Almaden Minerals Ltd. ("Almaden" or "the Company") (TSX: AMM)(NYSE
Amex: AAU) is pleased to report the results of a positive
Preliminary Economic Assessment ("PEA") of the open pit potential
of its 100% owned Elk gold project located in British Columbia,
Canada. The Positive PEA demonstrates the potential that a viable
project could be launched on the Elk property. The results for the
base case (at US$1,000 per troy ounce) indicate a mining project
with a 7 year mine life producing 139,000 ounces of gold at
estimated cash operating costs of $C528 per troy ounce, initial
capital expenditures of C$9.91 MM, pre-tax Internal Rate of Return
of 51%, payback of 1.85 years and NPV of $C28.7 MM using a discount
rate of 8%. The results for US$1,200 per troy ounce case indicate a
mining project with a 9 year mine life producing 297,000 ounces of
gold at estimated cash operating costs of $C652 per troy ounce,
initial capital expenditures of C$17.5 MM, pre-tax Internal Rate of
Return (IRR) of 39%, payback of 3.3 years and NPV of $C67.9 MM
using a discount rate of 8%.
J.D. Poliquin, Chairman of Almaden commented, "The new positive
PEA clearly demonstrates the possible economic viability of the Elk
deposit's bulk tonnage potential. We look forward to incorporating
the 2010 drill results into this analysis as we move forward in
developing the Elk deposit utilising the recommendations of the
report. SRK's analysis confirms Elk as a project with solid
economics and capable of producing gold with good cash costs.
Exploration results at Elk have continued to demonstrate
significant growth potential as each additional exploration
campaign is conducted. We view the PEA as an excellent foundation
and consider it the starting point for Elk which we anticipate will
continue to grow in size."
The NI 43-101 compliant PEA was completed by Roger Pooley,
(MAusIMM) of SRK Consulting Australasia Pty Ltd. ("SRK"). SRK
relied on other authors in the areas of Geology, Resources, and
Mineral Processing. Susan Lomas, P.Geo of Lions Gate Geological
Consulting ("LGGC") prepared an updated National Instrument 43-101
compliant resource. Gary Hawthorn, P.Eng. of Westcoast Mineral
Testing Inc. (WCMT) supervised the metallurgical testing and
estimated the preliminary capital and operating costs for a
treatment plant. Brian Alexander, P.Geo. supervised the 2010
drilling program at Elk. A Technical Report entitled "NI 43-101
Technical Report for a Preliminary Economic Assessment on the Elk
Gold Project, Merrit, British Columbia, Canada" dated January 14th,
2010 will be filed at www.sedar.com. The experts listed above have
written sections of this Technical Report and are acting as the
Qualified Person (QP) for those sections.
The PEA did not consider the underground potential of the
resource but only the portion of the current resource amenable to
open pit mining. The 2010 Mineral Resource Estimate and the PEA
study do not include the results of the 2010 drilling at The
Company plans to incorporate the 2010 drilling results into an
updated mineral resource estimate once all the assay results are
received, for the purposes of more advanced studies, including an
analysis of the underground potential. The PEA recommends that the
Company proceed with a Pre Feasibility Study of the project.
Highlights of the Preliminary Economic Assessment:
- Average life of mine cash operating cost of $C528 per ounce at
$US 1,000 per ounce (Base Case) and $C 652 at $US1,200 per
ounce.
- Estimated start-up capital expenditures of $C9.91 million and
life of mine sustaining capital of $C12.18 million (Base Case).
- At $US1,000 per ounce, pre-tax Internal Rate of Return (IRR)
of 51%, payback of 1.85 years and NPV of $C28.7 MM using a discount
rate of 8% (Base Case).
- At $US1,200 per ounce gold, pre-tax Internal Rate of Return
(IRR) of 39%, payback of 3.3 years and NPV of $C67.9 MM using a
discount rate of 8%.
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Project summary Base Case $1200 Case Unit
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Assumed gold price 1000 1200 $US/tr.oz
Tonnes per day treated 500 1000 tpd
Life 7 9 years
Total tonnes treated 1.1 2.6 MT
Grade 4.14 3.89 g/t
Waste: Ore ratio 16.4 30.1
Plant recovery 92 92 %
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Ounces Au produced 139,198 297,239 Tr.oz
Initial capital expense 9.91 17.50 $CADM
Working and preproduction capital 2.27 9.60 $CADM
Waste mining 2.42 1.90 $CAD/tonne waste
Ore mining 8.38 5.87 $CAD/tonne ore
Processing 20.68 14.74 $CAD/tonne ore
Administration and overheads 2.07 1.27 $CAD/tonne ore
Total operating cost 70.30 78.91 $CAD/tonne ore
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Pre-tax NPV @ 8% 28.7 67.9 $CADM
Pre-tax IRR 51% 39%
Max Exposure 13.66 33.53 $CADM
Payback, years from start production 1.85 3.30 years
ratio, gross earnings: max exposure 5.02 6.00
ratio, NPV: max exposure 2.10 2.03
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Table 1: Project Assumptions and Results for Base and US$1,200 Cases
Economic Parameters and Constraints for the Preliminary Economic
Assessment:
The preliminary assessment 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 preliminary assessment will be realized. This mining study and
PEA are at a conceptual level where different options can be
considered and a broad understanding of the potential project
performance can be gained. SRK and Almaden consider this project to
be preliminary or "green field" in nature as previous mining
activity on the property was largely for exploration purposes and
the property has not been the subject of a detailed pre-feasibility
study as is defined in NI 43-101. For the base case pit scenario 9%
of the resource considered viable in the study are Measured
Resources, 73% Indicated and 18% Inferred Resources. For the
US$1200 pit scenario 7% of the resource considered viable in the
study is based on Measured Resources, 71% on Indicated and 22% on
Inferred Resources.
The trial open pit operation that occurred in the 1990s mined a
small portion of vein material. The scenario developed as a
recommendation for further study is summarised in the following
table. Known as the Base Case, it is based on using augmented
process equipment that Almaden already owns. This limits the
throughput to 500 tpd. The Base Case is a conservative and low risk
scenario in the light of the current gold price, and in practice
the project could be expanded to mine a much larger part of the
known resources if current gold prices are sustained. To show the
effect of this, an alternative case known as the $US1200 case was
also studied. The $US1200 case assumes that a gold price of
$US1200/tr.oz will be maintained for eight years. The mine
processing plant production is doubled, to 1,000 tpd. The
underground resources declared in Table 3 below are not considered
for production in this report. It is believed that if the project
proposed goes ahead, then these resources will have a much improved
chance of being mined, because access can be gained from within the
open pit, and the treatment plant will have been built, and will be
ready to accept underground production without further capital
expense. This matter can therefore safely be left for consideration
at a later time.
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Item Value Unit
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Slope Angle 45 degrees
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Mining Costs 2.29 $/tonne waste
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8.25 $/tonne ore
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Mining Recovery 1.0
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Mining Dilution 1.1
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Processing Cost including G & A 22.75 $/tonne
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Processing Recovery 92 %
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Gold price 1,000 USD
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US Dollar / CAD Dollar exchange rate 0.95
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Selling Cost 2% Of nominal gold sale price
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Table 2: Base Case Pit Optimisation Parameters
Highlights of Updated Mineral Resource Estimate:
A mineral resource for the Elk Property was estimated by LGGC.
Multiple quartz veins were interpreted on north-south trending
cross sections. Three-dimensional solids models were built from the
sectional interpretations using diamond drill hole data captured
through to 2007. Assay gold grades were capped and composited to
vein width composites averaging about 1.5 m. Gold grades were
estimated into a block model using the inverse-distance method.
Cut-Off
Vein Location Class Au g/t Tonnage Au g/t Ounces
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B&WD In Pit Measured 0.50 200,000 8.77 55,000
B&WD In Pit Indicated 0.50 1,870,000 3.50 210,000
B&WD In Pit M&I 0.50 2,070,000 4.00 266,000
B&WD In Pit Inferred 0.50 640,000 5.71 117,000
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B&WD Below Pit Measured 5.00 - - -
B&WD Below Pit Indicated 5.00 130,000 8.46 35,000
B&WD Below Pit M&I 5.00 130,000 8.46 35,000
B&WD Below Pit Inferred 5.00 510,000 8.91 146,000
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B&WD In & Below Pit Measured 0.50 & 5.00 200,000 8.77 55,000
B&WD In & Below Pit Indicated 0.50 & 5.00 2,000,000 3.82 245,000
B&WD In & Below Pit M&I 0.50 & 5.00 2,190,000 4.26 301,000
B&WD In & Below Pit Inferred 0.50 & 5.00 1,150,000 7.13 263,000
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Table 3: Mineral Resources for the B and WD Veins at the Elk Project
LGGC directed SRK to produce a pit shell that LGGC incorporated
into the resource estimation tabulations using a $US1200 gold price
to constrain the blocks into open pit amenable resources reported
at a 0.5 g/t Au cut-off. The remaining resources, that may have
potential for underground extraction, was reported at a 5.0 g/t Au
cut-off and are located below the $US1200 pit shell. Table 3
reports the results of the mineral resource estimation for the B
and WD Veins using data available from December 2007.
Property Location and History:
The Elk Property is located in southern British Columbia, Canada
roughly 325 km northeast of Vancouver and 55 km west of Okanagan
Lake, approximately midway between the towns of Merritt and
Peachland. The property is within the Similkameen Mining District
and consists of 27 contiguous mineral claims and one mining lease
covering 16,566 hectares. Except for the Agur Option block, Almaden
has a 100% interest in all claims. A 1% NSR production royalty is
payable on production from the Agur Option block, located
approximately 4 km south of the area of estimated resources, and is
not relevant to this report. Prospecting activities date back to
the early 1900s but detailed work in the area began in 1960s and
1970s by several companies who focused on copper and molybdenum.
Fairfield Minerals investigated the area for gold in 1986.
Approximately 51,500 ounces of gold were produced between 1992 and
1995 from a test pit and underground mining exploration (a decline
was excavated for underground drilling activity, but no stoping or
underground mining occurred). Almaden Resources Ltd. amalgamated
with Fairfield Minerals in 2002 to form Almaden Minerals (Almaden),
which thereby became the sole owner of the Elk gold property and
has continued exploration activity on the project since this
time.
Marc Blythe, P. Eng., VP of Mining of Almaden and a qualified
person as defined by NI 43-101, has reviewed the technical
information in this news release.
About Almaden:
Almaden is a well-financed mineral exploration company working
in North America. The company has assembled mineral exploration
projects, including the Ixtaca Zone, through its grass roots
exploration efforts. While the properties are largely at early
stages of development they represent exciting opportunities for the
discovery of significant gold and copper deposits as evidenced at
Ixtaca. Currently six projects (Caldera, Caballo Blanco, Tropico,
Nicoamen River, Matehuapil and Merit), are optioned to separate
third parties who each have the right to acquire an interest in the
respective project from Almaden through making certain payments and
exploration expenditures. Four further projects are held in joint
ventures. Almaden also holds a 2% NSR interest in 11 projects.
Almaden's business model is to find and acquire mineral properties
and develop them by seeking option agreements with others who can
acquire an interest in a project by making payments and exploration
expenditures. Through this means the company has been able to
expose its shareholders to discovery and capital gain without the
capital that would be required if the company were to have
developed these projects without a partner. The company intends to
expand this business model, described by some as prospect
generation, by more aggressively exploring several of its projects
including the Ixtaca Zone.
On Behalf of the Board of Directors
Morgan J. Poliquin, Ph.D., P.Eng., President, CEO and
Director
Almaden Minerals Ltd.
Statements contained in this news release that are not
historical facts are forward looking statements as that term is
defined in the private securities litigation reform act of 1995.
Such forward -looking statements are subject to risks and
uncertainties which could cause actual results to differ materially
from estimated results. Such risks and uncertainties are detailed
in the Company's filing with the Securities and Exchange
Commission. Except for the statements of historical fact contained
herein, certain information presented constitutes "forward-looking
statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and Canadian securities
laws. Such forward-looking statements, including but not limited
to, those with respect to potential expansion of mineralization,
potential size of mineralized zone, and size and timing of
exploration and development programs, estimated project capital and
other project costs and the timing of submission and receipt and
availability of regulatory approvals involve known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievement of Almaden to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such
factors include, among others, risks related to international
operations and joint ventures, the actual results of current
exploration activities, conclusions of economic evaluations,
uncertainty in the estimation of mineral resources, changes in
project parameters as plans continue to be refined, environmental
risks and hazards, increased infrastructure and/or operating costs,
labour and employment matters, and government regulation and
permitting requirements as well as those factors discussed in the
section entitled "Risk Factors" in Almaden's Annual Information
form and Almaden's latest Form 20-F on file with the United States
Securities and Exchange Commission in Washington, D.C. Although
Almaden has attempted to identify important factors that could
cause actual results to differ materially, there may be other
factors that cause results not to be as anticipated, estimated or
intended. There can be no assurance that such statements will prove
to be accurate as actual results and future events could differ
materially from those anticipated in such statements. Almaden
disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, other than as required pursuant to
applicable securities laws. Accordingly, readers should not place
undue reliance on forward-looking statements.
Neither the Toronto Stock Exchange (TSX) nor the NYSE AMEX have
reviewed or accepted responsibility for the adequacy or accuracy of
the contents of this news release which has been prepared by
management.
Contacts: Almaden Minerals Ltd. Morgan J. Poliquin, Ph.D.,
P.Eng. President, CEO and Director 604-689-7644 604-689-7645 (FAX)
www.almadenminerals.com
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