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TAMERLANE ANNOUNCES UPDATED NI 43-101 RESERVE REPORT AND BANKABLE FEASIBILITY STUDY
- Feasibility study includes R190 and five other deposits at Pine Point -
Blaine, WA: Tamerlane Ventures Inc. (TAM: TSX-V) is pleased to announce the positive results of its bankable Feasibility Study and NI 43-101 Reserve Report for the Pine Point Project (PPP), located in Canada’s Northwest Territories. The Feasibility Study was completed by Tamerlane’s staff of engineers and geologists, and reviewed by the third party consultants Pincock Allen and Holt (PAH). The updated NI 43-101 reserve and resource report was independently generated by PAH. Mr. Stuart Collins, P.Eng., Mr. Don M. Larsen, Ph.D., P.Eng., and Mr. Barton G. Stone, C.P.G. were the Independent Qualified Persons for the Mining Section review by PAH. The study results show the Pine Point Project is feasible and will provide satisfactory returns with acceptable risk.
The Feasibility Study covers all aspects of infrastructure development, mining and processing. As outlined in the Feasibility Study, Tamerlane will focus first on the R190 deposit, which will utilize a freeze perimeter and other proven technologies for underground mining operations. The Company will then use this infrastructure to access a series of five nearby deposits, which have been upgraded from measured and indicated resources to proven and probable reserve status.
Highlights (From Pincock Study)
| (all dollar amounts are US$ except where indicated) | NI 43-101 compliant mineral inventory Proven & Probable Reserves 7.8 million tonnes (6.16% Zn, 3.01% Pb)
Measured & Indicated Resources: 8.0 million tonnes (2.26% Zn, 1.13% Pb)
Inferred Resources: 4.1 million tonnes (2.36% Zn, 0.82% Pb) Historic Resources* 50.3 million tonnes (3.79% Zn, 1.19% Pb)
Overall Metal Recovery 93.6% Zn, 88.9% lead
Capital Costs Years 1-3 $114.1 million (construction) Pretax financial analysis
Internal rate of return (IRR) (PAH) 53%
Net cash flow (PAH) $255 million
Net present value (@ 7.5% discount rate)(PAH) $157 million | |
*Note: a qualified person has not done sufficient work to classify the historical resource estimate as current mineral resources, the issuer is not treating the historical estimate as current mineral resources and the historical estimate should not be relied upon.
1. Reserves and Resources
Tamerlane will develop continued mining operations by first starting with the R190 deposit and continuing on with the remaining five additional nearby deposits which have been upgraded from measured an indicated resources to proven and probable reserve status.
Reserves and resources have been evaluated as indicated in Tables 1-1 and 1-2. Mining reserves were calculated at 7,790,271 tonnes at 6.16% zinc and 3.01% lead. Measured and indicated resources are 8,030,000 tonnes at 2.26% zinc and 1.13% lead, while inferred resources total 4,128,000 tonnes at 2.36% zinc and 0.82% lead. Also, an additional 50,332,000 tonnes of non NI 43-101 compliant historical resources contain a combined grade of 4.98% zinc and lead.
Table 1-1
Proven and Probable Reserves
Deposit | Category | Tonnes | Pb% | Zn% | R-190 | Proven | 647,308 | 6.10 | 12.47 | Probable | 357,311 | 3.79 | 8.27 | TOTAL | 1,004,619 | 5.28 | 10.98 | P-499 | Proven | 182,841 | 4.07 | 7.78 | Probable | 708,811 | 2.32 | 5.38 | TOTAL | 891,652 | 2.68 | 5.87 | O-556 | Proven | 433,860 | 3.47 | 3.92 | Probable | 596,398 | 2.11 | 3.49 | TOTAL | 1,030,258 | 2.68 | 3.67 | X-25 | Proven | 1,625,380 | 2.61 | 7.21 | Probable | 482,933 | 1.33 | 5.11 | TOTAL | 2,108,313 | 2.32 | 6.73 | Z-155 | Proven | 426,121 | 3.54 | 5.89 | Probable | 349,297 | 1.74 | 3.96 | TOTAL | 775,418 | 2.73 | 5.02 | G-03 | Proven | 960,804 | 3.57 | 6.09 | Probable | 1,019,207 | 2.52 | 3.91 | TOTAL | 1,980,011 | 3.03 | 4.97 | TOTAL | Proven + Probable | 7,790,271 | 3.01 | 6.16 |
Table 1-2
Measured, Indicated and Inferred Resources
Deposit | Cutoff Grade %Zn | Category | Tonnes | Lead % | Zinc % | R-190 | ³ 1% | Measured | 471,654 | 1.84% | 2.68% | ³ 1% | Indicated | 1,143,579 | 1.18% | 2.74% | ³ 1% | Total | 1,615,233 | 1.37% | 2.72% | P-499 | ³ 1% | Measured | 43,299 | 0.84% | 2.12% | ³ 1% | Indicated | 530,675 | 0.76% | 1.87% | ³ 1% | Total | 573,974 | 0.77% | 1.89% | O-556 | ³ 1% | Measured | 138,362 | 1.86% | 1.88% | ³ 1% | Indicated | 664,128 | 1.32% | 1.92% | ³ 1% | Total | 802,490 | 1.41% | 1.91% | X-25 | ³ 1% | Measured | 2,195,412 | 0.98% | 2.37% | ³ 1% | Indicated | 1,026,300 | 0.67% | 2.46% | ³ 1% | Total | 3,221,712 | 0.88% | 2.40% | Z-155 | ³ 1% | Measured | 113,155 | 0.80% | 1.69% | ³ 1% | Indicated | 292,419 | 0.96% | 1.90% | ³ 1% | Total | 405,573 | 0.92% | 1.84% | G-03 | ³ 1% | Measured | 393,758 | 2.08% | 2.14% | ³ 1% | Indicated | 1,018,338 | 1.24% | 1.76% | ³ 1% | Total | 1,412,097 | 1.47% | 1.87% | TOTAL M&I | ³ 1% | Measured | 3,355,000 | 1.26% | 2.34% | ³ 1% | Indicated | 4,675,000 | 1.04% | 2.20% | ³ 1% | Total | 8,030,000 | 1.13% | 2.26% | | Deposit | Cutoff Grade %Zn | Category | Tonnes | Lead % | Zinc % | R-190 | ³ 1% | Inferred | 319,000 | 1.08% | 2.86% | P-499 | ³ 1% | Inferred | 519,000 | 0.94% | 2.62% | O-556 | ³ 1% | Inferred | 627,000 | 0.88% | 1.97% | X-25 | ³ 1% | Inferred | 1,873,000 | 0.54% | 2.52% | Z-155 | ³ 1% | Inferred | 331,000 | 0.84% | 2.18% | G-03 | ³ 1% | Inferred | 459,000 | 1.52% | 1.74% | TOTAL | ³ 1% | Inferred | 4,128,000 | 0.82% | 2.36% |
*Note: Mineral resources that are not mineral reserves do not have demonstrated economic viability.
2. Concentrate production
Clean commercial zinc concentrate and lead concentrate will be produced at Pine Point and trucked to a transload facility in Hay River, which is 42 kilometres from the mine site by paved road. At the transload facility the concentrate will be unloaded, stockpiled, and reloaded onto railcars for shipment to Vancouver Wharfs, and ultimately the smelter. The following table shows forecasted concentrate production and grades.
Table 2-1
Concentrate Production Forecast Annual Concentrate Production | Dry Zn Con. Tonnes | Dry Pb Con. Tonnes | Zinc Assay | Lead Assay | Moisture | Year 1 | 108,206 | 43,117 | 61.8% | 71.8% | 8% | Year 2 | 114,110 | 43,967 | 61.8% | 71.8% | 8% | Year 3 | 65,263 | 34,533 | 61.8% | 71.8% | 8% | Year 4 | 96,157 | 30,845 | 61.8% | 71.8% | 8% | Year 5 | 106,039 | 29,894 | 61.8% | 71.8% | 8% | Year 6 | 85,320 | 34,042 | 61.8% | 71.8% | 8% | Year 7 | 78,308 | 39,043 | 61.8% | 71.8% | 8% | Year 8 | 68,951 | 34,378 | 61.8% | 71.8% | 8% | Total by Year 8 | 722,409 | 289,819 | 61.8% | 71.8% | 8% | A financial model was developed using capital quotations, estimates from suppliers and contractors, operating costs from similar operations within Canada and The Western Mine Engineering’s mining cost service.
Table 3-1
Financial Analysis (pre-tax) | Pincock, Allen & Holt Forecast | 2011 Macquarie Research Forecast | Tamerlane Feasibility Price | Current Price Scenario | Metals prices | Zinc | $1.15 | $1.20 | $1.14 | $0.85 | Lead | $0.96 | $1.50 | $1.16 | $0.85 | IRR | 53% | 105% | 68% | 3% | Net cash flow (US$: millions) | $255 | $495 | $324 | $7.2 |
The cash flow model is based on a long term production schedule. The ramp up period is 2,300 tonnes per day for the first quarter of production, 2,600 tonnes per day for the second quarter, and 2,800 tonnes per day for the third through fifth quarters, and 3,000 tonnes per day in the sixth quarter. The USD/CAD exchange rate was assumed to be US$1= CA$1. The weighted average cost of capital, calculated to be 7.5%, was applied as the discount rate. The financial model assumes 100% equity financing, though the company plans to pursue an arrangement of approximately 60% senior debt, 25% subordinated debt tied to concentrate off take and the remaining 15% financed through equity issue.
Table 3-2Cost per Payable Pound Zinc (with lead credits used to reduce operating costs) | *Price $/lb Zn | Price $/lb Pb | Operating Cost Per Pound of Zinc | | Mining | Milling | Power/ Diesel | Freight | Smelting | Enviro Service | NSR | ** $/lb Zinc Produced | Tamerlane | 1.00 | 1.16 | 0.195 | 0.067 | 0.059 | 0.133 | 0.187 | 0.012 | 0.026 | 0.680 | PAH | 1.00 | 0.96 | 0.195 | 0.067 | 0.059 | 0.133 | 0.180 | 0.012 | 0.024 | 0.671 | Current | 1.00 | 0.85 | 0.195 | 0.067 | 0.059 | 0.133 | 0.177 | 0.012 | 0.023 | 0.666 |
*To reflect the effect of lead price on the direct cost of zinc production, the market zinc price has been set at $1.00 for the purpose of calculating smelter charges.
**Additional Cost per payable pound capital = $0.19. Assumes all capital paid off over known reserves contained in this 43-101.
Table 3-3
Sensitivity Analysis
The zinc and lead prices used were based on 60% historical prices plus 40% future LME prices. However, the price of zinc was downgraded from this estimate from $1.28 per pound to $1.14 per pound and lead was calculated at $1.16 per pound. Tamerlane chose to use a lower zinc price than was calculated due primarily to the zinc market futures outlook stabilizing while lead price expectations show an increase.
4. Capital Costs Total capital cost for development and construction of each deposit within the PPP are broken down in Table 4-1.
Table 4-1
Projected Capital Costs
(US$: 1,000) | Activity | Main Mine Site & R-190 | Sustaining Capital | P-499 | O-556 | X-25 | Z-155 | G-03 | Freezing & Infrastructure | $54,529 | $15,872 | $13,734 | $33,713 | $12,682 | $16,463 | Conveyance Systems | $550 | $1,040 | 0 | $1,699 | $433 | $1,372 | Support Equipment & Buildings | $21,427 | $2,743 | $40 | $4,447 | $406 | $426 | Critical Spares | $968 | $256 | $256 | $256 | $256 | $256 | Mill & Other Infrastructure | $24,502 | $500 | $250 | $1,000 | $500 | $1,000 | Underground Utilities & Misc. | $1,770 | $876 | $709 | $1,119 | $602 | $926 | Subtotal | $103,745 | $21,288 | $14,989 | $42,234 | $14,880 | $20,443 | 10% Contingency | $10,375 | $2,129 | $1,499 | $4,223 | $1,488 | $2,044 | TOTAL | $114,120 | $23,417 | $16,488 | $46,458 | $16,368 | $22,487 | |
5. Operating Costs
The operating costs for the Pine Point Project have been calculated first from principles based on actual quotations where possible, and from other similar scale projects in Canada.
A summary of operating costs are broken down annually and by deposit as shown in Tables 5-1 and 5-2. In addition, smelting and transport costs are summarized in Table 5-3.
Table 5-1
Annual Operating Cost Summary
(US$/metric tonne mined)
Activity | Y2 | Y3 | Y4 | Y5 | Y6 | Y7 | Y8 | Y9 | TOTAL | Mining | $31.71 | $29.71 | $29.48 | $29.74 | $29.79 | $30.01 | $31.10 | $31.10 | $30.26 | Processing | $14.13 | $11.16 | $9.91 | $9.91 | $9.91 | $9.91 | $9.91 | $9.91 | $10.43 | Power/ Diesel | $9.47 | $8.84 | $9.19 | $9.28 | $9.28 | $8.95 | $9.27 | $9.27 | $9.19 | Admin/Tech/Environmental | $2.06 | $1.88 | $1.83 | $1.83 | $1.83 | $1.83 | $1.83 | $1.83 | $1.86 | Operating Cost per ton Mined | $57.38 | $51.59 | $50.41 | $50.77 | $50.82 | $50.70 | $52.12 | $52.12 | $51.74 |
*Does not include NSR
Table 5-2 Operating Costs by Deposit (US$/metric tonne mined) Deposit | Operating Costs | Freight & Smelting | R-190 | $56.49 | $90.60 | P-499 | $49.85 | $48.82 | O-556 | $50.56 | $35.27 | X-25 | $50.82 | $52.42 | Z-155 | $50.62 | $43.82 | G-03 | $52.12 | $44.93 | Table 5-3 Freight and Smelting Summary Payable Zinc | 85% | Zn metal produced | Payable Lead | 95% | Pb metal produced | Zinc Treatment Charges | Base Charge- Zn | $300.00 | /dmt concentrate | Escalator- Zn | $0.10 | /$1 over $3,000/MT | Deflator- Zn | $0.08 | /$1 under $3,000/MT | Lead Treatment Charges | Base Charge- Pb | $160.00 | /dmt concentrate | Escalator- Pb | $0.07 | /$1 over $1,500/MT | Deflator- Pb | $0.08 | /$1 under $1,500/MT | Smelter Cost- Zn | $261.06 | /dmt Zn concentrate | Smelter Cost- Pb | $234.01 | /dmt Pb concentrate | Freight | $153.80 | /wmt concentrate | | | | Figure 5-4
Project Schedule  Ross Burns, President and CEO, said: “We are pleased to have finalized the feasibility study. This document and accompanying NI 43-101 technical report produced by Pincock, Allen and Holt will be used to procure the financing necessary to put the project into production. It must be noted that even at today’s depressed metals prices the project is better than break even. As the industry slows down and other producers shut down Tamerlane will be able to procure equipment and contractors at more aggressive pricing than used in the study. It is our objective to finalize a financing package this fall with anticipation that construction will commence soon thereafter. Given this time table the project will be producing concentrates by early 2010. It is also worth noting that the reserves outlined in this feasibility study are a small percentage of the overall potential of the project. The project has an additional 50 million tonnes of historic resources still not verified. Further excitement will be generated from potential new deposits which may be discovered, such as the recently discovered mineralized zone between deposits M67 and L65. Regarding financing, a confidential information memorandum has been prepared to present to banking and other financial institutions, with all of the Company’s resources now dedicated to preparing for the construction and development phase.”
Investor Conference Call
The Company will host an investor conference call regarding completion of the positive Feasibility Study and reserve report for the Pine Point Project.
The conference call will be held on Friday, September 19 at 11:00 a.m. Pacific time (2:00 p.m. Eastern time) to discuss details of the Feasibility Study and reserve report. Mining analysts, investors and the media are invited to phone 1-800-779-1304, or 1-212-287-1820 if outside Canada and the U.S.A., followed by the pass code 6323402 approximately 5 minutes before the start of management’s presentation. The presentation will be followed by a question and answer period. A replay of the conference call can be heard through Friday, September 26 by dialing 1-866-430-8792, or from outside North America 1-203-369-0939.
“Ross F. Burns”
President & CEO
For further information, please contact:
Brent Jones, Manager of Investor Relations
E-mail:
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Phone: (360) 332-4653
Fax: (360) 332-4652
Website: www.tamerlaneventures.com
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the contents of this press release.
Caution Concerning Forward-Looking Information
This press release contains forward-looking information within the meaning of applicable securities laws. We use words such as “may”, “will”, “should”, “anticipate”, “plan”, “expect”, “believe”, “estimate” and similar terminology to identify forward-looking information. It is based on assumptions, estimates, opinions and analysis made by management in light of its experience, current conditions and its expectations of future developments as well as other factors which it believes to be reasonable and relevant. Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those expressed or implied in the forward-looking statements and accordingly, readers should not place undue reliance on those statements. Risks and uncertainties that may cause actual results to vary include but are not limited to the speculative nature of mineral exploration and development, including the uncertainty of reserve and resource estimates; operational and technical difficulties; the availability to the Company of suitable financing alternatives; fluctuations in zinc, lead and other resource prices; changes to and compliance with applicable laws and regulations, including environmental laws and obtaining requisite permits; political, economic and other risks arising from our activities; fluctuations in foreign exchange rates; as well as other risks and uncertainties which are more fully described in our annual and quarterly Management’s Discussion and Analysis and in other filings made by us with Canadian securities regulatory authorities and available at www.sedar.com.
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