Cambridge Mineral Resources plc ("CMR" or "the Company")(AIM:CMR)announces that, following the completion of an economic study on the Quintana Gold Project, the Company will proceed with the development of the mine. The Economic Feasibility Study (the "Study") suggests the technical and commercial viability of underground mining and the construction of a new processing plant at Quintana.
The Study integrates the work of a team of internationally recognised consultants who undertook or validated individual sections such as resource estimates, mining and mineral processing methods, and operating and capital costs. Estimates of production tonnage and mill head grade used in the financial model of the mine were made in-house by CMR personnel.
Highlights
- Capital cost estimated at US$4.5 million - payback period 19 months
- Cash operating cost of US$131/oz average over mine life
- NPV of US$10.8 million at a 10% discount rate (based on initial 5.5 year mine life)
- Pre-tax annual profits of approx US$5 million expected
- Initial life of mine 5.5 years but excellent upside to extend
- Current uncut JORC resource statement: Over 86,000 ozs of gold valued in situ at US$51.6m assuming a gold price of US$600 per oz
- Planned annual production from Quintana to rise to c.15,500 ozs of gold and 6,500 ozs of silver within 36 months
The Quintana Mine is located in the Remedios Municipality of the Department of Antioquia in central Colombia within the country's foremost gold mining district and exploits a single mesothermal auriferous quartz vein with minor sulphides and free gold. The Total Resource of 109,852 tonnes at 24.58 g/t gold in situ includes JORC compliant Proven and Probable Reserves of 24,740 tonnes at 7.33g/t gold, 11.87g/t silver together with Inferred Resources of 87,581 tonnes at a mine diluted grade averaging 21.02 g/t gold.
The in-house economic study realised a NPV of US$10.8m, based on a gold price of US$600/oz and Plant and Infrastructure capital costs of US$4.5m.
Cash operating costs are forecast to average just US$131/oz for the initial 5.5 years of the project based upon known Reserves and Resources. However with the nature of vein type deposits and the methods of ongoing development this could be extended.
CMR Managing Director Colin Andrew commented:
"The study has confirmed the excellent economic parameters of the Quintana Mine which we expect to be a major profit contributor to CMR over a long period. We are now advancing funding discussions for Quintana and the other mines that the Company intends to bring forward to a production decision over the next year or so."
The Reserve & Resources estimation and analytical methodologies have been independently reviewed and approved by CSA International Ltd. ("Competent Person's" report in terms of the JORC Code). Mineral processing is simple and excellent recoveries are indicated from scoping and pilot scale metallurgical testwork conducted on behalf of CMR by Wardell Armstrong International, UK. Process Plant Design and costings of both Capex and Opex has been completed by GBM Minerals Engineering Consultants Ltd, UK, and electrical installation and switchgear have been designed by Eng. Jorge Ortiz of PRYME, Medellin. Tailings impoundment design and laboratory testwork was completed by Golder Associates, Brazil and Peru. A full Environmental Impact Assessment ("EIA") and a detailed environmental programme have been completed by Hernan Pulido & Associates of Medellin, Colombia and the University of Minnesota, USA. Colombian tax, amortization and other fiscal policies within the financial model have been verified by Grant Thornton, Colombia.
It is important to note that the financial model is based on a plant feed grade averaging 26.6 g/t gold over five and a half years. The Company intends to obtain this grade by mining the highest grade resource and leaving low grade material in pillars. Around 90% of this feed is scheduled to be from resources currently classified as Inferred. An Inferred Mineral Resource is a resource for which tonnage, grade and mineral content can be estimated with a low level of confidence and caution is necessary when this category is used in economic studies. There is no guarantee that Inferred Resources will be reclassified as reserves.
Information in this press release is based on data reviewed by Colin J. Andrew, BSc ARSM MIMMM FGS CEng, Managing Director for Cambridge Mineral Resources plc, who is a Chartered Engineer and Member of the Institute of Materials, Minerals & Mining, and qualifies as a Competent Person in accordance with the "Guidance Note for Mining, Oil and Gas Companies, March 2006" of the London Stock Exchange. Mr Andrew has over 30 years experience in mining and mineral exploration and has consented to the inclusion of the information in the form and context in which it appears.
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