TSXV:YMI VANCOUVER, March 2, 2012 /CNW/ - Yellowhead Mining Inc. ,
"YMI" or "the Company") reports the results of the independent
Harper Creek Feasibility Study ("FS"). Highlights -- The project
estimated pre-tax NPV8is $749.7 million with an IRR of 20.2% for a
28 year project life at a milling rate of 70,000 tpd (25.55Mt/y),
based on long-term metal price projections of US$2.50/lb Cu,
US$1,250/oz Au and US$20/oz Ag, and a US$:Cdn$ exchange rate of
0.86:1.Capital costs are estimated at $838.95 million1+/- 15% in Q4
2011 dollars, including contingency of 10% or $76.4 million. --
Life of Mine ("LOM") onsite cash operating costs, including
precious metal credits, are estimated at US$0.95/lb Cu (US$0.80/lb
for the first 5 years) and total onsite and offsite cash cost
(including precious metal credits) is estimated at US$1.56/lb Cu.
-- LOM2 cash operating costs per tonne milled are estimated as
follows: Mining $2.82; Milling $3.12; Site Services $0.28; General
& Administrative $0.38 for a total of $6.60/t milled. -- The
project as designed is expected to produce a total of 3.63 billion
pounds of copper, 372,000 ounces of gold and 14 million ounces of
silver contained in concentrate. -- LOM stripping ratio is
estimated at 0.81:1. The mill is also scheduled to process ore
recovered from low grade stockpile for the last 5 years of
operation. During pre-production in year -1 a total of 30 million
tonnes is expected to be mined predominately for roads, tailings
starter dam and other civil construction activities. -- The FS is
based on an updated resource (refer to press release dated February
16, 2012). At a 0.20% Cu cutoff Measured Resources are estimated at
348.5Mt at 0.31 % Cu, 0.034g/t Au, 1.3g/t Ag; Indicated Resources
at 466.5Mt at 0.28% Cu, 0.03g/t Au, 1.3g/t Ag for a total Measured
and Indicated Resource of 815Mt at 0.29% Cu, 0.032g/t Au and 1.3g/t
Ag. A further 80.17Mt at 0.30% Cu, 0.033g/t Au, and 1.4g/t Ag are
estimated in the Inferred Resource category and is reported as
waste in the mine production schedule until it can be upgraded by
additional infill drilling. -- Total mineable reserves were
determined by pit optimization runs using a Lerchs-Grossmann
algorithm to determine the "optimum" pit limit. At a 0.14% Cu
cutoff, Proven Reserves are estimated at 401.18Mt @ 0.272% Cu,
0.031g/t Au and 1.15g/t Ag; Probable Reserves 303.22Mt @ 0.248% Cu,
0.027g/t Au and 1.13g/t for a total Proven and Probable Reserve of
704.4Mt @ 0.262% Cu, 0.029g/t Au and 1.14g/t Ag. -- Sustaining
capital over the project life is estimated at $293.2 million.
Production Statistics The following table details production
estimates by period.
_____________________________________________________________________
| | Ore | Head Grade | Recovered to | Avg Cu | | |Milled | |
Concentrate | Recovery |
|_________|_______|__________________|_________________|______________|
| | Mt |Copper|Gold|Silver| Cu | Au | Ag | % | | | | % |g/t | g/t
|lb X 1000| oz | oz | |
|_________|_______|______|____|______|_________|_______|__________|___|
|Years 1 -|125,195| 0.31 |0.04| 1.15 | 762,944 |85,145 |2,635,177
|91%| |5 | | | | | | | | |
|_________|_______|______|____|______|_________|_______|__________|___|
|Years 1 -|252,945| 0.29 |0.03| 1.19 |1,483,114|164,580|5,624,259
|90%| |10 | | | | | | | | |
|_________|_______|______|____|______|_________|_______|__________|___|
|Life of |704,392| 0.26 |0.03| 1.14
|3,630,564|372,137|14,736,280|89%| |Mine | | | | | | | | |
|_________|_______|______|____|______|_________|_______|__________|___|
Economic Analysis The base case economic analysis is based on the
following long term metal price projections: US$2.50/lb Cu (based
on a US$:Cdn$ exchange rate of 0.86:1 taken from an established
historic relationship with copper prices), US$1,250/oz Au and
US$20/oz Ag. Based on the above capital and operating cost
estimates, the Harper Creek project is estimated to have a pre-tax
net present value of US$749.7 million (@ 8% discount rate) and an
internal rate of return of 20.2 % based on 100% equity financing.
Sensitivity Analyses The following table demonstrates the
sensitivity of project economics to changes in copper prices.
Corresponding foreign exchange ("FX") rates are taken from the
established historical relationship which demonstrates a very
strong copper price to US$:Cdn$ FX rate correlation. Gold and
silver prices are unchanged from the base case prices of $1,250 and
$20 per ounce respectively.
_______________________________________________ | Cu price | NPV8
|IRR |Payback|US$:Cdn$| | $/lb | US$M | % | Years |FX Rate |
|_________________|_______|____|_______|________| | 2.00 |199.60
|11.7| 7.6 | 0.82 |
|_________________|_______|____|_______|________| | 2.25 | 474.7
|16.1| 6.2 | 0.84 |
|_________________|_______|____|_______|________| | Base Case 2.50
| 749.7 |20.2| 5.1 | 0.86 |
|_________________|_______|____|_______|________| | 2.75
|1,002.5|23.4| 4.4 | 0.89 |
|_________________|_______|____|_______|________| | 3.00
|1,277.4|26.8| 3.9 | 0.91 |
|_________________|_______|____|_______|________| | 3.82 | | | | |
|[as of 29/2/2012]|2,124.7|35.6| 3.3 | 1.00 |
|_________________|_______|____|_______|________| Harper Creek
Feasibility Study The FS team is comprised of: -- Merit Consultants
International Inc. ("Merit"): FS study management as well as
providing capital cost estimating, financial analysis, project
scheduling and implementation strategy -- Knight Piesold Limited
("KP"): geotechnical, mine waste and water management -- Allnorth
Consultants Limited: process plant and facilities design -- GeoSim
Services Inc.: resource estimation -- Nilsson Mine Services Ltd.:
reserve estimation, mine planning and scheduling, mine capital and
operating costs -- Laurion Consulting Inc.: metallurgy, plant
flowsheet design, process operating costs The following also
provided support to the FS: -- CME Consultants Inc.: drilling,
geological interpretation, QA/QC -- G&T Metallurgical Services
Limited ("G&T"): metallurgical test work -- KWM Consulting
Inc.: comminution -- SRK Consulting Ltd.: geochemistry -- Lawrence
Consulting Ltd.: geochemistry, water treatment -- Cliveden AG:
marketing The Company provided overall support and guidance to the
project especially in the areas of operating and staffing
philosophy, marketing and financial analysis. The FS design is
based on the development of a large-scale open pit mining and
milling operation and essentially follows the concept developed in
the Preliminary Economic Assessment ("PEA") completed by TetraTech
and filed on www.sedar.com on April 1, 2011. The main changes
were the location of the primary crusher which was moved closer to
the pit limit with a resulting lengthening of the coarse ore
conveyor and reduction in hauling costs to the crusher.
Following extensive crushing and grinding testwork conducted by
FLSmidth primarily at their Bethlehem, PA laboratory, together with
improved recovery at a coarser grind size, the Company was able to
reduce the expected power draw by the ball mills, compared to the
PEA estimate, by 25% and eliminate two crushers for SAG mill coarse
pebble rejects. This resulted in a reduction in capital cost
for crushing and grinding and significantly reduced milling costs.
The mine will employ 311mm (12¼") electric and diesel rotary
blasthole drills, 42m³ (55yd³) electric hydraulic shovels, 240st
capacity haul trucks plus support equipment. Bulk heavy
ammonium nitrate slurry explosives will be delivered down the blast
holes by a third party vendor. The mill feed will be crushed by a
1.5m (60") x 2.3m (89") gyratory crusher to a nominal 80% passing
200mm (8"). Crushed material will feed a stockpile of nominal
70,000t live capacity, before being reclaimed to the process plant.
Plant design is based on a single line flow sheet employing SAG and
ball milling, flotation including regrinding, thickening and
filtering to produce a concentrate for export averaging 25.5% Cu
together with gold and silver credits. The primary grinding
circuit includes an 11.6m (38') x 6.7m (22') SAG mill with a 20MW
(26,800HP) gearless drive feeding two 7.3m (24') x 12.8m (42') twin
pinion drive ball mills, 13MW (17,400HP) total for each mill,
providing a primary grind size of 80% passing 180µm. Primary
grinding circuit discharge feeds two banks of six 300m³ rougher
flotation cells. The rougher concentrate will be reground by two
M10000 (3MW each) Isamills to 80% passing 20 µm prior to two stages
of cleaner flotation by column flotation cells. At a 0.33% Cu head
grade in Year 1, the recovery of copper to concentrate is estimated
at 91.1%. The primary and regrind product sizes and flotation
parameters were determined by G&T. Testwork indicates
that the concentrate is clean with no elements at smelter penalty
levels and both gold and silver at payable levels. Concentrate will
be loaded on B-Trains of nominal 40t capacity for hauling to the
rail loadout facility in the town of Vavenby, a distance of
approximately 25km, for rail shipment to the Port of Vancouver, a
distance of 450km. From there it will be shipped to
smelters/refineries most likely in the Pacific Rim. In
November 2011, the Company announced the purchase of an old
Weyerhaeuser sawmill site in Vavenby, with an existing rail siding,
for its concentrate loadout facility. Water from the tailings
slurry will be reclaimed from the Tailings Management Facility
("TMF") for use in the milling process. The TMF has the
capacity to store all tailings and submerge any potentially acid
generating waste rock. Low grade material will be stockpiled
to the south of the pit for easy reclaim for processing in the
latter years of the mine life. The TMF is located in a
natural valley to the south of the plant in an area devoid of any
fish habitat. Mine infrastructure includes upgrading of an existing
logging road over a distance of approximately 12km. A 600
person camp will be established for construction workers at site;
most of the mine and plant operating and maintenance labour is
expected to be drawn from the local area. Power will be supplied by
an upgraded BC Hydro 138 kVA transmission line that parallels the
Yellowhead Highway, approximately 10km north of the plant.
The upgraded transmission line will also provide improved
reliability of power to existing customers within the North
Thompson River Valley and provide capacity for expansion to the
existing industrial base. The Company's expected
connect date is March 2015. The project is expected to employ up to
430 hourly and staff personnel. Based on industry experience,
approximately 1,000 to 1,200 jobs will be created in the
surrounding communities and elsewhere within the province to
provide support to the project. Following exhaustion of reserves,
the project will close and be reclaimed according to regulatory
requirements. All equipment and facilities will be removed
and the area graded and seeded. Environmental A Project Description
has been delivered to the BC Environmental Assessment Office
("BCEAO") and is available on their website at:
http://a100.gov.bc.ca/appsdata/epic/documents/p333/1295903690301_5aa204813a3a28bbaad434d7890ebbdd62ee07f028154720b0c5f52e258d5011.pdf
KP is managing the environmental assessment process under a
harmonized process led by the BCEAO with the Canadian Environmental
Assessment Agency ("CEAA"). The Application Information
Requirements was approved on October 21, 2011 and is available on
the BCEAO website at:
http://a100.gov.bc.ca/appsdata/epic/documents/p333/1324486256257_52f0eacc11967dc2f94835822071af1c135a39a7fafb7a9c9345318e1c23535e.pdf
The Application is expected to be submitted in the fall of
2012. KP is being supported by specialist consultants in the
areas of fisheries, water quality, wildlife and archeology.
The Company has signed General Services Agreements with the Simpcw
First Nation and the Adams Lake Indian Band who provided personnel
to assist with the collection of baseline information. National
Instrument 43-101 Compliance The following Qualified Persons, as
defined by National Instrument 43-101 ("NI 43-101"), with the
exception of Christopher Naas and Ian Smith, are independent of
Yellowhead Mining and responsible for the preparation of the Harper
Creek Technical Report as shown below:
____________________________________________________________________
| Qualified Person | Scope of Responsibility |
|_______________________________|____________________________________|
|Christopher Naas, P.Geo. |drilling, geological interpretation,|
|CME Consultants Inc. |QA/QC |
|_______________________________|____________________________________|
|Ron Simpson, P.Geo. |Mineral resource modelling and | |GeoSim
Services Inc. |analysis |
|_______________________________|____________________________________|
|John Nilsson, P.Eng. |Proven & Probable Reserves, mine |
|Nilsson Mining Services |planning, production scheduling, | |
|mine capital and operating costs |
|_______________________________|____________________________________|
|John Fox, P.Eng. |Metallurgical testing review, | |Laurion
Consulting Inc. |mineral processing, process | | |operating costs
and infrastructure | | |with exception of power and roads |
|_______________________________|____________________________________|
|Mark Dobbs, P.Eng. |Process plant and facilities design,|
|Allnorth Consultants Limited |power supply and control systems |
|_______________________________|____________________________________|
|Jay Collins, P.Eng. |Capital cost estimate, project | |Merit
Consultants International|development schedule, financial | |Inc.
|analysis |
|_______________________________|____________________________________|
|Ken Brouwer, P.Eng. |Tailing impoundment, water and waste| |Knight
Piesold Limited |management plan, open pit slopes | | |design and
environmental |
|_______________________________|____________________________________|
|Stephen Day, P.Eng. |Geochemistry | |SRK Consulting (Canada) Inc.
| |
|_______________________________|____________________________________|
|Ian Smith, BE Min, FAusIMM, CP |Project operating, staffing, |
|Yellowhead Mining Inc. |marketing philosophy, financial | |
|analysis |
|_______________________________|____________________________________|
Future Work Program Management's plans for 2012 are: -- Complete
and submit the Environmental Assessment Application with
synchronous permitting; -- Step out drilling to the east and north
to increase the resource; -- Commence detailed engineering and
place orders for long lead-time equipment; -- Investigate and
implement opportunities for improvement in project economics; --
Proceed with financing and strategic partnership discussions with
interested parties. The Feasibility Study was prepared to Canada's
NI 43-101 reporting standards for a Technical Report. Details of
mineral resource estimates including QA/QC procedures, Proven and
Probable Reserves, mine and process plant design, capital and
operating cost estimates, project schedule and implementation
strategy and financial analysis are found in the Harper Creek NI
43-101 Technical Report, a copy of which will be filed on SEDAR on
or before April 1, 2012 and available at www.sedar.com and on the
Company's website at www.yellowheadmining.com. About Yellowhead
Mining Inc. and the Harper Creek Project The Harper Creek Project
is a copper-gold-silver volcanogenic sulphide deposit with an
updated Measured and Indicated Resource of 815 million tonnes
grading 0.29% Cu (5.26 billion pounds of copper) plus 0.032 g/t
gold and 1.3 g/t silver, plus an Inferred Resource of 80.2 million
tonnes grading 0.30% Cu (0.53 billion pounds of copper). The Harper
Creek Project is located in south-central British Columbia,
approximately 150 kilometers by highway north of Kamloops.
Yellowhead has a 100% interest in the Harper Creek
Project(3). A Preliminary Economic Assessment Report ("PEA"),
which demonstrated the technical and economic viability of the
Project, was completed at the end of March 2011, filed on SEDAR on
April 1, 2011 and can be viewed on www.sedar.com. The
PEA will be superseded by the new NI 43-101 Technical Report when
filed. FORWARD-LOOKING STATEMENTS AND CAUTIONARY DISCLAIMER Except
for statements of historical fact, this news release contains
certain "forward-looking information" within the meaning of
applicable securities laws. Forward-looking information is
frequently characterized by words such as "plan", "expect",
"project", "intend", "believe", "anticipate", "estimate" and other
similar words, or statements that certain events or conditions
"may" or "will" occur. Forward-looking statements 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 anticipated in the forward-looking
statements, including, among others, the accuracy of mineral grades
and related assumptions, inherent operating risks, planned
expenditures, proposed exploration and development at the Harper
Creek Project, operating and economic aspects of the Harper Creek
Project, as well as those risk factors identified in the Company's
Annual Information Form filed under the Company's SEDAR profile.
Yellowhead undertakes no obligation to update forward-looking
information if circumstances or management's estimates or opinions
should change except as required by law. The reader is cautioned
not to place undue reliance on forward-looking statements. More
detailed information about potential factors that could affect
projected results is included in the documents filed from time to
time with the Canadian securities regulatory authorities by
Yellowhead. This news release includes disclosure of scientific and
technical information, as well as information in relation to the
calculation of mineral resources and reserves, with respect to the
Harper Creek Project. Yellowhead's disclosure of mineral resource
and reserve information is governed by National Instrument 43-101 -
Standards of Disclosure for Mineral Projects ("NI 43-101") under
the guidelines set out in the Canadian Institute of Mining,
Metallurgy and Petroleum (the "CIM") Standards on Mineral Resources
and Mineral Reserves, adopted by the CIM Council, as may be amended
from time to time by the CIM ("CIM Standards"). There can be no
assurance that mineral resources will ultimately be converted into
mineral reserves. Mineral resources are not mineral reserves and do
not have demonstrated economic viability. This news release uses
the terms "measured", "indicated" and "inferred" resources. U.S.
persons are advised that while such terms are recognized and
required by Canadian regulations, the U.S. Securities and Exchange
Commission does not recognize them. "Inferred Resources" have a
great amount of uncertainty as to their existence and as to their
economic and legal feasibility. It cannot be assumed that all or
any part of an inferred resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of inferred resources may
not form the basis of feasibility or other economic studies. U.S.
persons are cautioned not to assume that all or any part of
measured or indicated resources will ever be converted into
reserves. U.S. persons are also cautioned not to assume that all or
any part of an inferred mineral resource exists, or is economically
or legally mineable. Neither the TSX Venture Exchange Inc. nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
(_________________________________________) (1) All Dollars
Canadian unless otherwise stated. (2) LOM refers to life of project
from start up through to closure. Cash mine operating cost
per tonne of ore milled to cessation of the open pit operations is
estimated at $3.10/t. (3) Subject to the payment of a 3% NSR
royalty capped at $2.5 million, adjusted for inflation, and an
additional 2.5% NSR royalty on an estimated 3.3 million tonnes of
ore which is expected to be mined beginning in year nine within the
NI 43-101 resource. Yellowhead Mining Inc. CONTACT: Ronald
Handford, Executive Vice President, Corporate
Developmentrhandford@yellowheadmining.comTel. 604.681.1709 ext.
204Website: www.yellowheadmining.comTwitter:
http://twitter.com/YMI_Mining
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