Luna Gold announces results of the Feasibility Study for its Aurizona gold project, Brazil

    VANCOUVER, July 7 /CNW/ - Luna Gold Corp. (TSXV-LGC) ("Luna" or the
"Company") is pleased to release the results of its Feasibility Study ("FS")
for its wholly owned, fully permitted Aurizona gold project, in Maranhao
State, Brazil. The study was completed by Luna's Brazilian subsidiary and its
Brazilian consultants. SRK Consulting ("SRK") of Lakewood, Colorado has
reviewed and contributed to the work of Luna and its consultants and drafted
the NI 43-101 Technical Report. The report has been filed and is available on
SEDAR. All gold reserves come from the Piaba deposit.

    Highlights of the Report

    -   0.5 million ounces of Proven and Probable gold reserves

    -   Life Of Mine ("LOM") is 7.5 years

    -   LOM production is 469,000 ounces gold (average production of
        approximately 60,000 oz/year)
        -  1.7 million tonnes of Inferred material at a grade of 1.12 g/t Au
           occurs within the pit and is reported as waste.

    -   Initial Capex of USD 47.5 million (including a USD 4 million
        contingency and USD 7 million owners costs)

    -   LOM cash operating costs of USD 422/ounce (USD 371/ounce over the
        first three years)

    -   NPV(5%) USD 75 million, IRR 46% (pre-tax basis, Base Case scenario
        with LOM average gold price of USD 780/oz and BRL of 1.8)
        -  NPV(5%) USD 155 million, IRR 69% (pre-tax basis, at LOM average
           gold price of USD 1,000/oz and BRL of 1.8 - this scenario is not
           part of the SRK report and SRK is not forecasting a USD 1000/oz
           gold price)

    Table 1. - Aurizona 43-101 Reserve Estimate (3 June 2008)

                         Proven                   Probable             P&P
               tonnes     Au              tonnes     Au
                (kt)     (g/t)     oz      (kt)     (g/t)     oz       oz
    Piaba       1,156    1.48    55,000   10,177    1.36    445,000  500,000

    Reserve Estimate Assumptions
    1)  Full miming recovery is assumed
    2)  Internal cut of grades of 0.45 g/t, 0.49g/t, and 0.60 g/t were used
        for Saprolite, Transition, and Fresh Rock respectively
    3)  Internal cut of grades include metallurgical recoveries of 95%, 93%,
        and 91% in Saprolite, Transition, and Fresh Rock respectively
    4)  Insitu ounces do not include metallurgical recovery losses
    5)  Saprolite is defined as highly weathered rock, Transition is defined
        as moderately weathered rock, and Fresh Rock is unweathered
    6)  the estimate is based off of a gold price of USD 650/oz
    7)  The ounces have been rounded to the nearest thousand
    8)  for further details on the resource estimate assumptions, please see
        the press release dated 20 May 2008

    Luna's CEO, Tim Searcy, comments, "The Company is very pleased with these
results. The FS provides an excellent view on the economic viability of mining
saprolite and fresh rock at Aurizona, but it does not reveal Aurizona's full
potential. Luna began work on this FS well before initiating its infill and
exploration drill program. As a result, the economic evaluation has focused
largely on the weathered resources defined by historic drilling. The success
Luna's exploration program is having in expanding the resource, especially in
the fresh rock, has not significantly impacted this economic analysis because
most of the added ounces are still Inferred, and Inferred material is treated
as waste under NI 43-101. Luna continues its fresh rock drilling at Piaba and
Tatajuba and intends to drill test other satellite deposits at Aurizona later
in the year. The Company is confident that these efforts will continue to
expand the resource at Aurizona and extend the LOM (please see"

    Capex and Opex

    LOM operating estimates are: a strip ratio of 2.64, mining costs of
USD 7.72/ore tonne, processing costs of USD 6.84/ore tonne, G&A of
USD 1.89/ore tonne, and an average recovery of 94% for a cash operating cost
of USD 422/oz.
    The recovery process is a standard grind, gravity, and CIL. The
processing rate was modeled at 1.5 mtpa; however, the nameplate capacity on
the mills is 1.8 mtpa. This provides the opportunity for a 20% increase in
production. Luna has already secured its grinding mills (please see the press
release dated 21 February 2008), and expects to have them on site by Q4, this
    Initial Capex, including contingency and owners cost, is estimated at
USD 47.5 million with USD 2.4 million for mining, USD 28.4 million for plant
and construction costs, USD 3.4 million for infrastructure, and
USD 6.3 million for the first three years of tailings containment. (A mining
contractor will be engaged to perform mining operations.) In addition, owners
cost during the construction and start-up period are estimated at
USD 7.0 million. More than 99% of the surface rights over the Piaba pit,
process plant, waste dump, and tailings storage facility have been acquired;
the process for securing the outstanding interests has been initiated.
    Luna's COO, Jim Bahan, states "The FS is a useful snapshot of the
potential at Piaba based on current operating cost estimates, plant
throughputs, and gold reserves. We will continue drilling to better define and
increase the overall reserves and resources at Piaba, and its satellite
deposits. Our strategic objective is to treat the higher grade ores in the CIL
plant and the lower grade ores by heap leaching, in order to substantially
boost overall gold output. In the meanwhile, Luna will focus on the surface
oxide resources that should provide a solid cash base for the company's growth
    Of the USD 3.4 million infrastructure component of capex, USD 2.2 million
is for the 41 km installation of a 69 kV powerline, which will be dedicated to
the Aurizona project. The overall capex also includes cost estimates for
diesel generator back-ups.

    Economic Model

    The economic analysis, at an average LOM gold price of USD 780/oz, BRL of
1.8, and a discount rate of 5%, returns an NPV of USD 75.3 million and an IRR
of 46%. This economic analysis includes only proven and probable reserves; it
treats inferred mineralization as waste. The FS pit includes 1.7 million
tonnes of Inferred resources with a grade of 1.12 g/t, for approximately
60,000 oz. Inferred Mineral Resources are considered too speculative
geologically to have the economic considerations applied to them that would
enable them to be categorized as Mineral Reserves. However, this Inferred
material represents an opportunity to improve the economics of the mine, if it
can be converted into reserves it could extend the mine life by one year and
reduce cash costs.

    Fiscal Incentives

    The Aurizona project area is located in a Federal development area known
as the SUDENE (Superintendência de Desenvolvimento do Nordeste). Gold mining
activities are listed as a priority industry for regional development by
SUDENE, as such the Project can reasonably expect to benefit from a number of
Federal and State fiscal incentives, including a reduction of 75% of the
Corporate Income Tax rate for a period of 10 years. This would bring down the
Corporate Income Tax rate to 6.25% from 25%. The Project remains subject to
the Social Contribution Tax of 9%.


    Luna's Exploration Manager, Titus Haggan states "Geologic
reinterpretation of the deposit and limited drilling have provided very
positive results to date. Drilling at Aurizona is ongoing, focusing on depth
expansion at Piaba and strike and depth expansion at Tatajuba. In addition,
Luna has yet to test a number of the other satellite deposits that occur in
the immediate vicinity of Piaba and Tatajuba within the area defined as
Aurizona Main. In the coming months, a second drill rig will be added to the
project to begin the testing of these targets." (please see


    The Aurizona project received its operating license on 11 July 2007
(please see the Luna press release dated 16 July 2007). The license permits
Luna's wholly owned subsidiary, Mineraçao Aurizona SA (Aurizona) to initiate
the mining and processing of gold. The permit is valid until 11 December 2009,
and is renewable every two years.

    Social Issues

    The village of Aurizona has approximately 1,500 inhabitants and
400 homes. The common means of survival has been gold mining, initially in
pits, but now, more commonly, in the shallow subsurface using metal detectors.
There has always been subsistence farming, combined with hunting of small game
and fishing.
    The community will benefit from improved infrastructure: better roads,
new water wells, and use of the 69 kV powerline after the mine closure or
after the project upgrades to a higher voltage line. Beyond infrastructure,
the community will benefit primarily from the creation of local jobs and a
much greater purchasing power within the community, which should have a
positive impact on local businesses.
    Luna has already provided the community with access to the project's
medical clinic which is staffed with a doctor and nurse. The mine will
commence an apprentice program whereby interested parties can obtain work
experience and skills training. Evening classes will be held to improve basic
education, particularly in the areas of domestic economics, health, and

    About Luna Gold Corp

    Luna is a mining exploration company focused on the acquisition,
exploration, and development of gold resources and advanced stage gold
exploration projects in northeastern Brazil.

    On behalf of the Board of Directors


    Tim Searcy, P. Geo. - President and CEO


    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this press release.

    Regulatory Footnotes

    Exploration on the Aurizona Project was initiated in 1978 by Brascan
Recursos Naturais S.A. (Brascan) and continued through the 1990's with work by
Brascan, Unamgen Mineraçao e Metalurgia S.A. (Unamgen) an exploration
subsidiary of Gencor Ltd. and Eldorado Gold Corp. (Eldorado). Luna acquired
the property in 2007 and commenced exploration soon after. Historic drill core
(HQ (63.5mm) diameter) analyses by previous operators Unamgen and Eldorado
were conducted at Nomos Laboratory in Rio de Janeiro and Bondar Clegg
Laboratory in Luziania, Goias respectively. Unamgen and Eldorado conducted
laboratory QA/QC programs and retained all original assay certificates. Luna
used Acme Laboratories Ltda in Maraba, Brazil and Vancouver, Canada. Luna's
QA/QC program consists of blanks, Certified Reference Materials (CRM), pulp
check assays at ALS Chemex in Belo Horizonte, Minas Gerais and coarse reject
check assays at Acme and at ALS Chemex. The Piaba reserve estimate contains
drill data produced up to 01/12/2007.
    The Feasibility Study was compiled by SRK Consulting of Lakewood, CO, an
internationally recognized independent consulting engineering company.
Peter Clarke, Registered Professional Engineer (British Columbia, No. 13,473),
is SRK's Qualified Person for the National Instrument 43-101 technical report
(Reserve Statement and scientific and technical work on which this release is
based), and has reviewed the technical information disclosed in this press
release. Mr. Clarke and SRK are independent of the company as defined under
NI 43-101.

    This news release does not constitute an offer to sell or a solicitation
of an offer to sell any of the securities in the United States. The securities
have not been and will not be registered under the United States Securities
Act of 1933, as amended or any state securities laws and may not be offered or
sold within the United States or to U.S. persons unless registered under the
United States Securities Act of 1933 and applicable state securities laws or
an exemption from such registration is available.

    Forward-Looking Statements

    Statements in this release that are forward-looking statements are
subject to various risks and uncertainties concerning the specific factors
identified in Luna Gold Corp.'s periodic filings with Canadian Securities
Regulators. Such forward-looking information represents management's best
judgment based on information currently available. No forward-looking
statement can be guaranteed and actual future results may vary materially.
Luna Gold does not assume the obligation to update any forward-looking
statement unless otherwise required by law.

For further information:

For further information: Investor Relations at (604) 689-7317 or toll
free at 1-866-689-7317

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