Avanti Mining receives positive prefeasibility study confirming robust
economics for restart of Kitsault mine
TSX-V:AVT
Highlights include:
- The mine plan calls for a total of 215.3 million tonnes of proven and probable reserves grading 0.085% molybdenum to be mined over a 15-year mine life, producing 368 million pounds of molybdenum. The first five years of production averages 0.10% Mo; - Initial capital costs are estimated at $641 million; - Cash operating costs are estimated to be $4.43/lb of accountable molybdenum (recovered molybdenum less 1% deductions); - The average life of mine (LOM) price of molybdenum for base case scenario is computed by using the CPM Group projections and it is $15.88/lb. - The base case after-tax NPV(8%) is $551 million, with an IRR of 20.6% - Projected undiscounted net cash flow (after-tax) is $1.56 billion; - Annual metal production for the mine life averages 24.5 million pounds of molybdenum with the first five years averaging 29.2 million pounds per year; - The mine has certain infrastructure in place with road and ocean freight access to the mine site and will be serviced by the BC Hydro transmission grid; - Develop a Run-of-River Hydro-electric project, by taking advantage of the site water diversion design in managing runoff from the average 2 meters of precipitation. - The Hydroelectric project may represent a long lived project asset with implications for project reclamation financing. - The reopening of the mine is projected to create over 330 jobs in addition to 250 construction jobs over that 3 year period. - The mines existing M-10 permit can be amended under the BC Mines Act process or a voluntary BC Environmental Assessment Act "opt-in" process.
"We are delighted that the PFS confirms the preliminary economic assessment done in 2008 by SRK," stated Craig J. Nelsen, Avanti's President and CEO. "We are happy with the robust economics disclosed in this report, with the most significant changes being the reduction in operating costs per lb to
Project Description -------------------
The Kitsault property is located about 140 km north of
Kitsault has road access to the mine site, which is approximately 12 km from ocean transport routes and is serviced by the BC Hydro transmission grid. The PFS estimates that the Kitsault Mine would operate at an annual resource throughput rate of 14.6 million tonnes, or 40,000tpd, with a strip ratio of 0.75:1 during a mine life of 15 years. The ore mined will be crushed in a gyratory primary crusher, then ground using a SAG-ball mill configuration. The molybdenum concentrate will be dried and packaged into bags for shipment. The life-of mine molybdenum production is estimated at 368 million pounds of molybdenum contained in 320,301 tonnes of molybdenum concentrate produced from the processing of 215.3 million tonnes of reserves grading 0.085%Mo. Total molybdenum recovery is estimated at 90.6%.
Mineral Resource/Reserves Statement -----------------------------------
The mineral resources are reported in accordance with National Instrument 43-101 ("NI 43-101"). The audit of this resource estimate was completed by
Table 1 Mineral Resource Statement* for the Kitsault Molybdenum Deposit - March 31, 2009 ------------------------------------------------------------------------- Grade Contained Metal --------------------------- ------------------------ Resource Qty Mo Ag Pb WO(3) Mo Ag Pb WO(3) Classification (Mt) (%) (g/t) (%) (%) (Mlb) (Moz) (Mlb) (Mlb) ------------------------------------------------------------------------- Measured(xx) 54 0.112 4.54 0.022 0.007 133 8 26 8 Indicated(xx) 153 0.088 5.24 0.025 0.006 297 26 84 20 Measured & Indicated(xx) 207 0.094 5.06 0.024 0.006 430 34 110 28 Inferred(xx) 26 0.069 4.15 0.019 0.005 40 4 11 3 ------------------------------------------------------------------------- ------------------------------------------------------------------------- * Mineral resources are not mineral reserves and do not have demonstrated economic viability. All figures have been rounded to reflect the relative accuracy of the estimates. The cut-off grades are based on metal price assumptions of US$20.00/lb Mo, and a metallurgical recovery of 89% Mo. Silver, lead, and WO(3) were not used in the pit optimization. (xx) Reported at a cut-off grade of 0.04 % Mo contained within a potentially economic open pit.
The mineral resources are reported at a cut-off grade to reflect the "reasonable prospects" for economic extraction. It is considered that portions of the Kitsault molybdenum deposit are amenable for open pit extraction, and has not considered underground mining methods for deeper portions of the deposit.
The following Table 2 reflects the material present at various cut-off grades.
Table 2 Mo Cut-off Grade Sensitivity Analyses within Resource Pit - Measured and Indicated Resources ---------------------------------------------------------------- Cutoff Grade Quantity Mo Grade Contained Metal (Mo%) (Mt) (%) Mo (Mlb) ---------------------------------------------------------------- 0.02 315 0.072 501 0.025 292 0.076 490 0.03 257 0.083 468 0.035 234 0.088 452 0.04 207 0.094 430 0.045 197 0.097 420 0.05 189 0.099 412 0.055 183 0.100 405 0.06 178 0.102 398 0.065 170 0.103 388 0.07 163 0.105 377 0.075 151 0.108 357 0.08 134 0.111 329 ---------------------------------------------------------------- ----------------------------------------------------------------
Avanti has completed a significant volume of work during the 2008 field season, which included a 33-hole (10,131 m) infill drilling program. This program focused on both conversion of inferred to indicated resources as well as the confirmation of the historical drilling results. The results of this program have been reviewed; the assay results from the 2008 drilling compare closely with the assays from the historic drilling and are overall confirmatory. In addition, the 2008 program successfully converted inferred resources to indicated and measured resources, and the current drillhole spacing within the Kitsault deposit appears sufficient to advance the project to feasibility level studies.
The Kitsault mine Mineral Reserves have been prepared in accordance with NI 43-101 standards and CIM standard definitions. This statement has been prepared by
Table 3 Mineral Reserves by Class ---------------------------------------------------------------- Cut-off Quantity Mo Grade Contained By Class Grade (Mo%) (Mt) (Mo%) Metal (Mlb) ---------------------------------------------------------------- Proven 0.036 55.7 0.109 121.35 0.027 3.8 0.031 2.35 Total 59.5 0.104 123.70 ---------------------------------------------------------------- Probable 0.036 134.5 0.086 231.08 0.027 21.2 0.031 13.13 Total 155.7 0.079 244.21 ---------------------------------------------------------------- Total Proven & Probable 215.3 0.085 367.91 ---------------------------------------------------------------- ---------------------------------------------------------------- Notes: 1. Reserves calculated in accordance with CIM guidelines. 2. The metal price used for reserve calculation is US$12.51/lb Mo. 3. Metallurgical recovery is 90.6% for Mo. 4. Pit optimization parameters have changed from the time the resource estimate was completed. As a result, an additional 8.3 million tonnes grading 0.031% Mo of the economic reserves within optimized pit was available for the variable cut-off strategy (Note 5 below) making the reserve statement higher than the resource statement (see Tables 1 & 2) 5. Cut-off grades used were variable, 0.036% Mo and 0.027% Mo. 6. Mining recovery is estimated at 100% and dilution is nil. 7. The waste-to-ore ratio for the deposit is 0.75. Mining ------
Mining will be conducted using two 18 m(3)-shovels, one 18 m(3) loader, and up to fifteen 177-t haul trucks with related support equipment. Benches will be drilled on an 8 m by 8 m drill pattern. All blast holes will be sampled and assayed for molybdenum. The holes will be loaded and shot with a combination of ANFO and emulsion. Benches are 10 m in height and the blast hole drilling will be to a depth of 11.6 m, including sub-drill.
Assay analyses will provide grade control for ore. Haul distances will be shortened both by the proposed borrow material for starter dam construction and the proposed low grade stock pile location on the top of existing Patsy Dump. Low grade ore will be stock piled and processed during the last two years of the operation and higher grade ore will be sent to the mill.
The mining production schedule is presented in Table 4.
Table 4 Summarized Production Schedule ------------------------------------------------------------------------- Mining Mine Production Low Grade SP Waste Period (t) (t) (t) ------------------------------------------------------------------------- -1 540,624 8,195,965 1 14,600,000 4,185,404 13,413,847 2 14,600,000 2,580,297 15,343,253 3 14,600,000 1,406,022 16,089,912 4 14,600,000 1,235,102 15,550,092 5 14,600,000 1,390,588 14,687,240 6 14,600,000 1,364,793 14,302,570 7 14,600,000 2,629,023 13,261,450 8 14,600,000 1,068,413 13,676,918 9 14,600,000 1,757,636 9,735,190 10 14,600,000 2,174,165 7,805,783 11 14,600,000 1,205,514 7,628,557 12 14,600,000 2,533,348 8,749,146 13 14,600,000 927,156 1,796,306 14 463,953 1,915 1,695,122 15 Total 190,263,953 25,000,000 161,931,351 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Mining Mill Production Grade Period Total Mined (t) S.R. (t) %Mo ------------------------------------------------------------------------- -1 8,736,589 15.16 0.067 1 32,199,251 0.71 14,600,000 0.109 2 32,523,550 0.89 14,600,000 0.100 3 32,095,934 1.01 14,600,000 0.103 4 31,385,194 0.98 14,600,000 0.092 5 30,677,829 0.92 14,600,000 0.096 6 30,267,362 0.90 14,600,000 0.086 7 30,490,473 0.77 14,600,000 0.094 8 29,345,331 0.87 14,600,000 0.092 9 26,092,826 0.60 14,600,000 0.085 10 24,579,948 0.47 14,600,000 0.083 11 23,434,071 0.48 14,600,000 0.088 12 25,882,494 0.51 14,600,000 0.086 13 17,323,462 0.12 14,600,000 0.089 14 2,160,990 3.64 14,600,000 0.033 15 10,863,953 0.031 Total 377,195,304 0.75 215,263,953 0.085 ------------------------------------------------------------------------- Processing ----------
The proposed concentrator in the PFS is based on an annual resource throughput rate of 14.
The proposed process design is based on historical testwork results, the results from a recent (2009) test program and utilizing plant data from the previous Kitsault concentrator operations with the exception that the crushing-grinding circuit has been revised to reflect current technologies using a primary crusher-SAG-ball mill configuration, which is comprised of the following unit processes:
- Primary crushing using a gyratory crusher; - Grinding using a SAG-ball mill configuration with cyclones for size classification; - Rougher and scavenger flotation; - Four stages of cleaner flotation with three stages of regrinding; - Final molybdenum concentrate thickening, leaching for the removal of contaminants, and the filtering, drying and packaging of the final concentrate; and - Tailing will be deposited by gravity into an on-site TMF. Capital Costs -------------
Initial capital is estimated at
The capital costs for the mine, plant and tailing management facility are given in Table 5 below.
Table 5 Capital Cost Summary -------------------------------------------------------------- Description US$000 -------------------------------------------------------------- Direct Works -------------------------------------------------------------- Overall Site 37,300 Mining 51,000 Crushing 24,000 Crushed Ore Storage and Reclaim 12,900 Process 106,200 Tailing Management Facility 122,200 Water Management 33,200 Site Services and Site Utilities (Mine Site) 4,500 Ancillary Buildings (Mine Site) 16,700 Plant Mobile Fleet 2,400 Temporary Services (Port Site) 13,400 Port Site Facilities 8,700 Subtotal 432,500 -------------------------------------------------------------- Indirects -------------------------------------------------------------- Project Indirects 104,000 Owner's Costs 26,000 Contingencies 78,100 Subtotal 208,100 -------------------------------------------------------------- -------------------------------------------------------------- Total Capital Cost 640,600 -------------------------------------------------------------- -------------------------------------------------------------- Operating Costs ---------------
LOM unit cash operating costs are US$7.47/t milled and operating costs for the processing plant are estimated at
Table 6 Unit Cash operation costs (LOM average) ------------------------------------------------------------------------- Dollars US$/Tonnes US$/Tonnes US$/Recovered Description $000s Mined Milled Lbs ------------------------------------------------------------------------- Mining 657,107 1.63 3.05 1.79 Processing 768,406 1.91 3.57 2.09 G & A 118,825 0.30 0.55 0.32 Power Generation 3,421 0.01 0.02 0.01 Tailings mgmt 61,085 0.15 0.28 0.17 Totals 1,608,844 4.00 7.47 4.38 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Project Economics -----------------
The PFS economic results utilized assumptions summarized in the Table 7 below:
Table 7 Financial Analysis Parameters ------------------------------------------------------------------------- Parameters Inputs ------------------------------------------------------------------------- General Assumptions Mine Life 15 years Available mill operating days per year 365 days/y Production Rate (average) 40,000tpd Process Recovery 90.6% Molybdenum Concentrate 320,301t Market Discount Rate 8% Base Case LOM average molybdenum price $15.88/lb Royalty Amax Zinc (Newfoundland) Ltd Net profits Interest 9.22% Alcoa Royalty 1.0% ------------------------------------------------------------------------- -------------------------------------------------------------------------
The PFS economic model for the base case assumes a LOM average molybdenum price of
The after-tax NPV at an 8% discount rate over the estimated mine life is
Sensitivity -----------
Sensitivity analysis for key economic parameters is shown in Table 8. This analysis suggests that the project is most sensitive to commodity prices followed by operating cost. The Project is least sensitive to capital costs.
Table 8 Base Case Sensitivity to Pre-Tax NPV (US$millions) at 8% Discount Rate ------------------------------------------------------------------------- -30% -20% -10% Base Case 10% 20% 30% ------------------------------------------------------------------------- Moly Price 108 378 648 919 1,189 1,460 1,730 Exchange Rate 2,003 1,551 1,200 919 689 497 335 Moly Head Grade 163 415 667 919 1,171 1,423 1,675 Operating Cost 1,154 1,076 997 919 840 762 684 Capital Cost 1,101 1,040 979 919 858 798 737 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Development Timetable ---------------------
Avanti is currently working toward completion of a formal bankable feasibility study by Q4, 2010. This study will largely involve, pit optimization, additional field investigations and metallurgical testwork to support the feasibility study, and also include a roaster trade off study and bi-product (lead-silver) recovery metallurgical work.
It is expected that the bankable feasibility work will progress over the next twelve months in conjunction with permitting, marketing and financing activities so Avanti can have a rapid transition to construction and be in production by Q3 2013 to take advantage of the expected global economic recovery and the resulting demand for commodities.
The NI 43-101 Preliminary Feasibility Study, Avanti Mining Inc., Kitsault Molybdenum Property, British Columbia,
SRK Consulting (U.S.) Inc. (SRK US) under the direction of
SRK US under the direction of
SRK Consulting (
SRK
Wardrop under the direction of
Wardrop under the direction of
Wardrop under the direction of
Resource Development Inc. (RDi) under the direction of
Knight Piésold Ltd. (KP) under the direction of
Rescan Environmental Services Ltd. (Rescan) under the direction of
Avanti Mining Inc. is focused on the development of the past producing Kitsault molybdenum mine located north of
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements: This news release contains certain forward-looking information concerning the business of Avanti Mining Inc. (the "Corporation"). All statements, other than statements of historical fact, included herein including, without limitation; anticipated dates for receipt of permits and approvals, construction and production, and other milestones; anticipated results of drilling programs, feasibility studies and other analyses; estimated timing and amounts of future expenditures, and the Corporation's future production, operating and capital costs, operating or financial performance, are forward-looking statements. These forward-looking statements are based on the opinions of management at the date the statements are made and are based on assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events to differ materially from those projected in forward-looking statements. Important factors that could cause actual results to differ materially from the Corporation's expectations include fluctuations in commodity prices and currency exchange rates; uncertainties relating to interpretation of drill results and the geology, continuity and grade of mineral deposits; uncertainty of estimates of capital and operating costs, recovery rates, production estimates and estimated economic return; the need for cooperation of government agencies and native groups in the exploration and development of properties and the issuance of required permits; the need to obtain additional financing to develop properties and uncertainty as to the availability and terms of future financing; the possibility of delay in exploration or development programs or in construction projects and uncertainty of meeting anticipated program milestones; uncertainty as to timely availability of permits and other governmental approvals; and other risks and uncertainties disclosed in the Corporation's Annual Information Form dated
%SEDAR: 00024083E
For further information: please visit www.avantimining.com, or phone (303) 565-5491 to contact: Craig J. Nelsen, Chief Executive Officer; A J Ali, Chief Financial Officer
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