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May 8, 2008
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Central Sun Announces Positive Orosi Mine Feasibility Study
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TORONTO, ONTARIO--(Marketwire - May 8, 2008) - Central Sun Mining Inc. (TSX:CSM)(TSX:CSM.WT)(AMEX:SMC)(the "Company") today reported results of a feasibility study on the Orosi Mine located in Nicaragua (the "Feasibility Study"), including economic forecasts and independently prepared Mineral Resource and Mineral Reserve estimates. The Company is currently converting the Orosi Mine from a heap leach operation to a conventional milling operation. The Feasibility Study was commissioned by Scott Wilson Roscoe Postle Associates Inc. and all figures are as at January 31, 2008; the date the models were run and calculated.
"We are very pleased with the robust economics demonstrated by the Orosi Mine feasibility study," said Peter Tagliamonte, President and Chief Executive Officer. "The exploration potential and the opportunity to grow the reserves and resources represent a tremendous additional upside for the Orosi Project. The operations team is doing an excellent job and construction is progressing well. We expect production at the Orosi Mine to start in the first quarter of 2009."
Feasibility Study Highlights
- Proven and Probable Mineral Reserves have been estimated by Scott Wilson Roscoe Postle Associates Inc. ("Scott Wilson RPA"), totaling 11.0 million tonnes (Mt), at a grade of 1.44 g/t Au, containing 510,000 ounces of gold
- The average cash operating costs from the open pit mine are estimated at $405 per ounce gold, not including royalties and taxes; Life of mine average cash operating cash costs, including reprocessing of spent ore after open pit mining is completed, would be $441 per ounce gold, not including royalties and taxes
- After-tax IRR for the Project going forward from January 31, 2008 is estimated at 62%, with an after-tax NPV of $89 million discounted at 0% and an after-tax NPV of $67 million discounted at 5% (capital expenditures to January 31, 2008 considered as sunk)
- Initial capital costs of $41.2 million, of which $12.8 million has been spent as at January 31, 2008. Life of mine sustaining capital costs are estimated at $5.6 million with net cash flow from operations of $123 million over the 7.5 year mine life
- An independently prepared report, compliant with National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101"), will be filed on SEDAR shortly, providing details of the Mineral Reserve estimate and economic model
Orosi Project Economics
The following inputs were considered in the economic forecast:
- Mineral Reserves of 11.0 Mt, at a grade of 1.44 g/t Au, consisting of
-- 6.1 Mt of open pit ore, at a grade of 1.91 g/t Au, and strip ratio of 6.0 to 1
-- 4.9 Mt of spent ore (previously leached material), at a grade of 0.85 g/t Au.
- Production starting in Q1 2009
- Production of 1.5 Mt milled per year (4,200 tonnes per day) for the first 5.5 years, consisting of 3,500 tpd open pit ore, plus 700 tpd spent ore
- Production of 1.8 Mt milled per year (5,000 tonnes per day) for two additional years, consisting entirely of spent ore
- Mill recovery is 90% for open pit ore, and 80% for spent ore
- Gold price declining from near-current prices to long-term forecasts over time
-- $800 per ounce for 2009 to 2011, and
-- $750 per ounce thereafter.
- Mine life capital totals $46.8 million, consisting of
-- $12.8 million in sunk costs, as of January 31, 2008
-- $28.4 million in pre-production capital
-- $5.6 million in sustaining capital over the entire mine life
- Average operating cost over the mine life is $17.61 per tonne milled
- Average cash cost over the mine life is $441 per ounce, not including taxes and royalties
-- $405 per ounce for 2009 to 2013 (open pit mining)
-- $580 per ounce for 2014 to 2013 (processing of spent ore)
Based on the stated assumptions, net present values and internal rates of return using base case and approximate current spot prices for gold are as follows:
ECONOMIC FORECAST RESULTS
Item Units Base Case Spot Case
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Average Gold Price $/oz 767 900
Total Project NPV@5% $ millions 51.3 90.3
Total Project IRR % 34.3% 48.8%
Going Forward NPV@5% $ millions 66.7 107.6
Going Forward IRR % 62.0% 85.4% Orosi Mineral Reserve and Mineral Resource Estimates
Mineral Reserve and Mineral Resource estimates were prepared by Scott Wilson Roscoe Postle Associates Inc. ("Scott Wilson RPA"). Mineral Reserves consist of open pit designs for an expansion of the existing Mojon pit, new pits in the Crimea and Santa Maria areas, and spent ore sources included in the Life of Mine Plan.
MINERAL RESERVE ESTIMATE - JANUARY 31, 2008
Location Probable Reserves
'000 t g/t Au oz Au
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Mojon 2,978 1.66 158,700
Crimea 2,210 1.98 140,500
Santa Maria 917 2.56 73,400
Spent Ore 4,912 0.85 134,900
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TOTAL 11,017 1.44 509,500
Notes:
1. CIM definitions were followed for Mineral Reserves.
2. Mineral Reserves were estimated at a block cut-off grade of 0.72 g/t Au.
3. Mineral Reserves were estimated at an average long-term gold price of
US$625/oz.
4. A selective mining unit of 6.25 m x 6.25 m x 6.00 m was used, with
grades diluted to full blocks of that size.
5. Numbers may not add due to rounding.Mineral Resources were estimated exclusive of (in addition to) Mineral Reserves. They consist of small amounts of Inferred Resources within the reserve pit design, Indicated and Inferred Resources outside the reserve pit design, and spent ore resources that have been classified as Inferred.
MINERAL RESOURCE ESTIMATE - JANUARY 31, 2008
Location Indicated Resources Inferred Resources
'000 t g/t Au oz Au '000 t g/t Au oz Au
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Mojon 2,311 1.36 101,200 76 1.46 3,600
Crimea 1,629 1.56 81,900 147 1.65 7,800
Santa Maria 187 2.90 17,400 7 2.27 500
Spent Ore 3,140 0.70 70,700
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TOTAL 4,126 1.51 200,400 3,371 0.76 82,600
Notes:
1. CIM definitions were followed for Mineral Resources.
2. Mineral Resources were constrained within a preliminary open pit shell.
3. Mineral Resources were estimated at a cut-off grade of 0.56 g/t Au.
4. Mineral Resources were estimated at an average long-term gold price of
US$800/oz.
5. Numbers may not add due to rounding.Qualified Persons
Graham Speirs, P. Eng., COO for Central Sun Mining, is the Qualified Person responsible for the disclosure as defined by NI 43-101. The internal quality control information were reviewed and verified by Mr. Speirs. Mr. Speirs has read and approved this news release.
Jason Cox, P. Eng., Supervisor of Mine Engineering for Scott Wilson RPA, is the Qualified Person with overall responsibility for the disclosure of Feasibility Study economic results, and Mineral Reserve estimates, as defined by NI 43-101. Mr. Cox has read and approved this news release.
About Central Sun Mining
The Company is a growing gold producer with mining and exploration activities focused in Nicaragua. The Company operates the Limon Mine in Nicaragua and is converting the Orosi Mine in Nicaragua to conventional milling to increase the annual gold output. It also holds an option to acquire a 100% interest in the Mestiza gold property which is located 70 kilometres east of the Limon Mine. The Company is focused on efficient and productive mining practices to establish high quality and cost effective operations. Central Sun Mining is committed to growth by optimizing current operations, expanding mineral reserves and resources at existing mines as well as exploring its extensive land holdings.
Cautionary Note Regarding Forward-Looking Statements: This press release contains "forward-looking statements", within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to the completion of the Company's new strategic plan, the future financial or operating performance of the Company, its subsidiaries and its projects, the future price of gold, estimated recoveries under the milling plan, the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital for the mill project, operating and exploration expenditures, costs and timing of the development of new deposits, outcome, costs and timing of future exploration, requirements for additional capital, government regulation of mining operations, environmental risks, reclamation expenses, title disputes or claims, limitations of insurance coverage and the timing and possible outcome of pending litigation and regulatory matters. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved".
Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: general business, economic, competitive, political and social uncertainties; the actual results of current exploration activities; actual results of reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of gold; possible variations of ore grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; political instability, insurrection or war; delays in obtaining governmental approvals or required financing or in the completion of development or construction activities, as well as those factors discussed in the section entitled "General Development of the Business - Risks of the Business" in the Company's annual information form for the year ended December 31, 2007 on file with the securities regulatory authorities in Canada and the Company's Form 40-F on file with the Securities and Exchange Commission in Washington, D.C. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements that are incorporated by reference herein, except in accordance with applicable securities law.
Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated or Inferred Resources
The information presented uses the terms "measured", "indicated" and "inferred" mineral resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize these terms. "Inferred mineral resources" have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted into mineral reserves. United States investors are also cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally mineable.
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