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TORONTO, Feb. 21, 2012 /CNW/ - Starfield Resources Inc. (TSX: SRU) ("Starfield", "the Company") today announced the completion
of the update to the Preliminary Economic Assessment (PEA) of its
100%-owned Ferguson Lake project located in Nunavut prepared by RPA
(formerly Scott Wilson RPA).
This study was originally completed in April 2008. The updated version,
dated November 30, 2011, reflects engineering and exploration work
completed since 2008. A copy of the report will be available on sedar.com.
Undiscounted pre-tax cash flow $4,484 million over 20 year mine life
Pre-tax IRR of 16.8% and a CDN$1,061 million NPV at an 8% discount rate.
At current metal prices (November 22, 2011) of US$8.05 nickel, US$3.36
copper and US$14.50 cobalt, as well as $100 per tonne hematite and $100
per tonne acid, the project has an undiscounted pre-tax flow of $3.3
billion and an IRR of 13.6%.
Production anticipated at 25.6 million lbs. nickel, 41.6 million lbs.
copper, and 2.9 million lbs. cobalt annually.
Average NSR value of $239 per tonne
Total average operating costs of $88.43 per tonne milled.
Resources sufficient to enable operations for 20-year mine life
Capital costs estimated to be CDN$1.58 billion (life of mine)
Hydromet process allows for very economical operations by northern
standards, with by-product electrical power generation
"I'm extremely pleased that the PEA continues to indicate a very viable
project at Ferguson Lake," said Philip S. Martin, President and CEO.
"We believe that the new study was completed to the highest standards
using very conservative estimates particularly with respect to capital
costs, which will allow us to bypass a prefeasibility study and go
directly to a full feasibility study in the future. In addition there
are many potential project upsides that have not been factored into the
East Zone Mineral Resources have not been considered for the purposes of
this PEA, as they are lower grade, do not contain estimates for cobalt
grades, and are physically isolated from the Main West Zone and West
Extension (on the opposite side of Ferguson Lake). There is, however,
the potential to extend the mine life in future studies, by inclusion
of the East Zone. The PEA also does not include the recovery of PGE's
and therefore excludes the potential of the low-sulphide, PGE style of
mineralization located adjacent to and below the subject massive
sulphide resource. The PEA also does not include the 2011 drill results
for core holes FL11-430 and FL11-432 (the results of which appear in
the November 10, 2011 press release), which potentially extend existing
mineralization of the West Zone to the southwest by 350 metres.
Finally, minimal net value was placed on the sulphuric acid produced as
a by-product credit, as customer contracts and related transportation
costs are not yet negotiated.
The PEA was prepared under the supervision of Messrs. Graham Clow,
P.Eng., President and CEO of RPA of Toronto, and Normand Lecuyer,
P.Eng., Principal Mining Engineer for RPA both of whom are Independent
Qualified Persons as defined under NI 43-101. Mineral Resources on
which the PEA is based used CIM definitions and included all diamond
drilling up to and including 2008. The resource estimate was prepared
by Jamie Lavigne, P. Geo., Associate Consulting Geologist with RPA an
Independent Qualified Person, as defined under NI 43-101.
The PEA study for Ferguson Lake is based on the following general assumptions:
Indicated Resources of 15.8 million tonnes grading 0.65% nickel, 1.00%
copper, 0.07% cobalt, and Inferred Resources of 20.8 million tonnes
grading 0.67% nickel, 1.11% copper, and 0.08% cobalt (excluding the
The Met plant feed of 40.3 million tonnes grading 0.61% nickel, 0.98%
copper and 0.07% cobalt, using appropriate mining dilution and typical
mining losses factors.
Mineral resources were estimated at NSR cut-off grades of $53 and $97
per tonne for open pit and underground, respectively.
Ore production rate of 6,000 tonnes per day, or 2.1 million tonnes per
year, using mechanized cut and fill mining.
Grinding facilities at Ferguson Lake
285 km slurry pipeline to the process plant site
Port and ship loading facilities at Arviat
Average annual production of 25.6 million lbs. of nickel, 41.6 million
lbs. of copper, 2.9 million lbs. of cobalt, and 0.85 million tonnes of
Base case revenue model utilized prices of US$10.00 per pound nickel,
US$3.50 per pound copper, US$20.00 per pound cobalt, $125 per tonne
hematite, which resulted in a pre-tax IRR of 16.8% and a pre-tax NPV of
$1,061 million at a 8% discount rate
Total Met plant feed tonnes and grade to be 40.3 million tonnes grading
0.61% nickel, 0.98% copper, and 0.07% cobalt
An average operating cost of CDN$88.43 per tonne milled
The pre-tax Internal Rate of Return (IRR) is 16.8%. Pre-tax Net Present Value (NPV) of the project at various discount
rates is as follows:
Pre-tax NPV @ 5% $1,872 million
Pre-tax NPV @ 8% $1,061 million
Pre-tax NPV @ 10% $692 million
Capital costs are estimated to be CDN$1.58 billion (life of mine). The
scoping study was designed to provide the best return on investment and
there were no constraints placed on initial capital investment. Capital
costs include a large tank farm, development of the hydromet process, a
slurry pipeline (estimated to cost CDN$130 million) and an overhead
power transmission line. Capital costs of the project are somewhat
higher than originally planned, but are expected to create an operating
cost structure that is at the low end of industry standards for
The Ferguson Lake project will initially consist of a small open pit
mine. Plans call for further development into an underground mine
within one year. Infrastructure is to include a processing plant onsite
at Ferguson Lake to crush, clean and grind massive sulphides into
slurry. A 285-km pipeline, as the crow flies, will transport the slurry from Ferguson Lake to a
metallurgical processing plant site located at Arviat. The two facilities will also be connected by a
285-km 11-megawatt power line that follows the same path as the slurry
The hydrometallurgical processing plant will extract pure, LME-grade
nickel, copper and cobalt metals from the Ferguson Lake massive
sulphides at very competitive production costs. Unlike most
metallurgical extraction processes, this environmentally friendly
method generates no toxic residues, recycles key reagents within the
process, and produces sufficient electricity directly from the massive
sulphides to power both the plant and the mine, with some excess
electricity left over for potential sale.
The electricity will be produced from steam generated as a result of
burning the hydrogen sulphide gas generated from the first stage of
leaching. This generates a vast amount of heat while producing a
saleable reagent (sulphuric acid) and superheated steam from which to
generate the electricity. "There is currently a major shortage of
sulphuric acid, which is expected to continue for the foreseeable
"A lot of planning and innovation went into this study," said Mr. Philip
S. Martin. "Our ability to generate our own electricity results in very
economical operations, and our proximity to deep water shipping will
make it easier for resupply and by-product transportation. As
previously disclosed, the Company is seeking strategic partners who are
appropriately suited to the long term development of the Ferguson Lake
assets, and other assets of the Company."
The PEA is preliminary in nature, and 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 reserves
development, production and economic forecasts on which this scoping
study is based will be realized.
Starfield Resources Inc. is an advanced exploration and development
stage company. The Company's primary asset is its Ferguson Lake
nickel-copper-cobalt-platinum-palladium property in Nunavut, Canada.
Additional assets include a nickel-copper-cobalt-PGE-chrome project in
the Stillwater district of Montana with historic copper, nickel,
chromite resources (non 43-101 and not to be relied on); the Superior
Mine Project formerly referred to as the Moonlight copper project in
California with two significant copper prospects, one of which has a
historical copper resource; and one gold property in Nevada that is
under option to another company.
Starfield has also funded the development of a novel, environmentally
friendly and energy efficient hydrometallurgical flow sheet to recover
metals from massive sulphides.
This news release may contain certain information that constitutes
forward-looking statements. Forward-looking statements are frequently
characterized by words such as "plan," "expect," "project," "intend,"
"believe," "anticipate" and other similar words, or statements that
certain events or conditions "may" or "will" occur. Forward-looking
statements are based on the opinions and estimates of management at the
date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the
forward-looking statements. These factors include the inherent risks
involved in the exploration and development of mineral properties, the
uncertainties involved in interpreting drilling results and other
geological data, fluctuating metal prices and other factors described
above and in the Company's most recent annual information form under
the heading "Risk Factors" which has been filed electronically by means
of the Canadian Securities Administrators' website located at
www.sedar.com. The Company disclaims any obligation to update or revise
any forward-looking statements if circumstances or management's
estimates or opinions should change. The reader is cautioned not to
place undue reliance on forward-looking statements.
SOURCE Starfield Resources Inc.
For further information:
Philip S. Martin
President and CEO
416-860-0400 ext. 222
Greg Van Staveren
Chief Financial Officer
416-860-0400 ext. 223