VAL-D'OR, QC, Jan. 20, 2012 /CNW Telbec/ - Abitex Resources Inc. (TSXV: ABE) (the "Company" "Abitex") is pleased to announce summary results of a Preliminary Economic Assessment ("PEA") completed by InnovExplo Inc. of Val d'Or, Quebec for the Lavoie uranium-gold deposit located in the Otish Mountains region northeast of Chibougamau, Quebec. Abitex has an earn-in Option and JV agreement to acquire a 50% interest in the Lavoie property from AREVA Resources Canada Inc. and SOQUEM Inc. Abitex is the operator during the option period and is solely responsible for all work programs and technical reports, including this PEA.
Base Case Scenario: Uranium price of US$65.00/lb U3O8 and an exchange rate of US$1.00 = C$1.05; all dollar amounts are expressed in Canadian dollars unless otherwise stated.
|Resources amenable to mining @ 0.24% eU3O8 cut-off grade||919,401 tonnes at 0.47% U3O8|
|Total contained metal||9.5 M lbs|
|Mine life (including 1 year exploration and 1 year pre-production periods)||6 years|
|Average daily mine production||700 tpd|
|Average cash operating cost||$332.72/t|
|US$ 30.87/lb U3O8|
|Capital cost (including sustaining capital)||$110.0 million|
|Total gross revenue||$636.0 million|
|Total operating cost||$277.4 million|
|Total project cost||$387.4 million|
|Salvage of equipment||$6.95 million|
|Closure cost estimate||$38.3 million|
|Net cash flow (including salvage and closure cost)||$165.6 million|
|Pre-tax NPV (10% discount )||$88.2 million|
|Pre-tax NPV excluding exploration (10% discount )||$132.2 million|
|Pre-tax IRR excluding exploration||159%|
|Payback period||39 months|
Yves J. Rougerie, President & CEO of Abitex, stated "The results of this PEA confirm the robust nature of the resource at the Lavoie project and its excellent potential return on investment at this early stage of development and evaluation. These results support our view that the Lavoie project is a viable project with very good upside. The PEA recommends that we proceed to pre-feasibility and proposes work programs to this effect. To date, less than 23,000 metres of drilling has been completed on the property, almost all of which is within 200 metres of surface. We believe there is very good potential for resource expansion along strike and significant undiscovered potential at depth which will impact positively on the project going forward."
Abitex Resources Inc. optioned the Lavoie property from AREVA Resources Canada Inc. and SOQUEM Inc. in September 2008. Under the option agreement, Abitex must spend $20M in exploration expenditures and complete a pre-feasibility study before December 31, 2011, along with certain share issuances. The option contract was modified and extended in December, 2011 whereby Abitex must now complete the original conditions before December 31, 2014, including a minimum of $4M in expenditures in 2012. Abitex has spent approx. $8M to date on the project, mainly on definition drilling programs and a NI 43-101 resource estimation completed in February, 2010.
Abitex mandated InnovExplo Inc. of Val d'Or, Quebec in 2011 to complete a Preliminary Economic Assessment for the Lavoie deposit as per CIM standards for technical studies and NI 43-101 standards for technical disclosures. InnovExplo had previously completed an NI 43-101 Mineral Resource Estimate for the Lavoie project in February, 2010. InnovExplo was responsible for all aspects of the PEA except for environmental considerations which were prepared and authored by Golder Associates of Val d'Or, Quebec. Metallurgical tests were completed at SGS Minerals Services of Lakefield, Ontario.
One of the main underlying assumptions to this PEA is that the ore would be sorted on-site, transported and processed off-site on Strateco Resources' Matoush property. There have been no formal discussions between Abitex and Strateco to this effect and there cannot be any certainty that a mill will be built at the Matoush project.
The risks associated with the Lavoie project are higher than for other projects at the same stage because uranium mining in Québec is not yet well established.
- Further metallurgical testing may indicate that recoveries are lower than presently expected;
- The Matoush mill construction may be delayed or may never proceed;
- Ore sorting results may be less than expected;
- The future price of uranium will be an important factor in the development of the deposit;
- There may be important delays in establishing clear legislation for uranium mining in Québec;
- The project is located within the limits of a proposed park;
- Social acceptability is paramount to the project moving forward. Open communications, discussions and negotiations will be required with all stakeholders, in particular with First Nations.
A NI 43-101 compliant technical report, the PEA, will be filed on SEDAR in accordance with securities laws and not later than 45 days from this release.
Financial evaluations of the Deposit were calculated by InnovExplo using a discounted cash flow (DCF) analysis. Parameters used for the evaluation are US$65.00/lb U3O8, an exchange rate of US$1.00 = C$1.05 and a discount rate ("DCF") of 10%. On a 100% equity financing basis, the Base Case analysis shows that the pre-tax Internal Rate of Return ("IRR") is 41.7% and the Net Present Value ("NPV"), at a 10% discount rate, is $88.3 million. The pre-tax undiscounted (Net) cash flow for the project is $165.6 million and the payback of capital is approximately 39 months, including the two year underground exploration and pre-production phases. The Base Case scenario assumes initial capital costs of $110 million to advance the project to commercial production, net of revenues of $51.8 million from production of 760,170 lbs of U3O8 during the exploration and pre-production phases. The average operating costs of life-of-mine ("LOM") is estimated to be $332.72 per tonne of ore mined and milled, which equates to approximately US$30.87 per pound U3O8.
Most projects evaluate deposits after the exploration phase. When this scenario is applied to the Lavoie deposit using the same evaluation parameters, the pre-tax IRR is 162% and the pre-tax NPV is $153 million.
The sensitivity of the project to uranium prices is shown in Table 1.
Table 1. Sensitivity of the Lavoie deposit to Uranium Price
|U308 Price US$||$55.00||$65.00 (Base Case)||$75.00||$90.00|
|Including U/G Exploration||M$ CAD||M$ CAD||M$ CAD||M$ CAD|
|Pre-Tax Net Cash Flow||68||166||263||410|
|Pre-Tax NPV @ 10% DCF||22||88||154||253|
|Pre-Tax IRR %||19%||42%||63%||92%|
|Excluding U/G Exploration||M$ CAD||M$ CAD||M$ CAD||M$ CAD|
|Pre-Tax Net Cash Flow||124||221||318||463|
|Pre-Tax NPV @ 10% DCF||81||153||224||332|
|Pre-Tax IRR %||83%||162%||278%||619%|
A NI 43-101 compliant Mineral Resource Estimate completed by InnovExplo Inc. was released on February 26, 2010. InnovExplo estimated that the deposit contains Indicated Resources of 391,000 tonnes grading 0.45% eU3O8 (3,910,000 lbs eU3O8) and Inferred resources of 749,000 tonnes grading 0.56% eU3O8 (9,260,000 lbs eU3O8).
A Technical Report and Mineral Resource Estimate titled "Technical report on the Lavoie Property and mineral resource estimate on the "L" uranium deposit (Otish area, Quebec)" by Pierre-Luc Richard, geo. and Alain Carrier, geo, independent Qualified Persons in accordance with NI 43-101 was filed on SEDAR on April 16, 2010.
Table 2. Summary of Lavoie Deposit Mineral Resources (InnovExplo, February 26, 2010)
|(x 1,000)||(% eU308)||(x 1,000)|
|1.)||The Qualified People for the Mineral Resource Estimates as defined by National Regulation 43-101 were Pierre-Luc Richard, B.Sc., P.Geo. and Alain Carrier, M.Sc., P.Geo. (InnovExplo Inc.), and the effective date of the estimate is February 26, 2010. National Regulation 43-101 and CIM definitions were followed.|
|2.)||Mineral Resources are not Mineral Reserves having demonstrated economic viability.|
|3.)||Results are presented undiluted and in situ, and some resource blocks may be locked in pillars. The estimate included six (6) zones (Main, Contact, Gab-1, Gab-2, Gab-3 and Gab-4) and covers the Lavoie property. Totals may not sum correctly due to rounding.|
|4.)||The Resources were compiled using a cut-off grade of 0.10% eU3O8*. This cut-off must be re-evaluated in light of the present market conditions: uranium price, exchange rate and mining cost. A fixed density of 2.72 g/cm³ was used in the gabbros and 2.66 g/cm³ in the sedimentary rocks based on the average density measured in respective mineralized lithologies. A minimum width of 1.5m was applied, using the grade of the adjacent material when assayed or value of zero when not assayed or borehole surveyed. Based on statistics, no capping was fixed as the grade distribution respect a log-normal distribution with no significant breaks. Raw assays were composited using 0.50 m drill hole intervals.|
|5.)||No Measured Resources were estimated. Indicated and Inferred Resources were evaluated from drill holes results using a block model approach (inverse distance squared interpolation) with GEMS software. The interpolation was constrained within six (6) individual 3D solids (Main, Contact, Gab-1, Gab-2, Gab-3 and Gab-4 zones).|
|6.)||Composites calculation used laboratory assayed samples results from core and radiometric values from borehole surveys. When both assayed results and borehole results were available, assayed results were prioritized. Out of 2,206 composites, 929 rely on laboratory assayed samples, 956 rely on radiometric borehole surveys and 321 are from unsampled intervals.|
Resources amenable to mining
The estimated potential resources amenable to mining totals 919,401 tonnes grading 0.47% eU3O8. The resources amenable to mining were defined by creating stope geometry in the existing block model at a 0.20% U3O8 cut-off grade. The guideline used in the stope design was a minimal thickness of 1.8 m for subvertical stopes, and contouring of the entire block model in the subhorizontal structure. The subvertical structures were cut at 20-m vertical intervals corresponding to access level elevations. The ratio between the two planned types of stopes is 64% long-hole and 36% room and pillar. The conversion of Mineral Resources to Resources amenable to mining takes into account dilution and losses during mining operations. The Mineral Resources are already diluted to a minimum width of 1.5 metres. For the room and pillar method, mining dilution was estimated at 5%. The long-hole stopes were evaluated at a minimal mining width of 1.8 metres plus 25% mining dilution, resulting in a final stope thickness of 2.25 meters.
The PEA is preliminary in nature in that it includes inferred mineral resources considered too speculative geologically to have economic considerations applied to them that would enable categorization as mineral reserves, and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
A preliminary mine-life schedule was elaborated based on a yearly production rate of 241,500 tonnes (700 tpd). The mine plan starts with a one-year exploration phase during which a ramp will be developed from surface level (750 meters A.S.L.) down to level 676 and the ventilation raise excavated to set the ventilation requirement. The ramp will be developed outside any potentially mineralized structure. A 10,000-tonne bulk sample will be taken to validate the room and pillar and long-hole methods. A one-year pre-production period will be required to put the mine in production. Table 3 presents the proposed mine life schedule.
Table 3. Proposed mine life schedule
|Mineralized||Year 1||Year 2||Year 3||Year 4||Year 5||Year 6||Total|
|Room and Pillar (t)||7,000||66,844||160,425||92,179||326,448 t|
|Long Hole (t)||2,242||37,529||132,622||241,500||109,386||523,279 t|
|Development (t)||778||8,651||43,546||16,699||69,674 t|
|Tonnage (t)||10,020||75,495||241,500||241,500||241,500||109,386||919,401 t|
As mentioned earlier, one of the main underlying assumptions to this PEA is that the ore would be transported and processed off-site at Strateco Resources' Matoush property. The distance separating the Lavoie Project from Matoush is 365 km according to the proposed route. Considering the processing and transportation costs, ore sorting technology is proposed to reduce the amount of material to be transported. It has been assumed, based on the Lavoie deposit rock type and mining dilution that 58% of the mined material subjected to the sorting process would be transported for ore processing. This totals approximately 542,447 tonnes grading 0.80% eU3O8.
SGS Minerals Services of Lakefield, Ontario completed a metallurgical test program for Abitex Resources. Uranium extractions were very high, at 98-99% under typical acidic uranium leach conditions. Leaching kinetics were favorable, with the majority of uranium dissolution occurring in the first 12 hours. No significant impurities were identified that would be detrimental to uranium recovery from solution.
Further study will be required to evaluate the compatibility of the Lavoie material with the proposed Matoush processing plant. Modifications to the plant may be required, in particular for recovery of precious metals, which could affect the capital cost.
Capital and Operating Costs
The total initial capital cost to advance the project to commercial production is $110 million, net of revenue of $51.8 million from production of 760,170 lbs of U3O8 during the exploration and pre-production phases in the first two years. This capital includes construction of offices, a camp and dry complex, an airstrip, a permanent road, surface installations, ore and waste pads, fuel tanks, ore sorting facility, water treatment plant and settling ponds, the ramp portal and underground development, environmental and permitting costs, operating costs, etc.
The average life-of-mine operating cost per tonne of ore mined and milled is estimated at $332.72 which equates to approximately US$30.87 per pound of U3O8. Custom-milling costs are estimated at $128.68 per tonne mined and milled ($170 per tonne milled, i.e. 1.5 times milling cost estimates in Strateco's PEA for the Matoush project of April, 2010).
Preliminary project closure and post-closure costs have been estimated at $38.25 million.
In the PEA, InnovExplo proposes further work on the project, including additional definition drilling in order to increase and upgrade the resources, as well as undertaking the numerous studies (environmental, geotechnical, metallurgical, etc.) required for the pre-feasibility study. Systematic assaying for precious metals is recommended in order to properly assess their content and eventual contribution to the project.
As a result of the positive PEA, Abitex intends to proceed with further evaluation of the Lavoie project. This work will include additional definition drilling within the Deposit area to increase and upgrade the resources to the Indicated category. The definition of additional near-surface high grade resources could lead to a review of the potential to mine the deposit by open pit method.
Completing the earn-in option is the priority for the Company, as the Lavoie project clearly has significant demonstrated potential at this (still) very early stage of development. Deep drilling below the Lavoie Deposit in search of prospective "Matoush-style" mineralization could also lead to significant new discoveries. Additionally, the Company's discovery of quasi-identical mineralized zones at surface on its 100% owned Epsilon property only 10km to the west is a clear indication of the potential for this area to host a stand-alone uranium-gold operation in the central Otish Mtns area. This requires the Company to invest approx. $12M over the next three years to complete the option and acquire a 50% interest. The Company is in discussions with various parties in order to finance these obligations going forward.
The PEA was prepared under the supervision of Sylvie Poirier, Eng. Senior Engineer with InnovExplo Inc. Ms Poirier is an independent Q.P. in accordance with NI 43-101 and has reviewed and approved the contents of this news release.
Mr. Pierre-Luc Richard, Geo, consulting geologist with InnovExplo Inc. and Rodrigue Ouellet, Eng, M.Sc.A, Consulting Engineer with Golder Associates are also independent Qualified Persons in accordance with NI 43-101 and have reviewed and approved the contents of this release pertaining to the sections of the PEA they prepared and authored. A NI-43-101 compliant PEA Technical report is currently being prepared by InnovExplo and will be filed on SEDAR by Abitex within 45 days of this news release.
The information in this release has been prepared, reviewed and approved by Yves Rougerie, Geo, President and CEO of Abitex and Yolande Bisson, Eng, MBA, project manager for Abitex. Mr. Rougerie and Ms Bisson are both Qualified Persons as defined by National Instrument 43-101.
Neither 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.
This press release contains "forward-looking information" which is subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking information.
For further information:
Yves J. Rougerie
President and CEO
Tel: (819) 874-6200