|
Avanti Mining Inc. (TSX-V:AVT)
("Avanti") is pleased to release the results of the NI 43-101
Feasibility Study ("FS") prepared by AMEC on its 100% owned Kitsault Molybdenum property in northwest British
Columbia, Canada. The complete report will be
filed on SEDAR and Avanti's web site, www.avantimining.com,
within 45 days of the issue of this press release. All figures are in US
dollars and were derived assuming 100% equity funding.
Highlights include:
- An increased resource estimate containing Measured and Indicated
mineral resources totaling 298.8 million tonnes
grading 0.072% molybdenum and 4.20 g/t Ag containing 472.5 million
pounds of Mo and 40.3 million ounces of Ag. This represents a 9.7%
increase of contained molybdenum and an 18% increase of contained silver
over our prior estimate for measured plus indicated mineral resources.
In addition, the Inferred category totals 157.1 million tonnes grading 0.050 % Mo and 3.65 g/t Ag containing
172.2 million pounds of molybdenum and 18.4 million ounces of silver an
increase of 330% of contained molybdenum and 360% of contained silver
over our previous resource estimate for inferred mineral resources.
- The mine plan calls for a total of 232.5 million tonnes of proven and probable reserves grading
0.081% molybdenum to be mined over a 16 - year mine life, producing
373.9 million pounds of molybdenum. The first five years of production
averages 0.101% Mo;
- A long term exchange rate of .92 has been used to convert CDN$ to
US $
- Initial capital costs are estimated at $770 million (+/- 15% accuracy estimated in C$ at $837 million);
- Cash operating costs (mine gate) are estimated to be $4.76/lb of molybdenum;
- The average annual price of molybdenum for the base case scenario
over the mine life as forecast by the CPM Group ranges from $13.75/lb to $18.25/lb
based upon their June 2010 Molybdenum Market
Outlook. The average over the Kitsault mine
life is $16.76 per pound of molybdenum.
Forecasts were also prepared for a low and a high price scenario.
- The base case after-tax NPV(8%) is $798
million, with an IRR of 26.8%
- Projected undiscounted net cash flow (after-tax) is $2.0 billion;
- Annual metal production for the mine life averages 23.4 million
pounds of molybdenum with the first five years averaging 29.6
million pounds per year;
- There is a life of mine roasting agreement in place with Molymet that assures roasting capacity for the
project;
- The mine has certain infrastructure in place with road and ocean
freight access to the mine site and will be serviced by the existing BC
Hydro transmission grid;
- The reopening of the mine is projected to create over 350 high
paying local jobs during its 16 year life, and at the peak of
construction, over 650 jobs. The construction period is estimated at 25
month;
- The project is progressing through environmental assessment
process under the BC and federal legislation as well as the Nisga'a
Final Agreement and expects to submit its Application in April 2011.
"We are delighted with the plan
developed in this Feasibility Study by AMEC and other contributors" stated
Craig J. Nelsen, Avanti's President and CEO. "We are pleased with
the projects robust economics and plan to utilize this study as the basis for
negotiating strategic partnerships to assist with the financing plan for Kitsault. Our schedule anticipates receipt of permits
toward the end of 2011 and construction to follow in early 2012 with initial
production in 2014"
Project Description
The Kitsault
property is located about 140 km north of Prince Rupert,
British Columbia, and south of the head of Alice Arm,
an inlet of the Pacific Ocean. The property includes three known
molybdenum deposits, Kitsault, Bell Moly, and Roundy Creek. The Kitsault
mine was a producer of molybdenum between 1967 and 1972 and from 1981 to 1982
with total production on the property during both periods being approximately
31 million pounds of molybdenum.
Kitsault has road access to the mine site, which
is approximately 12 km from ocean transport routes and is serviced by the BC
Hydro transmission grid. The Feasibility Study estimates that the Kitsault Mine would operate at an annual resource
throughput rate of 14.6 million tonnes, or 40,000 tpd, with a strip ratio of 0.77:1 during a mine
life of 16 years. The ore mined will be crushed in a gyratory primary
crusher, then ground using a SAG-ball mill configuration. Conventional
flotation and five stages of cleaning will produce molybdenum concentrate
that will be dried and packaged into bags for shipment. The
life-of-mine molybdenum production is estimated at 373.9 million pounds of
molybdenum contained in 326,150 tonnes of
molybdenum concentrate produced from the processing of 233.7 million tonnes of reserves plus planned dilution grading
0.081%Mo. Total molybdenum recovery varies depending on mill head grade
but is estimated to average 89.9%.
Mineral Resource/Reserves Statement
The mineral resources are reported in
accordance with Canadian Institute of Mining, Metallurgy and Petroleum (CIM)
Definition Standards for Mineral Resources Mineral Reserves and their
Guidelines, and are compliant with National Instrument 43-101 ("NI
43-101"). The resource estimate was prepared under the supervision
of Greg Kulla, P.Geo, an independent Qualified Person (QP), as this term
is defined in NI 43-101. The mineral resource statement for the Kitsault molybdenum project is presented in Table 1
below:
Table
1
|
Kitsault Mineral Resources, Effective Date 8 November, 2010,
Greg Kulla,
P. Geo. (cut-off 0.021% Mo)
|
|
|
|
|
|
|
|
|
Category
|
Volume
|
Density
|
Tonnage
|
Mo
|
Mo
|
Ag
|
Ag
|
|
Mm3
|
g/cm3
|
Mt
|
%
|
MLb
|
Ppm
|
Moz
|
Measured
|
27.6
|
2.65
|
73
|
0.093
|
150.3
|
4.28
|
10
|
Indicated
|
84.9
|
2.66
|
225.8
|
0.065
|
322.2
|
4.17
|
30.3
|
Measured + Indicated
|
112.4
|
2.66
|
298.8
|
0.072
|
472.5
|
4.2
|
40.3
|
Inferred
|
58.8
|
2.66
|
157.1
|
0.05
|
172.2
|
3.65
|
18.4
|
Notes:
1. Mineral Resources are inclusive of
Mineral Reserves
2. Mineral Resources that are not Mineral
Reserves do not have demonstrated economic viability
3. Mineral Resources are defined with a Lerchs-Grossmann pit shell, and reported at a 0.021% Mo
cut-off grade
4. Mineral Resources are reported using a
commodity price of Can$15.62/lb Mo, an average process recovery of 89%, a
process cost of Can$ 5.84/t and selling cost of $1.24
/lb of Mo sold. No revenue was assumed for Ag
5. Tonnages are rounded to the nearest
1,000 tonnes, grades are rounded to three decimal
places for Mo and two decimals for Ag
6. Rounding as required by reporting
guidelines may result in apparent summation differences between tonnes, grade and contained metal content
7. Tonnage and grade measurements are in
metric units; contained molybdenum is in imperial pounds.
8. There is potential for a 30 to 50%
recovery of the silver reporting to a saleable concentrate. As of December 1, 2010, the metallurgical work in support of
this is indicative only, suggesting that although there may be a reasonable
prospect to extract this silver resource there is insufficient work to define
the level of benefit that would support inclusion of silver in a reserve
estimate. No dedicated silver recovery circuit has been included in the
process design, but there are reasonable expectations that this can be added
in the future.
The mineral resources are reported at a
cut-off grade to reflect the "reasonable prospects" for economic
extraction. This estimate of the Kitsault
molybdenum deposit is based open pit extraction and Avanti and AMEC has not
considered underground mining methods for deeper portions of the deposit.
Although silver has been reported in the mineral resource, it has not been
included in the economic analysis or the reserve statement below. There is
sufficient metallurgical testwork to suggest it
could be an economic contributor but this work has not yet reached the
feasibility level of confidence. The recovery of silver remains a potential
project upside contributor, as well as the opportunity of conversion of
Inferred to higher confidence categories through additional drilling.
Additional drilling will continue through the 2011 field season in parallel
with Basic and Advanced Engineering studies
The following Table 2 reflects the
sensitivity of the resource estimate to various cut-off grades.
Table
2
|
Mo Cut-off Grade Sensitivity
Analyses within Resource Pit - Measured and Indicated Resources
|
|
|
|
|
|
|
|
MEASURED & INDICATED RESOURCES
|
Cut-off
|
Tonnes
|
Mo
|
Ag
|
Mo
|
Ag
|
Mo%
|
(kt)
|
(%)
|
(ppm)
|
(Mlbs)
|
(Moz)
|
0.010
|
348,203
|
0.064
|
4.09
|
489.7
|
45.8
|
0.015
|
328,421
|
0.067
|
4.13
|
484.2
|
43.6
|
0.021
|
298,835
|
0.072
|
4.2
|
472.5
|
40.3
|
0.025
|
278,316
|
0.075
|
4.26
|
462.1
|
38.1
|
0.030
|
249,895
|
0.081
|
4.34
|
444.8
|
34.8
|
0.035
|
224,460
|
0.086
|
4.4
|
426.7
|
31.8
|
0.040
|
204,924
|
0.091
|
4.47
|
410.6
|
29.4
|
AMEC conducted a complete re-evaluation
of all old historic and recent drilling information and recalculated the
mineral resources from first principals. 10 holes from the previous database
were not used in the calculation because of inability to verify core quality
(recoveries) and assay methods.
The Kitsault
mine Mineral Reserves have been prepared in accordance with NI 43-101
standards and CIM Definition Standard (2010). This statement has been
prepared by Mr. Ryan W. Ulansky
(P.Eng.) of AMEC, a QP as defined in NI 43-101.
These reserves are sufficient for 16 years of operation at an annual
production rate of 40,000 t/d. Mineral Reserves are summarized by category in
Table 3. The notes accompanying Table 3 are an integral part of the Mineral
Reserves and should be read in conjunction with the Mineral Reserve
statement.
Table
3
|
Kitsault Mineral Reserves, Effective Date 8 November, 2010,
Ryan Ulansky, P. Eng. (cut-off 0.026% Mo)
|
|
|
|
|
Category
|
Tonnage (Mt)
|
Mo (%)
|
Contained Mo
|
(MLb)
|
Proven
|
69.7
|
0.097
|
148.5
|
Probable
|
162.8
|
0.075
|
267.3
|
Total Proven and
Probable
|
232.5
|
0.081
|
415.8
|
Notes:
1. Mineral Reserves are defined within a
mine plan, with pit phase designs guided by Lerchs-Grossmann
(LG) pit shells, and reported at a 0.026% Mo cut-off grade, after dilution
and mining loss adjustments. The LG shell generation was performed on
measured and indicated materials only, using a molybdenum price of
Cdn$13.58/Lb, an average mining cost of Cdn$1.94/t mined a combined ore
based cost of Cdn$5.84/t milled, and a selling cost of $1.24 /lb of Mo sold. Metallurgical recovery used was a
function of the head grade, defined as Recovery =7.5808*Ln
(Mo %) +108.63 with a cap applied at 95%. Overall pit slopes varied from 42
to 48 degrees.
2. Dilution and Mining loss have been
accounted for based on a waste neighbour
analysis. 1.5Mt of measured and
indicated material above cut-off was routed as waste. 1.9Mt of measured and indicated material below cut-off
has been included as dilution material. An additional 0.2Mt of inferred dilution material with grades set to
zero is included in the mine plan as millfeed.
3. Tonnages are rounded to the nearest
1,000 tonnes, grades are rounded to three decimal places for Mo.
4. Rounding as required by reporting
guidelines may result in apparent summation differences between tonnes, grade and contained metal content
5. Tonnage and grade measurements are in
metric units; contained molybdenum is in imperial pounds.
6. The life of mine strip ratio is 0.77
Mining
The single ultimate pit will be mined in
six phases, with elevated cut-offs in the early years and low grade
stockpiling. A bulk mining approach has been selected, mining on 10m
benches. The selected mining fleet features one 26 m3 rope
shovel, one 28 m3 electric hydraulic shovel, one 18 m3
front end loader, and up to ten 218-tonne haul trucks with related support
equipment. Benches will be drilled with 8 m by 8 m production drill patterns
and wall control patterns as required. The holes will be loaded and shot with
a 70% emulsion/30% ANFO blend blasting agent. Ore control will be based on blasthole samples assayed for molybdenum.
Waste rock will be stored in an
expansion to the existing Patsy Waste Management Facility. Low grade ore will
be stockpiled throughout the mine life on the top of the existing Clary Waste
Management Facility. This ore stockpile will be reclaimed and processed
during the last two years of the operation.
The mining production schedule is
presented in Table 4.
Table 4
|
Summarized Production
Schedule
|
|
|
|
|
|
|
|
|
|
|
Ore to
|
|
|
|
|
|
Mining
|
Ore Direct
|
Low Grade
|
Waste
|
Total
|
Strip
|
Mill
|
Mo Grade
|
Period
|
to Mill (kt)
|
Stockpile (kt)
|
Mined (kt)
|
|
Ratio
|
Production
|
(%)
|
-2
|
-
|
-
|
-
|
|
-
|
-
|
-1
|
|
362
|
8,500
|
|
23.48
|
|
|
1
|
13,836
|
3,801
|
19,910
|
37,547
|
1.13
|
14,029
|
0.104
|
2
|
14,600
|
4,126
|
22,940
|
41,666
|
1.23
|
14,600
|
0.106
|
3
|
14,600
|
3,088
|
21,375
|
39,063
|
1.21
|
14,600
|
0.114
|
4
|
14,600
|
5,969
|
13,315
|
33,884
|
0.65
|
14,600
|
0.088
|
5
|
14,600
|
2,833
|
15,349
|
32,782
|
0.88
|
14,600
|
0.096
|
6
|
14,600
|
2,581
|
14,136
|
31,317
|
0.82
|
14,600
|
0.096
|
7
|
14,600
|
2,087
|
12,675
|
29,362
|
0.76
|
14,600
|
0.089
|
8
|
14,600
|
1,043
|
12,725
|
28,368
|
0.81
|
14,600
|
0.082
|
9
|
14,600
|
1,024
|
11,061
|
26,685
|
0.71
|
14,600
|
0.08
|
10
|
14,600
|
291
|
8,125
|
23,016
|
0.55
|
14,600
|
0.074
|
11
|
14,600
|
-
|
6,523
|
21,123
|
0.45
|
14,600
|
0.072
|
12
|
14,600
|
-
|
5,360
|
19,960
|
0.37
|
14,600
|
0.068
|
13
|
14,600
|
-
|
3,657
|
18,257
|
0.25
|
14,600
|
0.079
|
14
|
14,600
|
-
|
2,103
|
16,703
|
0.14
|
14,600
|
0.081
|
15
|
1,833
|
-
|
475
|
2,308
|
0.26
|
14,600
|
0.037
|
16
|
-
|
-
|
-
|
-
|
|
14,245
|
0.031
|
|
|
|
|
|
|
|
|
Totals
|
205,469
|
27,205
|
178,229
|
410,903
|
0.77
|
232,674
|
0.081
|
Note: As part of the dilution /
mining loss adjustments, an additional .202 kt of
inferred dilution material with grades set to zero is routed to the mill
Processing
The proposed concentrator in this study
is based on an annual resource throughput rate of 14.6
Mt, or 40,000 tpd at 92% plant availability,
for the production of a molybdenum concentrate. The processing plant is
expected to operate 24 hours/day, 365 days/year. Over the life of mine,
the processing plant will produce an estimated 326,150 t of molybdenite concentrate grading 52% Mo. The
molybdenum recovery is variable with the average estimated at 89.9%.
The proposed process design is based on
historical testwork results, the results from a
recent (2009 and 2010) test program and utilizing plant data from the previous
Kitsault concentrator operations. Plant design,
principally the crushing-grinding circuit has been revised to reflect current
technologies using a primary crusher-SAG-ball mill configuration. The process
design is composed of the following unit processes:
- Primary crushing using a gyratory crusher;
- Grinding using a SAG-ball mill-pebble crusher configuration with
cyclones for flotation feed size classification;
- Rougher and scavenger flotation;
- Five stages of cleaner flotation with three stages of regrinding;
- Final molybdenum concentrate thickening, leaching for the removal
of contaminants, and the filtering, drying and packaging of the final
concentrate; and
- Flotation to produce desulfidized
tailings which will have a portion cycloned
for dam construction and the remainder will be deposited by gravity into
an on-site Tailings Management Facility (TMF). Pyritic tailings will be
deposited in a separate submerged cell in the TMF to prevent oxidation.
Capital Costs
Initial capital costs are estimated at $770 million, which includes $50
million for mobile mining equipment. Preproduction stripping
costs of $13 million are reflected in the initial
operating costs. Life of Mine sustaining mine capital was estimated to
be $50 million, which is comprised mainly of
mobile equipment and TMF embankment ongoing construction. All capital
costs are [+/-15%] in this estimate.
The capital costs for the mine, plant and TMF are given in Table 5 below.
Table
5
|
Capital
Cost Summary
|
|
|
|
Area
|
Description
|
Cost
|
(US$M)
|
1000
|
Mining
|
83.8
|
2000
|
Site
preparation and roads
|
35.5
|
3000
|
Process facilities
|
195.1
|
4000
|
Tailings management and
reclaim systems
|
89.8
|
5000
|
Utilities ties
|
39.7
|
6000
|
Ancillary buildings and
facilities
|
38.4
|
|
Total Direct Costs
|
482.3
|
8000
|
Owner's costs
|
21.1
|
9000
|
Indirects
|
266.7
|
|
Total Indirect Costs
|
287.8
|
|
Contingency
|
Incl above
|
|
Total Capital Costs
|
770
|
Operating Costs
LOM unit cash operating costs are
US$7.64/t milled and operating costs for the processing plant are estimated
at $4.36/t milled (±15% accuracy).
General and administrative costs have been estimated at $1.00/t
milled. The Life of Mine unit cash operating costs are also summarized in
Table 6 below:
Table
6
|
Unit Cash operation costs
(LOM average - US$)
|
|
|
|
|
Area
|
Total
LOM($000)
|
US$/t Milled
|
US$/lb Mo
|
Mine Operations
|
528,038
|
2.27
|
1.42
|
Processing Operations
|
1,014,030
|
4.36
|
2.71
|
Administration
|
232,745
|
1.00
|
0.63
|
Total
|
1,774,813
|
7.64
|
4.76
|
Project Economics
The Feasibility Study economic results
utilized assumptions summarized in the Table 7 below:
Table
7
|
Financial
Analysis Parameters
|
|
|
Parameters
|
Inputs
|
General
Assumptions
|
|
Mine
Life
|
16 years
|
Available
mill operating days per year
|
365 days/y
|
Production
Rate (average)
|
40,000tpd
|
Average Process Recovery
|
89.9%
|
Molybdenum Concentrate - LOM
|
326,150t
|
CDN$:US$ exchange rate
|
.92
|
Market
|
|
Discount
Rate
|
8%
|
Base
Case LOM average molybdenum price
|
$16.76/lb
|
Royalty
|
|
Amax
Zinc (Newfoundland) Ltd Net profits Interest
|
9.22%
|
Alcoa
Royalty
|
1.0%
|
The FS economic model for the base case
in this study assumes a LOM average molybdenum price of $16.76/lb
for revenue purposes, as projected by CPM Group.
The after-tax NPV at an 8% discount rate
over the estimated mine life is $798 million.
The after-tax IRR is 26.8%. Payback of the initial capital investment
is estimated to occur in 2.6 years after the start of production
Sensitivity
Sensitivity analysis for key economic
parameters is shown in Table 8 prior to tax effects. This analysis
suggests that the project is most sensitive to exchange rates followed by
commodity prices. The Project is least sensitive to operating and
capital costs.
Table 8 Base Case Sensitivity to Pre-Tax NPV
at 8% Discount Rate
|
|
|
|
SENSITIVITY OF PRE-TAX NPV
@ 8%
|
Change in Factor
|
|
|
-30%
|
-20%
|
-10%
|
0%
|
10%
|
20%
|
30%
|
Factor
|
Exchange rate
|
2,424
|
1,922
|
1,531
|
1,219
|
963
|
749
|
569
|
Capital expenditure
|
1,426
|
1,357
|
1,288
|
1,219
|
1,150
|
1,080
|
1,011
|
Operating expenditure
|
1,485
|
1,396
|
1,307
|
1,219
|
1,130
|
1,041
|
953
|
Metal price
|
365
|
650
|
934
|
1,219
|
1,503
|
1,787
|
2,071
|
|
Development Timetable
A construction schedule has been
established that is contingent on the following milestones to be realized:
Table
9:
|
Project
Milestones
|
|
|
Milestone
|
Date
|
Notice
to proceed
|
1-Jan-12
|
Begin crushing and screening
at pit site
|
1-Jan-12
|
Begin earthworks at plant
site
|
2-Mar-12
|
Begin work at south
embankment
|
1-Apr-12
|
Construction camp ready for
partial occupancy
|
1-Jun-12
|
Construction power and
communications at plant site compete
|
30-Jun-12
|
Commence concrete at plant
site
|
1-July-12
|
Construction camp ready for
full occupancy
|
30-Sep-12
|
Truckshop construction complete
|
30-Oct-13
|
Complete installation of
power and distribution
|
31-Oct-13
|
Complete
NE tailings dam
|
31-Oct-13
|
Begin
commissioning
|
1-Dec-13
|
Plant ready for start-up
|
29-Jan-14
|
Complete SW tailings dam
|
30-Jan-14
|
The NI 43-101 Preliminary Feasibility
Study, Avanti Mining Inc., Kitsault Molybdenum
Property, British Columbia, Canada was
prepared by industry consultants, all of whom are independent of Avanti
Mining Inc. and are QP's under National Instrument 43-101. The QP's
have reviewed and approved this news release. The consultants (QP's)
with their responsibilities are as follows:
AMEC Inc. under the direction of Mr. Greg Kulla (P. Geo.) for
matters relating to geology and mineral resource reporting.
AMEC Inc. under the direction of Mr. Ryan W. Ulansky (P.Eng.) for matters and costs relating to mineral reserve
statements, mining, mining capital, and mine operating costs.
AMEC Inc. under the direction of Mr. Tony Lipiec (P.Eng.) for matters relating to the metallurgical testing
review, mineral processing, and process operating costs.
SRK Consulting (Canada)
Inc. (SRK Canada) under the direction of Mr. Peter Healey (P.Eng) for
matters and costs relating to mine closure and reclamation.
SRK US under the direction of Mr. Michael Levy (P.E., P.G.) for matters relating to
the pit slopes.
Knight Piésold
Ltd. (KP) under the direction of Mr. Bruno Borntraeger (P.Eng.) for
matters and costs relating to plant site geotechnical conditions, surface
water diversions and the Tailings Management Facility (TMF).
Avanti Mining Inc. is focused on the
development of the past producing Kitsault
molybdenum mine located north of Prince Rupert
in British Columbia. Mr. Kenneth Collison, Senior Vice President of Project
Development for the Company and a Qualified Person as defined in NI 43-101,
has reviewed and approved the scientific or technical information in this
press release.
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of this
release.
Forward-Looking Statements: This news release contains certain
forward-looking information concerning the business of Avanti Mining Inc.
(the "Corporation"). All statements, other than statements of
historical fact, included herein including, without limitation; statements
about the recoverability of molybdenum at the Kitsault
property, the results of the feasibility study, operating cost, capital cost,
cash flow, the anticipated dates of commencement of construction and
production, production schedule, molybdenum products meeting the
specifications of the London Metals Exchange
and other matters related to the development of the Kitsault
molybdenum mine, are forward-looking statements. These forward-looking
statements are based on the opinions of management at the date the statements
are made and are based on assumptions and subject to a variety of risks and
uncertainties and other factors that could cause actual events to differ
materially from those projected in forward-looking statements. Important
factors that could cause actual results to differ materially from the
Corporation's expectations include fluctuations in commodity prices and
currency exchange rates; uncertainties relating to interpretation of drill
results and the geology, continuity and grade of mineral deposits;
uncertainty of estimates of capital and operating costs, recovery rates, production
estimates and estimated economic return; the need for cooperation of
government agencies and native groups in the exploration and development of
properties and the issuance of required permits; the need to obtain
additional financing to develop properties and uncertainty as to the
availability and terms of future financing; the possibility of delay in
exploration or development programs or in construction projects and
uncertainty of meeting anticipated program milestones; uncertainty as to
timely availability of permits and other governmental approvals; and other
risks and uncertainties disclosed in the Corporation's Annual
Information Form for the year ended December 31, 2009,
which is available at www.Sedar.com.
The Corporation is under no obligation to update forward-looking statements
if circumstances or management's opinions should change, except as required
by applicable securities laws. The reader is cautioned not to place
undue reliance on forward-looking statements
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