Shares Outstanding: 183,201,174
TORONTO , July 23, 2014 /CNW/ - Aquila Resources Inc. (TSX: AQA) (FKT: JM4A) ("Aquila"), a development-stage company with assets in the Great Lakes Region
including its 100%-owned gold- and zinc-rich Back Forty Project in
Michigan's Upper Peninsula ("Back Forty"), today announced positive
results from its new preliminary economic assessment ("PEA") on Back
Forty. The PEA, which incorporates a revised mine plan based on results
from Aquila's 2013 resource update, was completed by Tetra Tech Inc.
after considering various trade-off studies which looked at different
mine configurations to determine the optimal scenario for the project.
The PEA will be filed on SEDAR (www.SEDAR.com) within 45 days and will also be available on Aquila's website. All
figures quoted are in USD unless otherwise specified.
PEA Highlights
The PEA contemplates mining 16.1Mt of mineralized material over the
16-year life of mine ("LOM"), of which 12.5Mt is open-pit and 3.6Mt is
underground. The PEA demonstrates the potential for a diverse earnings
stream with a payable metal value mix of 41.2% gold, 40.5% zinc, 12.0%
copper, 5.7% silver, and 0.6% lead.
Table 1. Key Economic Highlights
|
Pre-Tax
|
After-Tax
|
NPV @ 6%
|
$247.2M
|
$184.7M
|
IRR
|
34.9%
|
28.9%
|
Payback Period
|
1.6 years
|
2.1 years
|
The PEA includes inferred resources that are considered too speculative
geologically to have the economic considerations applied to them that
would enable them to be categorized as mineral reserves. There is no
certainty that the PEA results will be realized.
Highlights from the PEA include:
-
Operating at an initial throughput rate of 5,350 tpd, the total payable
production of the mine is expected to be 532 thousand ounces of gold,
704 million pounds of zinc, 63 million pounds of copper, 4,645 thousand
ounces of silver, and 11 million pounds of lead;
-
A total estimated initial capital cost of $261 million comprised of $177
million of direct pre-production capital expenditure ("CAPEX"), a $44
million contingency, and $40 million of indirect and owner's costs;
-
The average on-site operating costs are $29.25 per tonne processed for
open-pit mining and $66.20 per tonne processed for the underground
mine; and,
-
The near-surface characteristics of the ore body provide the opportunity
to develop a low-CAPEX, high-grade initial phase operation. The
economics of this are still being evaluated as part of the PEA and will
be reported when complete.
"The results from our PEA validate our decision to acquire 100% of Back
Forty and focus on strategic assets in this promising region," stated
Barry Hildred , Chief Executive Officer of Aquila. "The PEA and new mine
plan show marked improvements across key metrics. Ultimately, we
believe this PEA demonstrates the potential of Back Forty while
carefully considering the interests of all our key stakeholders."
Mark Burridge , Chairman of Aquila stated: "Our focus is now on
recommencing project development at Back Forty. The PEA provides a path
forward for the next set of project milestones, including the ramp-up
of permitting activities and the commencement of a feasibility study
and an exploration program initially focused on near-mine satellite
targets."
Sensitivity Analysis
A sensitivity analysis was performed to test the economic viability of
Back Forty against possible fluctuations in commodity prices. A table
illustrating project sensitivity is presented below:
Table 2. Sensitivity Analysis
|
Base Case -15%
|
Base Case
|
Base Case + 15%
|
Gold
|
$1,099/oz
|
$1,293/oz
|
$1,487/oz
|
Silver
|
$17.39/oz
|
$20.46/oz
|
$23.53/oz
|
Zinc
|
$0.82/lb
|
$0.96/lb
|
$1.10/lb
|
Copper
|
$2.70/lb
|
$3.18/lb
|
$3.66/lb
|
Lead
|
$0.82/lb
|
$0.96/lb
|
$1.10/lb
|
Pre-Tax
|
NPV @ 6%
|
$94.2M
|
$247.2M
|
$399.2M
|
IRR
|
20.2%
|
34.9%
|
47.7%
|
Payback Period
|
3.3 years
|
1.6 years
|
1.0 year
|
After-Tax
|
NPV @6%
|
$74.6M
|
$184.7M
|
$294.5M
|
IRR
|
17.5%
|
28.9%
|
38.7%
|
Payback Period
|
3.5 years
|
2.1 years
|
1.4 years
|
Mineral Resources
In February 2013 , Aquila updated its mineral resource estimate. The 2014
PEA incorporates the results from this updated resource, of which 90%
was classified as Measured and Indicated and only 10% Inferred. Please
refer to Aquila's annual information form dated March 31, 2014 for
further information regarding the updated mineral resource estimate.
Table 3. Global Resource at Back Forty
Category
|
Tonnes
|
Au (g/t)
|
Ag (g/t)
|
Cu (%)
|
Pb (%)
|
Zn (%)
|
Au (oz) Content
|
Zn (lbs) Content
|
Measured
|
6,700,000
|
2.16
|
27.30
|
0.47
|
0.18
|
3.95
|
465,000
|
583,000,000
|
Indicated
|
8,430,000
|
1.92
|
22.24
|
0.22
|
0.26
|
2.36
|
520,000
|
439,000,000
|
M&I
|
15,130,000
|
2.03
|
24.48
|
0.33
|
0.22
|
3.06
|
985,000
|
1,022,000,000
|
Inferred
|
2,340,000
|
2.07
|
26.53
|
0.36
|
0.33
|
2.20
|
156,000
|
113,000,000
|
Notes:
(1)
|
Mineral resources are not mineral reserves and do not have demonstrated
economic viability.
|
|
|
(2)
|
NSR cut-off values for the 2013 resource estimate were based on metal
price assumptions of US$0.96 per pound zinc, US$3.65 per pound copper,
US$1.01 per pound lead, US$1456.36 per troy ounce gold and US$27.78 per
troy ounce silver. Metallurgical recoveries were determined and applied
for each of the metallurgical domains determined for the deposit.
Average cut-off value for the open-pit resource contained within an
optimized pit shell was US$27.75. Average cut-off value for the
underground resources outside of the optimized pit shell was US$66.45.
|
Project Potential
The optimized mine plan provides some flexibility in the development of
the project including a low-CAPEX, high-grade initial phase operation.
This option would focus on mining near-surface, high-grade zones by way
of three small open pits in order to maximize capital return in the
early years of production. This approach has the potential to provide
attractive economic returns, mitigate certain start-up risks, and allow
for significant optionality in the long-term development of the
project. This opportunity would be fully evaluated during the
feasibility stage of project development and could be pursued depending
on future macro-economic conditions.
Other opportunities for consideration include optimization of the
underground mining approach, which was not completed as part of the
PEA, improving processing performance, and defining the upside
potential, including further exploration and expansion of the
underground resource, in-pit targets, and near-mine drill targets,
which have the potential to extend mine life and improve project
economics.
Qualified Persons
The PEA was prepared under the supervision of Tetra Tech Inc.,
specifically Rex Bryan , SME; Wenchang Ni , P.Eng.; Daniel Sweeney ,
P.Eng.; Arun Vathavooran, Ph.D., C.Eng., MIMMM, SME; Dharshan
Kesavanathan , P.Eng.; Mike McLaughlin , P.Eng.; Sabry Abdel Hafez ,
P.Eng.; and, Andrew Carter , Eur. Ing., C.Eng., MIMMM, MSAIMM, SME. All
of the aforementioned individuals are qualified persons as defined in
National Instrument 43-101.
The scientific and technical information in this news release was
reviewed and approved by Thomas O. Quigley , Vice President of
Exploration and Senior Technical Advisor for the Back Forty Project. By
virtue of his education, experience, and professional association, Mr.
Quigley is considered a Qualified Person as defined under National
Instrument 43-101. Information regarding data verification is provided
in Aquila's annual information form dated March 31, 2014 .
About Aquila Resources
Aquila Resources Inc. (AQA.TO) (JM4A.F) is a
development-stage company with assets in the Great Lakes Region
including its 100%-owned gold- and zinc-rich Back Forty Project in
Michigan's Upper Peninsula. The Company is led by an experienced
management team that has identified significant ore deposits over the
last 30 years.
The Toronto Stock Exchange neither approves nor disapproves the
information contained in this News Release. Neither the Toronto Stock
Exchange nor its Regulation Services Provider (as that term is defined
in the policies of the Toronto Stock Exchange) accepts responsibility
for the adequacy or accuracy of this release.
This press release contains certain forward-looking statements within
the meaning of applicable Canadian securities legislation. In certain
cases, forward-looking statements can be identified by the use of words
such as "plans", "expects" or "does not anticipate", or "believes", or
variations of such words and phrases or statements that certain
actions, events or results "may", "could", "would", "might" or "will be
taken", "occur" or "be achieved" and similar expressions suggesting
future outcomes or statements regarding an outlook.
Forward-looking statements relate to any matters that are not historical
facts and statements of our beliefs, intentions and expectations about
developments, results and events which will or may occur in the future,
without limitation, statement with respect to: (i) the economic
analysis contained in the PEA; (ii) the development plan of the PEA and
results thereof; (iii) capital expenditure programs; (iv) the quality
or quantity of the mineral resources subject to estimates by Aquila;
and, (v) work plans to be conducted by Aquila.
These and other forward-looking statements and information are subject
to various known and unknown risks and uncertainties, many of which are
beyond the ability of Aquila to control or predict, that may cause
their actual results, performance or achievements to be materially
different from those expressed or implied thereby, and are developed
based on assumptions about such risks, uncertainties and other factors
set out herein. Aquila expressly disclaims any obligation to update
forward-looking information except as required by applicable law. Such
forward-looking information represents Aquila's best judgment based on
information currently available. No forward-looking statement can be
guaranteed and actual future results may vary materially. Accordingly,
readers are advised not to place undue reliance on forward-looking
statements or information. Furthermore, mineral resources that are not
mineral reserves do not have demonstrated economic viability.
SOURCE Aquila Resources Inc.