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China Gold estimates Jiama NPV at $1.2-billion (U.S.)
2012-10-25 09:00 ET - News Release
Dr. Xin Song reports
CHINA GOLD INTERNATIONAL ANNOUNCES PRE-FEASIBILITY STUDY FOR EXPANSION OF THE JIAMA PROJECT WITH IRR OF 53.7% AND PROJECT UPDATE
China Gold International Resources Corp. Ltd. has released the results of an updated National Instrument 43-101-compliant independent prefeasibility study for the phase two expansion of its Jiama copper-polymetallic mine in Tibet, China. The prefeasibility study was completed by Minarco-MineConsult (MMC), part of the Runge Ltd. group of companies, in conjunction with independent consulting engineers and management (all amounts in U.S. dollars unless otherwise stated).
- Copper measured and indicated mineral resources increased to 10.2 billion pounds of metal at 0.44 per cent Cu;
- Copper proved and probable mineral reserves increased to 6.2 billion pounds of metal at 0.77 per cent Cu;
- Production from open-pit and underground operations is expected to produce 6.3 million tonnes and six million tonnes of run-of-mine (ROM) ore per annum, respectively;
- Ramp-up to an annual processing capacity of 12.3 million t of ROM ore over a 31-year period, producing approximately:
- 176 million pounds of copper per annum;
- 35,000 ounces of gold per annum;
- 2.7 million ounces of silver per annum;
- 2,300 tonnes of molybdenum per annum;
- Estimated capital expenditures of $705-million;
- Aftertax net present value (NPV) of $1.2-billion with a discount rate of 9 per cent at metal price assumptions of $2.90/pound Cu, $18/pound Mo, $1,380/ounce Au and $16.5/ounce Ag;
- Aftertax internal rate of return (IRR) of 53.7 per cent and payback period of 4.5 years;
- Pretax NPV of $1.5-billion with IRR of 60.4 per cent;
- Life-of-mine (LOM) projected average cash cost of $1.76/pound of copper-equivalent, or $1.52/pound Cu with other metals credited;
- Average annual net cash flow of $120-million for 31-year LOM;
- Contribution of Cu, Mo, Au and Ag to gross revenues are 75 per cent, 11 per cent, 7 per cent and 6 per cent, respectively. Lead and zinc contributes less than 1 per cent of overall revenue;
- Undiscounted cumulative net cash flow is approximately $3.8-billion.
Dr. Xin Song, chief executive officer of the company, commented: "With a potential increase in the processing capacity from 6,000 to 40,000 tonnes per day, along with a longer mine life of close to 31 years, we are very pleased with the future outlook of the operation. Highlights of the study show a payback period of less than five years, an internal rate of return of 53.7 per cent and an aftertax NPV of approximately $1.2-billion, indicating solid economics and strong annual net cash flow of $120-million over the mine life. During 2012, we continued to increase our reserve and resource base, and we work to achieve the expansion of this strategic asset."
The Jiama project is a large-scale polymetallic (Cu, Mo, Au, Ag, Pb and Zn) deposit located about 60 kilometres east of Lhasa City along the Sichuan-Tibet Highway within the Gangdise copper metallogeny belt in central Tibet, China.
The company plans to expand the project from its current processing capacity of 6,000 tpd to 40,000 tpd of ore through the expansion of current open-pit operations and the development of new open-pit and underground mining operations. The phase two expansion will include four open pits, one underground and a new floatation plant with a processing capacity of 34,000 tpd of ore. The total project processing capacity will be increased from its current production rate of 1.8 million tonnes of ore per year to 12.3 million t of ore per year, producing approximately 176 million pounds of Cu, 2,300 tonnes of Mo, 35,000 ounces of Au and 2.7 million ounces of Ag per annum over a period of 31 years. LOM average head grade will be 0.77 per cent, 0.03 per cent, 0.22 gram per tonne and 12 g/t for Cu, Mo, Au and Ag, respectively.
The project is located in the central-south portion of the Gangdise-Nianqing Tanggula terrane. Stratigraphy outcropping in the project area is dominated by passive epicontinental clastic-carbonate rocks. Three types of copper-polymetallic mineralization are observed within the project. These include skarn-, hornfels- and porphyry-hosted mineralization. All three styles of mineralization are structurally controlled with concentrations occurring along shear/structure zones and mineralization offset by thrust and detachment faults, as well as associated with anticlines and synclines.