February 14, 2008 - Vancouver, British Columbia - Minefinders
Corporation Ltd. (the "Company") (TSX: MFL / AMEX: MFN) today
reported an updated economic forecast and independently prepared reserve
estimate for its Dolores gold and silver mine in Chihuahua, Mexico.
"Perhaps the most important finding of the new study, given the
global environment of cost escalation, is that the economics for the Dolores
Mine remain robust," said Mark Bailey, Minefinders' President and CEO. "Looking
ahead, there is significant upside potential from optimization efforts
currently underway, with results expected later this year."
Update Highlights (all
dollar amounts are in US$)
- Proven
and probable reserves have increased 37% from the February 2006 Dolores
feasibility study (the "2006 feasibility study") to 99.3
million tonnes containing 2.44 million ounces of gold and 126.64 million
ounces of silver, increases of 24.8% and 22.1% respectively;
- Life
of mine production has increased to 1,765,606 ounces
of gold and 64,354,508
ounces of silver or 3,005,027 ounces
of gold and gold-equivalent silver ("gold equivalent ounces")
at base case prices;
- Life
of mine average cash operating costs are estimated at $297 per gold
equivalent ounce and $32 per gold ounce, net of silver by-product credits;
- Pre-tax
internal rate of return ("IRR") is estimated at 26%, with a
pre-tax net present value ("NPV") of $831 million discounted
at 0% and a pre-tax NPV of $563 million discounted at 3%, inclusive of
capital expenditures to date; and
- Initial
capital costs, including a $10 million contingency, of $192 million, of
which $141 million has been spent as at December 31, 2007. Sustaining
capital costs are estimated at $50 million with net cash flow from
operations of $1.1 billion over the life of the mine.
An independently prepared report, compliant with Canada's
National Instrument 43-101 ("NI 43-101") standard for mineral
disclosure, will be filed on SEDAR shortly, providing details of the updated
reserve and economic model.
Dolores Mine Economics Update
Base case metal price assumptions of $675 per ounce gold and $13 per
ounce silver were used in the economic analysis, with $600 gold and $10
silver used to define the reserve. Net present values and internal rates of
return using base case and approximate spot prices for gold and silver are as
follows:
|
Base
Case
|
Spot
Case
|
Gold
|
$675
per ounce
|
$900
per ounce
|
Silver
|
$13.00
per ounce
|
$17.00
per ounce
|
|
|
|
NPV 0%
discount - pre-tax(1)
|
$831
million
|
$1.5
billion
|
NPV 3%
discount - pre-tax(1)
|
$563
million
|
$1.0
billion
|
IRR -
pre-tax(1)
|
26%
|
43%
|
(1)Inclusive of $141 million
in capital expenditures to December 31, 2007.
The following table provides a comparison of the updated Dolores Mine
production and economics to the 2006 feasibility study:
|
Dolores Mine Update
|
2006 Feasibility Study
|
Mine life
|
15.5 years
|
12 years
|
|
|
|
Production(1):
|
|
|
Gold
|
1.77 million ounces
|
1.44 million ounces
|
Silver
|
64.35 million ounces
|
53.2 million ounces
|
Gold Equivalent
|
3.0 million ounces (52:1 Ag:Au)
|
2.29 million ounces (63:1 Ag:Au)
|
|
|
|
Average strip ratio
|
3.7 waste tonnes to 1 ore tonne
|
3.7 waste tonnes to 1 ore tonne
|
|
|
|
Life of
mine average cash cost per ounce(2):
|
|
|
Gold
equivalent
|
$297
per ounce
|
$228
per ounce
|
Gold (silver by-product)
|
$32 per
ounce
|
$85 per
ounce
|
|
|
|
Initial
capital costs(3)
|
$192
million
|
$132
million
|
Sustaining
capital costs
|
$50
million
|
$29
million
|
|
|
|
Base
case returns:
|
|
|
Pre-tax
IRR
|
26%
|
28.9%
|
Pre-tax
NPV 0% discount
|
$831
million
|
$389
million
|
Pre-tax
NPV 3% discount
|
$563
million
|
$285
million
|
(1)Inclusive of incidental
production during the commissioning stage.
(2)Excluding royalties of 3.25% on gold ounces produced and 2% on
silver ounces produced. Cash operating costs net of revenue from silver
production are applied to gold ounces produced in estimating cash cost per
ounce of gold net of silver by-product.
(3) Including contingency of $10 million and $5.7 million,
respectively.
The updated Dolores Mine economics are based on a comprehensive study
incorporating current costs and an updated production schedule for an open
pit operation lasting over 15 years. While estimated costs have increased
from those in the 2006 feasibility study, economics for the Dolores Mine
remain robust. Operating cost escalations having the most significant impact
to the mine economics include higher local wage rates, diesel, reagent, and explosives
costs. Additional significant cost increases above those in the 2006
feasibility study include costs for equipment maintenance and parts,
community relations, security and camp operations.
Capital cost estimates have been updated to reflect the increase in
ore tonnes processed over the mine life, which require additional leach pad
space, haul trucks and other equipment, and the cost to complete
construction. Increased costs associated with immediate and ongoing
improvements in the housing, medical and school infrastructure for the new
community of Dolores are also included in the revised estimates. Initial
capital expenditures of $141 million have been incurred to December 31, 2007.
Remaining initial capital expenditures are estimated at $51 million, which
includes a $10 million contingency. Life of mine sustaining capital is
estimated at $50 million.
Dolores Reserves Update
The updated reserve estimation was prepared by Gustavson Associates of
Denver, Colorado ("Gustavson"). It is the first independent
estimation of reserves at Dolores since the 2006 feasibility study. An audit
by Gustavson of the reserve estimation is in progress and will be reported
when completed in an NI 43-101 technical report to be filed on SEDAR.
Consistent with the previously reported internally prepared reserve
update (see news release dated July 25, 2006 and SEDAR filings for NI 43-101
technical reports), when adjusted for stockpiled material, the open-pit,
reserve base at the Dolores Mine has increased to 2.44 million ounces of gold
and 126.64 million ounces of silver, or 4.55 million gold equivalent ounces -
an increase of 24.8% in contained gold reserve and an increase of 22.1% in
contained silver reserve from the 2006 feasibility study.
The new reserves are contained in 99.3 million tonnes of proven and
probable ore having an average grade of 0.77 grams per tonne
("gpt") gold and 39.67 gpt silver and using economic gold
equivalent cut-off grades ranging from 0.26 gpt to 0.37 gpt for the various
ore types.
Dolores Mine - Proven and Probable Reserve Estimate
- February, 2008
Reserves(1)(2)
|
Tonnes (000s)
|
Gold Grade (gpt)
|
Gold Ounces Contained
|
Silver Grade (gpt)
|
Silver
Ounces Contained
|
AuEq Grade (gpt)(3)
|
AuEq Ounces Contained(3)
|
Proven
|
56,629
|
0.80
|
1,453,946
|
40.32
|
73,415,147
|
1.47
|
2,677,532
|
Probable
|
42,675
|
0.72
|
989,713
|
38.80
|
53,229,746
|
1.37
|
1,876,875
|
Proven &
Probable
|
99,305
|
0.77
|
2,443,659
|
39.67
|
126,644,893
|
1.43
|
4,554,407
|
1.
Proven and probable reserves
have been estimated as of December 31, 2007 in accordance with
definitions adopted by the Canadian Institute of Mining, Metallurgy and
Petroleum on November 14, 2004. Gustavson has prepared these estimates.
William J. Crowl of Gustavson is the "Qualified Person" as defined
in NI 43-101 for this mineral reserve statement. Some numbers may not sum due to
rounding.
2. Using
$600 per ounce gold; $10.00 per ounce silver.
3. Gold
equivalent ounces ("AuEq") are based on a 60:1 silver to gold
ratio, without regard to metallurgical recoveries.
The block model bench height and selective mining unit size were
increased to match current mining practice and the mine equipment fleet,
resulting in increased dilution from the 2006 feasibility study. Analysis of
dilution will continue during production ramp-up.
Due to the higher assumed metal prices, ore tonnes with lower average
recovery rates have been added to the life of mine production. These
additional tonnes have decreased average recoveries slightly compared with
the 2006 feasibility study; 72.25% from 74% for gold and 50.8% from 51% for
silver.
Gustavson's work is based on the previously audited resource model
reported by the Company in a news release dated June 12, 2007 and an NI
43-101 technical report filed on SEDAR July 27, 2007. The total measured and
indicated resources used for estimation of the mineral reserves at Dolores
incorporates data from all drilling up through the end of 2006. The resources
are currently estimated at 3.1 million ounces of gold and 148.7 million
ounces of silver.
An additional 661,000
ounces of gold and 27.5 million ounces of silver,
contained in 30.3 million tonnes (at average grades of 0.677 gpt gold and
28.2 gpt silver), are classified as "inferred resources".
Dolores Upside Potential
The Company is undertaking a feasibility study in 2008 to assess the
economic viability of adding a flotation mill, which would enhance recoveries
from high-grade ore in the open pit, process additional underground ore and increase
annual production capacity. Previous flotation mill test work showed
recoveries from sulphide ores of 90-92% for gold and 90% for silver.
The open-pit mine plan and updated Dolores Mine economics do not take
into account significant high-grade gold and silver mineralization that lies
below and up to one kilometer peripheral to the proposed pit or increased
gold and silver production that would result from processing high grade open
pit ore through a mill. The completion of the mill feasibility study
and evaluation of underground development are examples of the optimization
efforts that will continue beyond the start of production from the Dolores
open pit mine.
Construction Update
Construction at Dolores is substantially complete. Local residents
have begun relocating to the new village and the village medical facilities
will be turned over to government authorities within a week, marking the
first time Dolores residents will have local access to health and medical
assistance.
Initial commissioning of the primary crusher is expected at the end of
the month. Commissioning of the tertiary crushers is expected in March with
initial loading of the leach pad now expected in late March or early April. "While the delays in
commissioning at Dolores have been frustrating for the Company, we believe it
is prudent to be thorough in our construction to ensure success when we
commence production" stated Mr. Bailey.
Qualified Person
Mark Bailey MSc., P.Geo., is the "qualified person" with overall
responsibility for the Dolores Project and is responsible for the contents of
this news release.
About
Minefinders
Minefinders is a precious metals mining and exploration company. The
Company is in the final stages of building the multi-million ounce Dolores
gold and silver mine in Mexico.
The mine is expected to have a 15-year life as an open pit mine with
additional potential as a high-grade underground mine in the future. The
Company continues its exploration efforts on several other prospective
projects in Mexico
to build a quality pipeline of precious metals projects for future growth.
MINEFINDERS CORPORATION LTD.
"Mark H. Bailey"
Mark H. Bailey
President and Chief Executive Officer
Safe Harbor Statement under the United States Private Securities
Litigation Act of 1995: Statements in this release that are forward-looking,
including statements relating to the timing of the commencement and
completion of the construction of, and the commencement of production from,
the Dolores mine, the anticipated costs related to the Dolores mine, the
adequacy of the capital and anticipated expenditures for working capital and
exploration, and other statements that are based on the estimates,
projections and expectations of management are subject to various risks and
uncertainties concerning the specific factors identified above and in the
Company's periodic filings with the regulatory authorities in Canada and the
United States. Such information contained herein represents
management's best judgment as of the date hereof based on information
currently available. The Company does not intend to update this
information and disclaims any legal liability to the contrary.
Cautionary Note to U.S. Investors: The SEC permits mining companies to
disclose only those mineral deposits that can be extracted or produced
economically in their filings with the SEC. This news release uses the term
"inferred resource" that the SEC guidelines prohibit from inclusion
in filings with the SEC.
Investor contact:
Mike Wills
Minefinders Corporation Ltd.
(604) 687-6263
mike@minefinders.com
www.minefinders.com