Critical Elements Corporation (TSX
VENTURE:CRE)(OTCQX:CRECF)(FRANKFURT:F12) ("Critical Elements") and
Blue Note Mining Inc. (TSX VENTURE:BNT) ("Blue Note") 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)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
583,285 t at 6.64g/t
(Measured+Indicated)
Resources included in 105,876 t at 7.13 g/t
Mine Plan(2) 566,872 t at 6.64g/t(3) (Inferred)(3)
---------------------------------------------------------------------------
Proven & probable mineral
reserve 566,872 t at 6.64g/t(3) N/A
---------------------------------------------------------------------------
124,503 oz
(Measured+Indicated)
Total contained gold 120,883 oz 24,287 oz (Inferred)
---------------------------------------------------------------------------
Mine life (including 18-
month pre-production) 5 years (58 months) 5 years (65 months)
---------------------------------------------------------------------------
425 t/day ramping up to 425 t/day ramping up to
Daily mine production 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
cost $164/tonne $160/tonne
---------------------------------------------------------------------------
Average cash operating
cost US$762/oz US$731/oz
---------------------------------------------------------------------------
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 flow
(before tax & royalties) $47.2 million $66.7 million
---------------------------------------------------------------------------
Estimated mining and
income taxes $12.5 million $18.2 million
---------------------------------------------------------------------------
Net cash flow (After tax
& royalties) $31 million $42.1 million
---------------------------------------------------------------------------
Pre-tax NPV (7% discount) $30.6 million $42.8 million
---------------------------------------------------------------------------
Pre-tax IRR 57 % 70 %
---------------------------------------------------------------------------
After-tax NPV (7%
discount) $21 million $28.9 million
---------------------------------------------------------------------------
After-tax IRR 44 % 53 %
---------------------------------------------------------------------------
Payback period 38 months 36 months
---------------------------------------------------------------------------
Pre-production period
(including 41,115t of
production) 18 months 18 months
---------------------------------------------------------------------------
(1) Bloomberg base case consensus forecasts as of December 19,
2011.
------------------------------------------------------------------------
------------------------------------------------------------------------
2012 2013 2014 2015
------------------------------------------------------------------------
Gold price ($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.
----------------------------------------------------------------------------
Mineral Resource Estimate
----------------------------------------------------------------------------
Category Cut-off 3 g/t Au Cut-off 4g/t Au Cut-off 5g/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 Reserve Estimate
------------------------------------------------------------
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 grade parameters
---------------------------------------------------------------------------
---------------------------------------------------------------------------
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 %
---------------------------------------------------------------------------
Included in the MSO
Mining dilution 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 Production Schedule
----------------------------------------------------------------------------
Year 1 Year 2 Year 3 Year 4 Year 5
-------------------------------------------------------
Month Month Month
Pre-prod Pre-prod Prod 25-36 36-48 49-58 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 Operating Costs
----------------------------------------------------------------------------
----------------------------------------------------------------------------
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 Quebec 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 To Mining
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Resources Potentially Viable to Mining
(Tonnage considered in the 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 Production Schedule
----------------------------------------------------------------------------
Year 1 Year 2 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 Operating Costs
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Description Total cost Unit cost
----------------------------------------------------------------------------
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 expenditure breakdown
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Description Pre-production Sustaining Total cost
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Capitalized
operating cost $16,116,179 $16,116,179
----------------------------------------------------------------------------
Capitalized revenue -$14,999,058 -$14,999,058
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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 Critical Elements Corporation
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 Ta2O5 contained in a tantalite
concentrate and US$6,000/t for lithium carbonate (Li2CO3) 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% Li2O Eq. or 0.98% Li2O and
163 ppm Ta2O5 and an Inferred resource of 10.7 million tonnes of
1.14% Li2O Eq. or 0.86% Li2O and 145 ppm Ta2O5.
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.
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.
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 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.
Contacts: Critical Elements shareholders, please contact:
Jean-Sebastien Lavallee, P. Geo, President & CEO
819-354-5146president@cecorp.ca www.cecorp.ca Paradox Public
Relations 514-341-0408 Media: Frederic Berard, Vice President,
Financial and Regulatory Affairs and General Manager, Montreal HKDP
Communications and Public Affairs 514-395-0375fberard@hkdp.qc.ca
Blue Note shareholders, please contact: Jean Mayer Executive Vice
President (800) 937-3095 x 236jmayer@bluenotemining.ca
www.bluenotemining.ca
Grafico Azioni Critical Elements Lithium (QX) (USOTC:CRECF)
Storico
Da Gen 2025 a Feb 2025
Grafico Azioni Critical Elements Lithium (QX) (USOTC:CRECF)
Storico
Da Feb 2024 a Feb 2025
