Company is continuing a systematic regional exploration program
across the 167km2 Yaramoko permit. Roxgold is currently drill testing targets defined
through auger and IP ("Induced Polarization") surveys completed earlier
in the year. Roxgold is currently also following up on success earlier
this year at the new zone at Bagassi South where it has commenced a
1,600 metre diamond drilling program.
NI 43-101 TECHNICAL REPORT
The complete updated NI 43-101 Technical Report which will include the
PEA will be filed on SEDAR (www.sedar.com) within 45 days and will also be available on the Company's website (www.roxgold.com).
PEA CONTRIBUTORS
The PEA was completed by AGP Mining Consultants Inc. ("AGP"), Toronto.
The information in this news release that relates to the PEA was
prepared by: Gordon Zurowski, P.Eng., Principal Mining Engineer,
Geoffrey Challiner, C.Eng, Chief Mining Engineer, and Lyn Jones,
P.Eng., Senior Associate Metallurgist, all of AGP, each of whom are
independent of Roxgold and are recognized as a Qualified Person within
the meaning of ("NI 43-101")
Pierre Desautels, Principal Geologist with AGP and a Qualified Person
within the meaning of 43-101, has reviewed and approved the scientific
or technical information in this press release. Mr. Desautels is
independent of Roxgold.
PEA RESULTS CONFERENCE CALL AND WEBCAST
Roxgold will be hosting a conference call and webcast presentation
discussing the results of the PEA on Monday, September 16, at 11:00
a.m. ET. A replay of the call will be available until September 23,
2013.
|
Conference Call Details:
|
|
|
Toll Free (North America)
|
1-888-390-0605
|
|
Toronto Local and International
|
416-764-8609
|
|
Webcast Link:
|
Click Here
|
|
Conference Call REPLAY:
|
|
|
Toll Free Replay Call (North America)
|
1-888-390-0541, Passcode: 484130
|
|
Toronto Local and International Replay Call
|
416-764-8677, Passcode: 484130
|
ABOUT ROXGOLD:
Roxgold is an exploration and development company with its key asset,
the 167 Km2 Yaramoko exploration permit, located in the Houndé greenstone region of
Burkina Faso, West Africa. Roxgold is focused on further exploring the
Company's 100% owned Yaramoko permit and advancing the 55 Zone. Roxgold
trades on the TSX Venture Exchange under the Symbol ROG.
"Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release."
This news release contains forward-looking information. Forward looking
information contained in this new release includes, but is not limited
to, statements with respect to: (i) the estimation of inferred and
indicated mineral resources; (ii) the success of exploration
activities; (iii) the completion and timing of the environmental
assessment process (iv) the results of the PEA including statements
about future production, future operating and capital costs, the
projected IRR, NPV, payback period, and production timelines for the 55
Zone on the Yaramoko permit.
These statements are based on information currently available to the
Company and the Company provides no assurance that actual results will
meet management's expectations. In certain cases, forward-looking
information may be identified by such terms as "anticipates",
"believes", "could", "estimates", "expects", "may", "shall", "will", or
"would". Forward-looking information contained in this news release is
based on certain factors and assumptions regarding, among other things,
the estimation of mineral resources, the realization of resource
estimate, gold metal prices, the timing and amount of future
exploration and development expenditures, the estimation of initial and
sustaining capital requirements, the estimation of labour and operating
costs, the availability of necessary financing and materials to
continue to explore and develop the Yaramoko project in the short and
long-term, the progress of exploration and development activities, the
receipt of necessary regulatory approvals, the completion of the
environmental assessment process, and assumptions with respect to
currency fluctuations, environmental risks, title disputes or claims,
and other similar matters. While the Company considers these
assumptions to be reasonable based on information currently available
to it, they may prove to be incorrect.
Forward looking information involves known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking information. Such factors include risks
inherent in the exploration and development of mineral deposits,
including risks relating to changes in project parameters as plans
continue to be redefined including the possibility that mining
operations may not commence at the Yaramoko project, risks relating to
variations in mineral resources, grade or recovery rates resulting from
current exploration and development activities, risks relating to
changes in gold prices and the worldwide demand for and supply of gold,
risks related to increased competition in the mining industry
generally, risks related to current global financial conditions,
uncertainties inherent in the estimation of mineral resources, access
and supply risks, reliance on key personnel, operational risks inherent
in the conduct of mining activities, including the risk of accidents,
labour disputes, increases in capital and operating costs and the risk
of delays or increased costs that might be encountered during the
development process, regulatory risks, including risks relating to the
acquisition of the necessary licenses and permits, financing,
capitalization and liquidity risks, including the risk that the
financing necessary to fund the exploration and development activities
at the Yaramoko project may not be available on satisfactory terms, or
at all, risks related to disputes concerning property titles and
interest, and environmental risks. This list is not exhaustive of the
factors that may affect any of the Company's forward-looking
information. These and other factors should be considered carefully and
readers should not place undue reliance on the Company's
forward-looking information. The Company does not undertake to update
any forward-looking information that may be made from time to time by
the Company or on its behalf, except in accordance with applicable
securities laws.
SOURCE Roxgold Inc.
