Grayd Resource Corporation (TSX VENTURE: GYD) today reported
positive results from a Canadian National Instrument (NI) 43-101
compliant Preliminary Economic Assessment (PEA) for the Company's
wholly owned La India Gold Project located in the State of Sonora,
Mexico. Highlights include a 51% internal rate of return (IRR), a
US$187 million net present value (NPV) (pre-tax, 5% discount rate),
a nine-year mine life and nearly 850,000 ounces of gold produced.
Grayd President and Chief Executive Officer Marc A. Prefontaine
stated, "The preliminary assessment is very good news and indicates
the La India project is economically robust even at gold prices
used in this study, which are well below what we're seeing today.
We plan on moving forward rapidly with the next steps toward
developing this project. In addition, we intend to continue
drilling on Tarachi and other new targets we have identified that
could add significantly to the project."
Assuming 100% equity financing, the PEA base case at US$950 per
ounce gold indicates an IRR of 51% and a pre-tax NPV of US$187
million at a 5% discount rate based on one year of construction,
nine years of mining and an additional one year of residual gold
recovery and heap decommissioning. At the ten-day average gold
price of US$1,355 per ounce, this increases to a 103% IRR and a
US$441 million NPV (pre-tax, 5% discount).
The Preliminary Economic Assessment was conducted on an
owner-operated scenario incorporating an open-pit mine and a 16,000
tonne per day heap-leach processing facility. The study was based
on indicated and inferred resources using the resource estimate
prepared by G. Giroux, P.Eng., that is detailed in a report titled,
"May 2010 Measured, Indicated, and Inferred Mineral Resource
Estimate, La India Gold Project, Municipio of Sahuaripa, Sonora,
Mexico", dated June 15, 2010. Economic pit optimization was run
using a US $900/oz gold price. Only oxide material was considered
in the assessment. Mining and processing the sulphide
mineralization that exists at La India represents an additional
opportunity for Grayd and will be the subject of further
studies.
Highlights of the Preliminary Assessment, using a base case
price of US$950 per ounce gold in the cash flow model, include:
-- Base case pit containing 996,000 ounces of gold (49.4 million tonnes
grading 0.63 g/t Au in situ) with a low strip ratio of 0.72 to 1 and
overall metallurgical recovery of 84%. Mining loss and dilution is
applied in the production schedule.
-- Average annual production of 92,000 ounces of gold over a nine-year mine
life at a total cash cost of US$507 per ounce of gold.
-- Pre-production (year -1) capital costs estimated at US$72 million plus
an additional US$32 million of sustaining capital over the life of the
mine.
-- Project payback of less than three years after the start of production.
Based on the favourable results of the PEA, Grayd intends to
initiate more detailed engineering studies on the project. Drilling
is also planned on some areas adjacent to the existing resource
aimed at providing incremental increases to the resource base for
the project.
The PEA was conducted by a group of experienced internal and
independent consultants under the auspices of Independent Qualified
Persons, Jim Gray, P.Eng., of Moose Mountain Technical Services,
Calgary, AB, Mark Smith, P.E., G.E., of RRD International Corp.,
Reno, Nevada and Matthew Gray, Ph.D., C.P.G., of Resource
Geosciences de Mexico, Hermosillo, Mexico.
Table 1: La India Preliminary Assessment - Financial Analysis - Pre-Tax
Pre-Production (year -1) through final gold recovery (year 10)
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Undiscounted NPV at 5%
Cash Flow Discount
Gold (millions (millions Payback
Price Scenario (US$/oz) US) US) IRR (%) Years
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$850 $184 $124 38% 3.4
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Base Case $950 $267 $187 51% 2.6
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2 Week average (i) $1355 $603 $441 103% 1.4
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(i) Source: www.kitco.com
10 trading day average London PM Fix from Oct. 6, 2010 - Oct. 19, 2010
Table 2: La India Preliminary Assessment Summary (i)(ii)(iii)(iv)
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Production Summary
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Processed Tonnes (iv) 49.4 million
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Average Gold Grade (iv) 0.63 g/t
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Contained Gold 996,000 oz
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Weighted Average Gold Recovery 84%
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Recovered Gold 832,000 oz
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Processing Rate (Tonnes Per Day) 16,000
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Mine Life (Years) 9
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Average Annual Gold Production 92,000 Ounces
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Estimated Costs
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Waste to Ore Ratio 0.72:1
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Mining Cost - Life of Mine ($/t ore) $3.52
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Processing Cost - Life of Mine ($/t ore) $3.45
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G&A Cost - Life of Mine ($/t ore) $1.42
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Total Operating Costs - Life of Mine ($/t ore) $8.39
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Pre-Production (year -1) Capital Cost Estimate $72.4 million
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Sustaining Capital Cost Estimate $32.0 million
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Total Capital Cost Estimate $104.4 million
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(i) All monetary values in U.S. dollars.
(ii) The PEA is preliminary in nature and there is no certainty that the
PEA will be realized. Mineral resources that are not mineral reserves
do not have demonstrated economic viability.
(iii) Base case metal prices of US$950 per ounce gold.
(iv) Resources do not meet NI 43-101 requirements for Ore (reserve).
The PEA is preliminary in nature and includes Inferred Mineral
Resources that are considered too speculative, geologically, to
have the economic considerations applied to them that would enable
them to be categorized as Mineral Reserves. There is no certainty
that all or any part of the mineral resource will be converted into
mineral reserves.
A technical report entitled "Preliminary Economic Assessment,
"La India Gold Project, Municipio of Sahuaripa, Sonora, Mexico",
will be completed within 45 days and will be filed on SEDAR. It
will also be posted on the Grayd website at www.grayd.com.
Independent Qualified Persons under NI 43-101 and principal
authors of the Preliminary Economic Assessment, Jim Gray, P.Eng.,
Mark Smith, P.E., G.E., and Matthew Gray, Ph.D., C.P.G., have
verified the data disclosed in this news release.
The information in this news release may contain forward-looking
statements. When used in this release, words such as "estimate",
"expect", "anticipate" and "believe" as well as similar expressions
are intended to identify forward-looking statements. Such
statements are used to describe management's future plans,
objectives, and goals for the Company and therefore involve
inherent risks and uncertainties. The reader is cautioned that
actual results, performance or achievements may be materially
different from those implied or expressed in such statements, which
speak only as of the date the statements were made. The Company
does not update forward-looking statements continually as
conditions change.
The TSX Venture Exchange has neither approved nor disapproved of
the information contained herein.
Contacts: Grayd Resource Corporation Marc A. Prefontaine
President and CEO 604-681-7446 604-684-9877 (FAX) www.grayd.com
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