Rolling Rock Resources Corporation (the "Company") (TSX VENTURE:
RLL) is pleased to announce the results from a positive preliminary
economic assessment study (the "Study" and "PEA") of the Company's
100% owned Monument Bay gold property located in Northern Manitoba,
Canada. The assessment was completed by Beacon Hill Consultants
(1988) Ltd. ("Beacon Hill") of Vancouver, B.C. to the standards of
NI-43-101.
The Study includes over 95,000 metres of diamond drilling and
some $28 million of expenditures since 2000 and comprises an
inferred resource estimate and a conceptual mining plan. Highlights
from this preliminary assessment are outlined below. All dollar
figures are in Canadian dollars unless otherwise indicated:
- Project Capital Cost of $140 million
- 11 year mine life
- Underground mine plan processing 1000 tonnes per day with
average life of mine grade 6.33 gAu/t (gram per tonne) averaging
64,000 ounces per year
- Operating cost of $106/tonne processed
- An economic base case using a US$750/oz gold price gives an
after tax IRR (Internal Rate of Return) of 8.14% and an
undiscounted NPV (Net Present Value) of $45 million, $7.4 million
discounted at 5%
- Based on a gold price of US$950/oz the undiscounted NPV is
estimated as $167 million with an after tax IRR of 22.48% and an
NPV of $96 million with a 5% discount rate
- The preliminary study recommends a 11,175 metre diamond drill
program targeting 8 of the existing zones with 21 drill holes
designed to further increase the inferred resource at the Monument
Bay project
Chief Executive Officer Scott Angus stated: "The completion of
this Study marks a significant milestone for the Company that gives
us a greater understanding of the upside potential and the
financial parameters of this deposit. We now have a foundation with
the recommendation for minimal work in potential areas to
significantly increase the tonnage and grade of the deposit
allowing us to advance this project to the next level."
Mineral resource estimates:
The estimate of the inferred resource to the standards of
NI43-101, summarized in the table below, was prepared by Garth
Kirham, P.Geo., P.Geoph. Associate of Beacon Hill using revised
vein interpretations and constraining solids, which define the
deposit more accurately.
Inferred Resources for Monument Bay
--------------------------------------
Cutoff
Grade Quantity Grade Contained
g/Au/t tonnes g/Au/t Gold ozs
--------------------------------------
2.00 12,575,000 4.22 1,706,000
--------------------------------------
3.00 6,304,000 5.98 1,212,000
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4.00 3,583,000 7.92 912,000
--------------------------------------
5.00 2,308,000 9.85 731,000
--------------------------------------
6.00 1,746,000 11.26 632,000
--------------------------------------
7.00 1,257,000 13.13 530,000
--------------------------------------
8.00 1,010,000 14.51 471,000
--------------------------------------
9.00 800,000 16.10 414,000
--------------------------------------
10.00 633,000 17.84 363,000
--------------------------------------
11.00 506,000 19.69 320,000
--------------------------------------
12.00 402,000 21.80 282,000
--------------------------------------
Due to the uncertainty that may be attached to Inferred Mineral Resources,
it cannot be assumed that all or any part of an Inferred Mineral Resource
will be upgraded to an Indicated or Measured Mineral Resource as a result
of continued exploration.
Conceptual Mine Plan:
The conceptual mine plan incorporates underground mining methods
with an ore production rate of 1,000 tonne per day with an 11 year
mine life. The concept strategy employs a combination of methods,
with shrinkage stoping being the primary method and longhole
stoping being the secondary method. The ore will be transported to
the mill via the main access ramp utilizing truck haulage.
Metallurgy and Plant Design:
Metallurgical testwork was carried out on Monument Bay ore by
the previous owners of the project (Bema Gold) at SGS Lakefield
(Lakefield, Ontario) and G&T Metallurgical Services (Kamloops,
BC). The ore is not difficult to treat with two potential
flowsheets being viable: Direct cyanide leaching of the ore giving
approximately 95% recovery, whilst flotation recovery of the ore
and leaching the flotation concentrate gives a somewhat lower
recovery of 92.5%. In both options significant gold can be
recovered by gravity ahead of other processing. At the proposed
1000tpd treatment rate the direct leaching process has been
selected. At significantly higher treatment rates, the flotation
option would possibly offer some benefits.
Power Supply:
Electrical power supply will be provided from a grid connection
to the Manitoba transmission system.
Preliminary information from Manitoba Hydro indicates that there
are two possibilities, namely a 25 kV supply from Red Sucker Lake
about 40 kilometres away, or a 138 kV supply from God's Lake
Narrows which is about 60 kilometres away. It is likely that the 25
kV supply will not be sufficient for the Monument Bay load and
large motor starting duty, however further study must be carried
out before this option can be eliminated. This PEA is based on
selecting the 138 kV option due to its greater stability and,
likely, reliability. Indicative capital costs are about $18.5
million for the 138 kV option and about $10 million for the 25 kV
option. As the power tariff is higher for the 25 kV supply than the
138 kV supply, there is a payback on the additional capital cost of
the 138 kV supply (about $300,000 per year). Likely construction
time would be about 2 years following a full commitment to proceed.
In either case, a main site substation would be required costing
about $1.5 million for the 138 kV option and $500,000 for the 25 kV
option.
Infrastructure:
An airstrip will be constructed at site to provide year-round
access, while ground access will be possible by a winter road from
Red Sucker Lake some 40km away.
Additional facilities will consist of a camp, dry, maintenance
facilities, warehouse, offices, fuel storage and explosives and cap
magazines. Access roads to the facilities will be constructed.
Capital and Operating Costs:
Initial capital expenditures have been estimated at $140 million
with ongoing capital at $18 million. Average operating costs are
estimated to be $105.93/tonne of ore processed. It is expected that
708,300 ounces of gold will be produced over the eleven year mine
life.
Financial Analysis:
A financial analysis was conducted at a gold price of US$750/oz,
an exchange rate of US$1 equals CAD$1.25, a production rate of
360,000 tonnes per annum for 11 years and an overall grade of 6.33
g/t gold.
The results of the analysis indicate that the property would
generate an IRR of 8.14% and an undiscounted NPV of $45 million.
Sensitivity analysis indicate that an increase of 5% in mining
grade, a reduction of 10% in capital cost, and a reduction of 10%
in operating cost could achieve a 15% IRR. An IRR of 15% may also
be achievable if an additional 40% potentially recoverable mineral
resource can be defined that would allow for a production rate of
some 504,000 tonnes per annum.
Base Case and Financial Model Table:
Production rate: 1,000 tonnes per day
Grade: 6.33 g/t
Recoveries: 93%
Output: 64,000 ounces gold per year (average)
Mine life: 11 years
Financial Parameters:
Gold price: $750(US) per ounce
Exchange rate: $1(US) equals $1.25(CAN)
Capital cost: $140.1 million (CAN)
Operating cost: $105.93/tonnes of ore processed
(i) After tax NPV (Net Present Value) at $US750/oz gold price (taxes are
approximate)
NPV (0% discount) $45.0 million
NPV (5% discount) $ 7.4 million
After tax internal rate of return: 8.14 per cent
(i) After tax NPV (Net Present Value) at $US950/oz gold price (taxes are
approximate)
NPV (0% discount) $164.0 million
NPV (5% discount) $ 96.4 million
After tax internal rate of return: 22.48 per cent
Qualified Person
W. Peter Stokes, P. Eng, President of Beacon Hill, is
independent of Rolling Rock and is the qualified person in
accordance with NI 43-101 and has reviewed and approved the content
of this release.
The TSX Venture Exchange does not accept responsibility for the
adequacy or accuracy of this release.
Contacts: Rolling Rock Resources Corporation Scott Angus (604)
488-1456
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