Avanti Mining receives positive prefeasibility study confirming robust
economics for restart of Kitsault mine


VANCOUVER, Nov. 16 /CNW/ - Avanti Mining Inc. (TSX-V:AVT) ("Avanti") is pleased to release the results of the NI 43-101 Preliminary Feasibility Study ("PFS") prepared by Wardrop, a Tetra Tech Company ("Wardrop") on its 100% owned Kitsault Molybdenum property in British Columbia, Canada. The complete report will be filed on SEDAR and Avanti's web site, www.avantimining.com, within 45 days of the issue of this press release. All figures in US dollars and were derived assuming 100% equity funding excluding the benefits and cost of potential debt financing.

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
    -   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"

"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 $4.43 per pound and the increase in the capex primarily due to on-site engineering of the tailing management facility and water diversion civil works. The discounted net present value of the project represents value of over $2.25 per issued share of Avanti. We plan to immediately embark on marketing and project financing efforts in parallel with initiating the Project's bankable feasibility study and continue mine permitting activities."

    Project Description

The Kitsault property is located about 140 km north of Prince Rupert, British Columbia, and south of the head of Alice Arm, an inlet of the Pacific Ocean. The property includes three known molybdenum deposits, Kitsault, Bell Moly, and Roundy Creek. The Kitsault mine was a producer of molybdenum between 1967 and 1972 and from 1981 to 1982 with total production on the property during both periods being approximately 30 million pounds of molybdenum.

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 Jeffrey Volk, P.Geo, an independent Qualified Person (QP), as this term is defined in NI 43-101. The effective date of this resource estimate is March 31, 2009 and the results were previously released on April 6, 2009. The mineral resource statement for the Kitsault molybdenum project is presented in Table 1 below:

    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 Mr. Miloje Vicentijevic (P.Eng.) of Wardrop, a QP as defined in NI 43-101. These reserves are sufficient for close to 15 years of operation at an annual production rate of 40,000 t/d. Mineral Reserves are summarized by class in Table 3. The notes accompanying Table 3 are an integral part of the Mineral Reserves and should be read in conjunction with the Mineral Reserve statement.

    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
    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 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
    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


The proposed concentrator in the PFS is based on an annual resource throughput rate of 14.6 Mt, or 40,000 tpd at 92% plant availability, for the production of a molybdenum concentrate. The processing plant is expected to operate 24 hours/day, 365 days/year. Over the life of mine, the processing plant will produce an estimated 314,700 t of molybdenite concentrate grading 52% Mo. The molybdenum recovery is estimated at 90.6%, consistent with previous production on the property.

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
    -   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 $641 million, which includes $48 million for mobile mining equipment. Preproduction stripping costs of $15 million are reflected in the initial operating costs. Life of Mine sustaining mine capital was estimated to be $435 million, which is comprised mainly of mobile equipment and TMF embankment ongoing construction. All capital costs are (+/-30%) in the PFS estimate.

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
    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 $3.57/t milled (+/-25% accuracy). General and administrative costs have been estimated at $0.55/t milled. Mine Closure costs have been estimated as $0.28/t ore milled. The Life of Mine unit cash operating costs are also summarized in Table 6 below:

    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
      Discount Rate                                                        8%
      Base Case LOM average molybdenum price                       $15.88/lb
      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 $15.88/lb for revenue purposes.

The after-tax NPV at an 8% discount rate over the estimated mine life is $551 million. The after-tax IRR is 20.6%. Payback of the initial capital investment is estimated to occur during the fourth production year.


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, Canada was prepared by industry consultants, all of whom are independent of Avanti Mining Inc. and are QP's under National Instrument 43-101. The QP's have reviewed and approved this news release. The consultants (QP's) with their responsibilities are as follows:

SRK Consulting (U.S.) Inc. (SRK US) under the direction of Mr. Jeffrey Volk (P.Geo.) for all matters relating to the mineral resource estimate.

SRK US under the direction of Mr. Michael Levy (P.E., P.G.) for matters relating to the pit slopes.

SRK Consulting (Canada) Inc. (SRK Canada) under the direction of Mr. Peter Healey (P.Eng) for matters and costs relating to mine closure and reclamation.

SRK Canada under the direction of Mr. Stephen Day (P.Geo.) for matters relating to metal leaching and acid rock drainage.

Wardrop under the direction of Mr. Miloje Vicentijevic (P.Eng.) for matters and costs relating to mineral reserve statements, mining, mining capital, mine operating costs, and financial analysis.

Wardrop under the direction of Mr. Andre de Ruijter (P.Eng.) for matters relating to the metallurgical testing review, mineral processing, and process operating costs.

Wardrop under the direction of Mr. Frank Grills (P.Eng.) for matters relating to the overall report coordination, process capital cost estimate and associated infrastructure.

Resource Development Inc. (RDi) under the direction of Mr. Deepak Malhotra (P.Eng.) for matters relating to metallurgical testing in 2009.

Knight Piésold Ltd. (KP) under the direction of Mr. Ken Brouwer (P.Eng.) for matters and costs relating to plant site geotechnical conditions, surface water diversions (including the diversion tunnel), tailing embankments, tailing access roads, tailing/reclaim pipeworks, and the run-of-river hydroelectric power plant.

Rescan Environmental Services Ltd. (Rescan) under the direction of Mr. Rolf Schmitt (P.Geo.) for matters and costs relating to environmental assessment, which involved qualified professionals conducting investigations on the property from October 2008 through November of 2009.

Avanti Mining Inc. is focused on the development of the past producing Kitsault molybdenum mine located north of Prince Rupert in British Columbia.

    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 July 2, 2009, which is available at www. Sedar.com. The Corporation is under no obligation to update forward-looking statements if circumstances or management's opinions should change, except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.

%SEDAR: 00024083E


For further information: 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

Organization Profile


More on this organization

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