Discovery Ventures-WillaMAX PEA Highlights Low CAPEX and Robust
Project Economics
VANCOUVER, BRITISH COLUMBIA--(Marketwired - May 28, 2014) -
Discovery Ventures Inc. ("Discovery" or the "Company")
(TSX-VENTURE:DVN) is pleased to announce that a recently released
National Instrument 43-101 (NI 43-101) compliant Preliminary
Economic Assessment (PEA) and Technical Report for the WillaMAX
Project demonstrates robust project economics. The PEA reviews the
economic potential of mining the Willa resource, located in the
Slocan Mining Division, and milling at the MAX Mine and Mill
facilities, located approximately 135 Highway - km from the Willa
property in the Revelstoke Mining Division, British Columbia,
Canada.
Background
The report
highlights the potential for near-term gold and copper production
from the consolidated projects. The Willa property is located near
Silverton in the Regional District of Central Kootenays (RDCK) and
the MAX Mine and Mill facility is located near Trout Lake in the
Columbia Shuswap Regional District (CSRD), both in south-eastern
British Columbia, Canada. The project area can be easily reached
from Vancouver via the TransCanada Highway 1 to Revelstoke (greater
than 650km).
The Willa property
includes a NI 43-101 compliant resource (2012, Makepeace and Ash)
and the MAX facility comprises a modern mill and concentrator
previously operating on a molybdenum resource (not the subject of
the PEA). Operations at MAX ceased in late 2011 as a result of
sustained low molybdenum prices.
The Willa property
consists of 20 mineral claims, all subject to an Assignment and
Assumption Agreement defining Discovery's right to acquire a 100%
interest in and to the property, subject to advance minimum royalty
payments and the assignment of an NSR. The MAX Mine and Mill
Facility are subject to an Acquisition Agreement whereby Discovery
can acquire a 100% interest in and to the mine (and all of its
facilities) by acquiring FortyTwo Metals Inc., a subsidiary of Roca
Mines Inc. for cash and shares of Discovery.
Willa Geology,
History and Resources
The Willa Deposit is
primarily contained within a heterolithic breccia pipe within a
roof pendant of Rossland volcanics surrounded by the Nelson
Batholith. There are three distinct gold-copper-silver mineralized
zones within the known extents of the breccia pipe
mineralization.
The Willa deposit
has been developed over time, with historic expenditures of
approximately CDN $18 million, to develop it to its present status.
Geological mapping, as well as geochemical and geophysical surveys
have led to approximately 600 diamond drill holes and 2,575 m of
underground development. With the exception of a bulk metallurgical
sample of 545 t, no production mining has been commenced at the
Willa Deposit.
The 2012 Mineral
Resource estimate identified 495,784 t designated in the Measured
category with an average grade of 7.18 g Au/t, 0.94% Cu and 12.16 g
Ag/t at a cut-off grade of 3.5 grams Au/tonne (3.5 g/t). The
Indicated category at the same cut-off grade is 262,415 t grading
5.71 g Au/t, 0.67% Cu, and 13.26 g Ag/t, for a total mineral
resource of the Measured and Indicated categories of 758,199 t
grading 6.67 g Au/t, 0.85% Cu, and 12.54 g Ag/t.
At a cut-off grade
of 2.5 grams Au/tonne (2.5 g/t), the Measured category of the
Mineral Resource is 814,970 t with an average grade of 5.52 g Au/t,
0.84% Cu and 10.55 g Ag/t. The Indicated category at the same
cut-off grade is 522,487 t grading 4.32 g Au/t, 0.59% Cu, and 10.99
g Ag/t, for a total mineral resource of the Measured and Indicated
categories of 1,337,457 t grading 5.05 g Au/t, 0.74% Cu, and 10.72
g Ag/t.
There are inferred
resources that are summarized in the 2012 Resource Estimate,
however these have not been included in the PEA. The economic
analysis contained in the PEA is considered preliminary in nature.
Mineral resources are not mineral reserves and have no demonstrated
economic viability and there is no certainty that economic
forecasts outlined in the PEA will be realized.
Operating Cost
Estimate and Resource Modeling
The estimated
operating costs for the project are in the range of C$115/t and are
substantially based on operating performance for the MAX mine,
inflated from 2011 dollars. Estimates of project revenue result
from three paying metals and therefore the Mineral Resource
estimate has been reduced to a dollar per tonne value (based on net
smelter returns) for assessing mineable stoping areas for a deposit
that can only be accessed from underground development. Three NSR
cut-offs were analysed in the report: C$100, C$125 and C$200.
Metallurgical
Testwork
Bench-scale
metallurgical testwork for the project was conducted by five groups
over time, including; Lakefield Research, Gary Hawthorn (Northair
Group), UBC Metallurgical Dept., PRA Labs and Met-Solve Labs
between 1985 and 2014. The results of all locked-cycle tests
typically indicated recoveries of 81% Au and 93% Cu. A concentrate
grading 24% Cu was projected from a mineral head grade in the order
of 7.0 g Au/t and 0.9% Cu.
Project Component
Status
The Willa property
has been on care-and-maintenance since 2005. Re-activation of the
underground workings, environmental permitting and approvals, First
Nation and community engagement, re-evaluation of the mineral
resources at different cut-off grades, re-development of the mine
design and re-evaluation of the capital and operating costs must be
completed to put the project into production.
Other levels of more
detailed 'bankable' feasibility level studies may not improve the
understanding of the projects economics nor provide any better
assessment of the project risks.
With an agreement to
acquire the modern 500 tpd MAX mine and mill facility, located
within 135km haulage distance, the high Net Present Value (NPV) and
Internal Rate of Return (IRR) and low CAPEX of C$12.8M it is
recommended that Discovery prepare for production in the immediate
future. The first phase of the pre-production period should include
permits to re-open the portals and inspect the underground workings
to obtain new samples for characterization studies, up-grade the
road access, and install the surface facilities for final
evaluation of the mine.
Economic Assessment
Summary
The Base Case
includes mining the known resource blocks in the West Zone with an
NSR value cutoff greater than $125/t and meeting specific
conditions of width and length to be mined. The calculation for
this value in each block is complex and based on recoveries and
smelter payments for Au, Cu and Ag and is calculated throughout the
block model. Similar to a previous study by others, the mine plan
works from the bottom of the known resource upward and accesses
higher grades in the Lower Mine area first. Initially working with
a mine‐diluted Au grade of 5.70 g/t Au, 13.12 g/t Ag, and 0.87% Cu,
grades change over time to 4.96, 13.04 and 0.90 respectively. At a
mining rate of 500 tonnes per day this equates to a nominal
four-year mine life. The mine plan may be extended by upgrading
inferred resources and through a planned exploration program to
test areas of the geologic model that remain open and present
compelling opportunities for grade and tonnes.
A Hybrid Case was
also studied to focus on high grades available in the Lower Mine in
the first year, thereby delivering very rapid payback and then
mines lower cutoff values in the Upper Mine. Potentially mineable
tonnes are left in the lower section to achieve this but it
highlights how the mine can be staged to focus on delivering
upfront then maximizing the value of the remaining deposit. The
cutoff value for blocks in the Lower Mine is equivalent to greater
than $200/t and the upper section is greater than $100/t. This
corresponds to average mine-diluted grades in the first year of
8.82 g/t Au, 20.74 g/t Ag and 1.18% Cu but delivers only 160,000
tonnes. The upper mine grades are lowered to support the mine life
and have average grades of 4.24 g/t Au, 11.24 g/t Ag and 0.79%
Cu.
The following table
provides a summary of the Base Case and Hybrid Case at US$1200 Au,
US$20 Ag and US$3.00 Cu analysis:
$1200 Au, $20 Ag, $3.00 Cu |
Base Case |
Hybrid Case |
tonnes |
748,826 |
676,733 |
Au (oz) |
104,824 |
93,477 |
Revenue |
164,763 |
147,101 |
Total CAPEX |
12,823 |
12,823 |
Total OPEX |
82,831 |
76,821 |
NPV10 Pre-tax |
54,958 |
48,355 |
IRR % Pre-tax |
412 |
972 |
Year 1 Cash Flow Pre-tax |
20,846 |
34,065 |
NPV10 After-tax |
54,958 |
48,355 |
IRR % After-tax |
412 |
972 |
Year 1 Cash Flow After-tax |
20,846 |
34,065 |
Notes to table:
All dollar figures
in 000's
- No "Inferred" Resources Used in the PEA
- The after-tax models inclusive of $50 million Tax Loss
Pools
A sensitivity
analysis was performed at higher metal prices and the following
table summarizes the results of the analysis at US$1500 Au, US$25
Ag and US$3.00 Cu:
$1500 Au, $25 Ag, $3.00 Cu |
Base Case |
Hybrid Case |
tonnes |
748,826 |
676,733 |
Au (oz) |
104,824 |
93,477 |
Revenue |
198,893 |
177,571 |
Total CAPEX |
12,823 |
12,823 |
Total OPEX |
82,831 |
76,821 |
NPV10 Pre-tax |
83,017 |
74,309 |
IRR % Pre-tax |
788 |
1,994 |
Year 1 Cash Flow Pre-tax |
29,764 |
42,319 |
NPV10 After-tax |
83,017 |
74,309 |
IRR % After-tax |
788 |
1,994 |
Year 1 Cash Flow After-tax |
29,764 |
42,319 |
Technical contents
of the WillaMAX disclosure in this news release have been reviewed
and approved by Wayne Ash, P.Eng., a qualified person as defined by
National Instrument 43-101.
Akash Patel,
President and Director Discovery Ventures Inc.
Neither the TSX
Venture Exchange Inc. nor its Regulation Service Provider (as that
term is defined in the policies of the TSX Venture Exchange Inc.)
accepts responsibility for the adequacy or accuracy of this press
release.
This press
release contains forward-looking information that involve various
risks and uncertainties regarding future events. Such
forward-looking information can include without limitation
statements based on current expectations involving a number of
risks and uncertainties and are not guarantees of future
performance of the Company, such as statements regarding estimated
mineral resources, estimated net present values, internal rates of
return, daily and annual production, costs, metal prices, and
statements regarding the Company's development plan. The
assumptions made in developing the forward‐looking statements
include: the accuracy of current resource estimates and the
interpretation of drill, metallurgical testing and other
exploration results; the timely receipt of required permits; the
continuing support for mining by local governments; the
availability of equipment and qualified personnel to advance the
projects; execution of the Company's existing plans and further
exploration and development programs, which may change due to
changes in the views of the Company or if new information arises
which makes it prudent to change such plans or programs; the
ability of the Company to acquire FortyTwo Metals Inc.; efficiency
of the markets in factoring developments at the projects into its
common share price and the assumptions and estimates disclosed in
the PEA. There are numerous risks and uncertainties that could
cause actual results and Discovery's plans and objectives to differ
materially from those expressed in the forward-looking information,
including: risks of the mineral exploration industry which may
affect the advancement of the Willa and MAX projects, including
possible variations in mineral resources, grade, metal prices,
capital and operating costs, and the application of taxes;
availability of sufficient financing to fund planned or further
required work in a timely manner and on acceptable terms;
timely receipt of required permits, availability of equipment and
qualified personnel, failure of equipment or processes to operate
as anticipated, changes in project parameters as plans continue to
be refined; failure of equipment or processes to operate as
anticipated; regulatory, environmental and other risks inherent in
the mining industry. These and all subsequent written and oral
forward-looking information are based on estimates and opinions of
management on the dates they are made and are expressly qualified
in their entirety by this notice. Except as required by law, the
Company does not intend to update these forward-looking
statements.
Discovery Ventures
Inc.(604)-818-1706www.discoveryventuresinc.comDiscovery Ventures
Inc.Investor Relations:Ron Birch(250)-545-0383Toll free:
1-800-910-7711
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