Mr. Stephen Orr reports
VENTANA ANNOUNCES POSITIVESCOPING STUDY RESULTS FOR LA BODEGA PROJECT ANDINITIAL NI 43-101 COMPLIANT MINERAL RESOURCE ESTIMATE; AVERAGE ANNUALGOLD PRODUCTION OF 301,000 OZ AT $322 PER OZ CASH COSTS FOR THE FIRSTSIX FULL YEARS; INFERRED MINERAL RESOURCE OF 3.5 MILLION GOLD OUNCES
Ventana Gold Corp. hasreleased an initial independent National Instrument 43-101-compliantmineral resource estimate and the scoping study results for its100-per-cent-owned La Bodega gold project in the California golddistrict of northern Colombia. The scoping study and initial resourcecalculation work represent the aggregate technical analysis conductedto-date on a portion of the La Bodega and La Mascota mineralized zonesthat exist within Ventana's La Bodega project. All figures are in USDollars except as otherwise noted.
Highlights of the report include:
-- Average annual production for the first six full years of 347,000 goldequivalent (AuEq)(i) ounces, which is comprised of 301,000 ounces ofgold, 1.4 million ounces of silver and 6.9 million pounds of copper-- Average cash costs of $322 per ounce of gold for the first six fullyears, net of silver and copper by-product credits-- Pre-tax internal rate of return (IRR)(i) of 34%-- Estimated start-up capital cost of $297 million-- Pre-tax net present value (NPV)(i) (5%) of $807 million-- Inferred mineral resource of 3.5 million ounces of gold, 19.2 millionounces of silver and 84.6 million pounds of copper-- Mine life of 14 years at a planned production rate of up to 7,500 tonnesper day-- Additional opportunities:- Resource expansion from ongoing drilling with surface explorationdrills focusing on La Baja, Las Mercedes, Aserradero, and the gaparea between the La Bodega and La Mascota zones- Resource expansion from underground drilling to explore deepextensions of the ore body past the current depth of the mineralresource- Improved mineral recovery from metallurgical optimization workconducted at a site-based pilot processing plant- Increased production from further exploration and development of theknown areas of mineralization(i) based on $1,000 per ounce gold price, $17 per ounce silver price and$3.00 per pound copper price.
"The scoping study results andresource estimate for La Bodega demonstrate the robust economics andvalue this project has to offer," said Stephen Orr, President and ChiefExecutive Officer of Ventana Gold. "These results confirm our beliefthat the La Bodega project is one of the most exciting emerging golddeposits in South America. Concurrent with on-going exploration effortsto upgrade and expand the resource, we will now focus on completion ofthe feasibility to bring Ventana closer to becoming Colombia's leadingprecious metals producer."
The Scoping Study
The scopingstudy calculates a pre-tax NPV (5%) of $807 million and a pre-tax IRR of34%, based on a $1,000 per ounce gold price, $17 per ounce silver priceand $3.00 per pound copper price. The project payback period isestimated at 2.9 years.
Project highlights from the scoping study are as follows:
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Annual Gold Production (i) (ounces) (First six full
years) 301,000
By-product Cash Cost ($ per ounce) (First six full years) $322
Operating Cost ($ per tonne) $43.72
Mine Life(i) 14 years
Overall Gold Recovery (after smelter deductions) 84%
Average Gold Equivalent Grade of Ore Processed 4.50 g/t
Capital Cost ($ millions) $297M
Pre-tax Undiscounted Cash Flow $1.4B
Pre-tax NPV @ 5% $807M
Pre-tax IRR 34%
Payback 2.9 years
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(i) Based on a mine plan derived from the initial NI 43-101 mineral resource
estimate
The initial capital cost for the La Bodega project is estimated at $297 million and is summarized below:
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Mining $25M
Ore transportation $27M
Processing $104M
Tailings storage $19M
Infrastructure $26M
Owners costs $29M
Other indirect costs $3M
EPCM $19M
Contingency $45M
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TOTAL $297M
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The Company estimatessustaining capital to be approximately $71 million for the life of mineand further mine development to be approximately $98 million.
Based on Ventana's internal analysis, the pre-tax NPV and pre-tax IRR for various scenarios are summarized below:
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Base Case Upside Case
($1,000/oz Au) ($1,200/oz Au)
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Pre-tax NPV (0%) $1.4B $2.0B
Pre-tax NPV (5%) $807M $1.2B
Pre-tax IRR 34% 43%
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Furtheranalysis was conducted to evaluate the impact of changes in capitalcost and operating cost estimates. If capital costs or operating costswere increased by 10%, the project's pre-tax NPV (5%) would be reducedby $26 million or $78 million, respectively.
The corporate taxrate in Colombia is approximately 33%, with the effective tax rateexpected to be approximately 23%, which takes into account current taxincentives and corporate tax planning initiatives.
Mining and Processing
Geotechnicalwork has indicated that the mineralized zone and its host rock aresufficiently competent to support an underground operation planned toproduce up to 7,500 tonnes per day. Ore extraction will occur by asublevel stoping bulk mining method with 20 metre high by 12 metre widetransverse panels. A total of six to eight panels must be active at alltimes to maintain the planned production rate and paste backfill will beused to fill open voids. The mine will be developed with a decline forpersonnel, material and equipment access and a vertical shaft for highvolume ore transport to the process plant. The shaft will be sunk to aninitial depth of 625 metres to facilitate expansion of the productionrate for any additional resources discovered at depth.
During thefirst six years of full production, the mine is expected to produce anannual average of 301,000 gold ounces, 1.4 million silver ounces and 6.9million pounds of copper at an average cash cost of approximately $322per ounce of gold, net of silver and copper by-product credits. Thetotal cash cost including royalties is expected to be $359 per ounce,net of silver and copper by-product credits. Over the 14 year mine life,annual production is expected to average 220,000 gold ounces, 1.2million silver ounces and 5.4 million pounds of copper at an averagecash cost of approximately $364 per ounce of gold, net of silver andcopper by-product credits. The total cash cost including royalties isexpected to average approximately $402 per ounce over the life of mine,net of silver and copper by-product credits.
Mineral processingwill consist of separate campaign treatment for the La Mascota and LaBodega ores. The process plant contains an initial gravity circuit thatcould recover approximately 24% of the La Mascota gold based on testingto-date. The remaining La Mascota mineralized material will be (1)subjected to flotation to create a separate copper-gold-silverconcentrate for sale to a third party smelter and (2) processed through aleach circuit to extract the remaining gold and silver that will bepoured into a dore bar at site. Metallurgical testing to-date hasindicated 86% of the gold, 89% of the silver and 88% of the copper canbe recovered from the La Mascota ore. The La Bodega ore, which accountsfor approximately 20% of the mined material, will be entirely processedin the flotation circuit to create a bulk flotation concentrate forfinal processing at a third party smelter. Recovery is expected to be86% of the gold, 89% of the silver and 77% of the copper. Overall goldrecovery is expected to be 84% after smelter deductions.
All ofthe La Bodega project's mineralization and proposed facilities are atelevations below the defined Paramo ecosystem, with the highest point at2,900 metres in elevation.
Scoping Study Contributors
MTBProject Management Professionals in Greenwood Colorado acted as overallproject managers for the resource and scoping study. Independentconsultants Robert Sims PGeo Inc. and Bruce Davis FAusIMM areresponsible for the mineral resource estimate. Giovanni Di Prisco didthe mineralogy analysis and Warren Pratt conducted the geologicstructural study. Geotechnical analysis was carried out by Wylie &Norrish and mine design was performed by Mine Development Associates inReno Nevada. Metallurgical analysis and design were managed by MikeOunpuu and Samuel Engineering using SGS Lakefield's lab. VectorEngineering conducted hydrology and environmental baseline work alongwith facility location design.
The NI 43-101 report will includethe initial resource statement combined with the scoping study technicalwork and will be filed on SEDAR within 45 days.
Initial NI 43-101 Mineral Resource Estimate
Ventana'sinitial mineral resource is comprised of 3.5 million ounces of gold,19.2 million ounces of silver and 84.6 million pounds of copper in aninferred category. The mineral resource estimate is as of November 8,2010 and includes drill and assay data up to September 2010. Drillingresults reported subsequent to this period will be incorporated intofuture resource updates. A summary of the inferred mineral resourceestimate is provided below:
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Tonnes Gold Silver Copper Gold Silver Copper
(000s) (g/t) (g/t) (%) (M oz) (M oz) (M lbs)
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La Bodega 4,672 4.1 10.6 0.10 0.6 1.6 10.0
La Mascota 18,671 4.0 21.6 0.14 2.4 13.0 59.3
La Mascota
SW
Extension 3,806 3.2 36.2 0.17 0.4 4.4 14.6
Footwall
Patches 646 3.1 10.3 0.05 0.1 0.2 0.7
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Total
Inferred: 27,795 3.9 21.5 0.14 3.5 19.2 84.6
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Notes:
1. Mineral resource calculated at a 2.0 g/t Au cut-off for large stopes and
1.8 g/t Au for smaller stopes.
2. Mineral resources that are not classified as mineral reserves do not have
demonstrated economic viability.
The initial mineral resource is distributed over an areameasuring approximately 2,500 metres along strike and up to 500 metresbelow surface. The bulk of the resource exists above 250 metres in themain La Mascota zone. The La Mascota Southwest Extension, FootwallPatches and deeper intercepts are sparsely drilled and represent areaswhere significant expansion potential exists. Mineralization at LaBodega, La Mascota and in the SW extension zone remains open at depthand along strike. Ventana has drilled 341 holes for a total of 126,000metres. Approximately 69% of the gold and 68% of the silver resourceoccur within the main La Mascota zone. Please see attached image:http://media3.marketwire.com/docs/ven117m.pdf.
Mineral resourceestimates were generated from sample data up to September 2010 andcontained within a total of 266 diamond core holes completed duringVentana's ongoing drilling program. Estimates were made using ordinarykriging with nominal block size measuring 5 metres x 5 metres x 5metres.
The mineral resource at different cut-off grades issummarized below and demonstrates the sensitivity of the resource tovariable cut-off grades. This scoping study mining plan uses a cut-offgrade of 2.0 grams per tonne for the large stopes and 1.8 grams pertonne for smaller stopes at La Mascota and La Bodega. Ultimately, theactual mining cut-off grade will be dependent upon gold, silver andcopper prices and the achieved operating costs in the operation.
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Cut-off
Grade (g/t Tonnes Gold Silver Copper Gold Silver Copper
gold) (000s) (g/t) (g/t) (%) (M oz) (M oz) (M lbs)
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0.5 139,469 1.5 10.2 0.06 6.7 45.7 184.5
1.0 64,128 2.5 15.7 0.09 5.1 32.3 130.1
1.5 39,610 3.2 19.2 0.12 4.1 24.5 103.0
2.0 27,795 3.9 21.5 0.14 3.5 19.2 84.6
2.5 20,694 4.4 23.3 0.15 3.0 15.5 69.8
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Next Steps and Opportunities
Pilot Plant
Duringthe next year, particular effort will be devoted to the metallurgicaldesign for metal recovery from the La Bodega and La Mascota zones ofmineralization. Recoveries have yet to be optimized and, to that end,Ventana is reconfiguring the existing and permitted La Baja processplant to operate as a pilot plant. This will allow continuous commercialscale testing using the current process design so that the full-scaleproject plant is constructed to effectively handle the variable orechemistry that exists between the La Bodega and La Mascota zones.
Exploration Program
TheCompany will continue exploration on its mineral properties, both fromthe surface and underground. Over the next year, exploration effortswill focus on extending the mineralization in La Bodega and La Mascotaalong strike and at depth. Ventana controls the mineral rights along 3.3kilometres of the mineralized strike extent.
Surface drills willalso be devoted to defining additional resources and the mineralizationextents of the recently discovered parallel Las Mercedes and Aserraderozones where the Company intercepted 3.0 metres at 14.33 grams per tonnegold and 5.0 metres at 23.18 grams per tonne gold, respectively. NeitherLas Mercedes nor Aserradero have been included in the initial NI 43-101resource statement. These zones are open in all directions and thepotential exists for additional zones of mineralization to be discoveredwithin the Company's mineral tenements. The Company will continue itsexploration efforts at the recently acquired La Baja property, whereinitial drilling along strike to the southwest of La Mascota intercepted15.2 metres at 13.48 grams per tonne gold.
The La Mascota and LaBodega zones are particularly prospective and completely unconstrainedfor mineralization extension at depth where drilling from surface hasintercepted mineralization beyond 500 metres down-dip. Effectiveexploration and delineation of the depth extent requires drilling fromunderground and work is starting on an exploration decline to developunderground access into the La Mascota and La Bodega zones. Ventana hasawarded the contract for the decline to Geominas SA and they havealready begun mobilisation on site. Underground exploration drilling isexpected start in the second quarter of 2011 to explore the deepextensions of mineralization.
Ventana also controls approximately3,700 hectares of mineral tenements in the Vetas district east of the LaBodega project tenements. Geochemical work has defined a number ofprospective drill targets and the Company plans to test an initialtarget called La Francia in 2011. La Francia has been detected over astrike length of 800 metres with samples grading over 30 grams pertonne.
Summary of Upcoming Events
-- Begin construction on the exploration decline - Q4 2010-- Begin drilling from the underground - Q2 2011-- Commission full pilot processing plant - Q2 2011
Conference Call
Ventanawill host a conference call today at 10:00am EDT/7:00am PDT to discussthe mineral resource statement and scoping study results. To join thecall:
-- Dial toll free 1-888-231-8191 from within North America-- Dial 1-647-427-7450 from international locations
A live audio webcast will also be available at www.ventanagold.com.
Anaudio playback of the call will be available following the call at12:00 pm ET for seven days and can be accessed by dialing the followingnumbers with the passcode 17065714.
-- Dial toll free 1-800-642-1687 from within North America-- Dial 416-849-0833 from international locations
Review by Qualified Person, Quality Control and Reports
Theresults of Ventana's drilling program have been reviewed, verified andcompiled by Jon Lehmann, L.P.G., a qualified person as defined byNational Instrument 43-101 (NI 43-101). Mr. Lehmann has over 25 years ofmineral exploration experience, is a Licensed Professional Geologist inthe State of Washington and a member in good standing of the CanadianInstitute of Mining and Metallurgy.
To ensure reliable sampleresults Ventana has a QA/QC program for gold in place that includes theinsertion of blanks, duplicates, and certified reference standards ineach batch of samples. Core is photographed and sawed in half with onehalf retained in a secured facility for verification purposes. Samplepreparation (crushing and pulverizing) is performed at an independentlocal laboratory established by a joint effort between the regionalenvironmental permitting agency and the German Geological Survey, and atthe Colombian preparation laboratory of ALS Chemex Laboratories.Prepared samples are direct-shipped to ALS Chemex Laboratories in Lima,Peru, an ISO 9001:2000 certified laboratory, for analysis.
IndependentNI 43-101 technical reports have been prepared by Samuel Engineering,Inc., dated May 1, 2010 for the La Bodega project and by EurGeol MillerO'Prey, P.Geo., dated June 14, 2008 for the nearby California-Vetasproject, to provide an updated review of the exploration activities thathave occurred on the projects. These reports are posted on Ventana'swebsite at www.ventanagold.com.
We seek Safe Harbor.
