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TORONTO, ONTARIO--(Marketwire - April
2, 2009) - CASTLE GOLD CORPORATION (Castle Gold, the Company)(TSX
VENTURE:CSG) is pleased to announce that it has completed an internal
study on an enhancement to its crushing plant at the Company's 100%
owned El Castillo gold mine in Durango State, Mexico. The investment is
for a total of US$1.0 million for the purchase and installation of a
portable screening deck. The new equipment is designed to screen out
the fine fraction (less than 3/4 inch) of the high-grade ore (presently
greater than 0.6 grams per tonne) so that it can bypass the existing
crushing equipment and be stacked directly on the heap leach pads.
Thomas Atkins, President and CEO of Castle Gold commented on this
investment opportunity stating: "This is a terrific example of the
collaborative efforts of our operating team at El Castillo and our
engineering team in Toronto to exploit efficiency enhancements at El
Castillo this early in the mine's life. This relatively small US$1.0 million total
investment offers an impressive 170% rate of return and ten month
payback based on operating cost reductions of US$34 per ounce. These
costs are in addition to the previously announced savings resulting
from the use of more efficient, larger scale mining equipment. It's our
objective to have the screening plant operational in order to coincide
as closely as possible with the ramp-up of mine production towards
50,000 ounces per annum. Precise timing details for engineering,
purchase, transport and construction are being evaluated now that we
have the contractor's schedule for mobilization of larger, more
efficient mining fleet to move our objective volumes to meet our
expanded production goals."
The opportunity to enhance the performance of the screening and
crushing plant arose from observations that a large percentage of the
high-grade material that is currently being sent to the crushing plant
is already present at a size below that targeted for optimal recoveries
- less than 3/4 inch in size. The currently contracted screening and
crushing operations do not have sufficient capacity to completely
separate this size fraction prior to the downstream crushing equipment
at the higher mine volumes envisaged under the expanded production
scenario, currently being advanced. The US$1.0 million investment for
the purchase and installation of the new screening equipment by the
Company is in addition to the coarse ore scalper that has already been
purchased and moved to site at a cost of US$263,000 and includes
engineering and a 20 percent contingency.
The Company selected portable screening equipment due to the relative
speed and reduced cost of installation and the additional flexibility
of being able to relocate this equipment at a future date as the open
pit evolves from its current, early mine-life configuration. The
Company expects to operate the new equipment either with a small group
of its own personnel or via the contractor. It is expected that the
purchase, installation and operation of the system will coincide with the
ramp-up of mine production to in excess of 800,000 tonnes per month
which corresponds to a production rate of 50,000 ounces per annum as
mining strip (waste to ore) ratios decline towards their life-of-mine
values. (as recently announced in a press release dated March 26,
2009).
On the basis of savings in crushing costs relative to the current
contractor terms, higher volumes of production and the recovery of
additional ounces of gold relative to the capacity of the current
system, per unit operating costs are expected to be reduced by
approximately 50 percent for savings of US$34 per ounce of gold
produced. The internal rate of return on the investment of US$1.0
million is calculated at 170 percent with an approximate 10 month
return on invested capital. Based on the US$34 per ounce operating cost
savings, enhanced gold recoveries and a US$800 per ounce gold price,
annual cost savings are estimated at US$1.7 million. Over the current
mine life of 10 years and assuming a 5% discount rate and a life-of-mine
average gold price of US$750 per ounce, this US$1.0 million investment
produces a net present value of US$10 million.
A copy of the internal study for the screening equipment investment
will be filed on the Company's web site under the 'Projects', 'Technical
Reports' Section in the near future.
This press release has been reviewed by Mr. Darren Koningen, P. Eng.,
Castle Gold's Vice President Project Development. Mr. Koningen is a
Qualified Persons under National Instrument 43-101.
Investor Relations Firm
In additional news, Castle Gold has engaged Alpha Investors Ltd.
("Alpha") to assist the Company in its investor relations
efforts and outreach program to potential investors. Alpha represents
an exclusive network of Investment Advisors across Canada that demand
superior returns for their clients.
Alpha will initially be issued 200,000 stock options to purchase common
shares of the Company at C$0.60 per common share, carrying a term of
five years. The stock options will vest over four quarters commencing
at the end of each quarter following the initial engagement, with the
first vesting period beginning on April 1, 2009. Alpha may be entitled
to cash payments of up to C$20,000 and additional stock option
issuances of up to 200,000 stock options (at the then current share
price), depending on Alpha's achievement of certain future performance
targets. The engagement of Alpha may be terminated by either party with
30 days' written notice, following which any stock option issuances by
the Company will cease to continue and all stock options issued must be
exercised within 30 days of termination of services to be provided by
Alpha.
The Company is pleased to be working with Alpha in this enhanced
program to communicate the attractive investment potential of Castle
Gold.
About Castle Gold
Castle Gold Corporation is a growth oriented gold producer with
projects focused in the America's. The Company owns a 100% interest in
the El Castillo gold mine in Mexico and a 50% interest in the El Sastre
gold mine in Guatemala. Castle Gold is also advancing exploration and
development work at its La Fortuna gold-silver-copper project in
Mexico.
TSX-V Trading Symbol: CSG
Total Shares Outstanding: 75.3MM
Fully Diluted: 82.0MM
52-Week Trading Range: C$0.15 - $0.63
Neither 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 ad
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