|July 19, 2012|
Treasury Metals Receives Updated Preliminary Economic Assessment
+2.8 g/tonne Au Eq. Open Pit at Goliath Gold Project, Ontario
TORONTO, July 19, 2012 /CNW/ - Treasury Metals Inc. ("Treasury Metals" or the "Company") is pleased to announce the results of a National Instrument 43-101 Preliminary Economic Assessment ("PEA" or the "Study") on its 100% owned Goliath Gold Project ("Goliath Gold" or the "Project") located about 20 kilometres east of the City of Dryden, Ontario. The PEA was compiled by the Company's engineering team and by independent consultant A.C.A. Howe International Limited ("A.C.A. Howe"). The PEA is an update to the July 2010 PEA and it incorporates the most recent resource report.
The results demonstrate low initial capital requirements with underground ("UG") development expenditures being funded by cash flow from open pit operations during the initial three years. The PEA is based on 51% of the gold ounces outlined in the NI 43-101 Mineral Resource Estimate released on November 9th, 2011. The 2011 Mineral Resource Estimate is re-summarized in this release and the technical report is available on the Company's website.
HIGHLIGHTS OF THE ECONOMIC ASSESSMENT INCLUDE:
"The PEA has confirmed management's targets for the Project. On a very conservative basis we have defined a profitable open pit mine allowing for rapid recovery of all of the initial capital costs while generating good margins and free cash flow for development of the underground operation," said Martin Walter, President and Chief Executive Officer of Treasury Metals.
"The Project has good grade and is located right here in Ontario surrounded by world-class infrastructure; this all makes for good business sense" he noted. "We also have significant exploration potential to increase the project's gold inventory both at depth, along strike and within other areas across the 49 km2 land package that the Company controls. Additional exploration successes can further enhance project economics and extend the current ten year mine life. We look forward to continued development of our mining project in the Dryden area."
The Goliath Gold Project, located in northwestern Ontario, lies 125 kilometres east of the City of Kenora, 20 kilometres east of the city of the Dryden and 325 kilometres northwest of the port city of Thunder Bay. The total area of the Project is 49 km2 and is held 100% by the Company.
The main zones of mineralization of the Goliath Gold Deposit consist of the Main Zone, Footwall Zones and Hangingwall Zones. Mineralized zones strike approximately east-west and dip 70-80 degrees to the south-southeast. The focus of exploration activities on the main area of the mineralization thus far has been concentrated on the current defined resource area, which extends to a depth of approximately 600 m below the surface, over a strike-length of approximately 2,300 m.
The staged mining operation would have a five-year open pit that will feed 2,500 tpd (875,000 tpa) to the carbon-in-leach (C.I.L.) process plant. Mining would feed a life of mine average head grade of 3.05 g/tonne (Au Eq) to the plant. With up to 70% recovery rates by gravity, a greater than 95% total gold recovery would be achieved by low leach times, both of which may reduce capital costs and lower operating costs.
Goliath Gold Project Base Case Metrics and Financial Model
The following table presents a list of the Project parameters and assumptions derived from the PEA and financial model. All amounts are in Canadian Dollars except the realized gold and silver price, which is quoted in US dollars. All grade and oz. values are quoted as gold equivalent ounces, with 1 oz Au = 50.9 oz Ag, calculated by base case metal prices as listed in the following table.
A.C.A. Howe concludes that under base case assumptions of 2,500 tpd production and US$1,375 per ounce gold, and assuming 100% equity financing, the Project has potential economic viability with a pre-tax Internal Rate of Return ("IRR") of 39.3%, a 5% discounted Net Present Value ("NPV") of $199.0 million and an estimated payback period of 2.2 years. The following table summarizes the base case compared to near spot metal process of US$1599 per ounce of gold:
*The 10% Ontario Mining Tax is only included in the pre-tax calculations.
Cautionary statement required by NI 43-101
Proposed Mining Plan
The staged approach to mining would begin by the extraction of an open pit with three distinct pit bottoms with an average undiluted grade of 2.80 g/tonne (Au Eq). By selectively mining higher grade material, a consistent head grade of 3.3 g/tonne (Au Eq) can be fed to the mill throughout the 5 year open pit mine life while the remainder of ore above the 0.45 g/tonne (Au Eq) cut-off would be stored in a 1.8 million tonne low-grade stockpile. Excavating the distinct pits in sequence will also allow for the backfilling of completed pits as mining progresses.
A portal would be established outside of the pit limits and UG development would commence year one, being wholly completed using incoming cash flows. Production from the longhole open stoping operations would begin in year three, and would benefit from the construction of a backfill plant which would allow higher mining recoveries and lower dilution rates. UG material would continue to be blended with the low-grade stock until the stockpile's eventual exhaustion in year 10, at which point the UG operations would continue until the end of mine life.
Metallurgy and Processing
Plant operations would use a jaw crusher and associated SAG and Ball mills to process 2,500 tpd of mill feed that would report to a gravity circuit followed by a C.I.L. process. All metallurgical testing to date - which includes Teck Resources previous 2,375 tonne bulk sample and the most recent 420 kg representative sample - has shown extremely positive results for this proposed circuit. Recoveries are indicated to be greater than 95% with up to 70% coming from gravity and very low leach times of 8-12 hours.
The Company has an ongoing extension and infill drilling program designed to augment the 2011 Resource Estimate that was completed in November 2011. The program has focused on pursuing strike extensions of previously identified mineralization as well as following potential new ore shoots down dip. Most recently the program has concentrated on delineating the C-Zone mineralization, now largely in the inferred category, both within and to the east of the proposed open pit boundary. Initial results were demonstrated in the Company's 1st Phase of the 2012 exploration program (see press release dated July 9, 2012) where modest grade, but substantial widths, were identified in the C-Zone.
There is also potential for additional open pit resources towards the west where several hundred meters of Hanging Wall and Main Zone mineralization have largely been tested only on a wide-spaced drilling pattern to date.
Though this was not the focus of the present PEA, there is also the potential to expand the UG exploitable resources of the Goliath Gold deposit by means of eventual deep drilling, or by an exploration program carried out from UG drill stations.
The Company also has an active exploration program to test additional targets projected along over 11 km of strike extension, principally to the northeast and east of the Goliath Gold deposit, in its 49 km2 property block. Significant gold values intercepted in previous drilling campaigns, as well as re-interpreted airborne EM and aeromag geophysics, are being used to guide the present drilling program. The objective of this program is to locate satellite open-pitable mineralization along strike from the main resource, or in the best case, to locate a significant new ore deposit.
Environmental, permitting, local community and development activities
A number of exploration and development programs are running simultaneously to the PEA and the further advancement of the Goliath Gold Project. These include:
2011 Mineral Resource Estimate
The 2011 Resource Estimate, which uses a combination of historical and current drilling results, includes 134 additional holes up to drill hole TL11-228 - that was completed in November 2011 - primarily consisting of in-fill drilling in late 2010 and throughout 2011. The 2011 Resource Estimate was completed by Howe.
Resources were defined using a block cut-off grade of 0.3 g/tonne Au for surface resources (150 metres deep) and 1.5 g/tonne Au for underground resources (>150 metres deep). Surface plus underground Indicated Resources total 9.14 million tonnes with an average grade of 2.6 g/tonne Au and 10.4 g/tonne Ag for 760,000 ounces gold and 3,070,000 ounces silver for a total of 810,000 gold equivalent ounces. Surface plus underground Inferred Resources total 15.9 million tonnes with an average grade of 1.7 g/tonne Au and 3.9 g/tonne Ag for 870,000 ounces gold and 1,990,000 ounces silver for a total of 900,000 gold equivalent ounces. The Main Zone and C Zone contained the majority of resources from both categories and are the primary targets for underground mining. A summary of mineral resources by resource category is as follows:
Mineral Resource Estimate Parameters and Assumptions:
This release includes certain statements that may be deemed to be "forward-looking statements". All statements in this release, other than statements of historical facts, that address events or developments that management of the Company expect, are forward-looking statements. Actual results or developments may differ materially from those in forward-looking statements. Treasury Metals disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, save and except as may be required by applicable securities laws.
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