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Intrepid Receives Feasibility Study on Casposo Gold - Silver Project, Argentina
March 5, 2007 – Intrepid Mines Limited (TSX: IAU, IXN & ASX: IAU), an international gold and silver production, development and exploration company, is pleased to announce results of the recently completed feasibility study conducted by AMEC (Peru) SA on the Kamila zone at the Casposo Project in San Juan, Argentina.
The highlights of the study are as follows (U.S. dollars are used, unless otherwise indicated):
- Mineral resources (Indicated only): 2.2 million tonnes of ore containing 313,278 ounces gold and 8.2 million ounces silver, grading 4.46 grams per tonne gold and 116 grams per tonne silver
- Mineral reserves: 1.8 million tonnes of ore containing 270,089 ounces of gold at 4.69 grams per tonne and 6.5 million ounces of silver grading 114 grams per tonne silver (predominantly open cut)
- Average annual production of 50,478 ounces of gold and 1.1 million ounces of silver or 68,500 ounces of gold equivalent annually using base case gold and silver pricing
- Average annual operating cost: $248 per ounce of gold equivalent, or $168 per ounce of gold after silver credits (of $8.50 per ounce)
- Capital costs, including 12 percent contingency, $45.5 million
- Average annual surplus operating cash flow (at $500 per ounce and $8.50 silver) after sustaining capital: $13.8 million
- Internal rate of return 15% at a base gold price of $500 per ounce and $8.50 per ounce silver, rising to 40% at $650 per ounce of gold and $12.85 per ounce of silver
- Construction period: 15 months
Project Economics of the Kamila Zone
The Casposo project hosts a mineralized corridor approximately six km long characterised by a low sulphidation vein complex which outcrops principally at the Kamila and Mercado deposits and together comprise the Kamila Zone. A decision was made in 2005 to focus drilling and a preliminary assessment at Kamila to test the economic potential of the deposit. Based on results of this work, Intrepid decided in late 2005 to proceed to feasibility while continuing to evaluate the remaining five km of the Casposo structure.
The results do not include Southeast Inca, Southeast Extension and Julieta Zones, all of which require further drilling to expand resources in proximity to the proposed development.
Based on the feasibility study (effective date February 2007) key assumptions, project parameters and a base gold price of $500 per ounce and $8.50 per ounce for silver, an internal rate of return (IRR) after taxes of the Kamila deposit at Casposo is estimated at 15 percent as highlighted in the price sensitivity analysis below. At recent metal prices the IRR ranges up to 40 percent at $650 per ounce of gold and $12.85 per ounce of silver. A range of sensitivities to commodity prices are provided below.
Project Economics - IRR
Laurence Curtis, President and CEO of Intrepid, said “This feasibility accounts for the first five years of operation at Casposo, but we see it as the starting point for a growing mineral deposit in terms of ounces, with currently identified targets at the peripheral Southeast Inca and Kamila Southeast Extension as indicators of a larger robust mining project. Kamila will be the driver that ensures that the Casposo project becomes a long life mine as exploration continues at depth and along strike.”
Mineral Resources
Total audited Indicated resources at the Kamila and Mercado deposits within the Casposo Project are 313,278 ounces of gold and 8.2 million ounces of silver, contained in 2.2 million tonnes grading 4.46 grams per tonne gold and 116 grams per tonne silver, at a cut-off grade of 1.4 grams per tonne gold equivalent.
One hundred and ninety nine exploration drill holes have been drilled at the Casposo project, investigating key geological structures. One hundred and seventy four holes were available at the date for completion of the resource estimate. The estimate provided for the feasibility study is based on 133 core holes, 71 trench and channel samples and five pit samples. Fifteen of the unreported holes were drilled as extensions to mineralized zones at Kamila. These holes cut mineralized intersections peripheral to the defined Kamila resource and will constitute additional resources to be assessed in follow-up drilling to commence in March 2007.
For purposes of reporting mineral resources, all material underneath the topographic surface was considered. Drill holes, pits and trenches were used for geological modeling and estimation of grades.
Mineral Reserves
The Kamila deposit is to be mined as both an open pit and underground operation. The overall open pit Probable Reserves are estimated to be 1,352,000 tonnes at a grade of 5.14 grams per tonne gold, 89 grams per tonne silver, (6.25 grams per tonne gold equivalent). The Reserves for the open pit were calculated separately for the Kamila Main, Kamila SE and Mercado open pits.
The underground Reserves are estimated to be 439,000 tonnes at a grade of 3.3 grams per tonne gold, 192 grams per tonne silver (5.7 grams per tonne gold equivalent). All the underground Reserves are in the Probable category. Underground Reserves have been calculated for the Kamila deposit only.
Mining Method
The Project comprises the mining of two separate deposits – Kamila and Mercado (1km distant). The Kamila deposit is much larger than Mercado and will be mined first. The top part of Kamila will be mined by open pit and the deeper portion by underground. The Kamila open pit consists of a large pit (Kamila Main pit) and a small satellite pit located 100 metres to the southeast (Kamila SE pit).
The underground mine will be accessed by a decline and exploited using a long hole open stoping mining method with sublevel retreat. The underground mine has been designed with a temporary crown pillar below the open pit floor and with the ramp portal and ventilation raise collar located beyond the perimeter of the open pit such that both the open pit and the underground mines can be operated concurrently.
Capital Cost Estimates
The capital cost to first gold pour including working capital and contingency is estimated at $45.5 million, detailed as follows. Not included are estimated sustaining costs of US$2.2 million.
The construction schedule will cover a period of 15 months from the scheduled project approval date to assure completion of detailed engineering, construction and pre-operations readiness of facilities and to assure delivery of long arrival date, specialized mining and milling components. The capital cost is based on all new equipment, however the 15 month construction schedule assumes a used ball mill and generator equipment will be procured, resulting in some further potential capital reduction opportunity.
Operating Costs
Operating costs include all costs required to process 1,000 tonnes per day of ore including normal surface and underground mine development and extension of principal underground mine ramps and raises. The life of mine Total Operating Costs, including mining, processing, and general and administration, are projected to be $47.34 per tonne of ore milled or $248 per ounce of gold equivalent and $168 per ounce of gold net of silver credits.
Production
The production rate for the mine will be 365,000 tonnes per annum with all production for the first two years coming from the Kamila open pits. Underground ore production will start in year three. The Mercado open pit will be mined in the final year of the mine life due to its lower grade and its more distant location further from the processing plant. The current estimated mine life for Kamila and Mercado is five years. During production, the mine will employ between 100 to 120 individuals.
Existing Infrastructure
A power line passes within 15 km of the property, however this has limited capacity and power for the project will be generated on site using diesel generators. The property has good access to transport hubs and supply centres via paved and gravel road combinations. Local communities such as the town of Calingasta have contributed human resources and base of operations during the exploration of the project and will continue to play a role in mine development and operations.
Report Preparation
The feasibility study and capital and operating cost estimates were prepared by independent engineering firm, AMEC (Peru) SA ("AMEC") with input provided by project operator Intrepid Mines Limited. The resource model and estimate were prepared by Eugene Puritch, P.Eng and audited by AMEC and AMEC estimated the reserves based on these resources. Intrepid used various external consultants to review the feasibility study on an audit basis.
A technical report including the feasibility resource and reserve estimates and a summary of the feasibility study will be completed and filed by Intrepid with SEDAR within the next 45 days in accordance with National Instrument 43-101. Information in this press release has been summarized from the AMEC study. William McGuinty P. Geo., Intrepid Mines Vice President of Exploration and an appropriately qualified person as defined by National Instrument 43-101, has reviewed this press release.
Looking Ahead: Casposo Project Development Milestones
Intrepid’s objective is to commence construction of the Casposo project in the fourth quarter 2007. Key target milestones identified for the project include:
2Q07: Discussions with potential financing/joint venture partners
2Q07: Completion and submission of Environmental Impact Assessment and Environmental Impact Statement
3Q07: Negotiate construction and operations contracts
3Q07: Initial project financing
4Q07: Receipt of key construction permits, Final Intrepid construction decision
4Q07: Start project construction
1Q-2009: Start commercial production
On behalf of the Board of Directors of Intrepid Mines,
Laurence Curtis, President & CEO
About Intrepid Mines:
Intrepid Mines Limited has an international production, development and exploration profile, and holds interests in several gold-silver and silver-base metal properties in Australia, Argentina, Central America and Canada, either directly or through joint venture partnership. The issued capital is 164,259,243 shares comprised of 140,432,589 ordinary shares of Intrepid Mines Limited quoted on the TSX:IAU and ASX:IAU and 23,846,654 Exchangeable Shares of Intrepid NuStar Exchange Corporation quoted on the TSX:IXN.
Qualified Person:
Information in this announcement is based on information provided by competent persons as defined in the 2004 Edition of the JORC ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ and as Qualified Persons as defined in Canadian National Instrument 43-101 (standards of Disclosure for Mineral Projects). Information has been compiled by William McGuinty P.Geo. VP Exploration, a full time employee of Intrepid Mines Limited who has sufficient experience relevant to the style of mineralization and type of deposit under consideration and to the activity which is being undertaken, and consents to the inclusion in the announcement of the matters based on his information in the form and context in which it appears.
Information in this announcement related to resources for the Casposo Project was prepared in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resources and Reserves Definition. Eugene Puritch, P.Eng, a Qualified Person under National Instrument 43-101 consents to the inclusion in the announcement of the matters based on his information in the form and context in which it appears.
Information in this announcement related to the feasibility study capital and operating cost estimates and reserves were prepared in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resources and Reserves Definition by engineering firm, AMEC (Peru) SA.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This release contains certain forward-looking statements that may involve a number of risks and uncertainties. Actual events or results could differ materially from the Company’s expectations and projections. The TSX & ASX has neither approved nor disapproved the information contained in this press release. Except for statements of historical fact relating to the Corporation, 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 factors include the inherent risks involved in the exploration and development of mineral properties, the uncertainties involved in interpreting drilling results and other ecological data, fluctuating metal prices, the possibility of project cost overruns or unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future and other factors. Circumstances or management's estimates or opinions could change. The reader is cautioned not to place undue reliance on forward-looking statements.
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