Treasury Metals Inc. ("Treasury" or the "Company") (TSX: TML) is
pleased to announce the results from recent trenching and sampling
on its wholly-owned Goliath Gold Project located about 20
kilometres east of the City of Dryden, Ontario. In addition, the
Company has filed on SEDAR, the National Instrument 43-101 ("NI
43-101") compliant Preliminary Economic Assessment ("PEA")
completed by independent consultant A.C.A. Howe International
Limited ("Howe") and originally announced July 13th, 2010. The full
report can be downloaded from SEDAR (www.sedar.com) and will be
posted on the Company's website (www.treasurymetals.com).
Trenching and Sampling
This Summer's work program included channel sampling on the Main
Zone of the Thunder Lake gold deposit, which was exposed by a 40
metre long trench. Sampling returned gold concentrations as high as
49.06 g/t Au over 0.55 metres. A total of 47 channel samples were
collected from 6 areas in the trench exposure and channel cuts were
made perpendicular to the strike of the Main Zone, at intervals of
approximately 5-10 metres along strike. Structural and geological
mapping was also completed over the exposed Main Zone.
Scott Jobin-Bevans, Treasury's President and CEO, commented,
"The main purpose of this trenching program was to expose the Main
Zone and enable our geological team to characterize the structural
aspects of the deposit as they relate to gold grade distribution.
By correctly interpreting the structures that host gold
mineralization at Goliath we can establish a pattern and better
target future drilling. With these results we can now confidently
project high-grade gold mineralization intersected at depth to the
surface, supporting our approach of open pit and underground mining
scenarios."
Preliminary Economic Assessment
Highlights:
-- Project has potential economic viability under base case assumptions
(US$850/oz gold).
-- Surface and underground mining operations with stand-alone
gravity/flotation milling complex.
-- Initial scenario contemplates 390,000 ounces Au recovered over 8 1/2
years at a production rate of 1,500 tonnes per day; average annual
recovery of 48,000 ounces Au.
-- At US$850 per oz (base case gold spot price): after-tax NPV@5% of $23
million and IRR of 15%.
-- At US$1,200 per oz (current gold spot price): after-tax NPV@5% of $91
million and IRR of 43%.
-- Estimated initial capital expenditure of $38 million; Life of Mine
capital expenditure of $59 million; and, payback period of 4 years at
US$850 per ounce gold, or 21/2 years at US$1,200 per ounce gold.
Howe concluded that:
-- Treasury should continue to advance the Project toward Pre-Feasibility.
-- Infill drilling to upgrade Inferred Resources to Indicated Resources,
aimed at increasing total gold ounces to be considered in future
economic/production models.
-- Collect material for further metallurgical test work to include gravity,
flotation and cyanidation mineral processing, optimised to confirm
recoveries used in the economic model.
-- Collect geotechnical information to be used for surface and underground
mine planning.
-- Optimization of economic model by investigating purchase of a used mill
instead of construction of new mill.
-- Initiation of Environmental Baseline studies as soon as possible.
Dr. Jobin-Bevans commented further, "The PEA has demonstrated
that our Goliath Gold Project has potential economic viability at
$850 gold and, as it contemplates only 35% of the contained ounces
in the current resource, shows tremendous upside. With a targeted
drilling program, we are planning to upgrade resources from
inferred to indicated through in-fill drilling, initiate
environmental baseline studies and complete further metallurgical
testing as recommended in the PEA. In addition, we plan to continue
building ounces along strike and to target other promising areas on
the greater than 45square kilometre Property. This Project is
located in an area with excellent infrastructure including access
to power, roads, services and labour and with this PEA we now have
a clear path toward pre-feasibility and permitting."
Economic Sensitivity
The base case considers the development of surface and
underground mining operations on the Thunder Lake gold deposit and
a stand-alone gravity/flotation milling complex at the Goliath Gold
Project. Howe concludes that under base case assumptions of 1,500
tonnes per day production and US$850 per ounce gold, and assuming
100% equity financing and an even exchange rate against the US$,
the Project has potential economic viability with an after-tax
Internal Rate of Return ("IRR") of 15%, a 5% discounted Net Present
Value ("NPV") of $23 million and an estimated payback period of
four years.
The following table summarizes the results of the PEA, assuming a production
rate of 1,500 tonnes per day:
-------------------------------------------------------
NPV
Gold Price (0%)(i) NPV (5%) NPV (10%)
(US$/oz) (CDN$M) (CDN$M) (CDN$M) IRR
-------------------------------------------------------
$850 $43 $23 $10 15%
-------------------------------------------------------
$1,000 $81 $52 $33 28%
-------------------------------------------------------
$1,200 $132 $91 $63 43%
-------------------------------------------------------
$1,400 $182 $129 $93 57%
-------------------------------------------------------
(i) Equivalent to cumulative after-tax profit.
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.
The PEA is an estimate of the economic viability of the Project
and does not contemplate the full spectrum of engineering and
regulatory factors, which would be required prior to making a
production decision. All amounts are in Canadian Dollars except the
gold price, which is quoted in US Dollars.
Proposed Mining Operations
As proposed, mining will initially be by surface methods with a
target production rate of 1,500 tonnes per day using standard
methods of drilling, blasting, and excavating using excavators and
truck haulage. Equipment for surface operations would be
leased.
Proposed development for underground mining will commence in
Year 1 with production commencing in Year 3. Access will be via a
decline with the portal located near the bottom of the first small
pit to be mined - currently the easternmost pit. In Year 3, the
surface production rate would drop to 750 tonnes per day, equal to
the underground production rate, for a combined production rate of
1,500 tonnes per day. Sublevel, long-hole stoping with delayed
backfill is recommended as the primary underground mining
method.
Proposed Mineral Processing
Previous work on the Property included an underground bulk
sample that was extracted in 1998. Howe notes that the head grade
of this historic composite sample was not representative of the
head grade currently being contemplated. It's Howe's opinion that
further metallurgical test work be completed. A conceptual mill
flowsheet is proposed that would involve gravity separation,
followed by flotation. This process has been initially selected as
the recovery method over gravity/cyanidation because of lower
capital costs and similar, if not lower, operating costs.
Mineral Resource Estimate - Updated
The PEA also includes an updated Mineral Resource Estimate
("Resource Estimate") for the Thunder Lake gold deposit, based on
diamond drilling completed as at December 2009. This Resource
Estimate does not take into account the results from the more than
10,300 metres completed in 2010 and does not incorporate potential
metal credits from silver and by-product metals of lead, zinc and
copper; these metals are also not included in the current PEA.
Resources were defined using a block cut-off grade of 0.5 g/t Au
for surface resources (less than 100 metres deep) and 2.0 g/t Au
for underground resources (greater than 100 metres deep). Surface
plus underground Indicated Resources total 3.4 million tonnes with
an average grade of 2.5 g/t Au, for 270,000 ounces. Surface plus
underground Inferred Resources total 10.6 million tonnes with an
average grade of 2.7 g/t Au, for 930,000 ounces. The Main Zone
contains the majority of resources from both categories and is the
primary target for underground mining. A summary of mineral
resources by resource category is as follows:
----------------------------------------------------------------
Block Cut- Tonnes Average Au Contained
off Grade Above Cut- Grade Au
Category (g/tonne) off (g/tonne) (ounces)
----------------------------------------------------------------
Indicated
----------------------------------------------------------------
Surface 0.5 2,900,000 1.9 180,000
----------------------------------------------------------------
Underground 2.0 490,000 5.7 90,000
----------------------------------------------------------------
Subtotal,
Indicated 3,400,000 2.5 270,000
----------------------------------------------------------------
----------------------------------------------------------------
Inferred
----------------------------------------------------------------
Surface 0.5 5,400,000 1.1 190,000
----------------------------------------------------------------
Underground 2.0 5,200,000 4.4 740,000
----------------------------------------------------------------
Subtotal,
Inferred 10,600,000 2.7 930,000
----------------------------------------------------------------
Notes:
1. Cut-off grade for mineralised zone interpretation was 0.5 g/tonne.
2. Block cut-off grade for surface resources (less than 100 metres deep)
was 0.5 g/tonne gold.
3. Block cut-off grade for underground resources (more than 100 metres
deep) was 2 g/tonne gold.
4. Gold price was US$850 per troy ounce.
5. Zones extended up to 150 metres down-dip from last intercept. Along
strike, zones extended halfway to the next cross-section.
6. Minimum width was 2 metres.
7. Non-diluted resources.
8. Mineral resources that are not mineral reserves do not have demonstrated
economic viability.
9. A specific gravity (bulk density) value of 2.78 was applied to all
blocks (based on 30 samples).
10. Un-cut. Top-cut analysis of sample data suggested no top cut was needed
and removal of high grade outliers would not materially affect the
global block model grade.
The Resource Estimate, which uses a combination of historical
and current drilling results, includes 41 additional holes up to
drill hole TL09-86, drilled in late 2009 with results reported in
early 2010. The Resource Estimate was prepared by Doug Roy,
M.A.Sc., P.Eng., Associate Mining Engineer with Howe.
Qualified Person
Technical information related to the PEA contained in this news
release has been reviewed and approved by Doug Roy, an independent
Qualified Person as defined by NI 43-101, with the ability and
authority to verify the authenticity and validity of this data. The
report titled "Technical Report and Preliminary Economic Assessment
on the Goliath Gold Project", with an effective date of July 9th,
2010 has been prepared by Doug Roy, Patrick Hannon, Ed Thornton and
Ian D. Trinder of A.C.A. Howe International Limited.
About Treasury Metals
Treasury Metals Inc. is a Canadian mining company that is
focussed on expanding the Company's gold resources and developing
its 100% owned flagship Goliath Gold Project located in the Kenora
Gold District of northwestern Ontario. Treasury Metals obtains
significant royalty revenue from an NSR on Goldgroup Mining Inc.'s
Cerro Colorado Mine located in Mexico.
For additional information on Treasury Metals and its projects,
including updated technical information as it pertains to this news
release, please visit the Company's website at
www.treasurymetals.com.
Forward-looking Statements
Securities regulators encourage companies to disclose
forward-looking information to help investors understand a
company's future prospects. This press release contains statements
about our future financial condition, results of operations and
business. These are "forward-looking" because we have used what we
know and expect today to make a statement about the future.
Forward-looking statements usually include words such as may,
expect, anticipate, believe or other similar words. We believe the
expectations reflected in these forward-looking statements are
reasonable. However, actual events and results could be
substantially different because of the risks and uncertainties
associated with our business or events that happen after the date
of this press release. You should not place undue reliance on
forward-looking statements. As a general policy, we do not update
forward-looking statements except as required by securities laws
and regulations.
Contacts: Treasury Metals Inc. Scott Jobin-Bevans President and
CEO 1.416.214.4654 scott@treasurymetals.com Treasury Metals Inc.
Wanda Cutler Corporate Development Consultant 1.416.303.6460
wandajcutler@gmail.com
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