Kinbauri Gold Corp.: Scoping Study Revision Boosts Economics for El Valle/Carles Project
13 February 2009 - 2:51AM
Marketwired Canada
Kinbauri Gold Corp. (TSX VENTURE:KNB)(FRANKFURT:3KG.DE)("Kinbauri") announced
today that it has been advised by Scott Wilson Roscoe Postle Associates
("SWRPA") that there were material errors in certain numbers provided to
Kinbauri and reported in its press release dated February 9, 2009. The numbers
pertain to the Preliminary Economic Assessment or Scoping Study (the "Scoping
Study") for Kinbauri's 100% owned El Valle/Carles project (the "Project") in
northwestern Spain. The Base Case Scenario numbers are correct. However under
the "Current Metals Prices" headings, certain input conversions resulted in a
material understatement of Revenue, Cash Flow, Net Present Value and Internal
Rate of Return (both pre-tax and after tax). SWRPA has also lowered the payback
periods.
As previously reported 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%. However, under the revised numbers, using
current metal prices and exchange rates, (as they were on February 9) the
Project has a pre-tax NPV at a 10% discount rate of CAD $221M versus the
previously reported CAD $178M. Similarly, under the corrected version, the IRR
is 58% versus the previously reported IRR of 51%. The financial highlights are
summarized below and the revised numbers are highlighted in bold:
Scoping Study(1) Financial Summary
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Base Case Scenario Current Metal Prices
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Undiscounted cash flow (pre-tax) CAD 274,244,800 CAD 422,652,800
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NPV @ 10% (pre-tax) CAD 132,537,600 CAD 220,980,800
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IRR (pre-tax) 42% 58%
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Undiscounted cash flow (after tax) CAD 213,307,200 CAD 331,948,800
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NPV @ 10% (after tax) CAD 94,235,200 CAD 164,955,200
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IRR (after tax) 33% 47%
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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
Detailed Cash Flow and Assumptions
The revised table below presents a complete list of assumptions and results
comparing the base case to current prices (as of February 9) 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 Grade 0.73% 0.73
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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
(750 USD/oz) (910 USD/oz)
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Copper Price 1.79EUR/lb 1.15EUR/lb
(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 609,985,000 EUR
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Copper Revenue 144,101,000 EUR 93,111,000 EUR
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Total Revenue 610,926, 000 EUR 703,097,000 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
without Cu credits 348EUR (USD 487) 348EUR (USD 452)
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Cash cost per Au oz with
Cu credits 266EUR (USD 372) 302EUR (USD 393)
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Cash Flow (pre-tax) 171,403,000 EUR 264,158,000 EUR
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NPV at 10% (pre-tax) 82,836,000 EUR 138,113,000 EUR
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IRR (pre-tax) 42% 58%
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Cash Flow (post-tax) 133,317,000 EUR 207,468,000 EUR
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NPV at 10% (post-tax 58,897,000 EUR 103,097,000 EUR
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IRR (post-tax) 33% 47%
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Payback Period 1.8 years 1.4 years
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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.
VISIT: 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.
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