ROMARCO ANNOUNCES POSITIVE FEASIBILITY STUDY FOR HAILE
GOLD MINE PROJECT
ROMARCO
MINERALS INC. (TSX:R) (the "Company") is pleased to announce
positive Feasibility Study results for its 100% owned Haile
Gold Mine Project in Lancaster
County, South Carolina, USA. The Feasibility Study was compiled by M3
Engineering & Technology Corporation ("M3") with the
participation and contribution of Independent Mining Consultants
("IMC") and AMEC Americas Limited
("AMEC"). All figures are in US dollars.
The Company
is also pleased to announce estimates of additional mineral potential that
exists outside of the recently reported $1,200 per ounce gold
in-shell resource that are not included in the Feasibility Study. Please see
the section below titled "Potential Mineral Deposits" for
details. Haile continues to remain open in all
directions and at depth with significant potential for continuing to increase
resources and reserves.
Highlights of
the Feasibility Study (base case at $950/oz gold):
·
One of the lowest capital cost, lowest operating cost
and highest-grade open-pit gold mines in the industry
·
o
Capital costs
of $275 million
o
o Average cash cost (after
by-product credit) of $347 per ounce first five years
o
o
Reserve grade of 2.06 grams/tonne
o
·
Proven and probable reserves of 2.0 million contained
ounces of gold
·
·
Robust project economics
·
o At $950 gold,
pre-tax net present value (NPV) at 5% discount of $279 million
and internal rate of return (IRR) of 19.6%
o
o At $1,300 gold,
pre-tax NPV (5%) is $693 million; 37.6% IRR - see table below
for sensitivities at various gold prices
o
·
Mine life in excess of 13 years at a mill throughput
of 7,000 tons per day (tpd)
·
o First year production of 172,000
ounces of gold
o
o First 5 years production average
150,000 ounces gold per year
o
·
Average 83.7% gold recovery
·
·
Life of mine (LOM) strip ratio of 7.2:1
·
·
The Feasibility Study does not include:
·
o Horseshoe, Snake Deep, West
Ledbetter and some portions of Mill Zone, Small and Champion deposits.
o
o
Inferred resources in the $950
pit
o
o These zones required additional
drilling and are the target of the 2011 exploration program.
o
·
The project will be designed and constructed to meet
the International Cyanide Management Code standards
·
Proven and
probable reserves and the mine plan were calculated using a $950
per ounce gold price and drill data from the most recently reported in-shell
resource (calculated at $1,200 per ounce gold with drill results
through September 30, 2010). The project has been
specifically designed to facilitate expansion early in the mine life.
Studies are currently being conducted to evaluate both open-pit and
under-ground expansion alternatives.
Once the
necessary permits have been received and financing is in place, Romarco plans to proceed immediately with the construction
and commissioning of the project as the first phase of development in the Haile district. Detailed design work is currently
underway on the project.
Development
of the Haile project will deliver significant,
positive impact on the economies of Lancaster
and Kershaw
counties, and the state of South Carolina. Romarco
anticipates directly employing approximately 500 persons at site during
construction and approximately 300 persons on a sustaining basis once in
production. Future expansions at Haile would require
additional personnel. The Company will continue to hire locally and use local
and regional suppliers as it has over the past three years. The Company
currently spends in excess of $1 million per month locally,
including wages. Contractors and consultants provide additional economic
benefits. The multiplier on the economic impact of Haile
to the local community and county will be significant.
Financial
Analysis
The financial
analysis for the Base Case ($950 gold and $18
silver) indicates a pre-tax NPV at a 5% discount rate of $279 million
with an IRR of 19.6% and a payback period of 4.2 years. On an
after-tax basis, the NPV at a 5% discount rate is $191 million
with an IRR of 15.7%. The base case is expected to generate $508
million in pre-tax operating cash flow.
Table 1 below
outlines gold price sensitivities for the pre-tax NPV and IRR of the Haile Gold Mine project:
Table 1: Pre-tax NPV and IRR
Sensitivity to Gold Price
($ Millions, except gold price)
|
|
|
|
|
|
|
Gold Price
per oz
|
NPV @ 0%
|
NPV @ 5%
|
NPV @ 10%
|
IRR %
|
Payback
Years
|
$1,500
|
$1,426
|
$930
|
$621
|
47.0%
|
2.0
|
$1,400
|
$1,259
|
$812
|
$534
|
42.3%
|
2.2
|
$1,300
|
$1,092
|
$693
|
$447
|
37.6%
|
2.4
|
$1,200
|
$925
|
$575
|
$359
|
32.7%
|
2.7
|
$1,100
|
$758
|
$457
|
$272
|
27.6%
|
3.1
|
$1,000
|
$591
|
$339
|
$185
|
22.3%
|
3.8
|
$950
|
$508
|
$279
|
$141
|
19.6%
|
4.2
|
$800
|
$257
|
$102
|
$10
|
10.7%
|
7.6
|
$700
|
$90
|
-$16
|
-$77
|
4.0%
|
9.4
|
Haile Mineral Reserves
and Resources
The open pit
mineral reserves and resources were completed by Independent Mining
Consultants (IMC), with John Marek, P.E. acting
as the Qualified Person (QP) for the calculations. The proven and
probable reserves were developed from the block model and the mine plan using a
gold price of $950 per ounce. The mineral reserve is the total
of all proven and probable category mineralization in the Feasibility mine
plan.
The floating
cone algorithm provided guidance to the design of the pushbacks
and the final pits. Multiple cones at a range of metal prices were run in
order to determine the best place to start mining, initial pit openings, and
guidance to final pit geometries.
The mineral
reserves and resources are summarized in Table 2 and Table 3 below:
Table 2: Proven and Probable
Reserves @ $950/oz Gold
|
|
|
|
|
|
|
|
Category
|
Metric
tonnes
(000s)
|
Grade
g/tonne
|
Short
tons
(000s)
|
Grade
oz/ton
|
Contained
oz
(000s)
|
Recovered
oz (000s)
|
|
|
|
|
|
|
|
Proven
|
19,592
|
2.19
|
21,596
|
0.064
|
1,382
|
1,166
|
Probable
|
10,917
|
1.82
|
12,034
|
0.053
|
636
|
515
|
Proven+Probable
|
30,509
|
2.06
|
33,630
|
0.060
|
2,018
|
1,681
|
|
|
|
|
|
|
Table 3: In-Shell Resources @
$1,200/oz Gold*
|
|
|
|
|
|
|
Category
|
Metric
tonnes
(000s)
|
Grade
g/tonne
|
Short
tons
(000s)
|
Grade
oz/ton
|
Contained
oz
(000s)
|
|
|
|
|
|
|
Measured
|
27,782
|
1.89
|
30,624
|
0.055
|
1,684
|
Indicated
|
25,596
|
1.75
|
28,215
|
0.051
|
1,439
|
Measured+Indicated
|
53,378
|
1.82
|
58,839
|
0.053
|
3,123
|
|
|
|
|
|
|
Inferred
|
24,944
|
1.34
|
27,496
|
0.039
|
1,072
|
*Previously
released November 2, 2010 and filed December 14, 2010
on SEDAR.
Exploration
Potential - Potential Mineral Deposits
Significant
upside potential exists within and surrounding the Haile
mineralized system, which continues to remain open in all directions and at
depth. The Company's focus is to expand the resource within and near
known deposits, upgrade inferred mineral resources, and discover new deposits
in areas surrounding the known deposits where drilling is sparse. Romarco will also begin exploring further along trend,
stepping easterly of the Horseshoe zone, and westerly of the Champion and 601
areas that are over 1 km west of South Pit. Additionally, as the Company
continues to expand its land position throughout the district, exploration
drilling will be initiated to evaluate these prospective new target
areas. Romarco's regional exploration team has
identified several new target areas beyond the Haile
system with historical drilling, and in some cases existing historical
resources. The 2011 exploration program consists of 110,000 meters of
both RC and core drilling.
Potential
mineral deposits within the proposed mine site were created in order to
estimate potential zones of gold mineralization outside of the in-shell
resource estimate ($1,200 gold). These zones are based on
trends, geology, and scattered drilling. It should be recognized that
these zones list only the areas where current knowledge of Haile's
mineralization is sufficient to indicate that these zones are viable targets.
These potential mineral deposits represent a small portion of the Haile property.There are numerous
additional targets at Haile that are not listed
here. Therefore, these tonnages and grades should not be construed as
minimums or maximums. Independent Mining Consultants (IMC) has
reviewed the geometries and procedures applied by Haile
in developing the potential mineral deposits. As a result, IMC holds the
opinion that those procedures are a reasonable means to establish range
estimates of potential quantities and grades for future drill targets.
The
conceptual estimates were based on projecting potential mineralized zones
through areas with limited drill information. The zones were developed by
constructing 3-dimensional wireframes using Vulcan
mine planning software and a minimum grade of 0.34 g/t.
Quantity
ranges were estimated using two scenarios: Scenario A
used geologic inference to determine the orientation and extent of the zones along
known mineralized trends based on the Haile geologic
model and current drill results. Scenario B excluded the distal portions
of the potential mineralized zones. Ranges of grade were assigned to the
potential mineralized zones using two cases: Case A
applied the average grade for zones within the $1,200 per ounce
gold shell to the adjacent zones outside the shell, and Case B was determined
by taking an arithmetic average of all the drill composites within each zone
outside the $1,200 per ounce gold shell. It should be
noted that averaging all composites has a tendency to reduce the grade versus
resource techniques that discard low-grade intervals.
The resulting
potential ranges of quantities and grades listed below are conceptual in nature
based on geologic knowledge, interpretation and wireframes. There has
been insufficient exploration to define a mineral resource and it is uncertain
if further exploration will result in any of the targeted areas being
delineated as a mineral resource. The Company currently plans to focus on
further exploration drilling within these potential mineral deposits during
2011 and beyond. Tables 4.1 (Imperial Units) and 4.2 (Metric Units)
display the potential mineral deposits at Haile.
Table 4.1: Potential Mineral
Deposits (Imperial Units)
|
|
|
|
|
|
Zone
|
Scenario A
tons (000s)
|
Scenario B
tons (000s)
|
Case A
oz/t
|
Case B
oz/t
|
|
|
|
|
|
Horseshoe
|
18,200
|
15,384
|
0.099
|
0.061
|
Ledbetter
|
24,000
|
19,381
|
0.069
|
0.025
|
Snake
|
4,372
|
3,777
|
0.058
|
0.034
|
Chase Hill
|
1,800
|
1,670
|
0.031
|
0.027
|
Mill Zone
|
2,000
|
1,734
|
0.043
|
0.038
|
Small
|
5,555
|
4,573
|
0.019
|
0.018
|
601 Area
|
7,348
|
5,970
|
0.026
|
0.024
|
Champion
|
7,335
|
5,476
|
0.028
|
0.024
|
Total
|
70,610
|
57,965
|
0.062
|
0.034
|
|
|
|
|
|
Table 4.2: Potential Mineral Deposits (Metric Units)
|
|
|
|
|
|
Zone
|
Scenario A
tonnes (000s)
|
Scenario B
tonnes (000s)
|
Case A
g/t
|
Case B
g/t
|
|
|
|
|
|
Horseshoe
|
16,511
|
13,956
|
3.39
|
2.09
|
Ledbetter
|
21,772
|
17,582
|
2.37
|
0.86
|
Snake
|
3,966
|
3,426
|
1.99
|
1.17
|
Chase Hill
|
1,633
|
1,515
|
1.06
|
0.93
|
Mill Zone
|
1,814
|
1,573
|
1.47
|
1.30
|
Small
|
5,039
|
4,149
|
0.65
|
0.62
|
601 Area
|
6,666
|
5,416
|
0.89
|
0.82
|
Champion
|
6,654
|
4,968
|
0.96
|
0.82
|
Total
|
64,055
|
52,585
|
2.11
|
1.18
|
Mining and Production
Romarco plans to use conventional open pit mining
methods. A combination of hard rock and soft rock will be encountered in
the deposit during the mining process. The majority of the material from
the mine will be hard rock, which will be drilled and blasted prior to
loading. The initial mining fleet consists of fourteen100-ton haul
trucks, two 15 cu yd front-end loaders, and one 14.4 cu yd hydraulic front
shovel, with various support equipment. The mine plan produces 2.55
million tons of ore per year for delivery to the process plant (7,000 tpd). A variable cutoff grade strategy was utilized
for the mining schedule in order to provide higher-grade mill feed during the
early years, while stockpiling low-grade material to be processed at the end of
the project life. The pit design is based on variable pit slope angles.
The inter-ramp slope angles utilized are 49 degrees for the north walls, 38 to
45 degrees for the south walls, 40 degrees in the saprolite,
and 27 degrees for the coastal plains sand.
Metallurgy
and Processing
The plant
design incorporates conventional precious metals recovery processes including
jaw crushing, semi-autogenous and ball milling,
flotation, fine grinding of the flotation concentrate, and carbon-in-leach cyanidation. The plant will process nominal 7,000 tpd based on 92% plant availability. Gold recovery is
calculated at 83.7% based on an average head grade of 2.06 g/t. Primary
grind product size is estimated at P80 = 74 microns. Fine
grind product size of the flotation concentrate is estimated at P80 =
15 microns. Nominal leach times for flotation tailing and flotation
concentrate are 20 hours and 40 hours respectively. The design is based
on numerous tests that were conducted at various laboratories, including Resource
Development Inc. located in Denver,
Colorado. Final plant tailing will be stored in a conventional tailing
facility. Well-proven and commercially applied sulfur dioxide/air cyanide
destruction technology will be used as needed to ensure tailing meets
International Cyanide Management Code standards.
Land and
Infrastructure
The Haile property is situated 4.8 kilometers northeast of the Town
of Kershaw in Lancaster
County, South Carolina, USA. The site is roughly one hour
south of Charlotte,
North Carolina and one and one half hour northeast of Columbia,
South Carolina. The project is somewhat unique in that it is
situated wholly on private land 100% owned fee simple (surface, water, and
mineral rights) and no royalties. Private lands, unlike federal (BLM or
USFS) lands are not subject to the proposed amendment of the 1872 mining law
imposing federal royalties on mining properties. To date the Company's
land position is approximately 8,000 acres.
The proximity
to existing infrastructure reduces project costs because the project is easily
accessible and there is adequate housing, power, phone, and water.
Natural gas, sanitary sewer, and potable water lines run along Highway
601, which borders the Haile property to
the west. Haile has two sources of power available to
it - Duke Energy and Lynches River Power Cooperative.
The power transmission infrastructure is well established, and less than 8
kilometers of new Duke or Lynches River service will be required.
Operating
Costs
The cash
operating costs are provided in Table 5 below. Life of mine (LOM) unit
costs per ton of ore is $18.92 and the unit cost per ounce of
gold produced is $379 including by-product credits. The
G&A component of the cash operating costs includes
property taxes of $0.62 per ton of ore, or $12.51
per ounce.
Table 5: Cash Operating Costs
|
|
|
|
|
$ per ton of ore
|
$ per ounce
of gold
|
Mining
|
9.62
|
192.84
|
Processing
|
7.67
|
153.61
|
G&A
|
2.26
|
45.28
|
Shipping/Refining
|
0.17
|
3.50
|
Sub-Total
|
19.72
|
395.23
|
By-product
(Silver) Credit
|
(0.80)
|
(15.96)
|
Total After By-product Credit
|
18.92
|
379.27
|
Opportunities
·
Conversion of measured and indicated as well as
inferred resources within the $1200 shell
·
·
Infill drilling to connect the pit bottoms of South
Pit, Ledbetter, and Snake could lead to a lower overall strip ratio and
increased gold ounces
·
·
Continued expansion of the high grade Mill Zone to
maintain higher production levels beyond the first year
·
·
A throughput expansion early in the mine life to
improve project economics
·
·
Further exploration:
·
o at Horseshoe to develop higher
grade underground potential
o
o between Snake Deep and Horseshoe
to connect mineralization
o
o
stepping out in all directions
o
·
Completion of the underground scoping study at
Horseshoe for possible expansion scenario - this higher grade ore would lead to
increased production and grade
·
·
Completion of analysis on tax matters including
applying prior net operating losses to operations
·
Risks
·
Fluctuation in commodity
prices
·
·
Increased costs or delayed availability of equipment
·
·
Timing of permits
·
·
Timing and availability
of financing
·
Qualified Persons for Feasibility
Study
The
Feasibility study was prepared by leading independent industry consultants, all
Qualified Persons (QP) under National Instrument (NI) 43-101, with the
collaboration of the Romarco technical group.
The QP's have reviewed and approved the content of this news release.
Table 6 below details the following consultants that participated in the study:
Table 6: Professional Qualifications
|
|
|
|
|
Responsibility
|
Qualified
Person
|
Registration
|
Company
|
Process
Plant Cost & Principal Author
|
Joshua Snider
|
PE
|
M3
|
Process & Metallurgy
|
Thomas L. Drielick
|
PE
|
M3
|
Environmental & Permitting
|
Lee "Pat" Gochnour
|
MMSA
|
G&A
|
Resources
Modeling, Potential Mineral Deposits, Mine Planning, Reserves, &
Geology
|
John Marek
|
PE
|
IMC
|
Tailing,
Overburden & Site Water Management
|
Derek Wittwer
|
PE
|
AMEC
|
An updated NI
43-101 compliant technical report reflecting additional information in the
Feasibility Study will be filed on the Company's website and on SEDAR as soon
as it is completed.
Conference
Call
Romarco will hold a conference call tomorrow (Thursday,
February 10, 2011) at 10 am EST where senior management
will discuss the Feasibility study and respond to questions from analysts and
investors. To join the call:
|
In Canada
and the United States -
|
1-877-974-0445
|
|
International -
|
416-644-3426
|
The
conference call will be recorded and playback of the call will be available
after the event by dialing toll free in Canada
and the United States
1-800-642-1687, or locally 416-640-1917, pass code 4409867# (available up to February
17, 2011).
About Romarco
Minerals Inc.
Romarco Minerals Inc. is a gold development company
focused on production primarily in the US. The Company has completed a
positive Feasibility study and is continuing exploration drilling and
permitting for its flagship project, the Haile Gold
Mine in South Carolina.
Please note:
This entire press release may be accessed via fax, e-mail, Romarco's
website at www.romarco.com and through CNW Group's
website at www.newswire.ca. All material information on Romarco Minerals
Inc. can be found at www.sedar.com
Forward-Looking
Information
This News
Release contains "forward-looking information" that is based on Romarco's expectations, estimates and projections as of the
dates as of which those statements were made. This forward-looking information
includes, among other things, statements with respect to the Company's business
strategy, plans, outlook, financing plans, long-term growth in cash flow,
shareholder value, projections, targets and expectations as to reserves,
resources, results of exploration (including targets) and related expenses,
mine development, mine operations, mine production costs, drilling activity,
sampling and other data, estimating grade levels, future recovery levels,
future production levels, capital costs, cost savings, cash and total costs of
production of gold, expenditures for environmental matters, projected life of Romarco's mines, reclamation and other post closure
obligations and estimated future expenditures for those matters, completion
dates for the various development stages of mines, availability of water for
milling and mining, future gold prices (including the long-term estimated
prices used in calculating Romarco's mineral
reserves), end-use demand for gold, currency exchange rates, debt reductions,
use of future tax assets, timing of expected sales and final pricing of
concentrate sales, and the percentage of anticipated production covered by
option contracts or agreements. Generally, this forward-looking
information can be identified by the use of forward-looking terminology such as
"outlook", "anticipate", "project",
"target", "believe", "estimate",
"expect", "intend", "should",
"scheduled", "will", "plan" and similar
expressions. Forward-looking information is subject to known and unknown risks,
uncertainties and other factors that may cause Romarco's
actual results, level of activity, performance or achievements to be materially
different from those expressed or implied by such forward-looking information,
and developed based on assumptions about such risks, uncertainties and other
factors set out herein, including but not limited to:
·
uncertainties relating to the success of the Company's
gold exploration and development properties and the ability to develop a
producing mine;
·
·
uncertainties associated with the highly speculative
nature of the Company's operations;
·
·
uncertainties associated with fluctuations in gold
prices;
·
·
uncertainties relating to resources and reserves
estimates;
·
·
risk that the Company may yield less mineral
production under actual conditions than is currently estimated;
·
·
risk that the Company may be unable to secure further
capital necessary to carry out its operations;
·
·
uncertainties relating to the ability of the Company
to secure the various permits to conduct its current and anticipated future
operations;
·
·
inherent uncertainties associated with exploration and
development activities;
·
·
uncertainties relating to actual capital costs,
operating costs and expenditures, production schedules and economic returns;
·
·
risks associated with Romarco's
operations being subject to significant environmental laws and regulations,
including change in governmental regulation;
·
·
risk that increased competition may adversely affect Romarco's ability to attract necessary capital funding or
acquire suitable producing properties or prospects for mineral exploration in
the future;
·
·
risk of being subject to legal proceedings;
·
·
uncertainties relating to the ability of the Company
to successfully acquire additional mineral rights;
·
·
uncertainties associated with integrating new
acquisitions into existing operations;
·
·
risk that Romarco will be
unable to attract and retain the necessary qualified management and technical
personnel to meet the requirements of its anticipated growth;
·
·
uncertainties relating to the Company's ability to
effectively manage growth;
·
·
risks associated with the limited operating history of
the Company and the lack of history of earnings, positive cash flow or
dividend payments;
·
·
risk that the Company's insurance coverage may not
cover all of its potential losses, liabilities and damage related to its
business;
·
·
uncertainties related to recent market events;
·
·
uncertainties related to the current global financial
conditions; and
·
·
conflicts of interest.
·
A discussion
of these and other factors that may affect Romarco's
actual results, performance, achievements or financial position is contained in
the filings by Romarco with the Canadian provincial
securities regulatory authorities, including Romarco's
Annual Information Form. Forward-looking statements are based on assumptions
management believes to be reasonable, including but not limited to the
continued operation of Romarco's mining operations,
no material adverse change in the market price of commodities, that the mining
operations will operate in accordance with Romarco's
public statements and achieve its stated production outcomes, and such other
assumptions and factors as set out herein. Although Romarco
has attempted to identify important factors that could cause actual results to
differ materially from those contained in forward-looking statements, there may
be other factors that cause results not to be as anticipated, estimated or
intended. There can be no assurance that forward-looking statements will prove
to be accurate. Accordingly, readers should not place undue reliance on
forward-looking statements. Romarco disclaims any
intent or obligations to update or revise publicly any forward-looking
statements whether as a result of new information, estimates or options, future
events or results or otherwise, unless required to do so by law.