Bear Creek announces positive scoping study and updated resource estimate at Corani deposit; Annual production of up to 22 million ounces silver; High rates of return



    VANCOUVER, Jan. 17 /CNW/ - Bear Creek Mining Corporation (TSX Venture:
BCM) ("Bear Creek" or the "Company") is very pleased to announce the results
of a positive scoping study, incorporating a preliminary economic assessment
(PEA) as defined by NI-43-101 based on the latest resource estimate update for
the Corani silver-lead-zinc deposit located in southern Peru. Highlights of
these studies include:

    
    -   The net present value is $329 million at a 7% discount rate for
        Bear Creek's 70% interest and the internal rate of return for the
        project is 40%.
    -   The scoping study shows that $587 million is the undiscounted after
        tax NPV for the Company's 70% share of the project.
    -   Recovered silver production for the first two years will average
        22 million ounces per year
    -   Cash cost of $2.49 per ounce silver.
    -   Measured and indicated resources have increased 18% to 327 million
        ounces of silver, 27% for lead to 4.0 billion pounds, and 55% for
        zinc to 2.5 billion pounds. Total measured and indicated resource is
        248.4 million tonnes at 40.9 g/t silver, 0.73% lead and 0.37% zinc
        average grades.
    

    The financial model indicates an after-tax internal rate of return (IRR)
of 40% and a net present value (NPV) at a zero percent discount rate for Bear
Creek's 70% interest in the project of $587M based upon metals prices of $12
per ounce silver, and $0.93 and $1.19 per pound of lead and zinc,
respectively. These prices represent a three-year historical rolling average
to the end of November 2007 and two-year future prices weighted 60:40
historical to future. At a 7% discount rate, the NPV for Bear Creek's share is
$329 million.
    Recovered silver production in the first two years is 22.0 million
ounces/year and the project will produce an average of 15.2 million payable
ounces of silver, 123 million pounds of lead and 66 million pounds of zinc
annually over a 12.5 year mine-life. Cash cost per ounce of silver is $2.49,
net of base metals credits. Pre-production capital investment in the project
is estimated to be $428M and total capital expenditures are estimated at $592M
over the 12.5-year life of the mine. Based upon the aforementioned metals
prices, the project achieves payback of capital in less than two years. The
scoping study has been prepared using cost estimates and production forecasts
provided by qualified engineering consulting groups and the economic analysis
was done in conjunction with Bear Creek's financial advisor, Scotia Capital.
    Andrew Swarthout, President and CEO, states, "We are very pleased that
the scoping study demonstrates that Corani has the capacity to become a large,
robust silver and base metals producer. Using current metals prices, Bear
Creek's 70% interest in Corani has an NPV of approximately $614M and a 60% IRR
at a 7% discount rate. The progress made in metallurgical recoveries during
the past six months have given us the confidence to produce a compelling plan
for developing the value of Corani, supported by the work of several of the
preeminent engineering and metallurgical testing firms involved in major
mining project development. Importantly, the study has considered current
capital and operating cost escalations recently affecting mine development.
Corani shows strong financial returns at assumed prices, costs, and operating
assumptions with several upside opportunities which will be examined and
optimized in the upcoming prefeasibility study."
    The new resource estimate on which the PEA is based, updated as of
November 2007 by Independent Mining Consultants (IMC), Tucson, AZ, shows
significant growth of measured and indicated resources. Additionally, the new
model increased the certainty of the resource estimate by converting an
additional 23% of the total tonnes from inferred into measured and indicated
categories. The continued conversion of inferred resource into measured and
indicated categories supports the continuity of the mineralization and
suggests that large, well-established reserves will be possible with very
limited in-fill drilling.

    
              SCOPING STUDY AND PRELIMINARY ECONOMIC ASSESSMENT
    

    The PEA is based upon mining assumptions derived from mine planning
sequences completed by IMC and metallurgical test work performed by SGS
Laboratories, G&T Metallurgical, and Dawson Metallurgical. The mining sequence
primarily derives ore from the higher-grade starter pits (see Resource
Estimate section below) in Years 1-6 and increases production from the global
resource in later years. Mine-life will likely extend well beyond the
12.5 year depending on ongoing metallurgical test work and future silver
prices. All resource categories were used, including inferred resources. Note
that in the mine sequence, only 131.5M tonnes of the 248.4M contained in the
global resource tonnes are mined.

    
    -------------------------------------------------------------------------
             Key Assumptions for the Corani Project - Base Case
    -------------------------------------------------------------------------
                               Item
    -------------------------------------------------------------------------
    Annual ore production - years 1 to end of life (tonnes)       10,500,000
    -------------------------------------------------------------------------
    Overall Process Recovery - Silver                                    80%
    -------------------------------------------------------------------------
    Overall Process Recovery - Lead - Into Lead and Bulk Cons            58%
    -------------------------------------------------------------------------
    Overall Process Recovery - Zinc - Into Zinc and Bulk Cons            61%
    -------------------------------------------------------------------------
    Total Processed Tonnes                                       131,460,000
    -------------------------------------------------------------------------
    Average Silver Grade (g/t)                                      60.6 g/t
    -------------------------------------------------------------------------
    Average Lead Grade (%)                                             0.99%
    -------------------------------------------------------------------------
    Average Zinc Grade (%)                                             0.56%
    -------------------------------------------------------------------------
    Recovered ounces of silver (total)                         204.7 million
    -------------------------------------------------------------------------
    Recovered pounds of lead (total)                            1.66 billion
    -------------------------------------------------------------------------
    Recovered pounds of zinc (total)                             995 million
    -------------------------------------------------------------------------
    Overall stripping ratio                                        1.56 to 1
    -------------------------------------------------------------------------
    Life of mine (mining only) years                                    11.5
    -------------------------------------------------------------------------
    Life of mine (processing) years                                     12.5
    -------------------------------------------------------------------------
    

    Resource prices determined in the resource model of November '07
utilizing three-year backward and two-year forward metals prices weighted
60:40 were maintained for the PEA base case. Using January 14 metals prices,
Bear Creek's 70% interest in Corani has an NPV of $614M and a 60% IRR.
    The scoping study determines that the project has a number of favorable
characteristics:

    
    -   Positive economics with excellent exposure to up-side silver and base
        metals prices
    -   Well-defined resources open to expansion and convertible to reserves
    -   Over 106M oz silver at lower grades in the current resource not
        considered in the current production schedule
    -   Favorable infrastructure; power and access
    -   Available local water supply
    -   Well-defined permitting path
    -   Local population acceptance

    Note: in accordance with NI43-101, mineral resources that are not mineral
reserves do not have demonstrated economic viability. The preliminary
assessment 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, and there is no
certainty that the preliminary assessment will be realized.

                              RE

SOURCE ESTIMATE The scoping study/PEA is based upon an updated resource estimation and mine sequencing performed in Dec '07 by IMC based upon 86,299 meters of drilling in 487 diamond drill holes completed through Nov. '07. Previous resource estimates used a silver cut-off value to establish the lower limit of the resource. The Company now employs a Net Smelter Return (NSR) method to determine the break between ore and waste. For the global resource, metal prices in the assumptions noted below were employed. To determine the final pit limits for the production schedule used in the scoping study, metal prices of $8.50 per ounce for silver, $0.50 per pound for lead and $0.75 per pound for zinc were used. This results in a production plan that generates higher grades and less tonnes than the global resource. Therefore, the sequencing assumptions used in the PEA are felt to be conservative and significant silver, lead, and zinc contained in the global resource represent up-side potential as process recoveries are improved and/or metals prices continue to strengthen. The following assumptions were used in the global resource estimates: - Mining Cost (Ore and Waste) - $1.25 per tonne - Processing Costs - $8.50 per tonne - General and Administration costs $0.85 per process tonne - Silver Recovery: 80% - Lead Recovery 60% - Zinc Recovery 60% - Resource prices - Silver Price $12 per ounce - Lead Price $0.93 per pound - Zinc Price $1.19 per pound - Other parameters including transportation and refining charges were based on IMC's database of equivalent projects. The current resource estimates are: Bear Creek Mining, Corani Project Silver Zone Mineral Resource Based on $9.35/tonne NSR cut-off and Prudent Open Pit Constraints November 16, 2007 ------------------------------------------------------------------------- Contained Metal ------------------------------------------------------------------------- Silver Lead Zinc Silver Lead Zinc Million Million Million Deposit Category Ktonnes Gm/t % % Ozs Lbs Lbs ------------------------------------------------------------------------- Main Measured 10,025 42.3 0.80 0.37 13.6 176.8 81.8 Indicated 64,250 30.0 0.57 0.43 62.0 807.4 609.1 --------- ------- ---- ---- ---- ----- ------- ------- Meas+Ind 74,275 31.7 0.60 0.42 75.6 984.2 690.9 Inferred 11,928 33.1 0.57 0.36 12.7 149.9 94.7 ------------------------------------------------------------------------- Minas Measured 6,168 53.4 1.05 0.44 10.6 142.8 59.8 Indicated 106,970 38.2 0.75 0.38 131.4 1,768.7 896.1 --------- ------- ---- ---- ---- ----- ------- ------- Meas+Ind 113,138 39.0 0.77 0.38 142.0 1,911.5 955.9 Inferred 19,698 32.5 0.54 0.39 20.6 234.5 169.4 ------------------------------------------------------------------------- Este Measured 20,523 63.3 0.91 0.69 41.8 411.7 312.2 Indicated 40,485 52.0 0.75 0.57 67.7 669.4 508.7 --------- ------- ---- ---- ---- ----- ------- ------- Meas+Ind 61,008 55.8 0.80 0.61 109.5 1,081.1 820.9 Inferred 1,526 30.4 0.41 0.21 1.5 13.8 7.1 ------------------------------------------------------------------------- Total Measured 36,716 55.9 0.90 0.56 66.0 731.3 453.8 All Indicated 211,705 38.4 0.70 0.43 261.1 3,245.5 2,013.9 Deposits --------- ------- ---- ---- ---- ----- ------- ------- Meas+Ind 248,421 40.9 0.73 0.45 327.1 3,976.8 2,467.7 Inferred 33,152 32.6 0.54 0.37 34.8 398.2 271.2 ------------------------------------------------------------------------- Higher-grade cores - Similarly to previous resource estimates, the Corani resource continues to have minable high grade cores. In the current resource estimate 54% of the silver, 49% of the lead and 38% of the zinc contained within the measured and indicated categories are found in the high grade core that represents 29% of the measured and indicated tonnes. Importantly, 98% of the higher-grade resource silver ounces are contained in measured and indicated resources. Bear Creek Mining, Corani Project Silver Zone High Grade Core Contained in Smaller Open Pit Shapes NSR Cut-off grade $19.60/tonne 16 November 2007 ------------------------------------------------------------------------- Contained Metal ------------------------------------------------------------------------- Silver Lead Zinc Silver Lead Zinc Million Million Million Deposit Category Ktonnes Gm/t % % Ozs Lbs Lbs ------------------------------------------------------------------------- Main Measured 3,877 77.9 1.34 0.26 9.7 114.5 22.2 Indicated 11,389 67.0 1.03 0.38 24.5 258.6 95.4 --------- ------- ---- ---- ---- ----- ------- ------- Meas+Ind 15,266 69.8 1.11 0.35 34.2 373.1 117.6 Inferred 1,071 65.1 0.79 0.50 2.2 18.7 11.8 ------------------------------------------------------------------------- Minas Measured 3,027 77.5 1.53 0.50 7.5 102.1 33.4 Indicated 26,642 66.1 1.34 0.41 56.6 787.1 240.8 --------- ------- ---- ---- ---- ----- ------- ------- Meas+Ind 29,669 67.3 1.36 0.42 64.1 889.2 274.2 Inferred 795 63.5 0.97 0.35 1.6 17.0 6.1 ------------------------------------------------------------------------- Este Measured 11,122 93.8 1.23 0.97 33.5 301.6 237.8 Indicated 16,057 88.5 1.14 0.85 45.7 403.6 300.9 --------- ------- ---- ---- ---- ----- ------- ------- Meas+Ind 27,179 90.7 1.18 0.90 79.2 705.2 538.7 Inferred 39 66.6 0.60 0.24 0.1 0.5 0.2 ------------------------------------------------------------------------- Total Measured 18,026 87.6 1.30 0.74 50.7 518.2 293.4 All Indicated 54,088 72.9 1.22 0.53 126.8 1,449.3 637.1 Deposits --------- ------- ---- ---- ---- ----- ------- ------- Meas+Ind 72,114 76.6 1.24 0.59 177.5 1,967.5 930.5 Inferred 1,905 64.5 0.86 0.43 3.9 36.2 18.1 ------------------------------------------------------------------------- Higher-grade zinc cores - the higher-grade zinc occurs in discrete pods. The current resource estimate shows that in the measured and indicated categories 43% of the zinc occurs in 10% of the tonnes. The zinc extraction has been designed in the mine sequencing in order to optimize zinc recoveries from the higher-grade pods where recoveries are markedly greater. Bear Creek Mining, Corani Project High Grade Zinc Areas at 1% Zinc cut-off of Global Resource 16 November 2007 -------------------------------------------------- Zn Pb Ag Contained Ktonnes % % gm/t M Lbs Zn -------------------------------------------------- Measured 5,800 2.19 1.42 81.2 280.0 -------------------------------------------------- Indicated 19,709 1.79 0.99 45.5 777.8 -------------------------------------------------- Total M&I 25,509 1.88 1.09 53.6 1,057.8 -------------------------------------------------- -------------------------------------------------- Inferred 2,994 1.61 0.52 24.8 106.3 -------------------------------------------------- The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release. Regulatory footnotes: All of Bear Creek's exploration programs and pertinent disclosure of a technical or scientific nature are prepared by or prepared under the direct supervision of David Volkert, P.Geo., Bear Creek's Vice President of Exploration and/or Marc Leduc, P. Eng., Vice President of Technical Services and the President and CEO, Andrew Swarthout, P.Geo., who serve as the Qualified Persons under the definitions of NI 43-101. The block model estimate was prepared by Independent Mining Consultants of Tucson Arizona. John Marek P.E. acted as the independent qualified person as defined by Canada's National Instrument 43-101. Additionally the methods used in determining and reporting the resources are consistent with the CIM Best Practices Guidelines for the estimation of mineral resources and mineral reserves. The method used in the resource calculation is equivalent to the method used in the resource calculation shown in our August 23, 2006 Press Release. For this resource estimate we have used metal prices based on a 3-year backward average and a 2-year forward price based on the current metal markets, assumptions used in the resource model by IMC. Actual results will vary based upon completion of metallurgical testing: Silver Price = $12.00/oz; Zinc Price = $1.19/lb; Lead Price = $0.93/lb; Silver Recovery = 80%; Zinc Recovery = 60%; Lead Recovery = 60%; Smelter charges: Silver = $0.35 per ounce; Zinc = $0.1989 per pound; Lead = $0.178 per pound; Mining Costs per tonne = $1.25; Process cost per tonne = $8.50; G&A per processed tonne = $0.85; Pit Slopes = 42 degrees in mineralized tuff and 50 degrees in post-mineralized tuff. High grade cores defined in a floating cone using $5.90/oz Ag, $0.46/lb. Pb and $0.59/lb. Zn; all other variables were consistent with the global resource calculation. All diamond drilling has been performed using HQ diameter core with recoveries averaging greater than 95%. Core is logged and split on site under the supervision of Bear Creek geologists. Sampling is done on two-meter intervals and samples are transported by Company staff to Juliaca, Peru for direct shipping to ALS Chemex, Laboratories in Lima, Peru. ALS Chemex is an ISO 9001:2000-registered laboratory and is preparing for ISO 17025 certification. Silver, lead, and zinc assays utilize a multi-acid digestion with atomic absorption ("ore-grade assay method"). The QC/QA program includes the insertion every 20th sample of known standards prepared by SGS Laboratories, Lima. A section in Bear Creek's website is dedicated to sampling, assay and quality control procedures. Certain disclosure in this release, including management's assessment of Bear Creek's plans and projects, constitutes forward-looking statements that are subject to numerous risks, uncertainties and other factors relating to Bear Creek's operation as a mineral exploration company that may cause future results to differ materially from those expressed or implied in such forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements. Bear Creek expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

For further information:

For further information: Andrew Swarthout - President and CEO, or
Patrick De Witt - Investor Relations, Phone: (604) 685-6269, Direct: (604)
628-1111, E-mail: info@bearcreekmining.com; For further information, please
visit the Company's website (www.bearcreekmining.com)


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890