Intrepid Mines Tujuh Bukit Project Indonesia: Heap Leach Operation on Oxide Resource Delivers Robust Preliminary Economic Assessment Results
Annual Gold Production - 143,000 OuncesCash Costs - US$376 Per Ounce (After Silver Credits)
Capital Costs to First Production - US$204 Million
BRISBANE, AUSTRALIA -- (Marketwire) -- 04/20/11 -- Intrepid Mines Limited (TSX: IAU) (ASX: IAU) (the 'Company') is pleased to announce the results of an independently prepared Preliminary Economic Assessment ('PEA') for a potential heap leach, open pit gold mine on the oxide resource of the Tumpangpitu area of the Company's (80% interest) Tujuh Bukit Project in Indonesia. The PEA was prepared by Kappes Cassiday, of Reno, Nevada, based upon column leach and other metallurgical tests performed at their laboratory.
The heap leach PEA is based on the Company's December 2010 resource estimate of the near surface oxide resource at Tujuh Bukit (see the Company's announcement of 14 December 2010) - which is separate from the far larger, underlying porphyry resources - and produced a positive conceptual economic analysis for the project. Significantly, the PEA, based on conservative assumptions, demonstrated a life of project annual average production of 143,000 recovered ounces of gold for 9 years at a cash cost of US$376 per ounce, net of silver credits at US$16.50 per ounce. The project delivers a post-tax cumulative cashflow of US$445 million, an NPV (at a 10% discount rate) of US$180 million and an IRR of 31%, at a gold price of US$1,050 per ounce (Table 1). The production and financial numbers are reported on a project basis (Intrepid Mines Ltd holds an 80% economic interest in the project).
The study also shows the deposit has considerable leverage to metal prices. At a gold price of US$1,450 per ounce and silver price of US$38 per ounce, post-tax cumulative cashflow increases to US$942 million (a NPV (10%) of US$446 million and an IRR of 54%) - Table 2.
The project has further significant potential with respect to increased resource tonnages at heap leach cut off grades and increases to silver recovery with a dedicated grinding circuit for material grading plus 100g/t silver.
The Company's board has approved immediate progress towards commencement of a pre-feasibility study, comprising in-fill drilling, metallurgical test work, engineering design and financing evaluation, with the forestry approval process to be conducted in parallel.
Brad Gordon, the Company's Chief Executive Officer, stated: 'The Tujuh Bukit Oxide PEA demonstrates the viability of an extremely robust, low capital intensity and low operating cost stand-alone gold project. There is significant potential to improve the economics of this initial study through further project refinements as to production rate, the possibility of a small grinding circuit and the conversion of waste to resources as in-fill drilling is completed. The merits of these options will be analysed during the pre-feasibility stage of the study process. I am pleased to announce that Intrepid is now proceeding to the oxide PFS stage.'
Table 1
Tujuh Bukit Oxide Gold Project - Heap Leach PEA - Summary (100%)
Life of Mine Production: 57Mt at 0.83 g/t gold and 23 g/t silver
Annual average gold 143,000 gold ounces per year
production:
Life of mine mining rate: 20,000 mill feed tonnes per day
Mining cost: US$5.76 / processed tonne;
(US$2.74 / tonne mined)
G&A cost: US$0.80 per processed tonne
Total operating cost: US$10.82 per processed tonne;
US$376 per ounce gold
(after silver credits)
Pre-production capital cost: US$204M (including working capital and pre-
production mining)
Company Tax: 25%
Royalties: 3.75% on sale price
Table 2
Base Case Gold Price Sensitivity Analysis (100%)
(all values in constant 2011 US$)
----------------------------------------------------------------------------
Post-tax
Gold / Silver Price cashflow - US$M NPV (post-tax) IRR
(US$/oz) (undiscounted) (10%) (US$M) %
----------------------------------------------------------------------------
1,050 / 16.50 445 180 31
----------------------------------------------------------------------------
1,450 / 38.00 942 446 54
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Note: Numbers are for 100% of the project and are in real terms and post
Indonesian Company tax rate of 25%.
The resource estimate used in the PEA was prepared by independent consultants Hellman and Schofield. The resource block model was used in conjunction with Whittle Four-X software to create an optimised pit shell as a guide for the working pit designs. A mining study including a practical pit design was created by independent consultants Australian Mine Design And Development Pty Ltd, placing access ramps and catch berms into the slopes while keeping as close as possible to the same volume and waste to mill feed tonnes ratio as the Whittle shell. The Whittle shell used the abovementioned input criteria, as well as a wall slope assumption of 45 degrees. The life of mine design focused on maximising grade delivered to the heap in the early years, while minimising waste haulage profile. The PEA considered a conventional cyanide heap leach followed by Merrill Crowe precipitation and smelting to produce a gold- silver dore on site.
Capital cost estimates to first production, as prepared by Kappes Cassiday, are:
Direct Costs
Mining $7M
Processing & infrastructure
Heap leach and solution ponds $32M
Reclaim and stacking $25M
Crushing $17M
Other $29M
Contingency $22M $125M
Sub total - direct costs $132M
Indirect Costs
Plant $4M
Working capital $13M
Owners' costs $20M
Initial fill $1M
Sub total - indirect costs $38M
EPCM $16M
VAT $17M
Capital to first production $204M
Total Phase 2 $9M
Total $212M
Note: Assumes contract mining
The Company cautions that this PEA is preliminary in nature, and is based on technical and economic assumptions which will be evaluated in the Pre-feasibility Study. The PEA is based on the February 2011 oxide resource model, which is an inferred resource. The current basis of project information is not sufficient to convert the in-situ mineral resources to Mineral Reserves, and mineral resources that are not mineral reserves do not have demonstrated economic viability.
Accordingly, there can be no certainty that the results estimated in this PEA will be realized. The PEA results are only intended as an initial, first-pass review of the potential project economics based on preliminary information.
Forward-looking statements
This announcement contains certain forward-looking statements, relating to, but not limited to Intrepid's expectations, intentions, plans and beliefs. Forward-looking information can often be identified by forward-looking words such as 'anticipate', 'believe', 'expect', 'goal', 'plan', 'intend', 'estimate', 'may' and 'will' or similar words suggesting future outcomes, or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future outcomes, or statements about future events or performance. Forward-looking information may include reserve and resource estimates, estimates of future production, unit costs, costs of capital projects, and timing of commencement of operations and is based on current expectations that involve a number of business risks and uncertainties. Factors that could cause actual results to differ materially from any forward-looking statement include, but are not limited to, failure to establish estimated resources and reserves, the grade and recovery of ore which is mined varying from estimates, capital and operating costs varying significantly from estimates, delays in obtaining or failures to obtain required governmental, environmental or other project approvals, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the development of projects and other factors. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ materially from those expressed or implied.
Shareholders and potential investors are cautioned not to place undue reliance on forward-looking information. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and various future events will not occur. Intrepid undertakes no obligation to update publicly or otherwise revise any forward-looking information whether as a result of new information, future events or other such factors which affect this information, except as required by law.
Statements relating to gold resource estimates are expressions of judgment, based on knowledge and experience and may require revision based on actual production experience. Such estimates are necessarily imprecise and depend to some extent on statistical inferences and other assumptions, such as gold prices, cut-off grades and operating costs, which may prove to be inaccurate.
Forestry Activities
The Indonesian Forestry Law restricts non forestry activities within protected forests and prohibits mining using an open pit method in protected forest areas. The area of the Porphyry copper-gold resource estimate, and the Zone A, Zone B and Zone C oxide resource estimate areas fall within a protected forest area. Intrepid's Alliance partner, PT IMN, is working with relevant Indonesian authorities regarding a potential review of forest land status. There is no assurance that the forestry reclassification will take place in this instance.
About Tujuh Bukit
Intrepid's principal asset is known as Tujuh Bukit, a gold/silver and gold/copper project located in Indonesia on the island of Java, approximately 205 kilometres south east of Surabaya, capital of the province of East Java, and 60 kilometres south-west of Banyuwangi. The Tujuh Bukit Project area covers 11,621 hectares under two Izin Usaha Pertambangan ('IUP's'), the form of exploration/mining title introduced under the new Indonesian Mining Law, enacted in January 2009. The property contains a potentially large, high sulphidation epithermal gold-silver-copper system with areas of near surface oxidised gold-silver mineralisation and multiple copper-gold-molybdenum porphyries. Through a series of joint venture agreements, and having satisfied certain related expenditure commitments, Intrepid has acquired an 80% indirect economic interest in Tujuh Bukit. The IUPs are held by the Company's joint venture partner, an Indonesian company, PT Indo Multi Niaga ('PT IMN') which has a 20% participation right in the project.
Qualified Person
The PEA was prepared by independent industry consultants, all qualified persons under National Instrument 43-101. The qualified persons have reviewed and approved the content of this news release. The following consultants and qualified persons participated in the PEA:
Kappes Cassiday and Associate, under the direction of Daniel Kappes, PEng. Mr Kappes is the President of KCA. He supervised and reviewed the heap leach pad and solution ponds design, process design and infrastructure requirements, capital and operating cost estimate, and financial analysis of this project.
Australian Mine Design and Development Pty Ltd., under the direction of Peter Allen, MAusIMM. Mr Allen is a Senior Geologist - Mine Planning Consultant at AMDAD Pty Ltd. He supervised and reviewed all the mining design aspects of this project. Mr Allen has 20 years of relevant experience in operations and planning for hard rock open pit mines.
An NI 43-101-compliant technical report will be filed on SEDAR within 45 days of the date of this press release.
The information in this announcement that relates to mineral resources is based on information compiled by or under the supervision of Dr. Phillip Hellman, who is an independent consultant to Intrepid Mines Limited, a Director of Hellman and Schofield Pty Ltd and a Fellow of The Australian Institute of Geoscientists. Dr Hellman has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' and an Independent Qualified Person as defined in the Canadian National Instrument 43-101 (standards of Disclosure for Mineral Projects). Dr Hellman consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Dr Hellman has undertaken independent verification sampling and assaying of drill core with a close agreement of results with those previously reported. A 40 x 40 x 6 metre block model was used for the quoted estimates. If smaller selective mining units are considered it is estimated that an approximate 10 to 20% lift in grade may result. In future, increasing the drilling density in areas of higher gold grades is anticipated to achieve a higher grade outcome.
Sample Analysis
Intrepid exercises a strict chain of sample custody in its drilling program at Tujuh Bukit. Joint Venture personnel remove core from the drill rig and deliver it to a project geologist who logs the core and marks the core into two metre sample intervals. Intrepid and Joint Venture personnel supervise the immediate splitting, sawing and bagging of samples, and packaging of groups of samples for dispatch to the laboratory. The remainder of the split core remains on site.
Samples are securely packaged, batched, and then transported under supervision to Intertek's laboratory facility in Jakarta. At the laboratory, the samples are prepared by crushing and pulverizing and a 30 gram charge is assayed for gold by conventional fire assay and/or atomic absorption methods. Multi-element ICP analysis is carried out using a multi-acid digestion process. All samples that contain silver and/or copper, lead, and zinc values that exceed the upper detection limits for ICP are re-analysed by conventional atomic absorption methods to determine the absolute values of these metals.
ABN: 11 060 156 452
Contacts:
Intrepid Mines Limited - Brisbane, Australia
Brad Gordon
Chief Executive Officer
+61 7 3007 8011 or Mobile: +61 400 036 636
bgordon@intrepidmines.com
Intrepid Mines Limited - Toronto, Canada
Greg Taylor
+1 905 337 7673 or Mobile: +1 416 605 5120
gtaylor@intrepidmines.com
www.intrepidmines.com