Marathon Project Receives Positive Feasibility Study
TORONTO, Dec. 19 /CNW/ - Marathon PGM Corporation ("Marathon" or "the
Company", MAR-TSX) is pleased to announce it has received a positive
Definitive Feasibility Study ("DFS") of its 100% owned Marathon PGM-Cu Project
(the "Project") located 10 km north of Marathon, Ontario. The summary of the
DFS will be filed within 45 days on SEDAR and posted on the Company's web page
upon receipt from Micon International Limited ("Micon").
Summary highlights of the DFS are:
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Base Case (3 year
trailing average)
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Undiscounted cash flow (pre-tax) CAD$510 million
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Undiscounted cash flow (after tax) CAD$369 million
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NPV @ 8% (after tax) CAD$77 million
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IRR (pre-tax) 15.5%
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IRR (after tax) 12.4%
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Payback period 4.7 years
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Proven and probable reserves
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Copper 465,310,000 lb
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PGM+Au 2,745,000 oz
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Silver 4,026,000 oz
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Average annual metal production
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Copper 42 million lbs
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PGM+Au 201,000 oz
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Silver 310,000 oz
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Cash cost per PGM+Au oz (net of credits) Negative US$53
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Cash cost per Cu lb (net of credits) US$0.28
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The DFS examined the economics of developing and mining the Marathon
Deposit, a large polymetallic deposit in Northern Ontario, at a rate of 22,000
tpd. The project will produce a single concentrate containing copper,
platinum, palladium, gold, silver and rhodium.
The study used three different economic cases and metal price forecasts,
which are presented below.
1. Base Case - Three Year Trailing Price, as of August, 2008:
US$3.12/lb Cu; US$345/oz Pd; US$1,340/oz Pt; US$688/oz Au,
US$13.0/oz Ag, US$/CAD$ exchange rate = 1.092.
2. TD Newcrest Variable Forecast as at November 2008:
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Long
Metal Units 2009 2010 2011 2012 2013 2014 2015 Term
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Copper US$/lb 2.25 2.50 3.00 3.00 2.75 2.50 1.75 1.75
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Platinum US$/oz 1,750 1,750 1,750 1,750 1,750 1,750 1,750 1,750
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Palladium US$/oz 400 400 400 400 400 400 400 400
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Gold US$/oz 850 800 800 800 800 800 800 800
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Silver US$/oz 10.5 11.0 12.0 12.0 12.0 12.0 12.0 12.0
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Exchange
rate USD/CAD 1.200 1.200 1.200 1.200 1.200 1.200 1.200 1.200
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3. Current Year Prices, average from January to August 2008:
US$3.67/lb Cu; US$426/oz Pd; US$1,888/oz Pt; US$906/oz Au,
US$17.2/oz Ag, US$/CAD$ exchange rate = 1.014.
Results of Three Different Pricing Scenarios
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Bank Variable Current
Base Case Forecast Year Prices
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Undiscounted cash flow
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Pre-tax CAD$510 million CAD$493 million CAD$902 million
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After tax CAD$369 million CAD$359 million CAD$650 million
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Net present value @
8% discount rate
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Pre-tax CAD$142 million CAD$158 million CAD$352 million
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After tax CAD$77 million CAD$93 million CAD$230 million
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Average annual cash
flow (pre tax) CAD$51 million CAD$49 million CAD$90 million
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Internal rate
of return
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Pre-tax 15.5% 17.5% 25.0%
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After tax 12.4% 14.1% 20.5%
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Capital investment
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Pre-production CAD$386 million CAD$386 million CAD$386 million
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Life-of-mine CAD$586 million CAD$586 million CAD$586 million
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Payback period 4.7 years 4.0 years 3.5 years
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Cash costs, net
of credits
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Per PGM+Au oz Negative US$53 US$99 Negative US$129
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Per lb copper US$0.28 Negative US$0.41 Negative US$0.29
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The DFS was managed and compiled by Micon with support by Met-Chem Canada
Inc. for process engineering and costing of the process and infrastructure,
Golder Associates Ltd. for environmental and geotechnical aspects of the study
and design and costing of the tailings, waste rock and water management
systems and P&E Mining Consultants Inc. ("P&E") for mineral resource and
reserve estimates, mine design, mine scheduling and mine costing. The DFS cost
estimates are considered to be of an accuracy of +/-15%.
The DFS included modeling of an optimized engineered open pit design that
resulted in a proven and probable mineral reserve estimate of 79 million
tonnes containing 465 million pounds of copper and 2.7 million ounces of PGMs
(Pt, Pd, Rh) + gold. This represents a 78% conversion rate relative to the 3.4
million ounce PGM+Au and 595 million pounds of Cu measured and indicated
resource estimate (see October 9, 2008 press release).
The DFS base case demonstrates that the Marathon Deposit generates strong
cash flow under appropriate metal price assumptions. This project is
potentially the base for establishing PGM and copper production in the
Marathon district by further exploration of the Company's extensive land
position and the potential of new acquisitions within proximity to the
proposed processing facilities.
The two largest areas for adding resources are located (i) immediately
outside the Marathon designed pit and (ii) at the Geordie Lake Deposit,
located 14 km west of Marathon. Large blocks of PGM-Cu extend well beyond the
current Marathon designed pit. These blocks were not included in the reserves
due to economic constraints, yet may represent future mining potential in
later stages of mining. In addition, there are several known PGM-Cu
mineralized zones on strike from the Marathon deposit that have not been fully
explored.
The Geordie Lake Deposit is located 14 km west of the Marathon Deposit
and is 100% owned by Marathon. It has an existing measured and indicated
resource of 25.99 Mt grading 0.55 g/t Pd, 0.03 g/t Pt, 0.05 g/t Au, 0.35% Cu
and 2.35 g/t Ag representing 456,800 oz Pd, 28,400 oz Pt, 45,800 oz Au, 195.7M
lb Cu and 1,938,400 oz Ag (please see MAR release of 08-Jul-08).
Mineralization at Geordie Lake is open down dip and to the north and south,
which bodes well for open pit mining potential. The potential for additional
PGM-Cu zones is high.
Location
The Marathon Deposit is located 8 km north of Marathon, Ontario. The
deposit is easily accessible from the Trans Canada Highway and is also close
to the CN railway. Electrical power is easily accessible with the deposit
being located within 1 km from two spurs of OPG's electrical power grid. The
region also benefits from a strong contractor and supplier base to the mining
industry and an experienced mining workforce.
Capital Investment Program
The initial capital investment program amounts to CAD$386 million and is
summarized below.
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CAD $ million
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Processing plant and infrastructure 289.5
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Tailings and water management 14.3
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Owner's cost 14.0
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Pre-strip and other mining 10.3
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Contingencies 57.8
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Total Pre-production capital 385.9
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Life-of-mine CAPEX (net of salvage) 162.5
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including Mining equipment(1) 586.5
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(1) Assumes a 10% down payment on mining equipment and financing of the
balance over 5 years at 9% p/a.
Mineral Reserve Estimate
Mineral reserves were based on a Whittle based open pit optimization and
subsequent mine design, undertaken by P&E using the measured and indicated
mineral resources, which were estimated by P&E and reported by Marathon in a
press release dated October 9, 2008. The optimal pit shell produced by the
Whittle software was used as a guideline for the design of the engineered pit.
The table below shows the reserve and resource statement for the Marathon
deposit:
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Classification Tonnes Cu % Au g/t Pt g/t Pd g/t Ag g/t Rh g/t
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Proven 58,902,000 0.291 0.081 0.233 0.794 1.61 0.0059
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Probable 20,445,000 0.194 0.075 0.235 0.650 1.50 0.0069
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Total 79,347,000 0.266 0.079 0.234 0.757 1.58 0.0062
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Open pit mining reserves were developed under the direction of "Qualified
Person" Eugene Puritch, P.Eng., of P&E.
Mining
The Marathon PGM Deposit will be mined utilizing conventional open pit
mining equipment and practices with a total fleet of sixteen 228 tonne
capacity haul trucks, two 27 m3 diesel-hydraulic shovels, three production
drills, a pre-shear drill and one 25 m3 wheel loader, and various ancillary
equipment to support the mining operations, to be acquired over four years on
a lease/purchase plan.
The open pit will operate on a year round basis and provide ore feed to
an on-site processing plant and low-grade ore stockpile. The feed rate to the
processing plant is designed to be 22,000 tpd ore. The pit will require the
removal of a total of 3.6 Mt of overburden and a total of 286.6 Mt of waste
rock over a mine life of 10.1 years. The overall waste tonnes to ore tonnes
stripping ratio is estimated to be 3.6:1. The pit design includes inter-ramp
pit slope angles that range from 48 to 55 degrees with the majority at 55
degrees.
The waste rock storage facility has been designed to hold the
life-of-mine waste rock production and has a storage volume of 114 million m3
with a footprint area of 241 hectares.
Mineral Processing
The plant design comprises a sulphide flotation facility with a nominal
throughput capacity of 22,000 tpd (7.7 M tonnes per annum) based on 90% plant
availability. Metallurgical recoveries are estimated at 91% for Cu, 63% for
Pt, 77% for Pd, 73% for Au and 77% for Ag.
The process flowsheet and design criteria are based on extensive
metallurgical testwork programs that were conducted at various laboratories,
including SGS Lakefield located in Lakefield, Ontario. The process includes
primary and secondary crushing using conventional crushers, tertiary crushing
using high pressure grinding rolls (HPGR), ball milling, conventional
flotation and concentrate dewatering. Approximately 90,000 tonnes per year of
a single bulk concentrate containing copper and high values of PGMs, Au and Ag
will be shipped to a third party smelter.
Thickened tailings disposal technology has been selected to minimize the
environmental impact of the Project. Marathon will dispose of the life-of-mine
tailings into a managed tailings facility with a design volume of 49 million
m3 and a footprint area of approximately 142 hectares.
Operating Costs
Total on-site cash operating costs are estimated at CAD$14.50 per tonne
milled. Estimated average life-of-mine unit operating costs per tonne of ore
processed are CAD$7.37/t for mining, CAD$6.02/t for processing and CAD$1.11
for general and administration. The cost of mining ore and waste is CAD$1.60
per tonne.
Financing and Cash Resources
As at November 30, 2008, Marathon had $17.0 million in its treasury. The
Company is examining a variety of different methods of securing the required
funding to develop the Marathon Deposit, including joint ventures, royalty
arrangements, project equity and debt instruments.
The Company has engaged TD Newcrest to act as financial advisor in
determining the best approach to developing the Marathon PGM-Copper Project.
Phillip Walford noted: "Despite the current situation, we are confident
that the healthy economics of the Marathon Project will enable the Project to
progress towards producing status."
Technical Report
A NI 43-101 F1 Technical Report summarizing the DFS will be filed within
45 days on SEDAR and posted on the Company's web page upon receipt from Micon.
Qualified Person
The Marathon DFS was prepared by Micon under the supervision of Richard
Gowans, P.Eng., the independent QP. Mr. Gowans is President and Principal
Metallurgist with Micon. Mr. Phillip Walford, President and CEO of Marathon,
is the Company's designated QP for the purpose of the DFS. Mr. Gowans and Mr.
Walford have reviewed and approved the contents of this press release.
Cautionary Notes Concerning Estimates of Mineral Resources
This news release uses the terms measured, indicated and inferred
resources as a relative measure of the level of confidence in the resource
estimates that occur separate from the quoted mineral reserves. Readers are
cautioned that Marathon's mineral resources associated with the Geordie Lake
Deposit are not economic mineral reserves and that the economic viability of
resources that are not mineral reserves has not been demonstrated. In
addition, inferred resources are considered too geologically speculative to
have any economic considerations applied to them. 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 pre-feasibility studies or economic
studies except for Preliminary Assessment as defined under NI 43-101. Readers
are cautioned not to assume that that further work on mineral resources will
lead to mineral reserves that can be mined economically.
About Marathon PGM Corporation:
Marathon has completed a definitive feasibility study on the Marathon
PGM-Cu deposit and also has development and exploration stage properties in
southeastern Manitoba and western Newfoundland and Labrador. The Company is
actively looking for additional projects of merit.
Cautionary Statement Regarding Forward Looking Information:
Except for statements of historical fact relating to the Company, certain
information contained herein constitutes "forward-looking statements".
Forward-looking statements are frequently characterized by words such as
"plan," "expect," "project," "intend," "believe," "anticipate" and other
similar words, or statements that certain events or conditions "may" or "will"
occur. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made and are subject to a variety of
risks and uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the forward-looking
statements. These risks and uncertainties include but are not limited to those
identified and reported in Management's Discussion and Analysis for the year
ended December 31, 2007. Circumstances or management's estimates or opinions
could change, and management disclaims any obligation to revise or update
forward-looking statements, whether for new information, future events or
otherwise. The reader is cautioned not to place undue reliance on
forward-looking statements.
On Behalf of Marathon PGM:
"Phillip C. Walford"
Phillip C. Walford, P.Geo.
President, Chief Executive Officer
Tel: +1.416.987.0711
gen@marathonpgm.com
%SEDAR: 00020574E
For further information: David Leng, P.Geo: Tel: (416) 849-3432, Fax: (416)
861-1925, dleng@marathonpgm.com
.
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