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- Robust economics indicated for Captain North Extension deposit
- Additional drilling recommended for Captain and Taylor Brook deposits
CALGARY, Oct. 20, 2011 /CNW/ - Stratabound Minerals Corp. is pleased to announce the results of an independent, National Instrument 43-101 compliant Preliminary Economic Assessment (PEA) of its 100%-owned base metal properties near Bathurst, New Brunswick. The PEA was done by Tetra Tech WEI Inc. (formerly Wardrop Engineering) of Toronto, Ontario in order to determine baseline economics of the properties.
In summary, the Captain North Extension (CNE) zinc-lead-silver deposit shows robust economics as a potential open pit custom-milling operation, with an Internal Rate of Return of 292%. The Captain (copper-gold) and Taylor Brook (zinc-lead-silver) deposits are reported to be non-economic at this time, with additional drilling programs recommended.
For the CNE deposit, the base case of the financial analysis assumes the open pit mining of 325,021 tonnes grading 4.74% zinc, 1.76% lead, 0.08% copper, and 58.09 g/t silver, and metal prices of $1.22/lb for zinc, $1.10/lb for lead, $3.62 for copper, and $22.74/oz for silver. The projected mining rate is 1,000 tonnes per day for a life of mine slightly less than one year.
Stripping ratio is 2.95; ultimate pit dimensions are 220 m X 175 m; depth is 71 m. A mining resource recovery of 95% with an overall waste rock dilution of 5% was assumed.
The strategy assumes a contract mining operation and toll mill processing, effectively eliminating most of the typical capital costs for mine construction projects, as capital is not required for mine equipment or for the processing plant.
The financial analysis in this PEA used a process operating cost of $28.53 which incorporates toll milling premiums. This represents an approximate 75-100% surcharge above operating cost for a typical 1,000 t/d mill with three concentrates. The financial analysis assumes this is adequate to represent the cash flow generated from a toll mill operation.
Revenue contribution is calculated from the net smelter return (NSR) for three concentrates.
For the one operating year the gross revenue is $37.6 M, the total operating costs (OPEX) including toll mill surcharges are $16.8 M, and total capital costs (CAPEX) are $6.9 M. This results in a pre-tax cash flow of $14.0 M. This result is dependent on successfully acquiring a toll mill contract and contract mining rates as used in the PEA report. The cash flow with the application of various discount rates is shown in Table 1.
Table 1 - Pre-tax Net Present Value (NPV)
& Internal Rate of Return (IRR)
|Pre-tax & Pre-finance NPV @ 6%||$13,131,483|
|Pre-tax & Pre-finance NPV @ 10%||$12,599,611|
|Pre-tax & Pre-finance NPV @ 20%||$11,372,963|
Based on sensitivity analysis results, the project is most sensitive to variation of the NSR value, much less sensitive to OPEX and least sensitive to CAPEX. For example, the sensitivity results for the base case using a 6% discount rate are summarized in Table 2.
Table 2: Sensitivity Analysis Results Using 6% Discount Rate
|NPV (Cdn$)||NPV Difference (Cdn$)||IRR%|
|NSR decrease 20%||5,977,939||(7,153,544)||134|
|NSR increase 20%||20,242,238||7,110,755||447|
|OPEX increase 20%||9,936,212||(3,195,271)||221|
|OPEX decrease 20%||16,283,965||3,152,482||360|
|CAPEX increase 20%||11,773,833||(1,314,861)||218|
|CAPEX decrease 20%||14,446,344||1,357,650||400|
At a 1.5% ZnEq* cut-off, the CNE deposit reports a Measured resource of 37,560 tonnes at 5.77% Zn, 1.91% Pb and 0.06% Cu; an Indicated resource of 276,721 tonnes at 4.54% Zn, 1.66% Pb and 0.11% Cu; and an Inferred resource of 16,517 tonnes at 2.74% Zn, 1.20% Pb and 0.06% Cu. Silver was estimated separately, reporting an Inferred resource of 330,799 tonnes at 59.95 g/t, at a 1.5% ZnEq* cut-off. The current silver resource estimate is classified as Inferred due to the inclusion of a smaller assay database. Tetra Tech is updating the resource estimate utilizing approximately double the number of silver assays, which will improve the classification of the silver resource of the CNE deposit. This resource update will be reported in November.
Tetra Tech note a number of undrilled geophysical "satellite" anomalies to the north, east and south of the CNE deposit which require exploration in the future.
A National Instrument 43-101 compliant resource estimate has previously been disclosed (see NI 43-01 Captain Technical Report at www.stratabound.com). Tetra Tech has determined that the mineralization found to date is not economically feasible.
The Captain copper deposit still remains open at depth and Tetra Tech recommends further assessment of the higher grade core of the deposit in this direction, including completion of an exploratory drill hole measuring approximately 500 metres in length, designed to target the core zone approximately 50 metres vertically below the CP10-30 intercept. They further recommend that selective bore hole electromagnetic surveying be undertaken. Strong off-hole anomalies delineated by such work should be considered high priority drilling targets for lead-zinc mineralization flanking the copper stockwork zone.
Tetra Tech reports that the deposit as currently known has a strike length of approximately 650 m and a down-dip extent of greater than 600 m.
This low-grade lead-zinc-silver sulphide zone comprises one to four stratabound horizons of heavily disseminated to semi-massive and massive sulphides interlayered with hydrothermally altered volcanic rocks. Width and grades of the base metal mineralization are highly variable within the sulphide zone. Metal zonation, that is, zinc and lead-rich tops and copper enriched bases, is locally developed on the scale of individual horizons or on the scale of total deposit thickness.
The lead, zinc, and copper mineralization is consistent with the same ratios from other deposits in the Bathurst Mining Camp.
The mineral resource estimates for the Taylor Brook deposit at 1.60% ZnEq* are: an Indicated resource of 243,000 tonnes at 1.69% Zn, 0.85% Pb, 0.02% Cu and 33.42 g/t Ag; and an Inferred resource of 102,000 tonnes at 1.70% Zn, 0.87% Pb, 0.02% Cu and 32.59 g/t Ag.
At a lower cut-off grade of 0.60% ZnEq* the mineral resource estimates for Taylor Brook are: an Indicated resource of 1,760,000 tonnes at 0.99% Zn, 0.44% Pb, 0.02% Cu and 19.24 g/t Ag; and an Inferred resource of 1,786,000 tonnes at 0.88% Zn, 0.31% Pb, 0.03 Cu% and 13.78 g/t Ag.
The mineralization found to date is not economically feasible. Tetra Tech believes further exploration is warranted and recommends that additional drilling be conducted to further investigate the known Taylor Brook deposit as it has not been delineated laterally to the east or west, nor at depth, to determine the continuity of geology and to see whether metal grades improve in these directions. They propose a definition drill program of approximately 2,900 metres in 24 holes.
The Taylor Brook deposit appears to have a nucleus of higher grade massive suphides concentrated in the northwest of the deposit. Tetra Tech proposes that 11 of the 24 holes be drilled along the western edge of the deposit, as there has been no drilling to determine the western extent of the massive sulphide zones.
The technical information contained in this release has been reviewed by John Duncan, P.Geo. and Stan Stricker, P.Geol., Qualified Persons as defined in National Instrument 43-101.
Mike McLaughlin, P.Eng., is a project manager with TetraTech and is acting as a Qualified Person for the financial analysis. Dan Gagnon. P.Eng. is an open pit mine engineer with TetraTech and is acting as Qualified Person for the open pit mine design and the associated estimated capital and operating cost for the open pit mine. Dr. Robert Morrison, P.Geo. MAusIMM (CP) is a lead resource geologist and is the Qualified Person for the CNE resource estimate. Michael P. Cullen, P.Geo. is a senior geologist with Mercator Geological Services Limited and is the Qualified Person for the Captain resource estimate. Paul Daigle, P.Geo. is a senior geologist with Tetra Tech and is the Qualified Person for the Taylor Brook resource estimate.
*Tetra Tech reports the resource estimate in a zinc equivalent (ZnEq%) cut-off. ZnEq% is often used in polymetallic deposits to value all other metals in the deposit as an equivalent to zinc. ZnEq% is calculated based on metal value and metal recovery. The following parameters and equation were employed in determining the ZnEq% values: ZnEq% = (((Zn Price * Zn Grade * 22.04622 * Zn Recovery) + (Pb Price * Pb Grade * 22.04622 * Pb Recovery) * (Cu Price* Cu Grade * 22.04622 * Cu Recovery)) / (Zinc Price)) / 22.04622, where Zn price = $1.06; Zn recovery = 76.50%; Pb price = $0.99; Pb recovery = 80.75%; Cu price = $3.01; Cu recovery = 82.03%; lbs per tonne = 2,204.622. The impact of including Ag in the ZnEq cut-off calculation will be investigated next month.
Neither TSX Venture Exchange 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.
The PEA is based partly on Inferred Mineral Resources, which are not Mineral Reserves and do not have demonstrated economic viability. Inferred Mineral Resources 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 therefore no certainty that the contribution of the inferred resource in the PEA will be realized.
Certain information regarding the Company contained herein may constitute forward looking statements. Forward looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. These statements are subject to certain risks and uncertainties and may be based on assumptions that could cause actual results to differ materially from those anticipated or implied in the forward looking statements. The Company does not plan to update or alter any forward looking statement except where required by law. These risks include operational and geological risks and the ability of the Company to raise necessary funds for exploration. The Company's forward looking statements are expressly qualified in their entirety by this cautionary statement.