Metanor Resources Inc.: Bachelor Lake Gold Project's Pre-Feasibility Study Confirms Profitability With an 85% IRR
VAL-D'OR, QUEBEC, CANADA -- (Marketwire) -- 01/04/11 -- Metanor Resources Inc. ('Metanor') (TSX VENTURE: MTO) is pleased to announce very positive results from the Pre-Feasibility Study on its 100% owned Bachelor Lake Gold Project, located near Desmaraisville, Quebec, Canada. The Pre-Feasibility Study was completed in collaboration between Metanor's technical team, and a number of independent consultants including Stantec (TSX: STN, NYSE: STN) for the mining and economics of the project.
The Pre-Feasibility Study confirms a pre-tax IRR of 85% and generates over $96M of free cash flow from the underground production of 200,000 oz over an initial 3 year mine life with an average annual production targeted at 60,000 ounces of gold per year.
HIGHLIGHTS OF THE PRE-FEASIBILITY STUDY (All Funds are in CDN dollars)
-- Using the 2005 Technical Report issued by Innov-Explo, containing
Measured and Indicated Resources of 841,591 tonnes grading 7.79
g/t(grams per tonne) representing 210,857 ounces gold using a 3.43 g/t
cut-off grade, (Table 3).
-- Proven and Probable reserves were determined, using a cut-off grade of
3.43 g/t to be 843,772 tonnes at 7.38 g/t Au for 200,177 oz Au (Table
4).
-- The net present value discounted at 5% is $ 76.3 M with an IRR at 85%,
and a payback period of only10 months.
-- The Pre-Feasibility Study estimates total pre-production capital
expenditures of $35.4M.
-- Total operating costs are planned at $ 464 per ounce of gold during the
production phase.
-- Project schedule to achieve full commercial production by Q3 2012 is as
follows:
-- Deepen the shaft another 536 ft. in Q1-Q2 2011.
-- Develop two complete new operating levels and infrastructure in Q3-
Q4 2011,
-- Complete a 5,000 tonne bulk sample in Q4 2011,
-- Ramp up production in Q1-Q2 2012.
-- Achieve full commercial production in Q3 2012 averaging 5,000 oz per
month.
BACHELOR LAKE GOLD PROJECT PRE-FEASIBILITY RESULTS
The Bachelor Lake Gold Project will provide a robust economic return using a proven low cost long hole mining method, an existing fully functional operating mill and surface infrastructure.
In an effort to continually extend the life of mine, the company will be investing $ 1.4 M in definition drilling to augment the mineable reserve, and increase the known measured and indicated resources. In the coming months, in parallel with the completion of the 5,000 tonne bulk sample, the company will then proceed with the required Feasibility Study scheduled to be released once the bulk sample is completed.
The Pre-Feasibility Study outlines an average annual production of 60,000 ounces. The total revenue is projected to be $ 215M.
The total unit operating costs are projected to be $103.45 per tonne. The operating costs have been developed from first principle to determine the underground mining cost. Actual operating activities presently being incurred were used to determine the processing, maintenance, and administration costs.
The pre-production capital estimate is $35.4M, and sustaining capital of $3M for a total of $38.4M including a $2.7M in restoration costs.
Table 1 and 2 below summarizes the project economics and associated parameters for the Bachelor Lake Gold Project.
Table1: Project Economics
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Item Value
-------------------------------------------------
Oz Gold Mined 200,177 oz Au
Oz gold recovered at the mill 186,122 oz Au
Total Revenue $ 215 M
Net Operating Cash flow $ 96.1 M
Net Present Value discounted at 5% $ 76.3 M
Internal Rate of Return 85%
Payback 10 months
-------------------------------------------------
Table 2: Summary of Economic Parameters
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Item Value
----------------------------------------------------------
Average Gold Price(1) CDN$ 1,271 per oz
Pre-production capital (CDN$ million)
Development $ 7.1M
Mine Site $ 12.3M
Equipment and Infrastructure $ 16.0M
----------------------------------------------------------
Total $ 35,4M
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Sustaining Capital $ 3.0M
Operating Cost per tonne milled
Mining cost $ 55.39
Processing cost $ 22.89
Support and Administration Cost $ 25.17
Total operating cost $ 103.45
Mill Recoveries 93.0%
(1) Current gold price forecast per ounces using the
Bloomberg consensus average gold price: 2012: $ 1,381,
2013: $1,416, 2014 and beyond: $ 1,177.
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Mineral Reserves and Resources
Since the company's last NI43-101 resource issued in December 2005 for the Bachelor Lake deposit, the company's geology QP reviewed the report and validated the resources from 2005. New information from 30 holes drilled between 2005 and 2010 along with the definition drilling planned in Q3 2011 will be incorporated in the revised resource estimate for the Feasibility Study.
The Pre-Feasibility reserves were calculated using the 2005 NI 43-101 resource using a cut-off grade of 3.43 g/t, recovery of 90%, and dilution of 10% in the stoping areas. Metanor has completed and updated the independent calculation of reserves on the project. The Pre-Feasibility study, including the evaluation of mineral reserves, was prepared by George Darling, P.Eng., independent QP, Stantec. The parameters and methodology used are described in a NI 43-101 technical Report which will be filed on www.sedar.com within 45 days.
Table 3: Underground Mineral Resource
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Bachelor Hewfran Total
------------------------------------------------------------
Measured Tonnes 177,898 14,696 192,594
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Grade (g/t) 8.83 8.50 8.80
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Oz of gold 50,487 4,018 54,504
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Indicated Tonnes 465,928 183,069 648,997
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Grade (g/t) 7.63 7.14 7.49
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Oz of gold 114,329 42,024 156,352
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Total Measured Tonnes 643,826 197,765 841,591
Indicated
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Grade (g/t) 7.96 7.24 7.79
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Oz of gold 164,815 46,042 210,857
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Inferred Tonnes 207,517 218,630 426,148
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Grade (g/t) 6.76 6.30 6.52
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Oz of gold 45,083 44,283 89,366
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Table 3: Underground Mineral Reserves
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Bachelor Hewfran Total
---------------------------------------------------------
Proven Tonnes 178,359 14,734 193,093
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Grade (g/t) 8.36 8.05 8.33
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Oz of gold 47,930 3,814 51,743
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Probable Tonnes 467,135 183,543 650,679
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Grade (g/t) 7.23 6.76 7.10
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Oz of gold 108,538 39,895 148,433
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Total Proven- Tonnes 645,494 198,278 843,772
Probable
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Grade (g/t) 7.54 6.86 7.38
---------------------------------------
Oz of gold 156,467 43,710 200,177
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Project Update
The mining contractor Montali performed their first blast in the shaft on December 20th, the mobilisation is now complete and on schedule, and they will now continue to sink the Bachelor shaft another 536 feet, and then construct 2 new levels in the coming 9 months to allow access to ore to complete a 5,000 tonne bulk sample. In parallel, the technical team will complete the Feasibility Study in 2011 to make a production decision before the end of 2011.
About Metanor
Metanor is a Canadian based gold mining company with a focus on adding value per share through efficient exploration, and development of it properties. Maintaining a low risk profile through a strong operating team, sound financial management, and operating in secure jurisdictions like Quebec are key priorities for Metanor's management team.
Qualified Person
Pascal Hamelin, P. Eng, Ing, General Manager of Operations, is the Qualified Person under NI 43-101 responsible for reviewing and approving the technical information contained in this news release.
The NI 43-101 Technical Report has been complied by a number of company and independent QP including:
George Darling, P.Eng., Stantec: Reserve estimate, mining methodology and project economics; Marc Lafontaine, Ing., GENIVAR: metallurgical processing; Andre Tremblay, Ing., Ressource Metanor: Geology, and resource estimate.
Cautionary Language and Forward-Looking Statements
This press release includes certain statements that may be deemed 'forward-looking statements'. All statements in this discussion, other than statements of historical facts, that address future exploration drilling, exploration activities, anticipated metal production, internal rate of return, estimated ore grades, commencement of production estimates and projected exploration and capital expenditures (including costs and other estimates upon which such projections are based) and events or developments that the Company expects, are forward looking statements. Although the Company believes the expectations expressed in such forward looking statements are based on reasonable assumptions, such statements are not guarantees of future performance, and actual results or developments may differ materially from those in forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include, metal prices, exploration successes, continued availability of capital and financing, and general economic, market or business conditions. Accordingly, readers should not place undue reliance on forward-looking statements.
152,058,355 outstanding shares
Neither the TSX Venture Exchange, nor its Regulation Services Provider accepts responsibility for the adequacy or accuracy of this release.
Contacts:
Metanor Resources Inc.
Ronald Perry
Vice-President
514-262-8286
rperry@metanor.ca