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Re: News - Monday, September 28, 2009
Minco Silver Announces Positive Feasibility Study Results for
Fuwan Silver Project
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Minco Silver Corporation (TSX: MSV "Minco Silver" the "Company") is
pleased to announce the positive results of Feasibility Study (the
"Study") for the Fuwan Silver project located in Southeast China. The
Feasibility Study was completed and overseen by Wardrop Engineering
Inc. of Vancouver, BC, Canada. Wardrop worked in conjunction with
China Nerin Engineering Co. Ltd. ("NERIN") of Nanchang, China,
Environmental Resource Management ("ERM") of Beijing, China and P&E
Mining Consultants Inc. ("P&E") of Brampton, ON, Canada. All
currencies listed are in US dollars, unless otherwise stated.
The Study defines an operation based on underground mining and milling
of the ore producing a silver/lead concentrate and a zinc concentrate
on site in township of Fuwan, approximately 45km southwest of the
provincial capital of Guangzhou, China.
Highlights of Feasibility Study:
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Feasibility Study Highlights (Pre-Tax) Feasibility Results
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Probable Mineral Reserve 9.118 Mt averaging 189 g/t Ag
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Mine Life 9.2 Years
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Daily Mine Throughput 3,000 tpd
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Mill Recovery (Ag Recovered in both concentrates) 91%
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Average Annual Recovered Ag in both concentrates 5.5 M oz
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Total Recovered Ag in both concentrates 50.4 M oz
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Total Operating Cost/t Ore Milled $34.42/t
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Total Cash Cost per Payable oz Ag $5.65/oz
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Pre-Production Capital Costs $73.1 M
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Silver Price Used for Feasibility Study Economics 13.57/oz Ag
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Total Revenue $648.2 M
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Total Operating Cost $313.8 M
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Total Royalty Payment $24.3 M
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Total Operating Cash Flow $310.0 M
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Net Present Value Before Tax @ 6% Discount Rate $111.5 M
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Net Present Value Before Tax @ 8% Discount Rate $95.3 M
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Internal Rate of Return Before Tax 33.2%
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Payback Period of Pre-Production Capital Costs 2.3 years
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Construction Period 20 - 24 months
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"We are very pleased with the results of the feasibility study. The
study substantiates the quality of the Fuwan project. The present
reserve base is an excellent starting point for the project and can be
expanded significantly by upgrading the inferred resources into
reserves and by potentially expanding the operation into the silver
mineralization on the Changkeng Permit. We are progressing well with
the permitting process and will continue to work expediently to bring
this robust project into production." commented Dr. Cai, President and
Chief Executive Officer.
Project Overview
Deposit
The Fuwan silver deposit (the "Deposit") falls into the broad category
of sediment-hosted epithermal deposits and is characterized by 8 zones
of vein and veinlet mineralization within zones of silicification.
Zones 7 and 8 are not included in the reserve estimate. The predominant
sulphide minerals are sphalerite and galena with lesser pyrite, as well
as rare arsenopyrite, chalcopyrite, and bornite. The deposit is poor in
gold (typically <0.2 ppm).
Resource Estimation
P&E completed five resource estimates for the Fuwan silver deposit in
November 2005, November 2006, June 2007, December 2007 and May 2008.
The May 2008 estimate, which is an update of the December 2007 estimate
on the basis of infill drilling, formed the basis of the Study. All
resource estimation technical reports were done in compliance with NI
43-101 and CIM standards, most of which were filed on SEDAR. There has
been no additional drilling on the deposit area since that time.
Contained Mineral Resources (at a 40g/t Silver cut-off)
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Resource Area & Classification
(does not include
Changkeng tonnes Ag Ag Au Pb Zn
mineralization) (M t) (g/t) (M oz) (g/t) (%) (%)
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Fuwan Permit Indicated 13.95 188 84.3 0.17 0.20 0.56
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Fuwan Permit Inferred 10.24 171 56.1 0.26 0.26 0.72
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Reserve Estimation
The resource estimate provided by P&E classified the resources for the
Fuwan Zones 1 to 4 as indicated and inferred. The reserve does not
include any resources from the Changkeng property. Only indicated
mineral resources as defined in NI 43-101 were used to establish the
probable mineral reserves. No reserves were categorized as proven.
Wardrop used a stope recovery factor of 95%, an average mining
extraction rate of 97%, and an average 7% internal dilution, 8%
external dilution, and 3% fill dilution to estimate the total amount of
diluted probable mineral reserves. Ore reserve calculations
conservatively assumed dilution to contain no metal.
Probable Mineral Reserves (Diluted and In-situ)
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Ag (M oz)
Zone tonnes Ag (g/t) In-situ Au(g/t) Pb(%) Zn(%)
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1 1,328,000 186 7.9 0.18 0.06 0.32
2 4,806,000 192 29.7 0.17 0.18 0.57
3 2,452,000 192 15.1 0.11 0.26 0.64
4 532,000 150 2.6 0.07 0.42 0.82
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Total 9,118,000 189 55.3 0.15 0.20 0.57
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Notes: Reserve based on: Silver 13.00 US$/oz; Gold 688 US$/oz; Lead
0.88US$/lb; Zinc 1.28US$/lb; Operating cost of $37.13/t
Mining
The mine will be accessed by a single decline developed at a gradient
of -15%. Mining will be with conventional trackless mechanized
equipment.
A 2 m minimum mining height was adopted for mechanized mining and
mining methods will vary and be dependent upon orebody geometry, ground
conditions, and ore grade.
Drift-and-fill mining, and a small amount of room-and-pillar mining,
will be used for flat lying zones. As the orebody has reasonably good
grades, a trade-off study was undertaken to assess at what grade it
would be worth backfilling with cemented fill and carrying out a
primary/secondary drift-and-fill type mining method allowing 100%
extraction without leaving any ore pillars.
Ore zones with lower grades will be mined by the room-and-pillar
method. This method is selective and zones of low grade can be left as
pillars. Stope and pillar dimensions, ground support in development
headings, and stopes will depend on orebody geometry and ground
condition.
The cut-and-fill method will be used for ore zones dipping between 15�
and 50�.
All stopes will be backfilled after mining is completed. Free draining
hydraulic backfill was selected as the most appropriate method due to
the flat-lying and relatively large horizontal extent of the orebody,
coupled with the distant location of the process plant and difficulties
with access above the orebody.
This backfilling method will allow up to 45 to 50% of the tailings to
be disposed of as hydraulic backfill underground, reducing the required
size of the surface tailings pond. Backfill will be prepared from
tailings produced in the plant and distributed to the underground stopes
by a pipeline through the main access ramp. For primary stope filling
in drift-and-fill, 5% cement will be added. Backfill for cut-and-fill,
room-and pillar, and secondary stopes of drift-and-fill mining will not
be cemented.
Mine production of 3000 tpd is based on a crew rotation of three 8 hour
shifts and over 330 days per year. A mining contractor is assumed for
pre-production development as well as ongoing mine development.
Metallurgy
A 3,000 tpd process plant has been designed for the Fuwan Project to
process silver, lead and zinc bearing sulphide mineralization. The main
value metals in the mineralization are silver, lead, zinc, and gold.
The process plant will operate 330 d/a at an annual process rate of
990,000 t/a and three shifts per day. Overall process plant
availability will be approximately 90%.
The run-of-mine (ROM) from the underground mine will be crushed by a
jaw crusher to 80% passing 150 mm, and then ground to 80% passing 100
�m in a semi-autogenous grinding (SAG)-ball mill-pebble crushing
circuit (SABC). The silver, lead, and zinc minerals will be recovered
by a conventional differential flotation process.
The tailings produced from the zinc rougher scavenger flotation circuit
will be sent to the tailings storage facility (TSF) for storage and to
the underground mine for hydraulic backfilling. The produced
silver-lead concentrate and zinc concentrate will be thickened and then
pressure filtered separately prior to being transported to smelters.
Depending on the lead head grade, the silver-lead concentrate may be
further processed to produce a silver concentrate and a lead-silver
concentrate.
The average dry concentrate production is forecast to be as follows:
. silver-lead concentrate - 15,900 t/a, including:
- 154,700 kg/a (4,975,000 oz/a) silver
- 1,600 t/a lead
. zinc concentrate - 9,300 t/a including:
- 4,700 t/a zinc
- 15,400 kg/a (495,000 oz/a) silver.
Infrastructure
The Fuwan property is located approximately 45 km southwest of
Guangzhou, the capital city of Guangdong province. Access to the
property is via the Guangzhou - Zhuhai highway, which passes through
Gaoming City. The property is located 2 km via gravel road northwest of
the town of Fuwan (population 30,000). The town of Fuwan is well
connected by paved highway and expressways to major cities, including
Guangzhou (70 km highway distance), Gaoming (15 km), and Jiangmen (60
km), The Fuwan property is also accessible by water on the Xijiang
River to major cities like Guangzhou, Zhaoqing and Jiangmen, as well as
to international waterways in the South China Sea. Electrical power,
water, telephone service, and supplies are available in Fuwan. The
proposed minesite is large enough to accommodate tailings and waste
disposal areas, and processing plant sites.
Operating Costs
The operating cost estimates are based on a process rate of 990,000 t
of ore annually or 3,000 tpd of ore.
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Mining $18.01/t
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Processing $ 9.90/t
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Tailings $ 1.13/t
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G&A $ 4.78/t
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Surface Services $ 0.60/t
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Total $34.42/t
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Capital Costs
This estimate has been completed partially by NERIN and partially by
Wardrop. The majority of the information used in the estimate is based
on the quantities and pricing provided by NERIN to Wardrop.
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Area Cost Direct Works (US$ x 1,000)
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A - Mining (Wardrop) 21,637
B - Primary Crushing 660
C - Crushed Ore Stockpile and Reclaim 305
D - Secondary and Tertiary Crushing 52
E - Grinding, Flotation, Dewatering, Reagents & Service 9,140
F - Tailings Disposal Facilities 4,250
G - Plant Site, Infrastructure & Ancillary Facilities 8,627
H - Temporary Services 35
L - Site/Plant Mobile Equipment 1,190
N - Power Lines (Included in G1 - Power Supply) Included in G1
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Direct Works Subtotal $45,896
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Indirect
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X - Project Indirect 13,330
Y1 - Land Acquisition 2,120
Y1 - Owner's Costs 5,663
Z - Contingency 6,051
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Indirect Subtotal $27,164
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TOTAL PRE-PRODUCTION CAPITAL COSTS (US$) $73,060
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Working Capital $8,300
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Sustaining Capital $59,900
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Financial Analysis
An economic evaluation of the Fuwan Project was prepared by Wardrop
based on a pre-tax financial model. For the 9.2 year mine life and 9.1
Mt reserve, the following pre-tax financial parameters were calculated:
. 33.2% IRR
. 2.3 years payback on $73.1 M capital
. US$111.5 M net present value (NPV) at a 6% discount rate.
The base case prices were as follows based on the 3 year historical
average metal prices from the London Metal Exchange (LME) as of April
29, 2009:
. Silver - US $13.57/oz
. Gold - US $767.72/oz
. Zinc - US $1.18/lb
. Lead - US $0.91/lb
No allowance has been made for inflation or escalation.
Sensitivity Analysis
The project economics are sensitive to silver price, Operating costs
and Capital expenditures. The sensitivity analysis results are in the
table below:
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Change
Economic ----------------------------------------
Parameter Indicator -20% -10% Base Case 10% 20%
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Silver Price NPV ($M) 33 72 112 151 190
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IRR (%) 15 25 33 41 48
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Opex NPV ($M) 157 134 112 89 66
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IRR (%) 41 37 33 29 24
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Capex NPV ($M) 126 119 112 105 97
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IRR (%) 42 37 33 30 27
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Conference Call
Minco Silver will host a conference call on Wednesday September 30,
2009 at 8:00 AM PST to discuss the Feasibility Study Report.
Toll Free Dial-in Numbers (within US and Canada): 1 866 400 1802
International Dial-in Number: +1 647 427 2437
Conference Code: 8066824422
Qualified Persons
Mr. Christopher N. Zahovskis, P. Eng., Chief Operating Officer for
Minco Silver, is the Qualified Person responsible for overall
supervision of the Feasibility Study and has reviewed and approved the
contents of this news release.
Mr. Dwayne L. Melrose, P. Geo., Vice President Exploration for Minco
Silver, is the Qualified Person responsible for verification and
quality assurance of the company's exploration data, analytical results
and resource statements and has reviewed and approved the contents of
this news release.
Mr. Eugene Puritch, P. Eng., President of P&E Mining Consultants Inc.
is an independent Qualified Person responsible for the Fuwan resource
estimate and has reviewed and approved the contents of this news
release
Mr. Jianhui Huang, Ph.D., P. Eng., of Wardrop Engineering Inc. is an
independent Qualified Person as defined by NI 43-101. Mr. Huang has
reviewed and approved the contents of this news release.
Mr. Byron Stewart, P. Eng., of Wardrop Engineering Inc. is an
independent Qualified Person as defined by NI 43-101. Mr. Stewart has
reviewed and approved the contents of this news release.
Mr. Scott Cowie, B. Eng., MAusIMM., of Wardrop Engineering Inc. is an
independent Qualified Person as defined by NI 43-101. Mr. Cowie has
reviewed and approved the contents of this news release.
The NI 43-101 Technical Report for the Feasibility Study Report will be
filed on SEDAR within 45 days of the date of this news release.
The terms "Mineral Resource", "Measured Mineral Resource", "Indicated
Mineral Resource", "Inferred Mineral Resource" and "Mineral Reserve",
"Proven Mineral Reserve" and "Probable Mineral Reserve" used in this
release are Canadian mining terms as defined in accordance with
National Instrument 43-101 - Standards of Disclosure for Mineral
Projects under the guidelines set out in the Canadian Institute of
Mining, Metallurgy and Petroleum (the "CIM") Standards on Mineral
Resources and Mineral Reserves, adopted by the CIM Council on August
20, 2000 as may be amended from time to time by the CIM. These
definitions differ from the definitions in the United States Securities
& Exchange Commission ("SEC") Guide 7. In the United States, a mineral
reserve is defined as a part of a mineral deposit which could be
economically and legally extracted or produced at the time the mineral
reserve determination is made. These terms are recognized and required
by Canadian regulations, they are not defined terms under standards in
the United States and normally are not permitted to be used in reports
and registration statements filed with the SEC. As such, information
contained in this report concerning descriptions of mineralization and
resources under Canadian standards may not be comparable to similar
information made public by U.S companies in SEC filings. With respect
to "indicated mineral resource" and "inferred mineral resource" there
is a great amount of uncertainty as to their existence and a great
uncertainty as to their economic and legal feasibility. It cannot be
assumed that all or any part of an "indicated mineral resource" or
"inferred mineral resource" will ever be upgraded to a higher category.
Investors are cautioned not to assume that any part or all of mineral
deposits in these categories will ever be converted into reserves.
About Minco Silver
Minco Silver Corporation (TSX: MSV) is a TSX listed company focusing on
the acquisition and development of silver dominant projects. The
Company owns 90% interest in the world class Fuwan Silver Deposit,
situated along the northeast margin of the highly prospective Fuwan
Silver Belt. For more information on Minco Silver, please visit the
website at www.mincosilver.ca or contact Ute Koessler at 1-888-288-8288
or (604) 688-8002 ir@mincosilver.ca.
ON BEHALF OF THE BOARD
"Dr. Ken Z. Cai"
Chairman & CEO
The Toronto Stock Exchange does not accept responsibility for the
accuracy of this news release. Certain statements and information
herein, including all statements that are not historical facts, contain
forward-looking statements and forward-looking information within the
meaning of applicable U.S. and Canadian securities laws. Such
forward-looking statements or information include but are not limited
to statements or information with respect to financial disclosure,
future price of silver, estimation of mineral reserves and mineral
resources, our exploration and development program, estimated future
expenses, exploration and development capital requirements, and our
goals and strategies. Often, but not always, forward-looking statements
or information can be identified by the use of words such as "plans",
"expects" or "does not expect", "is expected", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates" or "does not
anticipate" or "believes" or variations of such words and phrases or
statements that certain actions, events or results "may", "could",
"would", "might" or "will" be taken, occur or be achieved.
With respect to forward-looking statements and information contained
herein, we have made numerous assumptions including among other things,
assumptions about the price of silver, anticipated costs and
expenditures and our ability to achieve our goals. Although our
management believes that the assumptions made and the expectations
represented by such statements or information are reasonable, there can
be no assurance that a forward-looking statement or information herein
will prove to be accurate. Forward-looking statements and information
by their nature are based on assumptions and involve known and unknown
risks, uncertainties and other factors which may cause our actual
results, performance or achievements, or industry results, to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements or
information. Such risks, uncertainties and other factors include among
other things the following: silver price volatility; discrepancies
between actual and estimated production and mineral reserves and
resources; speculative nature of exploration; mining operational and
development risk; and regulatory risks.
See our annual information form and our quarterly and annual
management's discussion and analysis for additional information on
risks, uncertainties and other factors relating to the forward-looking
statements and information. Although we have attempted to identify
factors that would cause actual actions, events or results to differ
materially from those disclosed in the forward-looking statements or
information, there may be other factors that cause actual results,
performances, achievements or events not to be anticipated, estimated
or intended. Also, many of the factors are beyond our control.
Accordingly, readers should not place undue reliance on forward-looking
statements or information. We undertake no obligation to reissue or
update forward-looking statements or information as a result of new
information or events after the date hereof except as may be required
by law. All forward-looking statements and information made herein, are
qualified by this cautionary statement.
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Copyright (c) 2009 MINCO SILVER CORPORATION (MNV) All rights reserved.
For more information visit our website at http://www.mincosilver.ca/
or send mailto:info@mincosilver.ca
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