MONTREAL, Feb. 22, 2012 /CNW Telbec/ - Blue Note Mining Inc. ("Blue
Note") and Critical Elements Corporation ("Critical Elements")
announce results from the updated Prefeasibility and Mineral
Resource Estimate (the "Prefeasibility Study") for their jointly
owned Croinor gold project located near Val d'Or, Quebec. The
Prefeasibility Study was completed by InnovExplo Inc. with the
participation and contribution of Golder Associates, Genivar and
other contractors, and confirms the project's positive economics.
The Prefeasibility Study includes updated mineral
resources/reserves with respect to Measured and Indicated
resources. In order to evaluate the impact of the Inferred
resources on the project economics with the assumption that the
Inferred resources would be converted into Indicated Resources, a
second study was completed. A preliminary economic assessment (the
"PEA") that includes Inferred resources potentially viable to
mining is presented in the same release. The Inferred resources are
all in the immediate vicinity of the Indicated resources. The bulk
of the Inferred resources represent a fringe around the Indicated
resources and extend to a maximum of 70m and do not have enough
drill holes intersects to be categorized as Indicated although It
would be relatively easy to convert all or parts of the Inferred
into Indicated category by definition drilling. The reader is
cautioned that the results of the PEA is preliminary in nature; it
includes Inferred mineral resources that are 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. The existing
mineral reserves and Prefeasibility Study are still current and
valid in light of the key assumptions and parameters used in the
PEA. The Prefeasibility Study outlines an underground mining
operation using custom milling at a fully permitted milling
facility near Val d'Or and projects a five-year mine life. The
Prefeasibility Study and PEA will be filed on www.sedar.com within
45 days of this news release in accordance with Regulation 43-101.
Highlights from the Prefeasibility Study and PEA are presented in
the following table. All currency in this report is in Canadian
dollars unless otherwise noted. HIGHLIGHTS OF PREFEASIBILITY STUDY
AND PEA((1)) This table compares Mineral Reserves with
Mineral Resources potentially viable to mining((2)).
_____________________________________________________________________
|Parameters |Prefeasibility Results|PEA Results(2) |
|______________________|______________________|_______________________|
| | | |
|______________________|______________________|_______________________|
|Resources included in |566,872 t at 6.64g/t |583,285 t at 6.64g/t
| |Mine Plan(2) |(3) |(Measured+Indicated) | | | |105,876 t at 7.13
g/t | | | |(Inferred)(3) |
|______________________|______________________|_______________________|
|Proven & probable |566,872 t at 6.64g/t | N/A | |mineral
reserve |(3) | |
|______________________|______________________|_______________________|
|Total contained gold |120,883 oz |124,503 oz | | |
|(Measured+Indicated) | | | |24,287 oz (Inferred) |
|______________________|______________________|_______________________|
|Mine life (including |5 years (58 months) |5 years (65 months) |
|18-month | | | |pre-production) | | |
|______________________|______________________|_______________________|
|Daily mine production |425 t/day ramping up |425 t/day ramping up
to| | |to 675 t/day in year 4|760 t/day in year 3 |
|______________________|______________________|_______________________|
|Gold recovery |97.5% |97.5% |
|______________________|______________________|_______________________|
|Annual gold production|21.259 to 41,578 oz |22,785 to 47,477 oz |
|______________________|______________________|_______________________|
|LOM recovered gold |117,956 oz |145,073 oz |
|______________________|______________________|_______________________|
|Average cash operating|$164/tonne |$160/tonne | |cost | | |
|______________________|______________________|_______________________|
|Average cash operating|US$762/oz |US$731/oz | |cost | | |
|______________________|______________________|_______________________|
|Capital cost(4) |$ 37.4 million(4) |$ 38.5 million(4) |
|______________________|______________________|_______________________|
|Total cost per ounce |US$1022/oz |US$951/oz |
|______________________|______________________|_______________________|
|Total revenue |$166 million |$203.9 million |
|______________________|______________________|_______________________|
|Total operating cost |$87 million |$104.2 million |
|______________________|______________________|_______________________|
|Total project cost |$124 million |$142.7 million |
|______________________|______________________|_______________________|
|Total operating cash |$47.2 million |$66.7 million | |flow (before
tax & | | | |royalties) | | |
|______________________|______________________|_______________________|
|Estimated mining and |$12.5 million |$18.2 million | |income taxes
| | |
|______________________|______________________|_______________________|
|Net cash flow (After |$31 million |$42.1 million | |tax &
royalties) | | |
|______________________|______________________|_______________________|
|Pre-tax NPV (7% |$30.6 million |$42.8 million | |discount ) | | |
|______________________|______________________|_______________________|
|Pre-tax IRR |57 % |70 % |
|______________________|______________________|_______________________|
|After-tax NPV (7% |$21 million |$28.9 million | |discount ) | | |
|______________________|______________________|_______________________|
|After-tax IRR |44 % |53 % |
|______________________|______________________|_______________________|
|Payback period |38 months |36 months |
|______________________|______________________|_______________________|
|Pre-production period |18 months |18 months | |(including 41,115t
of | | | |production) | | |
|______________________|______________________|_______________________|
(1)Bloomberg base case consensus forecasts as of December 19, 2011
2012 2013 2014 2015 Gold price ($US/oz) 1,834 1,893 1,572 1,506
Exchange rate ($C/$US) 1.03 1.01 1.04 1.01 (2)The reader is
cautioned that the results of the PEA is preliminary in nature; it
includes Inferred mineral resources that are 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 (3)Tonnage and
grade take into account the mining dilution and recovery
(4)Includes 17.9M sustaining/working capital in the case of
Prefeasibility Study, 19.10M sustaining/working capital in the case
of PEA and capitalized preproduction operating costs net of
associated revenue in all cases OUTLOOK Blue Note intends to pursue
project financing based on this new updated information. Upon
successful completion of such financing, Blue Note intends to
proceed with mine dewatering and pre-production as outlined in the
Prefeasibility Study. Blue Note intends to evaluate the possibility
of mining an open-pit on the western part of the project to reduce
capital requirements and generate cash flow that would improve the
project economics and accelerate the development process. Resource
Estimation The Mineral Resource Estimate was performed by Karine
Brousseau, Eng. and Tafadzwa Gomwe, Ph.D., G.I.T., under the
supervision of Carl Pelletier, B.Sc., P.Geo, all from the Val d'Or
based consulting firm InnovExplo Inc. One of the objectives of
InnovExplo's work was to prepare a Mineral Resources estimate in
compliance with Regulation 43-101 for the Croinor deposit using 3D
block modelling instead of polygonal method like the previous
estimates. The effective date of this Mineral Resource Estimate is
November 4, 2011. At a cut-off grade of 4 g/t Au, the Measured
Resources contains 80,000 tonnes at 8.41 g/t Au for 22,000 ounces,
the Indicated Resources contains 600,000 tonnes at 9.18 g/t Au for
177,000 ounces and the Inferred Resources contains 160,000 tonnes
at 8.56 g/t Au for 44,000 ounces. The Mineral Resource Estimate was
made using 3D block modelling and the inverse distance (1/D(6))
interpolation method for a 1,570-m strike-length corridor of the
Croinor property and down to a vertical depth of 545 metres below
surface on 54 mineralized zones. InnovExplo compiled drill holes of
the Croinor property. The 2010 and 2011 surface drill holes were
added up to CR-11-413, which was complete, in term of assays
results, at the time of the current Mineral Resource Estimate. The
current Mineral Resource Estimate considered 1,219 surface and
underground diamond drill holes and covers an east-west distance of
1,530 m on the Croinor deposit. The database contains a total of
27,655 assays taken from the 122,339 metres of core drilled in
1,219 drill holes. The data base also comprise 4,309 assays taken
from 1,927 channel samples compiled by InnovExplo in 2005
(Pelletier C. and Boudrias, G., 2005) combining chip samples from
the development headings done between 1983 and 1986. At a cut-off
grade of 5 g/t Au, the Measured Resources contains 59,000 tonnes at
9.81 g/t Au for 19,000 ounces, Indicated Resources contains 447,000
tonnes at 10.78 g/t Au for 155,000 ounces and Inferred Resources
contains 102,000 tonnes at 10.90 g/t Au for 36,000 ounces. For the
previous Mineral Resources Estimate made by O'Dowd (2009), the
Measured Resources contained 31,192 tonnes at 8.59 g/t Au for 8,615
ounces, Indicated Resources contained 783,036 tonnes at 9.13 g/t Au
for 229,799 ounces and no Inferred Resources. For the current
Mineral Resources Estimate, Inferred Resources were calculated. No
Inferred were calculated in the previous estimate. Because
additional drilling was done in the lateral extension and at depth
in 2010 and 2011, it has been demonstrated that the mineralized
zones were continuous outside the area of the known resources and
that sufficient information was available to establish the
geological and grade continuities of the zones. The Inferred
resources of the Croinor deposit are all in the immediate vicinity
of the Indicated resources. The bulk of the Inferred Resources
represent a fringe around the indicated resources and extend to a
maximum of 70m and do not have enough drill holes intersects to be
categorized as Indicated although it would be relatively easy to
convert all or parts of the Inferred into Indicated category by
definition drilling. After the Mineral Resource Estimate was
performed by O'Dowd in 2009, a total of 65 drill holes for a total
of 15,390 m were drilled by Blue Note. In order to quantify the
impact of the recent drilling on the Mineral Resources, a second
calculation of the block model was done without the 2010-2011 drill
holes. A total of 47 drill holes and 2,444 assays were removed from
the database and the block model was recalculated with the same 3D
solids and the same parameters. The results show that without the
2010 and 2011 drill holes, the Measured Resources contains 59,000
tonnes at 9.81 g/t Au for 19,000 ounces, Indicated Resources
contains 430,000 tonnes at 10.79 g/t Au for 149,500 ounces and
Inferred Resources contains 65,000 tonnes at 10.61 g/t Au for
22,000 ounces. There was a decrease of 336,036 tonnes from the 2009
resource estimate to the 2012 estimate based on changes in resource
estimation methodology and geological interpretation. Based on
results from the 2010 and 2011 diamond drill campaigns, 16,209
tonnes of indicated resources and 37,990 tonnes of inferred
resources were added to the 2012 resources. This exercise
demonstrates that the 2010-2011 drilling programs had a positive
impact on the mineral resources and that the decrease in Mineral
Resources is mainly cause by the change of estimation method.
O'Dowd (2009) used polygonal method on cross section and InnovExplo
used 3D block modelling with inverse distance power six (1/D(6)).
The table below show the Mineral Resources Estimate with cut-off
variation from 3 g/t Au to 5 g/t Au. MineralResourceEstimate
Category Cut-off3g/t Au Cut-off4g/t Au Cut-off5g/t Au tonnes g/t
ounces tonnes g/t ounces tonnes g/t ounces Measured 112,395 7.00
25,306 80,517 8.41 21,759 59,390 9.81 18,724 Indicated 848,260 7.51
204,726 599,565 9.18 176,866 447,322 10.78 154,996 Total Measured
and indicated 960,700 7.45 230,000 680,100 9.08 198,700 506,700
10.66 173,700 Inferred 227,751 7.03 51,512 160,140 8.56 44,071
102,428 10.90 35,885 PREFEASIBILITY STUDY HIGHLIGHTS Reserve
Estimation Mineral reserves were classified in accordance with the
CIM Definition Standards for Mineral Resources and Mineral
Reserves. Mineral Reserves for the project incorporate appropriate
allowances for mining dilution and mining recovery according to the
selected mining method. In order to determine the Resource to be
converted to Reserve, the MSO (Mineable Shape Optimizer), a
Datamine software application, was used. According to specified
stope parameters, MSO generates individual stope shapes from the
block model. Two mining methods appear to be most convenient for
the Croinor deposit, long-hole retreat and room-and-pillar. In
order to select the most appropriate mining method, two MSO runs
were completed on the block model using the following parameters
for both methods. A small block size was selected in order to
obtain results adapted to the narrow vein nature of the deposit.
Long-hole mining method: -- Cut-off grade value: 3.7 g/t; --
Minimal mining width of 1.8 m (stope thickness); -- Mining dilution
of 0.4 m on the hanging wall and 0.2 m on the footwall; -- Minimal
slope walls angles of 45 degrees; -- Sub-level interval of 13 m
(vertical height); -- Spacing interval of 5 m (stope length). Room
and pillar mining method: -- Cut-off grade value: 5.4 g/t; --
Minimal mining width of 1.8 m (stope thickness); -- Maximal mining
width of 3 m (stope thickness); -- Maximal slope walls angles of 45
degrees; -- Spacing interval of 5m x 5m (stope size long strike).
The estimated proven and probable reserves are presented in Table
below and totalled 120,883 ounces after applying the mining
recovery and dilution factor according to the selected method.
Diluted Mineral ReserveEstimate Category tonnes g/t ounces Proven
68,849 6.23 13,789 Probable 498,023 6.69 107,094 Total Reserves
566,872 6.64 120,883 The current study report a lower tonnage and
grade leading to lower ounces compared with the 2010 prefeasibility
study. Lower tonnage result of changes in resource estimation
methodology, geological interpretation and changes in the criterion
of resources category. Lower grade is caused by the increase in
long hole mining method application. In the current mine plan, 75%
of the resources is planned with the long hole method as oppose to
20% in the 2010 prefeasibility study. This method was applied as
much as possible due to lower mining cost and higher productivity.
Ore Recovery and Dilution The ore recovery and dilution factor
applied in the mining plan and reserve calculations were based on
rock geomechanical study and on common factors applied to the
selected method. In the long-hole method, as a first step, each
stope was evaluated individually and pillar locations were
determined according to the geomechanical evaluation. A 95%
recovery factor was then applied to the remaining tonnage. A
0.6-meter thickness dilution was initially applied in the MSO
parameters. Once compiled, the overall stope resulting dilution was
24%. In order to remain conservative, a 6% dilution factor was
added to consider an overall dilution factor of 30% for the
long-hole stopes resulting average mining width of 4.0 m including
1.2 m of dilution. The dilution grade was set at 0.0 g/t Au. The
room-and-pillar stopes were evaluated considering a recovery factor
of 85%. In the cases where the stope dimension was smaller and
considered stable from the geomechanical study, a 100% recovery
factor was applied. A dilution factor of 5% was applied to
room-and-pillar stopes. Cut-off grade The estimated cut-off grade
was calculated using a metal price of $1205.52 at an exchange rate
of 1.07. This metal price reflected the three-year average metal
prices as of October 31, 2011 at the time the stope shapes were
generated. The remaining parameters used in the cut-off grade
estimation are presented in the following Table. Cut-off
gradeparameters Long-hole Room-and-pillar Operating Cost $150.00/t
$203.00/t Mint cost $5.00 /oz $ 5.00 /oz Mill recovery 97.5 % 97.5
% Mining dilution Included in the MSO parameters 5.0% InnovExplo is
not aware of any environmental, permitting, legal, title, taxation,
socio-economic, marketing, political, or other relevant issues that
would materially affect the Mineral Reserve Estimate. InnovExplo
considers the present Prefeasibility Study to be reliable and
thorough, based on quality data, reasonable hypotheses and
parameters compliant with Regulation 43-101 and CIM standards with
regard to Mineral Reserve and Resource estimates. Mining The
proposed mining plan of the Croinor project involves the
underground mining of narrow subvertical vein. A large portion of
the identified resources presents a dip running below 45 degrees.
This dip is unfavorable to long-hole mining since the broken ore
does not flow easily on the footwall. It is also unfavorable for
room-and-pillar as the dip makes it hard for workers to travel in
the stope with the equipment and the material. However, in the
recent years, the introduction of electronic detonators
demonstrated better results in control in blasting leading to
better mining recovery in stopes with low dipping footwall angle.
The mining plan for the Croinor project comprises a combination of
conventional and mechanized mining. The approach in this study was
to force long-hole mining application by adding dilution to ensure
a minimal footwall angle of 45 degrees. When this approach was not
convenient, room-and-pillar mining was selected. The use of MSO
software permitted this stope analyses by calculating optimized
stope shape according to specified mining parameters. The ore will
be transported to surface using a combination of 3.5-yd and 6-yd
scooptrams and 30-tons truck. Waste material will either be brought
to surface or used to fill mined out stope when possible. The
deposit will be accessed via a ramp. The existing ramp will be
restored to level 125 and a new section will be excavated to access
all resources. The production drifts will be accessed via crosscuts
connecting the ramp. A small portion of the resources will be mined
with captive method; however, the haulage will always be
mechanized. Existing Mine Infrastructure The Croinor deposit is
serviced by a ramp measuring 300m long by 4m high by 4.5m wide (4m
x 4.5m) that extends to level 125 (38m), and by a 3-compartment
shaft extending 195m deep. Development was completed on four (4)
levels: 496 metres on level 125; 560 metres on level 250; 233
metres on level 375; and 730 metres on level 500. Approximately 320
metres of raise development was also completed. The Croinor mine is
currently flooded to the portal entrance. Production Schedule
InnovExplo developed a preliminary development and production
schedule based on the existing underground development. The
operation will use a production schedule of two 10-hour shifts, 6
days a week for a total of 300 days per year. The underground mine
design provides for a five-year mine plan producing 566,429 tonnes
of ore assaying 6.64 g/tonne. Using a mill recovery of 97.5%, a
total of 117,950 oz of gold will be produced during this period.
The mining method will have a 75/25 ratio for long-hole mining to
room-and-pillar. The mining plan includes all development required
to access and mine the mineralized zones. The Table below presents
the mine life production schedule. Prefeasibility Mine Life
ProductionSchedule Year1 Year2 Year3 Year4 Year5 Pre-prod Pre-prod
Prod Month25-36 Month36-48 Month49-58 Total Long hole (t) 0 19,110
53,455 81,966 154,299 112,746 421,576 Grade (g/t) 0.00 6.05 7.70
5.17 6.18 5.48 5.98 Development (t) 4,914 7,623 6,552 20,686 12,726
0 52,501 Grade (g/t) 5.63 6.40 5.73 5.42 5.75 0.00 5.70 Room and
pillar (t) 0 4,554 3,522 33,319 34,584 16,374 92,352 Grade (g/t)
0.00 9.06 6.66 14 8.66 7.41 10.19 Mill tonnage (mt) 4,914 31,287
63,529 135,971 201,609 129,120 566,429 Grade (g/t) 5.63 6.58 7.44
7.29 6.58 5.73 6.64 Processing and Metallurgy Ore from
Croinor will be processed at a mill in the Val-d'Or area which will
have excess capacity for the duration of the Croinor operation.
Contact has been made with potential custom milling partners and
tentative commitments have been arranged for processing the ore.
Ore previously mined from the Croinor open pit operations was
processed at a mill in the area and, based on actual results
achieved during these runs, a gold recovery of 97.5% has been used
in this study. Infrastructure A 25 KV transmission line will be
extended from the nearby Chimo mine site to the Croinor site to
supply electrical power for the site. The existing roads to and on
the site will be upgraded to support vehicle travel to and from the
site including the offsite transportation of ore for processing.
The mine will be dewatered and the existing 300-meter ramp and 2-km
mine level development will be reconditioned and extended to meet
mine requirements. The existing 200-meter deep shaft will be
reconditioned and used as a ventilation raise and emergency escape
way. Ore and waste will be hauled to surface via ramp. One existing
building will be set up for use as a cold storage building and
additional buildings will be erected to serve as dry, offices,
garage and core shack. Environmental Studies and Permitting The
Certificate of Authorization (CofA) for operating a mine was
delivered to Blue Note from MDDEP in September 2010. Other studies
and permits with respect to environment, rehabilitation, crown
pillar required to operate a mine are also completed. Other
miscellaneous accessory permits will be obtained once project is
started upon completion of financing. Operating Costs Operating
costs over the life of mine are projected to average US$762 per oz.
The cost distribution is as follows: Summary of Total Life-of-Mine
OperatingCosts Description Total cost Unit cost Definition drilling
$2,332,270 4.40 $/t 20.44 US$/oz Stope development $16,039,477
30.25 $/t 140.55 US$/oz Mining $19,372,502 36.54 $/t 169.76 US$/oz
Blue Note staff $10,847,925 20.46 $/t 95.06 US$/oz Contractor
(indirect cost) $10,885,100 20.53 $/t 95.38 US$/oz Surface services
$189,508 0.36 $/t 1.66 US$/oz Energy cost $4,482,168 8.45 $/t 39.28
US$/oz Milling and transportation $22,055,439 41.60 $/t 193.27
US$/oz Environment $779,739 1.47 $/t 6.83 US$/oz Total $86,984,128
164 $/t 762 US$/oz Capital Costs The pre-production costs are
estimated at $19.49 million, including $1.23 million of capitalized
operating costs net of production revenue received during the
pre-production period. Sustaining capital is estimated at $17.88
million, excluding $0.66 million for final closure costs. The cost
breakdown is presented in the Table below. Capital expenditure
breakdown Description Pre-production Sustaining Total cost
Capitalized operating cost $16,363,677 $16,363,677 Capitalized
revenue -$15,133,846 -$15,133,846 Dewatering and rehabilitation
$1,249,609 $1,249,609 Development $4,537,911 $10,760,313
$15,298,224 Ventilation equipment $340,075 $340,075 Mine dewatering
$442,718 $56,614 $499,331 Surface installation and equipment
$2,081,591 $670,628 $2,752,219 Electrical distribution $6,029,064
$1,232,000 $7,261,064 Mobile equipment $2,955,638 $4,903,494
$7,859,132 Environment $371,596 $258,162 $629,758 Contractor
demobilization $255,642 $255,642 Total capital expenditures
$19,493,675 $17,881,210 $37,374,885 Economic Analysis
An after-tax model was developed for the Croinor project. All costs
are in 2010 Canadian dollars with no allowance for inflation or
escalation. The Croinor project is subject to the following taxes:
-- Quebec mining rights; -- Federal and provincial taxes. The
income tax rate is 26.9% (2012 federal and Québec tax rate) and the
mining tax rate is 16% (2012) rate and will be sanctioned as
proposed in May 2011 bill. It is assumed that Blue Note and Blue
Note's wholly-owned subsidiary, X-Ore Resources Inc. ("X-Ore"),
will proceed with a vertical amalgamation. This vertical
amalgamation will allow the available non-capital losses of Blue
Note and X-Ore to be used by the resulting corporation to offset
any future income derived from its mining activities. The economic
valuation of the project was performed using the Internal Rate of
Return (IRR) and Net Present Value (NPV) methods. The IRR on an
investment is defined as the rate of interest earned on the
unrecovered balance of an investment. The NPV method converts all
cash flows for investments and revenues occurring throughout the
planning horizon of a project to an equivalent single sum at
present time at a specific discount rate. The discount rate used in
the analysis is 7%. According to the NPV method, a positive NPV
represents a profitable investment where the initial investment
plus any financing interest are recovered. The following parameters
were considered in the financial analysis: An average gold price of
US$1495/oz and an exchange rate of 1.03 CA/US which correspond to
the Bloomberg consensus estimate of December 19, 2011. It also
considers that the pre-production would be initiated in April 2012.
PEA HIGHLIGHTS The objective of the PEA was to evaluate the impact
of the Inferred Resources on the project economics with the
assumption that the Inferred resources would be converted into
Indicated Resources with future definition drilling. The PEA was
evaluated in using the same methodology and parameters as in the
Prefeasibility Study except that Inferred Resources potentially
viable to mining were included in the mine plan. Additional
development was required to advance the ramps 45 metres below the
last elevation reached in the prefeasibility mining plan. The
Resources potentially viable to mining resulting from the
assessment are presented in the Table below. Mining dilution and
recovery factors are considered in the numbers presented. The
existing mineral reserves and Prefeasibility Study are still
current and valid in light of the key assumptions and parameters
used in the PEA. The reader is cautioned that the results of the
PEA is preliminary in nature; it includes Inferred mineral
resources that are 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 Resources Potentially Viable ToMining
Resources Potentially Viable to Mining (Tonnage considered inthe
PEA assessment) Category Undiluted cut-off 5 g/t Au tonnes g/t
ounces Measured 75,006 6.31 15,228 Indicated 508,279 6,69 109,275
Total Measured and Indicated 583,285 6,64 124,503 Inferred 105,876
7.13 24,287 The results of the mine plan prepared for the PEA
assessment is described in the table below. PEA Proposed
ProductionSchedule Year 1 Year2 Year 3 Year 4 Year 5 Year 6 Total
Month Month Month Month Pre-prod Pre-prod Prod 25-36 36-48 49-60
61-65 Long hole (t) 0 19,110 54,242 86,863 161,232 163,264 22,175
506,866 Grade (g/t) 0.00 5.99 7.66 5.06 6.13 5.97 7.63 6.12
Development (t) 4,914 7,623 6,552 20,686 12,726 0 0 52,501 Grade
(g/t) 5.61 6.39 5.73 5.34 5.75 0.00 0.00 5.67 Room and pillar (t) 0
4,554 8,971 39,552 53,858 22,847 0 129,782 Grade (g/t) 0.00 8.89
7.80 12.40 8.42 7.68 0.00 9.48 Mill tonnage (mt) 4,914 31,287
69,765 147,101 227,816 186,111 22,175 689,169 Grade (g/t) 5.61 6.51
7.50 7.07 6.65 6.18 7.63 6.72 Operating Costs Operating costs for
the proposed production schedule are estimated at an average of
US$731 per oz. The cost distribution is as follows: PEA Summary of
Total Life-of-Mine OperatingCosts Description Totalcost Unitcost
Definition drilling $2,414,540 3.70 $/t 16.94 US$/oz Stope
development $19,670,429 30.12 $/t 138.07 US$/oz Mining $24,925,440
38.17 $/t 174.96 US$/oz Blue Note staff $12,817,511 19.63 $/t 89.97
US$/oz Contractor (indirect cost) $11,164,056 17.10 $/t 78.36
US$/oz Surface services $207,556 0.32 $/t 1.46 US$/oz Energy cost
$4,920,617 7.54 $/t 34.54 US$/oz Milling and transportation
$27,160,968 41.60 $/t 190.65 US$/oz Environment $902,396 1.38 $/t
6.33 US$/oz Total $104,183,512 160 $/t 731 US$/oz Capital Costs The
pre-production costs are estimated at $19.38 million, including
$1.12 million of capitalized operating costs, net of production
revenue received during the pre-production period. Sustaining
capital is estimated at $19.10 million, excluding $0.66 million for
final closure costs. The cost breakdown is presented in the Table
below. PEA Capital expenditurebreakdown Description Pre-production
Sustaining Total cost Capitalized operating cost $16,116,179
$16,116,179 Capitalized revenue -$14,999,058 -$14,999,058
Dewatering and rehabilitation $1,249,609 $1,249,609 Development
$4,537,911 $11,976,753 $16,514,665 Ventilation equipment $340,075
$340,075 Mine dewatering $442,718 $56,614 $499,331 Surface
installation and equipment $2,081,591 $670,628 $2,752,219
Electrical distribution $6,029,064 $1,232,000 $7,261,064 Mobile
equipment $2,955,638 $4,903,494 $7,859,132 Environment $371,596
$258,162 $629,758 Contractor demobilization $255,642 $255,642 Total
capital expenditures $19,380,964 $19,097,651 $38,478,615
SENSITIVITY ANALYSIS Sensitivity of the Croinor project to certain
operating and financial factors has been analyzed in order to
determine the robustness of the investment to the variation of
these factors to those estimated. The sensitivity has been carried
out on the economic model of the project and is represented as
changes to the discounted Net Present Value (NPV) from the
Bloomberg base case. The factors considered to have the greatest
impact are the ore grade, gold price, operating cost and capital
cost. The following table demonstrates the impact of 10% and 20%
changes in these parameters on the project undiscounted NPV.
Prefeasibility Study Sensitivity Analysis - NPV($M) Parameter
Change -20% -10% Base Case 10% 20% Ore grade 5.7 13.5 21.0 28.5
36.0 Gold price 5.7 13.5 21.0 28.5 36.1 Operating cost 29.2 25.1
21.0 16.9 12.44 Capital Cost 28.3 23.9 21.0 18.1 15.18 PEA
Sensitivity Analysis - NPV($M) Parameter Change -20% -10% Base Case
10% 20% Ore grade 11.05 20.04 28.9 37.7 46.5 Gold price 10.6 19.8
28.9 38.0 47.1 Operating cost 38.4 33.7 28.9 24.1 19.2 Capital Cost
34.8 31.8 28.9 25.9 22.9 Qualified Persons The overall content in
this news release has been prepared, reviewed and approved by
Stephane Dubois, P.Eng., Vice-President, Operations of Blue Note
Mining Inc.; Qualified Person as defined under Regulation 43-101
guidelines. The Resources Estimate was prepared under the
supervision of Carl Pelletier, P.Geo, consulting geologist with
InnovExplo Inc. Mr. Pelletier is a qualified and independent person
in accordance with NI 43-101 and has reviewed and approved the
technical contents of this news release pertaining to resource
estimation of the technical report he prepared and authored. The
Prefeasibility Study and the PEA was prepared under the supervision
of Sylvie Poirier, P.Eng., senior engineer with InnovExplo Inc. Ms.
Poirier is a qualified and independent person in accordance with NI
43-101 and has reviewed and approved the technical contents of this
news release pertaining to the Prefeasibility Study and the PEA she
prepared and authored. A technical report NI 43-101 compliant
containing the results of the Resource Estimate and the
Prefeasibility along with a Technical report NI 43-101 compliant
presenting the PEA are currently being prepared by InnovExplo and
will be filed on SEDAR by Blue Note within 45 days of this news
release. About Blue Note Mining Blue Note Mining is a mineral
exploration and mining company headquartered in Montreal with
properties located in known gold regions of Canada, including the
prolific Val-d'Or region of Quebec and northern New Brunswick.
About Critical Elements Critical Elements is actively developing
its 100%-owned Rose lithium-tantalum flagship project located in
Quebec. A recent financial analysis of the Rose Project based on
price forecasts of US$260/kg ($118/lb) for Ta(2)O(5) contained in a
tantalite concentrate and US$6,000/t for lithium carbonate
(Li(2)CO(3)) show an after-tax Internal Rate of Return (IRR) of an
estimated 25% for the Rose Project, with an estimated Net Present
Value (NPV) of CA$279 million at an 8% discount rate. The payback
period is estimated at 4.1 years. The pre-tax IRR is estimated at
33% and the NPV at $488 million at a discount rate of 8%. (Mineral
resources that are not mineral reserves do not have demonstrated
economic viability). The project hosts a current NI
43-101-compliant Indicated resource of 26.5 million tonnes of 1.30%
Li(2)O Eq. or 0.98% Li(2)O and 163 ppm Ta(2)O(5) and an Inferred
resource of 10.7 million tonnes of 1.14% Li(2)O Eq. or 0.86% Li(2)O
and 145 ppm Ta(2)O(5). Critical Elements is presently in the
tendering process for the various aspects of the feasibility study
and has commissioned Genivar to complete an environmental impact
study of Rose deposit and Acme Metallurgical Ltd. of Vancouver is
carrying out project metallurgy. Critical Elements' portfolio also
includes rare-earth and tantalum-niobium projects in the Rocky
Mountains of British Columbia and in Quebec, as well as a 50%
interest in the Croinor project, which is located in Quebec and
hosts a current NI 43-101-compliant measured and indicated resource
of 814,228 tonnes at 9.11 g/t Au, for 238,414 ounces of gold at a 5
g/t cut-off. Forward-Looking Statements This news release contains
discussion of items that may constitute forward-looking statements
within the meaning of securities laws that involve risks and
uncertainties. Although the company believes the expectations
reflected in such forward-looking statements are based on
reasonable assumptions, it can give no assurances that its
expectations will be achieved. Factors that could cause actual
results to differ materially from expectations include the effects
of general economic conditions, actions by government authorities,
uncertainties associated with contract negotiations, additional
financing requirements, market acceptance of the Company's
products, technical uncertainties associated with operating an
underground mine and competitive pressures. These factors and
others are more fully discussed in Company filings with Canadian
securities regulatory authorities. "Neither the TSX Venture
Exchange nor its Regulation Services Provider (as that term is
defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release."
BLUE NOTE MINING INC. CONTACT: Blue Note shareholders,
please contact:Jean MayerExecutive Vice President(800) 937-3095 x
236jmayer@bluenotemining.cawww.bluenotemining.caCritical Elements
shareholders, please contact: Jean-Sebastien Lavallee, P. Geo,
President &
CEO819-354-5146president@cecorp.cawww.cecorp.caParadox Public
RelationsJean-Francois Meilleur514-341-0408 Media:Frederic
BerardVice President, Financial and Regulatory Affairs and General
Manager,MontrealHKDP Communications and Public
Affairs514-395-0375fberard@hkdp.qc.ca
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