TIDMGSL
Greystar Releases Positive Scoping Study for Angostura Underground Operation
FOR: GREYSTAR RESOURCES LTD.
TSX, AIM SYMBOL: GSL
May 3, 2011
Greystar Releases Positive Scoping Study for Angostura Underground Operation
VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 3, 2011) - Greystar Resources Ltd. (TSX:GSL)(AIM:GSL)
("the Company") is pleased to announce receipt of a positive scoping stage Preliminary Assessment
under National Instrument 43-101 ("Scoping Study") for an underground only operation at its 100%-owned
Angostura gold-silver project in northeastern Colombia. The Technical Report entitled "Mineral
Resource Estimate and Preliminary Economic Assessment for Underground Mining, Angostura Gold-Silver
Project, Santander, Colombia" prepared by Rodrigo Mello, MAusIMM, Carlos Guzman, MAusIMM (NCL
Ingenieria y Construccion Ltda.), John Wells, FSAIMM, Giovanny Ortiz, MAusIMM (Greystar) and dated
April 25, 2011 is available for viewing under the corporate profile of Greystar at www.sedar.com.
The Scoping Study, which evaluated roasting, bio-oxidation ("BIOX") and pressure oxidation ("POX")
processing treatments for the production from Angostura underground resources, estimated that 1.9
million ounces of gold, 7.7 million ounces of silver and 228,316 pounds of copper could be produced
over a 14-year mine life.
Highlights of the Scoping Study include:
=- All three processing routes produce positive returns with roasting being
the most economically beneficial method evaluated
=- Average annual production for the first seven full years of 209,458 gold
equivalent (AuEq) ounces, which is comprised of 197,840 ounces of gold
and 582,079 ounces of silver
=- Total cash costs of $455 per ounce over the life of mine, net of silver
and copper by-product credits
=- Pre-tax internal rate of return (IRR)(i) of 21.4%
=- Estimated initial capital cost of $301.6 million
=- Pre-tax net present value (NPV)(i) (5% discount) of $400.2 million
=- Mineable Resource ("In Stope Inferred Mineral Resource") of 2.4 million
ounces of gold in 13.98 million tonnes grading 5.35 grams gold, 29.61
grams silver per tonne and 0.091% copper based on 3 gram gold per tonne
cut-off grade
=- Mine life of 14 years at a planned production rate of up to 4,000 tonnes
per day
=- Potential Economic Enhancements
-- Mineable Resource Expansion - Study does not include mineral
resource estimates defined outside of the stopes, which comprise an
additional indicated mineral resource of 1.44 million ounces of gold
and an additional inferred mineral resource of 1.0 million ounces of
gold, at 3 gram gold per tonne cut-off grade.
-- Mineable Resource Expansion - Optimizing cut-off grade to enhance
tonnage and contained ounces of gold/silver.
-- Mineral Resource Expansion - Mineralization remains open at depth
with deep drilling program on going.
-- Improved mine design and mineral recovery through on going
optimization work
-- Potential to increase production scenario and/or enhance mine life
from further exploration and development of known areas of
mineralization.
(i) based on a gold price of $1,170 per ounce and a silver price of $18.25 in the first two years
followed by a life of mine price of $1,015 per ounce for gold and $15.85 per ounce for silver.
"The Scoping Study results clearly demonstrate the viability of developing the Angostura deposit as an
underground only operation with all three processing routes yielding positive returns," stated
Greystar's Chief Operating Officer, David Heugh. "The Company is excited by the prospects of further
enhancing the positive economic potential and the future growth leverage offered through resource
expansion and mine optimization."
The Scoping Study
The Scoping Study represents an unoptimized, technically feasible design that includes the development
of a mineable resources inventory and a mine plan for the recovery of high-grade veins of the deposit
and a preliminary engineering design for process plant options to extract gold, silver and copper. For
Greystar, NCL Ingenieria y Construccion Ltda. completed the mining studies and Alquimia Conceptos S.A.
completed the process and infrastructure components of the Scoping Study. NCL also developed a
preliminary economic evaluation of the project with a pre-tax cash flow analysis.
Economic Evaluation from the Scoping Study
=---------------------------------------------------------------------------
Roasting POX BIOX
=---------------------------------------------------------------------------
Dore Produced Oz 12,983,907 13,040,538 12,995,233
=---------------------------------------------------------------------------
Gold in dore Oz 1,928,577 1,985,209 1,939,904
=---------------------------------------------------------------------------
Silver in dore Oz 7,725,719 7,725,719 7,725,719
=---------------------------------------------------------------------------
Copper in dore lb 228,316 228,316 228,316
=---------------------------------------------------------------------------
=---------------------------------------------------------------------------
Copper in cathodes lb x 1000 17,758 17,758
=---------------------------------------------------------------------------
Sulfuric Acid kt 881
=---------------------------------------------------------------------------
=---------------------------------------------------------------------------
Mine Cost US$/t 40.4 40.4 40.4
=---------------------------------------------------------------------------
Process Cost US$/t 26.02 26.25 27.09
=---------------------------------------------------------------------------
G&A US$/t 5.0 5.0 5.0
=---------------------------------------------------------------------------
Selling Costs US$/oz 5.00 4.89 4.97
=---------------------------------------------------------------------------
Royalty US$/oz 35.0 34.9 35.0
=---------------------------------------------------------------------------
Cathodes Transport US$/t Cu 70.0 70.0
=---------------------------------------------------------------------------
=---------------------------------------------------------------------------
Total Cost US$/oz 509.0 496.9 512.9
=---------------------------------------------------------------------------
=---------------------------------------------------------------------------
Initial Capital KUS$ 301,630 299,447 274,421
=---------------------------------------------------------------------------
Mine KUS$ 20,667 20,667 20,667
=---------------------------------------------------------------------------
Process & Infrastructure KUS$ 280,963 278,780 253,754
=---------------------------------------------------------------------------
=---------------------------------------------------------------------------
Total Capital KUS$ 506,462 504,279 479,253
=---------------------------------------------------------------------------
Mine KUS$ 220,381 220,381 220,381
=---------------------------------------------------------------------------
Process & Infrastructure KUS$ 286,081 283,898 258,872
=---------------------------------------------------------------------------
=---------------------------------------------------------------------------
NPV (5%) KUS$ 400,193 397,040 355,823
=---------------------------------------------------------------------------
IRR % 21.4% 21.5% 21.3%
=---------------------------------------------------------------------------
The Scoping Study includes only the underground portion of the Angostura gold-silver deposit, with a
total mineable resource comprised of In Stope Inferred Mineral Resources of 2.4 million ounces of gold
in 13.98 million tonnes grading 5.35 grams gold, 29.61 grams silver per tonne and 0.091% copper based
on 3 gram gold per tonne cut-off grade.
The Scoping Study contemplates a 4,000 tonnes per day ("tpd") underground mine and a 3,300 tonne per
day floatation plant producing an average of just over 140,000 ounces of gold and just over 570,000
ounces of silver annually over a 14 year mine life. The total mine capital cost is $220 million for
the life of the mine, with $108 million for equipment and $49 million for development. These numbers
include a 35% contingency given the preliminary nature of the analysis.
In all three of the processing options (Roasting, Pressure Oxidation ("POX") and Bio-Oxidation
("BIOX")) the main final product is metal Dore, with a content of 75% of gold-silver and 25% of
copper. In the case of roasting, small productions of copper cathodes and sulfuric acid were also
accounted and included in the economic evaluation. Pre-tax NPV at 5% discount rate and IRR of the cash
flows have been calculated for a gold price of $1,015 per ounce and a silver price of $15.85 per
ounce. Higher prices were applied to the two initial years of the plan ($1,170 per ounce for gold and
$18.25 per ounce for silver).
All the options show positive results. The option of Roasting shows better NPV and slightly lower IRR
compared to the POX option due to the contribution of copper cathodes and sulfuric acid sales. Without
that contribution this option results in an NPV of $340 million with a 17.8% IRR.
Project sensitivity analysis indicates that the Project NPV is more sensitive to feed grade and metal
price followed by operating costs and then capital costs.
Mine Design and Processing
Different mining methods were analysed for the underground exploitation of the Angostura deposit.
Based on the rock conditions presented, a geotechnical assessment was provided by consultants AKL
S.A., whose recommendations for mining methods were:
=- Veins with less than 5 m width = Bench and Fill Stoping
=- Veins within 5 m and 20 m width = VCR (Vertical Crater Retreat)
=- Veins within 20 m and 40 m width = Blast Hole Open Stoping
The processing operation was designed for a nominal throughput of 3,288 tpd (tonnes per day) with an
average head grade of 5.5 grams gold, 18 grams silver and 0.077% copper. According to mining plan the
ore type composition is: 75% sulfide; 15% transition and 10% oxide.
The Mine layout was designed considering the following restrictions and criteria:
=- Avoid surface accesses and roads above 3,000 meters above sea level.
=- Main transport levels should connect the different sectors of
production.
=- Portals for access to the main transport levels located below 3,000
meters above sea level.
=- If possible, use accesses from surface avoiding development of long
internal ramps.
=- Ore passes will take the ore to the transport level, and ventilation
shafts will provide fresh air; for every ramp created. The ventilation
shafts will be equipped with fans (range between 200 to 300 thousand
cfm) that have been sized according to the requirements of the mine.
Mineable Mineral Resources ("In Stope Inferred Mineral Resources")
In the preliminary underground study, underground mining potential was restricted by the terms of
reference resulting in a cut-off grade of 3.0 g/t gold. The mineral resource estimate is as of March
18, 2011 and includes drill and assay data up to July 2010. A gold price of $850 per ounce was
utilized for the cut-off grade calculation. Drilling results reported subsequent to this period will
be incorporated into future resource updates.
In Stope mineral resource estimates consider dilution and the mineral resource estimates were
determined from the selected veins by generating a contour at 3.0 gram gold per tonne cut-off grade.
These contours were created from plan views at 20 metres. Stopes were created from 20 m level
contours. These polygons were tied between levels to delineate the corresponding solids representing
the stopes. A minimum width of 2 m was applied for the construction of the solids. Given the
separation of the levels and the width of the veins, the delineation of the stopes does not accurately
follow the limits of the high grade veins, incorporating dilution to the content of the generated
solids. For this reason, no additional dilution factors have been applied to the calculation of the
mineable resources.
The terms of reference are detailed below:
=---------------------------------------------------------------------------
Total Mine Cost (Production & Maintenance) 40 US$/t
=---------------------------------------------------------------------------
Process Cost 20 US$/t
=---------------------------------------------------------------------------
G&A 10 US$/t
=---------------------------------------------------------------------------
Selling 10 US$/oz Au
=---------------------------------------------------------------------------
Recovery Au 85 %
=---------------------------------------------------------------------------
Au Price 850 US$/oz
=---------------------------------------------------------------------------
The mining method selected as most suitable for the preliminary economic assessment was bench and fill
because of the narrow width of veins.
Diluted mineable resources contained within stope limits are detailed in the following table:
In Stopes Inferred Mineral Resources, @ 3.0 g/t Au COG (diluted)
=--------------------------------------------------------------------------
Ore (t) Au (g/t) Ag (g/t) Cu (%)
=--------------------------------------------------------------------------
Oxide 616,324 5.746 18.514 0.027
=--------------------------------------------------------------------------
VETA DE BARRO 144,203 5.836 8.287 0.009
=--------------------------------------------------------------------------
CENTRAL 112,470 6.000 18.662 0.048
=--------------------------------------------------------------------------
PEREZOSA FAULT 229,678 6.028 11.302 0.022
=--------------------------------------------------------------------------
SILENCIO-LOS LACHES 129,972 4.928 42.477 0.035
=--------------------------------------------------------------------------
Mixed 2,291,293 5.676 21.990 0.043
=--------------------------------------------------------------------------
VETA DE BARRO 435,836 6.200 15.984 0.025
=--------------------------------------------------------------------------
CENTRAL 174,416 3.975 25.204 0.090
=--------------------------------------------------------------------------
PEREZOSA FAULT 945,243 5.507 13.029 0.053
=--------------------------------------------------------------------------
SILENCIO-LOS LACHES 735,798 5.987 36.298 0.030
=--------------------------------------------------------------------------
Sulfide 11,076,011 5.260 31.806 0.105
=--------------------------------------------------------------------------
VETA DE BARRO 1,070,032 5.065 16.345 0.044
=--------------------------------------------------------------------------
CENTRAL 685,539 4.731 16.103 0.169
=--------------------------------------------------------------------------
PEREZOSA FAULT 6,032,143 5.462 15.260 0.094
=--------------------------------------------------------------------------
SILENCIO-LOS LACHES 3,288,297 5.062 70.463 0.131
=--------------------------------------------------------------------------
Total 13,983,628 5.349 29.612 0.091
=--------------------------------------------------------------------------
In addition to the above mineable portion of the resource estimate, Mineral Resources, inside the high
grade veins and outside the stopes @ 3.0 g/t Au COG which were not included in the economic assessment
but are included in the Technical report are as follows:
Outside of the Stopes Mineral Resources, @ 3.0 g/t Au COG
=--------------------------------------------------------------------------
Ore (t) Au (g/t) Au Oz Ag (g/t) Cu (%)
=--------------------------------------------------------------------------
INDICATED
=--------------------------------------------------------------------------
Oxide 499,214 5.43 87,198 15 0.025
=--------------------------------------------------------------------------
Mixed 1,783,624 5.77 330,880 24 0.037
=--------------------------------------------------------------------------
Sulfide 5,642,124 5.62 1,019,271 31 0.102
=--------------------------------------------------------------------------
Sub-total 7,924,963 5.64 1,437,349 28 0.083
=--------------------------------------------------------------------------
INFERRED
=--------------------------------------------------------------------------
Oxide 308,467 5.78 57,328 14 0.028
=--------------------------------------------------------------------------
Mixed 666,322 6.42 137,632 18 0.050
=--------------------------------------------------------------------------
Sulfide 4,207,439 5.94 803,700 35 0.107
=--------------------------------------------------------------------------
Sub-total 5,182,227 5.99 998,661 32 0.095
=--------------------------------------------------------------------------
The mineral resources in this press release were estimated using the Canadian Institute of Mining,
Metallurgy and Petroleum (CIM), Standards on Mineral Resources and Reserves, Definitions and
Guidelines prepared by the CIM Standing Committee on Reserve Definitions. Solids were constructed to
represent the mineralization, using a mix of criteria: geologic description and gold grade, using a
reference cut-off of 1.5 g/t. 200 different veins were modeled, which were grouped into 5 different
families, according to predominant directions. Data inside the veins were composited to a standard 1m
length, except for Los Laches area, where 1.5 m length was applied. Grade distribution was evaluated
using a probability plot. Grade caps were applied to gold, silver and copper grades. Variograms were
constructed to provide the appropriate distances for search ellipsoid radii for each vein family.
Ordinary kriging was used for interpolating gold, silver, copper and sulfur. Each vein was
interpolated with its own data and using an ellipse that follows the dominant aptitude of its family
(Strike and Dip). The model was validated using visual methods, tabulations, and comparison between
the average grade of composites and interpolated values (drift analysis) to ensure no biases were
present.
The mineral resource estimate and the mineable in stope mineral resource estimate are based on 306,915
metres of drill core from 936 drill holes.
Mineral resources which are not mineral reserves do not have demonstrated economic viability. The
estimate of mineral resources may be materially affected by environmental, permitting, legal, title,
taxation, sociopolitical, marketing, or other relevant issues. The quantity and grade of reported
Inferred resources in this estimation are uncertain in nature and there has been insufficient
exploration to define these Inferred resources as an indicated or measured mineral resource and it is
uncertain if further exploration will result in upgrading them to an Indicated or Measured mineral
resource category.
The Scoping Study 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, and there is no certainty that the preliminary assessment
will be realized. Additional drilling will be required and is planned to better categorize these
mineral resources.
Moving Forward
Based upon the results of this Scoping Study, Greystar plans to proceed with follow-up diamond
drilling, engineering, metallurgy and other work in order to develop a Preliminary Feasibility Study
for an underground only operation. A diamond drilling program is underway to expand the current
underground resource. Trade-off studies will include different processing options and mining
schedules. Greystar will continue with further metallurgical testing to optimize process parameters
and project economics.
Exploration Program
The Company will also continue exploration on its mineral properties. Over the next year, exploration
efforts will focus on extending the mineralization at Angostura to depth and outlining the extent of
mineralization on its La Plata property and Mongora prospect 4-km and 3-km to the southwest
respectively.
Qualified Persons
The Preliminary Economic Assessment is based on a NI 43-101 compliant mineral resource estimate
reviewed by Rodrigo Mello, Independent Consulting Geologist (MAusIMM).
The following are the Qualified Persons as defined under National Instrument 43-101 who are
responsible for reviewing and approving the contents this press release: Carlos Guzman, Principal
Mining Engineer (MAusIMM), was responsible for the overall preparation of the report, Rodrigo Mello,
Geologist (MAusIMM), was responsible for the resource estimation and database auditing, John Wells,
Metallurgical Engineer (FSAIMM), provided an independent review and analysis of the metallurgy and
process plant, Giovanny Ortiz, Exploration Manager from Greystar Resources Ltd. (MAusIMM) was
responsible for the preparation of the geology, exploration and geological model. The expert, Americo
Delgado, Superintendent of Metallurgy from Greystar Resources, was responsible for the metallurgical
testwork program and the review of the process plant design.
All of the above Qualified Persons and experts are independent of the Company with the exception of
Mr. Ortiz and Mr. Delgado.
About Greystar Resources Ltd.
Greystar Resources Ltd. is a precious metals exploration and development company currently working on
an alternative way to develop its wholly owned, multi-million ounce Angostura gold-silver deposit in
northeastern Colombia. Greystar is committed to developing the project but recognizes that there is a
need to reconfigure it. Consequently, we intend to continue with studies into the feasibility of an
alternative project, which includes underground, at Angostura whilst the uncertainty surrounding the
definition of Paramo and the exclusion of mining from Paramo affects the permitting of our open
pit/heap leach project.
Forward-Looking Statements
Certain statements in this news release are "forward-looking" within the meaning of Canadian
securities legislation. They include statements about estimated resources, estimated annual
production, estimated pre-tax internal rate of return, estimated initial capital cost, estimated pre-
tax net present value and estimated mine life relating to an underground only operation at the
Company's Angostura Project and the future price of gold and silver. Forward-looking statements are
necessarily based upon the current belief, opinions and expectations of management that, while
considered reasonable by the Company, are inherently subject to significant business, economic,
competitive, political and social uncertainties and other contingencies. Many factors could cause the
Company's actual results to differ materially from those expressed or implied in the forward-looking
statements. These factors include, among others, conclusions or realization of mineral resources, the
actual results of exploration activities, possible variations in ore grade or recovery rates,
fluctuations in the price of gold and silver, risks relating to additional funding requirements,
political and foreign risks, production risks, environmental regulation and liability, government
regulation as well as other risk factors set out under the heading "Risk Factors" in the Annual
Information Form dated March 25, 2011 which is available on SEDAR at www.sedar.com. Investors are
cautioned not to put undue reliance on forward-looking statements due to the inherent uncertainty
therein.
CAUTIONARY NOTE CONCERNING INFERRED MINERAL RESOURCES
A preliminary economic assessment is preliminary in nature and includes inferred mineral resources.
Inferred mineral resources have a great amount of uncertainty as their existence and as to their
economic and legal feasibility. It cannot be assumed that an inferred mineral resource will have the
economic consideration applied that would enable it to be categorized in the mineral reserves
category, and there is no certainty that the preliminary assessment will be realized.
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
Greystar Resources Ltd.
David B. Rovig
Interim CEO
+ 406 245 9520
rovigminerals@imt.net
OR
Greystar Resources Ltd.
Rafael Nieto Loaiza
President
+57 310 239 8269
rnieto@greystar.com.co
www.greystarresources.com
OR
4C Communications
Carina Corbett
Carina Corbett
+44 (0) 20 3170 7973
Corbett@4ccommunications.com
OR
Evolution Securities
Romil Patel / Andrew Dacey
London NOMAD Contacts
+44 207 0714300
Neither the Toronto Stock Exchange nor the AIM Market of the London Stock Exchange has reviewed and
neither accepts responsibility for the adequacy or accuracy of this news release.
Greystar Resources Ltd.
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