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Largo Resources Ltd. (TSX VENTURE:LGO - News;
"Largo" or the "Company") is pleased to report the
results of a NI 43-101 compliant Preliminary Economic Assessment (the
"PEA") on the Currais Novos
Tungsten Project, which is currently under the Company's option, in Rio
Grande de Norte, northeastern Brazil. The PEA has
been completed by D.E.N.M Ltd. ("DENM") of Burlington, Ontario.
The results of the PEA are very positive
and construction for the project is underway for the recovery of tungsten
from mine tailings. Production of Tungsten (WO3 concentrate) from the Currais Novos Project is
expected to commence by June 2011.
Largo remains confident that there is
potential to significantly increase the tungsten asset base in the Currais Novos region. Largo
also hopes to develop bi-product credits in order to increase production
volumes and the production life at Currais Novos.
Projected Cash Flows and Economic
Results
Based on an estimated initial capital
investment of US$6.1 million (including resource purchase price) and the
milling of 4,270,000 tonnes of tailings material at
a grade of 0.115% WO3, the project has a discounted payback of less than one
year and is expected to generate net revenues of US$29.8 million over its
estimated production life of four years on a pre-tax basis.
This results in a pre-tax IRR of 163%
and a NPV of US$15.2 million at a discount rate of 10% per year. Total WO3
concentrate produced over the projected life of the operation is estimated to
be 4.9 million lbs (221,000 mtu).
Price forecasts for WO3 concentrate are
based on the assumed long-term price of US$260 per mtu
versus current tungsten prices at $325 per mtu.
The PEA was based on work carried out by
DENM and other consultants, including Mr. Milko
Rivera, P. Eng., an independent Qualified Person as
defined by National Instrument 43-101, with DENM taking overall
responsibility for compiling the study.
Project Description
The Currais Novos property is located 179 kilometres
west-southwest of Natal in the State of Rio Grande do Norte, in northeastern
Brazil. The project is in the municipality of Currais
Novos. The tungsten tailings deposits are the
result of the processing of ore from the Barra
Verde and Boca de Laje Tungsten mines. The project
has previously been explored by a number of companies including Union Carbide
and Anglo American and from these workings the project has been described as
a scheelite (tungsten) skarn
type deposit.
Test work and process flow sheet
development was carried out by CETEC, a mineral processing laboratory located
in Belo Horizonte, Brazil. Two composite samples (approximately 10 tonnes) were processed to obtain a scheelite
concentrate with, at least 65% WO3, and an economically acceptable recovery.
The laboratory results highlights are as follows:
-- 45% recovery of WO3;
-- Concentrate grade from testwork resulted in a +65% WO3 product;
-- Recovery technique was carried out which includes the repulping of 100%
of tailings followed by gravity preconcentration using centrifuges,
preconcentrate classification and regrinding, vibratory tabling cleaning
and upgrading, and scheelite concentrate roasting followed by a high-
intensity magnetic separation stage to remove iron sulphide impurities;
and
-- Preliminary Fluorine work and recovery was carried out, but the results
have not proved conclusive at this time.
The processing facilities are expected
to include equipment and infrastructure capable of processing a minimum of
3,288 tonnes per day of reclaimed tailings. The
plant will consist of gravity concentration, gravity tabling upgrade, concentrate cleaning, roasting and magnetic separation to
produce the final concentrate. Tailings from the process will be pumped to a
new tailings area nearby.
The town of Currais
Novos has well established infrastructure for the
transport of supplies as well as access to local labour,
accommodations, power lines and communications systems - telephone, both land
and cellular, as well as internet connections. A paved main road services the
project from outside Currais Novos
which allows for accessible transportation of equipment,
and for the shipping of the concentrate to the required port facility of
Natal.
Estimated Mineral Resources
Largo has completed a new block model
and updated mineral resource estimate incorporating the results from its 2010
auger drill program consisting of 121 holes totalling
794 metres and 556 samples.
The updated mineral resource for the two
tailings deposits at a cut-off grade of 0.06 % WO3 is estimated as Indicated
mineral resources of 3.46 million tonnes grading
0.12% WO3 and 1.74% F. The Indicated mineral resource estimate contains 7.2
million pounds of WO3. Inferred mineral resources were estimated to be
810,000 tonnes grading 0.093% WO3 and 1.44% F
containing 1.3 million pounds of WO3.
Mineral Resources are presented in Table
1 below for the two tailings deposits for each resource category, which are
included within the overall resource. The cut-off grade was determined based
on comparison to similar deposit types that are being mined or planned to be
mined by open pit methods, but has not been confirmed by appropriate economic
studies.
Table 1: Mineral Resources in the Barra Verde and Boca de Laje
Tailings Deposits, as at December 10, 2010(i),
based on 0.06 % WO3 cut off grade.
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Indicated Mineral Resources
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Tailings Tonnage (Mt) WO3 (%) F (%) WO3 (Mlbs) F (Mlbs)
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Barra Verde 2.61 0.12 1.82 5.4 105.1
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Boca De Laje 0.85 0.12 1.51 1.8 28.1
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Total 3.46 0.12 1.74 7.2 133.2
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Inferred Mineral Resources
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Tailings Tonnage (Mt) WO3 (%) F (%) WO3 (Mlbs) F (Mlbs)
----------------------------------------------------------------------------
Barra Verde 0.70 0.09 1.42 1.1 22.0
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Boca De Laje 0.11 0.11 1.57 0.22 4.0
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Total 0.81 0.093 1.44 1.32 26.0
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Notes: (i) The
above resource classifications conform to CIM Standards on Mineral Resources
and Reserves referred to in National Instrument 43-101. Although 0.06% WO3 is
considered a likely cut-off grade for this deposit, based on comparisons with
other similar deposit types, it has not been confirmed by the appropriate
economic studies. Totals may not add up exactly due to rounding. The mineral
resource estimate was prepared by Largo and reviewed by Dr. Fernando Tallarico, Ph.D., P.Geo., an independent Qualified Person as defined by National
Instrument 43-101.
At Currais Novos, tungsten mineralization is concentrated in two
tailings piles known as Barra Verde and Boca de Laje. Barra Verde is the larger
of the two. The mineralization is fairly homogeneous throughout the piles.
The Mineral Resource estimate was
generated using lithological, mineralogical, WO3
and F assay data from 121 auger holes totalling 794
metres of drilling and 556 samples. The deposits
were modeled into two domains using the Gemcom
mining software. Samples were composited over 5 metre
intervals. WO3 grades were interpolated into estimation domains using
Ordinary Kriging.
The Mineral Resource estimate has been
prepared by Largo, and reviewed and validated by Dr. Fernando Tallarico, Ph.D., P.Geo a
Senior Consulting geologist. Dr. Tallarico, an
independent Qualified Person as defined under National Instrument 43-101,
visited the site from February 5 to 7, 2010. Dr. Tallarico
has verified the scientific and technical information contained in this news
release.
Assaying for the 2010 auger drill
program was carried out by SGS Minerals Laboratories in Belo Horizonte,
Brazil, and Lakefield, Ontario, Canada; both are ISO 9001-2000 certified
laboratories. Largo employs a systematic industry standard QA/QC program
including standards, duplicates and blanks. The samples were crushed to 70%
passing 10 mesh, split to 250 g and pulverized to
95% passing 150 mesh. A 5 g split was analyzed for W using a phosphoric acid
leach followed by ICP-emission spectrometry. A second 5 g split is analyzed
for Fluorine by ICP-mass spectrometry. Routine check assays are performed on
sample rejects by SGS. Mr. Andy Campbell, P.Geo. is the Qualified Person as defined under National
Instrument 43-101 responsible for the scientific and technical work on the
program.
Readers should note that the PEA is
preliminary in nature, includes Inferred mineral 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,
and there is no certainty that the PEA will be realized.
Costs
Capital costs associated with tailings
acquisition, infrastructure, mining and construction of the process plant are
estimated to be US$6.1 million including a contingency of US$0.9 million. The
estimate has an intended level of accuracy of 20% as engineering and cost
estimation has progressed beyond the PEA stage with site construction already
having been commenced and orders for certain equipment having already been
placed.
Operating costs over the life of the
operation are estimated to be US$57.61 per mtu.
All dollar amounts in this press release
are in U.S. dollars (US$). For the dollar amounts in this press release,
Largo has used an exchange rate assumption of 1.75 Brazilian Reais (R$) for each U.S. dollar.
Geological Potential
The Currais Novos property is underlain by a portion of the Serido Mobile Belt (SMB) which is located in northeastern
Brazil and consists of a gneiss basement (Paleo-Proterozoic),
a metasedimentary sequence (marble, quartzites, and schists), and
the Brasiliano igneous suite (both of Neo-Proterozoic age). In this region, numerous mineralized skarns occur within marble and at the marble-schist
contact in the metasedimentary sequence and have
been known since at least the 1940s. and several
mines currently operate on a small scale in this part of northeastern Brazil
producing tungsten concentrate.
About Largo
Largo is a Canadian-based mineral
resource exploration and development company focused on creating a world
leading strategic metals company. The Company currently holds an 80% interest
in the Maracas Vanadium Project, 100% interest in the Currais
Novos Tungsten Tailing Project, a 100% interest in
the Campo Alegre de Lourdes Iron-Vanadium Project,
all in Brazil, and a 70% interest in the Northern Dancer Tungsten-Molybdenum
property located in the Yukon Territory, Canada. The immediate goal of the
Company is to develop the Maracas Vanadium Project by Q1 2013 and begin
production of WO3 concentrate from the reprocessing of tungsten tailings from
Currais Novos by June,
2011. Largo has a very skilled management team both in Canada and Brazil with
the ability to advance these projects.
Largo is a publicly listed company on
the TSX Venture Exchange under the symbol LGO. For more information please
refer to Largo's website: www.largoresources.com
Mr. Tim Mann, an officer of the Company,
is the Qualified Person as defined under National Instrument 43-101
responsible for the scientific and technical disclosure in this press
release.
Disclaimer
This press release contains
forward-looking information under Canadian securities legislation.
Forward-looking information includes, but is not limited to, informationwith respect to the estimation of mineral
reserves and mineral resources; conclusions of the preliminary economic
assessment; the timing and amount of estimated future production, development
and exploration; costs of future activities; capital and operating
expenditures; success of exploration activities; mining or processing issues;
currency exchange rates; government regulation of mining operations; and
environmental risks. Generally, forward-looking information can be identified
by the use of forward-looking terminology such as "plans",
"expects" or "does not expect", "is expected",
"budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" 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".
Forward-looking information is based on the opinions and estimates of
management as of the date such statements are made. Forward-looking
information is subject to known and unknown risks, uncertainties and other
factors that may cause the actual results, level of activity, performance or
achievements of Largo to be materially different from those expressed or
implied by such forward-looking information, including but not limited to
risks related to: timing and availability of external financing on acceptable
terms; unexpected events and delays during construction, expansion and
start-up; variations in ore grade and recovery rates; receipt and revocation
of government approvals; actual results of current exploration activities;
changes in project parameters as plans continue to be refined; future prices
of ferrovanadium; failure of plant, equipment or processes to operate as anticipated;
accidents, labour disputes and other risks of the
mining industry. Although management of Largo has attempted to identify
important factors that could cause actual results to differ materially from
those contained in forward-looking information, there may be other factors
that cause results not to be as anticipated, estimated or intended. There can
be no assurance that such information will prove to be accurate, as actual
results and future events could differ materially from those anticipated in
such Information. Accordingly, readers should not place undue reliance on
forward-looking information. Largo does not undertake to update any
forward-looking information, except in accordance with applicable securities
laws.
NEITHER THE TSX VENTURE EXCHANGE (NOR
ITS REGULATORY SERVICE PROVIDER) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR
ACCURACY OF THIS RELEASE
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