Kinbauri Gold Corp.: Scoping Study Determines Robust Economics for El Valle/Carles Project
09 February 2009 - 10:00PM
Marketwired Canada
Kinbauri Gold Corp. ("Kinbauri") (TSX VENTURE:KNB)(FRANKFURT:3KG.DE) is pleased
to announce that it has received the results from a Preliminary Economic
Assessment or Scoping Study (the "Scoping Study") prepared by Scott Wilson
Roscoe Postle Associates ("SWRPA") for its 100% owned El Valle/Carles project
(the "Project") in northwestern Spain. Under the base case scenario the results
reveal a pre-tax NPV (net present value) at a 10% discount rate of CAD $132M and
an IRR (internal rate of return) of 42%. Using current metal prices and exchange
rates, the Project has a pre-tax NPV at a 10% discount rate of CAD $178M and an
IRR of 51%. The current mine plan shows a life of more than nine years. The
financial highlights of the study are summarized below.
Scoping Study(1) Financial Summary
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Base Case Scenario Current Metal Prices
(2) (3)
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Undiscounted cash flow CAD 274,244,800 CAD 348,678,400
(pre-tax)
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NPV @ 10% (pre-tax) CAD 132,537,600 CAD 178,899,200
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IRR (pre-tax) 42% 51%
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Undiscounted cash flow CAD 213,307,200 CAD 272,769,600
(after tax)
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NPV @ 10% (after tax) CAD 94,235,200 CAD 131,272,000
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IRR (after tax) 33% 41%
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Total gold production 894,000 oz 894,000 oz
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Total copper production 83,710,000 lbs. 83,710,000 lbs.
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(1) All conversions to CDN dollar are based on an exchange rate of
1.6 CDN equals 1 euro
(2) Base case price $750 Au, $2.50 Cu, Exchange rate Euro to USD 1.4
(3) Current price $910 Au, $1.50 Cu, Exchange rate Euro to USD 1.3
Dr. Vern Rampton, Kinbauri's President and CEO commented, "We are pleased with
the results of the Scoping Study. SWRPA's independent assessment confirms what
Kinbauri believed to be a viable project with robust economics when it purchased
the assets in 2007. The result of this study gives us a firm economic basis to
proceed to feasibility and production. The situation is further enhanced with
the potential of adding new resources with more drilling at El Valle/Carles".
Detailed Cash Flow and Assumptions
The table below presents a complete list of assumptions and results comparing
the base case to current prices as well as pre and post tax scenarios. Cost
assumptions are based on contractor quotes and the overall economics are
estimated by SWRPA to be plus or minus 15%, which is significantly more concise
than standard scoping study estimates. However this analysis does contain
inferred resources as part of the assessment and therefore is classified as a
Scoping Study. All figures are in Euros to reflect costs of production in Spain.
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Project Parameter Base Case Current Prices
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Total Ore Tonnes Processed 6,331,000t 6,331,000t
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Average Diluted Gold Grade 4.77 g/t 4.77 g/t
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Average Diluted Copper 0.73% 0.73%
Grade
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Gold Recovery (total) 92% 92%
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Copper Recovery (total) 82% 82%
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Total Gold Production 894,000 oz 894,000 oz
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Total Copper Production 83,710,000 lbs 83,710,000 lbs
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Gold Price 536 EUR/oz 700 EUR /oz
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(750 USD/oz) (910 USD/oz)
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Copper Price 1.79 EUR/oz 1.15 EUR /oz
(2.50 USD/lb) (1.50 USD/lb)
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Exchange Rate: US to EUR 1.4 1.3
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Gold Revenue 466,825,000 EUR 566,415,000 EUR
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Copper Revenue 144,101,000 EUR 86,461,000 EUR
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Total Revenue 610,926, 000 EUR 652,875,000 EUR
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Cash Operating Cost 303,125,000 EUR 303,125,000 EUR
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Pre-Production CAPEX 67,474,000 EUR 67,474,000 EUR
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Deferred CAPEX 22,449, 000 EUR 22,449,000 EUR
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Total Project CAPEX 89,923, 000 EUR 89,923,000 EUR
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Cash cost per Au oz 348 EUR (USD 487) 348 EUR (USD 487)
without Cu credits
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Cash cost per Au oz 266 EUR (USD 372) 302 EUR (USD 393)
with Cu credits
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Cash Flow (pre-tax) 171,403,000 EUR 217,924,000 EUR
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NPV at 10% (pre-tax) 82,836,000 EUR 111,812,000 EUR
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IRR (pre-tax) 42% 51%
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Cash Flow (post-tax) 133,317,000 EUR 170,481,000 EUR
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NPV at 10% (post-tax) 58,897,000 EUR 82,045,000 EUR
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IRR (post-tax) 33% 41%
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Payback Period 2 years 2 years
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Kinbauri continues its assessment of strategic alternatives in advancing the
Project for the purpose of ensuring maximum shareholder value (see press release
dated December 15th, 2008). The Company plans to release an update on this in
the near term.
Cautionary Statement as Required by NI 43-101, Sect 2.3 (3): This assessment is
preliminary in nature; it 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,
and there is no certainty that the preliminary assessment will be realized.
This press release has been prepared by Dr. V. N. Rampton, P. Eng and Mr. Brian
McEwen, PGeol in their capacity as qualified persons under the guidelines of NI
43-101. The press release has also been reviewed and approved by SWRPA.
About Kinbauri:
Kinbauri is a TSXV - Tier 1 Mineral Exploration Company focused on the
development of mineral properties, primarily precious metal prospects in
northwestern Spain, Nevada and Canada. Its immediate focus is to expand and
upgrade resources to reserves at the El Valle property in Asturias, Spain in
order to start operations at the mine and existing mill complex there in 2011.
It currently has 48,852,695 common shares issued and outstanding.
This press release contains certain forward-looking statements, which are based
on the opinions and estimates of management at the date the statements are made,
and are subject to a variety of risks and uncertainties and other factors that
could cause actual events or results to differ materially from those projected.
Kinbauri undertakes no obligation to update forward-looking statements if
circumstances or management's estimates or opinions should change. The reader is
cautioned not to place undue reliance on forward-looking statements.
Kinbauri Gold's Hub at http://www.agoracom.com/IR/kinbauri where investors can
post questions and receive answers or review questions and answers already
posted by other investors. Kinbauri Web-Site: www.kinbauri-gold.com
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