Minco Silver Corporation (TSX: MSV) ("Minco Silver" the "Company")
is pleased to announce the positive results of Feasibility Study
(the "Study") for the Fuwan Silver project located in Southeast
China. The Feasibility Study was completed and overseen by Wardrop
Engineering Inc. of Vancouver, BC, Canada. Wardrop worked in
conjunction with China Nerin Engineering Co. Ltd. ("NERIN") of
Nanchang, China, Environmental Resource Management ("ERM") of
Beijing, China and P&E Mining Consultants Inc. ("P&E") of
Brampton, ON, Canada. All currencies listed are in US dollars,
unless otherwise stated.
The Study defines an operation based on underground mining and
milling of the ore producing a silver/lead concentrate and a zinc
concentrate on site in township of Fuwan, approximately 45km
southwest of the provincial capital of Guangzhou, China.
Highlights of Feasibility Study:
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Feasibility Study Highlights (Pre-Tax) Feasibility Results
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Probable Mineral Reserve 9.118 Mt averaging 189 g/t Ag
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Mine Life 9.2 Years
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Daily Mine Throughput 3,000 tpd
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Mill Recovery (Ag Recovered in both concentrates) 91%
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Average Annual Recovered Ag in both concentrates 5.5 M oz
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Total Recovered Ag in both concentrates 50.4 M oz
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Total Operating Cost/t Ore Milled $34.42/t
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Total Cash Cost per Payable oz Ag $5.65/oz
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Pre-Production Capital Costs $73.1 M
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Silver Price Used for Feasibility Study Economics 13.57/oz Ag
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Total Revenue $648.2 M
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Total Operating Cost $313.8 M
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Total Royalty Payment $24.3 M
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Total Operating Cash Flow $310.0 M
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Net Present Value Before Tax @ 6% Discount Rate $111.5 M
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Net Present Value Before Tax @ 8% Discount Rate $95.3 M
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Internal Rate of Return Before Tax 33.2%
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Payback Period of Pre-Production Capital Costs 2.3 years
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Construction Period 20 - 24 months
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"We are very pleased with the results of the feasibility study.
The study substantiates the quality of the Fuwan project. The
present reserve base is an excellent starting point for the project
and can be expanded significantly by upgrading the inferred
resources into reserves and by potentially expanding the operation
into the silver mineralization on the Changkeng Permit. We are
progressing well with the permitting process and will continue to
work expediently to bring this robust project into production,"
commented Dr. Cai, President and Chief Executive Officer.
Project Overview
Deposit
The Fuwan silver deposit (the "Deposit") falls into the broad
category of sediment-hosted epithermal deposits and is
characterized by 8 zones of vein and veinlet mineralization within
zones of silicification. Zones 7 and 8 are not included in the
reserve estimate. The predominant sulphide minerals are sphalerite
and galena with lesser pyrite, as well as rare arsenopyrite,
chalcopyrite, and bornite. The deposit is poor in gold (typically
less than 0.2 ppm).
Resource Estimation
P&E completed five resource estimates for the Fuwan silver
deposit in November 2005, November 2006, June 2007, December 2007
and May 2008. The May 2008 estimate, which is an update of the
December 2007 estimate on the basis of infill drilling, formed the
basis of the Study. All resource estimation technical reports were
done in compliance with NI 43-101 and CIM standards, most of which
were filed on SEDAR. There has been no additional drilling on the
deposit area since that time.
Contained Mineral Resources (at a 40g/t Silver cut-off)
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Resource Area & Classification
(does not include Changkeng tonnes Ag Ag Au Pb Zn
mineralization) (M t) (g/t) (M oz) (g/t) (%) (%)
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Fuwan Permit Indicated 13.95 188 84.3 0.17 0.20 0.56
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Fuwan Permit Inferred 10.24 171 56.1 0.26 0.26 0.72
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Reserve Estimation
The resource estimate provided by P&E classified the
resources for the Fuwan Zones 1 to 4 as indicated and inferred. The
reserve does not include any resources from the Changkeng property.
Only indicated mineral resources as defined in NI 43-101 were used
to establish the probable mineral reserves. No reserves were
categorized as proven.
Wardrop used a stope recovery factor of 95%, an average mining
extraction rate of 97%, and an average 7% internal dilution, 8%
external dilution, and 3% fill dilution to estimate the total
amount of diluted probable mineral reserves. Ore reserve
calculations conservatively assumed dilution to contain no
metal.
Probable Mineral Reserves (Diluted and In-situ)
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Ag (M oz)
Zone tonnes Ag (g/t) In-situ Au(g/t) Pb(%) Zn(%)
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1 1,328,000 186 7.9 0.18 0.06 0.32
2 4,806,000 192 29.7 0.17 0.18 0.57
3 2,452,000 192 15.1 0.11 0.26 0.64
4 532,000 150 2.6 0.07 0.42 0.82
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Total 9,118,000 189 55.3 0.15 0.20 0.57
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Notes: Reserve based on: Silver 13.00 US$/oz; Gold 688 US$/oz; Lead
0.88US$/lb; Zinc 1.28US$/lb; Operating cost of $37.13/t
Mining
The mine will be accessed by a single decline developed at a
gradient of -15%. Mining will be with conventional trackless
mechanized equipment.
A 2 m minimum mining height was adopted for mechanized mining
and mining methods will vary and be dependent upon orebody
geometry, ground conditions, and ore grade.
Drift-and-fill mining, and a small amount of room-and-pillar
mining, will be used for flat lying zones. As the orebody has
reasonably good grades, a trade-off study was undertaken to assess
at what grade it would be worth backfilling with cemented fill and
carrying out a primary/secondary drift-and-fill type mining method
allowing 100% extraction without leaving any ore pillars.
Ore zones with lower grades will be mined by the room-and-pillar
method. This method is selective and zones of low grade can be left
as pillars. Stope and pillar dimensions, ground support in
development headings, and stopes will depend on orebody geometry
and ground condition.
The cut-and-fill method will be used for ore zones dipping
between 15 degrees and 50 degrees.
All stopes will be backfilled after mining is completed. Free
draining hydraulic backfill was selected as the most appropriate
method due to the flat-lying and relatively large horizontal extent
of the orebody, coupled with the distant location of the process
plant and difficulties with access above the orebody.
This backfilling method will allow up to 45 to 50% of the
tailings to be disposed of as hydraulic backfill underground,
reducing the required size of the surface tailings pond. Backfill
will be prepared from tailings produced in the plant and
distributed to the underground stopes by a pipeline through the
main access ramp. For primary stope filling in drift-and-fill, 5%
cement will be added. Backfill for cut-and-fill, room-and pillar,
and secondary stopes of drift-and-fill mining will not be
cemented.
Mine production of 3000 tpd is based on a crew rotation of three
8 hour shifts and over 330 days per year. A mining contractor is
assumed for pre-production development as well as ongoing mine
development.
Metallurgy
A 3,000 tpd process plant has been designed for the Fuwan
Project to process silver, lead and zinc bearing sulphide
mineralization. The main value metals in the mineralization are
silver, lead, zinc, and gold. The process plant will operate 330
d/a at an annual process rate of 990,000 t/a and three shifts per
day. Overall process plant availability will be approximately
90%.
The run-of-mine (ROM) from the underground mine will be crushed
by a jaw crusher to 80% passing 150 mm, and then ground to 80%
passing 100 micrometers in a semi-autogenous grinding (SAG)-ball
mill-pebble crushing circuit (SABC). The silver, lead, and zinc
minerals will be recovered by a conventional differential flotation
process.
The tailings produced from the zinc rougher scavenger flotation
circuit will be sent to the tailings storage facility (TSF) for
storage and to the underground mine for hydraulic backfilling. The
produced silver-lead concentrate and zinc concentrate will be
thickened and then pressure filtered separately prior to being
transported to smelters. Depending on the lead head grade, the
silver-lead concentrate may be further processed to produce a
silver concentrate and a lead-silver concentrate.
The average dry concentrate production is forecast to be as
follows:
- silver-lead concentrate - 15,900 t/a, including:
-- 154,700 kg/a (4,975,000 oz/a) silver
-- 1,600 t/a lead
- zinc concentrate - 9,300 t/a including:
-- 4,700 t/a zinc
-- 15,400 kg/a (495,000 oz/a) silver.
Infrastructure
The Fuwan property is located approximately 45 km southwest of
Guangzhou, the capital city of Guangdong province. Access to the
property is via the Guangzhou - Zhuhai highway, which passes
through Gaoming City. The property is located 2 km via gravel road
northwest of the town of Fuwan (population 30,000). The town of
Fuwan is well connected by paved highway and expressways to major
cities, including Guangzhou (70 km highway distance), Gaoming (15
km), and Jiangmen (60 km), The Fuwan property is also accessible by
water on the Xijiang River to major cities like Guangzhou, Zhaoqing
and Jiangmen, as well as to international waterways in the South
China Sea. Electrical power, water, telephone service, and supplies
are available in Fuwan. The proposed minesite is large enough to
accommodate tailings and waste disposal areas, and processing plant
sites.
Operating Costs
The operating cost estimates are based on a process rate of
990,000 t of ore annually or 3,000 tpd of ore.
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Mining $18.01/t
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Processing $ 9.90/t
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Tailings $ 1.13/t
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G&A $ 4.78/t
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Surface Services $ 0.60/t
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Total $34.42/t
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Capital Costs
This estimate has been completed partially by NERIN and
partially by Wardrop. The majority of the information used in the
estimate is based on the quantities and pricing provided by NERIN
to Wardrop.
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Area Cost Direct Works (US$ x 1,000)
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A - Mining (Wardrop) 21,637
B - Primary Crushing 660
C - Crushed Ore Stockpile and Reclaim 305
D - Secondary and Tertiary Crushing 52
E - Grinding, Flotation, Dewatering, Reagents & Service 9,140
F - Tailings Disposal Facilities 4,250
G - Plant Site, Infrastructure & Ancillary Facilities 8,627
H - Temporary Services 35
L - Site/Plant Mobile Equipment 1,190
N - Power Lines (Included in G1 - Power Supply) Included in G1
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Direct Works Subtotal $45,896
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Indirect
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X - Project Indirect 13,330
Y1 - Land Acquisition 2,120
Y1 - Owner's Costs 5,663
Z - Contingency 6,051
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Indirect Subtotal $27,164
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TOTAL PRE-PRODUCTION CAPITAL COSTS (US$) $73,060
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Working Capital $8,300
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Sustaining Capital $59,900
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Financial Analysis
An economic evaluation of the Fuwan Project was prepared by
Wardrop based on a pre-tax financial model. For the 9.2 year mine
life and 9.1 Mt reserve, the following pre-tax financial parameters
were calculated:
- 33.2% IRR
- 2.3 years payback on $73.1 M capital
- US$111.5 M net present value (NPV) at a 6% discount rate.
The base case prices were as follows based on the 3 year
historical average metal prices from the London Metal Exchange
(LME) as of April 29, 2009:
- Silver - US $13.57/oz
- Gold - US $767.72/oz
- Zinc - US $1.18/lb
- Lead - US $0.91/lb
No allowance has been made for inflation or escalation.
Sensitivity Analysis
The project economics are sensitive to silver price, Operating
costs and Capital expenditures. The sensitivity analysis results
are in the table below:
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Change
Economic ----------------------------------------
Parameter Indicator -20% -10% Base Case 10% 20%
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Silver Price NPV ($M) 33 72 112 151 190
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IRR (%) 15 25 33 41 48
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Opex NPV ($M) 157 134 112 89 66
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IRR (%) 41 37 33 29 24
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Capex NPV ($M) 126 119 112 105 97
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IRR (%) 42 37 33 30 27
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Conference Call
Minco Silver will host a conference call on Wednesday September
30, 2009 at 8:00 AM PST to discuss the Feasibility Study
Report.
Toll Free Dial-in Numbers (within US and Canada): 1 866 400
1802
International Dial-in Number: +1 647 427 2437
Conference Code: 8066824422
Qualified Persons
Mr. Christopher N. Zahovskis, P. Eng., Chief Operating Officer
for Minco Silver, is the Qualified Person responsible for overall
supervision of the Feasibility Study and has reviewed and approved
the contents of this news release.
Mr. Dwayne L. Melrose, P. Geo., Vice President Exploration for
Minco Silver, is the Qualified Person responsible for verification
and quality assurance of the company's exploration data, analytical
results and resource statements and has reviewed and approved the
contents of this news release.
Mr. Eugene Puritch, P. Eng., President of P&E Mining
Consultants Inc. is an independent Qualified Person responsible for
the Fuwan resource estimate and has reviewed and approved the
contents of this news release
Mr. Jianhui Huang, Ph.D., P. Eng., of Wardrop Engineering Inc.
is an independent Qualified Person as defined by NI 43-101. Mr.
Huang has reviewed and approved the contents of this news
release.
Mr. Byron Stewart, P. Eng., of Wardrop Engineering Inc. is an
independent Qualified Person as defined by NI 43-101. Mr. Stewart
has reviewed and approved the contents of this news release.
Mr. Scott Cowie, B. Eng., MAusIMM., of Wardrop Engineering Inc.
is an independent Qualified Person as defined by NI 43-101. Mr.
Cowie has reviewed and approved the contents of this news
release.
The NI 43-101 Technical Report for the Feasibility Study Report
will be filed on SEDAR within 45 days of the date of this news
release.
The terms "Mineral Resource", "Measured Mineral Resource",
"Indicated Mineral Resource", "Inferred Mineral Resource" and
"Mineral Reserve", "Proven Mineral Reserve" and "Probable Mineral
Reserve" used in this release are Canadian mining terms as defined
in accordance with National Instrument 43-101 - Standards of
Disclosure for Mineral Projects under the guidelines set out in the
Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM")
Standards on Mineral Resources and Mineral Reserves, adopted by the
CIM Council on August 20, 2000 as may be amended from time to time
by the CIM. These definitions differ from the definitions in the
United States Securities & Exchange Commission ("SEC") Guide 7.
In the United States, a mineral reserve is defined as a part of a
mineral deposit which could be economically and legally extracted
or produced at the time the mineral reserve determination is made.
These terms are recognized and required by Canadian regulations,
they are not defined terms under standards in the United States and
normally are not permitted to be used in reports and registration
statements filed with the SEC. As such, information contained in
this report concerning descriptions of mineralization and resources
under Canadian standards may not be comparable to similar
information made public by U.S companies in SEC filings. With
respect to "indicated mineral resource" and "inferred mineral
resource" there is a great amount of uncertainty as to their
existence and a great uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part of an
"indicated mineral resource" or "inferred mineral resource" will
ever be upgraded to a higher category. Investors are cautioned not
to assume that any part or all of mineral deposits in these
categories will ever be converted into reserves.
About Minco Silver
Minco Silver Corporation (TSX: MSV) is a TSX listed company
focusing on the acquisition and development of silver dominant
projects. The Company owns 90% interest in the world class Fuwan
Silver Deposit, situated along the northeast margin of the highly
prospective Fuwan Silver Belt.
ON BEHALF OF THE BOARD
Dr. Ken Z. Cai, Chairman & CEO
Certain statements and information herein, including all
statements that are not historical facts, contain forward-looking
statements and forward-looking information within the meaning of
applicable U.S. and Canadian securities laws. Such forward-looking
statements or information include but are not limited to statements
or information with respect to financial disclosure, future price
of silver, estimation of mineral reserves and mineral resources,
our exploration and development program, estimated future expenses,
exploration and development capital requirements, and our goals and
strategies. Often, but not always, forward-looking statements or
information can be identified by the use of words 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.
With respect to forward-looking statements and information
contained herein, we have made numerous assumptions including among
other things, assumptions about the price of silver, anticipated
costs and expenditures and our ability to achieve our goals.
Although our management believes that the assumptions made and the
expectations represented by such statements or information are
reasonable, there can be no assurance that a forward-looking
statement or information herein will prove to be accurate.
Forward-looking statements and information by their nature are
based on assumptions and involve known and unknown risks,
uncertainties and other factors which may cause our actual results,
performance or achievements, or industry results, to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements or
information. Such risks, uncertainties and other factors include
among other things the following: silver price volatility;
discrepancies between actual and estimated production and mineral
reserves and resources; speculative nature of exploration; mining
operational and development risk; and regulatory risks.
See our annual information form and our quarterly and annual
management's discussion and analysis for additional information on
risks, uncertainties and other factors relating to the
forward-looking statements and information. Although we have
attempted to identify factors that would cause actual actions,
events or results to differ materially from those disclosed in the
forward-looking statements or information, there may be other
factors that cause actual results, performances, achievements or
events not to be anticipated, estimated or intended. Also, many of
the factors are beyond our control. Accordingly, readers should not
place undue reliance on forward-looking statements or information.
We undertake no obligation to reissue or update forward-looking
statements or information as a result of new information or events
after the date hereof except as may be required by law. All
forward-looking statements and information made herein, are
qualified by this cautionary statement.
The Toronto Stock Exchange does not accept responsibility for
the accuracy of this news release.
Contacts: Minco Silver Corporation Ute Koessler 1-888-288-8288
or (604) 688-8002 ir@mincosilver.ca www.mincosilver.ca
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