VANCOUVER, BRITISH COLUMBIA, Dec 21, 2011 (MARKETWIRE via COMTEX) –Abacus Mining & Exploration Corporation /quotes/zigman/375353 CA:AME +3.23% (“Abacus”) is pleased to announce the results of the FeasibilityStudy (‘FS’) for the Ajax Copper-Gold Project (the “Ajax Project”)located southwest of Kamloops, B.C. the Ajax Project is beingdeveloped through KGHM Ajax Mining Inc. (“KGHM Ajax”), owned 49% byAbacus and 51% by KGHM Polska Miedz S.a. (“KGHM”). the NI 43-101Technical Report will be available on the Company’s website( amemining.com ) and on SEDAR ( sedar.com ).
Base Case Highlights: (all economic figures in US$)
— Total proven and probable mineral reserves of 3 billion lbs Cu and 2.7 million ozs Au at 0.27% Cu and 0.17 g/t Au based on $2.50 Cu and $1,085 Au — 23 year mine life at a processing rate of 60,000 t/d or 21.9 million t/a at a LOM stripping ratio of 2.4:1 — LOM production of 2.5 billion lbs Cu and 2.28 million ozs Au in concentrate — Initial capital costs of $795 million, including contingency of $87 million — Cash cost per lb of copper of $1.28 net of gold credits
the base case economic analysis produced by Wardrop, a Tetra TechCompany (Tetra Tech) projects that the Ajax Project will have apre-tax net present value of $416 million (@ 8% discount rate) andinternal rate of return of 14.5% based on pre-tax 100% equityfinancing. the pre-tax economic results for the base case andadditional case scenarios are presented in the following table.
Table 1: Summary of Ajax Project Pre-Tax Economic Results ————————————————————————— Alternate Alternate Base Case Case Case Scenario Scenario1 Scenario2 ————————————————————————— Cu US$/lb $2.75 $3.00 $ 3.50 ————————————————————————— Au US$/oz $1,085 $1,300 $1,700 ————————————————————————— Exchange Rate (us$:C$) 0.92 0.94 0.98 ————————————————————————— Pre-tax Internal Rate of Return 14.5% 19.5% 30.3% ————————————————————————— Cash Cost per lb Cu (net of gold credits) $1.28 $1.11 $0.79 ————————————————————————— Pre-Tax Net Present value (8% discount rate) $416 million $818 million $1,601 million ————————————————————————— Payback Years 7.8 3.8 2.2 —————————————————————————
James D. Excell, President & CEO of Abacus, commented, “The FS confirmsthe economic viability of the Ajax Project at long term copper andgold prices, and demonstrates the leverage to increases in metalprices. At recent market prices the Project is very robust and theNPV nearly quadruples from the base case with an associated 2.2 yearpayback of initial capital.
the delivery of the FS is a pivotal milestone for Abacus and advancesthe Ajax Project along the critical path to production start-uptargeted for 2015. the Ajax Mine economics compare very favorably tothe leading copper projects being developed around the world givenits long-life, location, open-pit mining and conventional processing.the mine also represents a small portion of the 8,000 hectarecopper-gold camp. we look forward to developing the Ajax Project withour world class partner, KGHM.”
Joint Venture Next Steps
Upon deemed delivery of the FS to KGHM, expected on or about December31, 2011, KGHM will have a maximum of 90 days to acquire a further29% in the Joint Venture company for a cash consideration equal to29% of the Proven and Probable copper equivalent reserve in the FS,to a maximum of US$35 million, towards use by Abacus for its share ofproject capital. thereafter, KGHM will arrange the financing for its(80%) proportionate interest in the project capital, and Abacus hasthe option to arrange its own financing for its (20%) proportionateinterest or elect to have KGHM do so on commercially reasonableterms.
in the event that KGHM chooses not to increase its interest in thejoint venture, Abacus then has 90 days to elect to purchase KGHM’s51% interest for US$37 million, and 90 days thereafter to close onthis purchase. Should Abacus choose not to purchase KGHM’s interestin its entirety, Abacus’ interest in the Joint Venture can beincreased to 51% by paying approximately US$1.5 million to KGHM.
Detailed FS Summary
the independent Ajax Project Feasibility Study which was commissionedin may 2010 in accordance with National Instrument 43-101, supports a60,000 tonne per day conventional milling plant, producing acopper-gold concentrate containing 25% Cu and 18 g/t Au. the Studywas led by Tetra Tech as the project’s lead consultant, inconjunction with a team of globally recognized consultants:
Tetra Tech – overall management, mineral processing, infrastructure, and financial analysis AMEC Americas Ltd. – geology, mineral resource estimate, mineral reserve estimate, and mine design Knight Piesold Ltd. – environmental studies, permitting, and social or community impact Golder Associates Ltd. – tailings handling, thickening and tailings area water management BGC Engineering Inc. – pit slope designs and site geotechnical investigation G&T Metallurgical Services Ltd. – metallurgical test work Krupp Polysius – High Pressure Grinding Rolls (HPGR) pilot test work for the process design
the FS encompasses trade-off studies that were performed to optimizelife-of-mine operations since the July 31, 2009 Preliminary EconomicAssessment (PEA). Since the PEA level report was issued, furtherconfirmatory metallurgical testing and variability analysis work havebeen completed. This FS builds on the results and premises of theprevious findings, as well as the subsequent test work programsbetween 2009 and 2011.
Some of the key optimizations from the trade-off studies includecrushers and conveyors for in-pit crushing and conveying of both oreand waste, high pressure grinding rolls, and high density tailingsdeposition. these methods have had the effect of reducing costs andimproving recoveries as well as location logistics to reduce theenvironmental footprint.
1) Mineral Resource Estimates
Mineral Resources take into account geologic, mining, processing andeconomic constraints, and have been confined within appropriate LGpitshells, and therefore are classified in accordance with the 2010CIM Definition Standards for Mineral Resources and Mineral Reserves.
Mineral Resources are reported using a copper price of US $2.88/lband a gold price of US$1,200/oz.
AMEC reported the Mineral Resources at a Base Case CuEq grade of0.20%.
Mineral Resource Estimate at Selected CuEq Cut-offs Effective Date may 26, 2011, Timothy O. Kuhl, SME Registered Member ————————————————————————— Cutoff Ton- Cu- Au NSR Contained Metal CuEq nes- Eq Cu (g/ (US$/ CuEq Cu Au (%) (Mt) (%) (%) t) t) (’000 lb) (’000 lb) (oz) ————————————————————————— Measured 0.1 322.5 0.38 0.27 0.17 13.83 2,667,000 1,933,000 1,734,600 0.2 255.8 0.42 0.31 0.19 15.71 2,389,000 1,734,000 1,555,400 ————————————————————————— Indicated 0.1 336.2 0.36 0.26 0.17 16.7 2,665,000 1,897,000 1,818,100 0.2 256.2 0.42 0.3 0.2 19.98 2,399,000 1,712,000 1,637,400 ————————————————————————— Measured 0.1 658.7 0.37 0.26 0.17 15.3 5,331,000 3,830,000 3,552,600 + Indicated 0.2 512 0.42 0.31 0.19 17.85 4,788,000 3,446,000 3,192,800 ————————————————————————— Inferred 0.1 115.7 0.3 0.21 0.13 13.39 753,000 538,000 499,200 0.2 73.7 0.38 0.27 0.17 17.46 613,000 439,000 405,700 ————————————————————————— Note 1. Mineral Resources are contained within a conceptual Measured, Indicated and Inferred optimized pitshell using the following assumptions: maximum copper recovery of 91.17% and maximum gold recovery of 86.49% based on the following equations: CuRec = (-74.812 x (Cu%^2)) + (85.727 x Cu%) + 66.668 and AuRec = 92.586 x Au(g/t)^0.064; assumed throughput rate of 60,000 t/d; Whittle constraining shell slopes between pit slope angle ranging from 38 degrees to 49 degrees, waste and processed material mining costs of US$1.08/t, fill waste mining costs of US$0.89/t, total processing costs including reclamation of US$3.23/t, general and administrative costs of US$0.52/t, gold price of US$1,200/oz, and copper price of US$2.88/lb. Note 2. Copper equivalency was calculated using the formula CuEq = (((%Cu) x (CuRec) x (22.0462) x ($lbCu) + (g/t / Au) x (AuRec) x (1/31.1035) x ($ozAu))) / ((CuRec) x (22.0462) x ($lbCu))). Note 3. Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content. Note 4. Tonnage and grade measurements are in metric units. Contained gold and silver ounces are reported as troy ounces, contained copper pounds as Imperial pounds.
2) Mineral Reserve Estimates
the Proven and Probable Mineral Reserves as of October 31, 2011consists of 503 million tonnes grading 0.27% Cu and 0.17 g/t Au(0.37% CuEq) containing approximately 3 billion lbs of copper and 2.7million ounces of gold.
Mineral Reserve Statement Effective Date 31 October 2011, R. Mendoza Reyes, P.Eng. ————————————————————————— Average Copper Contained Cut-Off Grades Equivalent Metal Confidence Grade Tonnes Cu Au CuEq Copper Gold Category (US$/t) (Mt) (%) (g/t) (%) (M lb) (k oz) ————————————————————————— Proven Mineral Reserve 4.53 279.5 0.27 0.17 0.38 1,680 1,520 Probable Mineral Reserve 4.53 223.5 0.26 0.17 0.37 1,280 1,230 ————————————————————————— Total Proven & Probable Mineral Reserves 4.53 503.0 0.27 0.17 0.37 2,960 2,750 ————————————————————————— Note 1. Mineral Reserves are estimated using a cut-off of US$4.53/t NSR, a copper price of US$2.50/lb, and a gold price of US$1,085/oz. the NSR is calculated by adding the NSR attributable to copper to the NSR attributable to gold and then subtracting the freight costs, which include land freight, port charges, ocean freight and miscellaneous costs. the attributable copper is calculated using the metallurgical recovery obtained by the formula: CuRec (%) = -74.812 (i) Cu(%)2 + 85.727 (i) Cu(%) + 66.668 with a maximum copper recovery of 91.17%. the attributable gold is calculated using metallurgical recovery obtained by the formula: AuRec (%) = 92.586 (i) Au(g/t)0.0649 with a maximum gold recovery of 86.49%. Note 2. Mineral Reserves are constrained within a pit shell, optimized using assumptions of a weighted average mining cost of US$1.32/t (ranging from US$0.92/t to US$2.50/t for the different mining benches); a processing cost of US$3.38/t plus US$0.51/t general and administrative costs, and US$0.05/t allocation for closure costs; and pit slope angles that vary from 40 degrees to 49 degrees. Note 3. a 0.5% mining loss factor was applied to account for dilution; diluted grades are estimated at 1.7% lower than the in-situ grades. Note 4. the life of mine, waste to ore strip ratio is 2.40. the assumed life-of-mine throughput rate is 60 kt/d. Note 5. the copper equivalency is calculated using the equation CuEq = ((%Cu) (CuRec) (22.0462) ($lbCu) + (g/t / Au) (AuRec) (1/31.1035) ($ozAu)) / ((CuRec) (22.0462) ($lbCu)). Note 6. Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content. Note 7. Tonnage and grade measurements are in metric units. Contained gold ounces are reported as troy ounces; contained copper pounds are Imperial pounds.
the mill copper feed grades generally vary between 0.13% and 0.63% Cu,while the gold grades generally vary between 0.05 g/t and 0.59 g/t Auof the mill feed. the Year 1 to 5 composite plant mill feed estimatewas replicated in a sample which was tested during the most recenttest program. This sample has a feed grade value of 0.29% Cu and 0.16g/t Au. these feed values were used as the basis of design for theplant.
3) Life of Mine plan
the FS supports production of a total of 2.5 billion lbs of copperand 2.28 million ozs of gold in concentrate or an average ofapproximately 109 million lbs of copper and 99,000 ozs of goldannually. the proposed mine plan envisages a conventional open pitoperation extracting 60,000 t/d or 21.9 million t/a of ore. the mineplan is based on the extraction of 503 million tonnes of ore forprocessing during 23 years of operation at an overall LOM strippingratio of 2.4:1 waste to ore. Total material movement from the pitduring the life of the mine is estimated at 1,701 million tonnes. Theaverage LOM head grade of process feed is 0.27% Cu and 0.170 g/t Au(0.37% CuEq) which equates to a NSR of $14.68 per tonne.
Mining will be accomplished using a conventional truck and shoveloperation, in conjunction with an in-pit crushing and conveying(IPCC) system. IPCC is a system where the mined material is reducedin size by crushing to make it suitable to be transported by beltconveyors out of the pit. After the PEA, IPCC was identified as apotential cost reduction implementation for the Ajax Project whencompared with a truck-haul option only.
4) Capital and Operating Costs
the capital and operating cost estimates provided by AMEC, Tetra Techand Golder indicate an initial estimated capital cost ofapproximately $795 million, inclusive of contingency of $87 million.the operating cost estimate will be $1.32/t for mining and in-pitcrushing and conveying, $3.46/t milled for processing and tailingsdisposal and $0.53/t G&A cost.
Initial Estimated Capital US$ ’000 ————————————————————————— Site general and substation 46,280 ————————————————————————— Mine pre-stripping 34,443 ————————————————————————— Mining equipment 80,443 ————————————————————————— Crushing 25,700 ————————————————————————— Conveying 11,764 ————————————————————————— Ore storage and HPGR 89,614 ————————————————————————— Concentrator 144,815 ————————————————————————— Tailings storage 79,493 ————————————————————————— Site services & utilities 15,304 ————————————————————————— Ancillary buildings 18,639 ————————————————————————— Plant site mobile fleet 4,437 ————————————————————————— Water supply from Lake 14,805 ————————————————————————— Total Direct Initial Capital 565,737 ————————————————————————— Project indirect 107,176 ————————————————————————— Owners costs 34,500 ————————————————————————— Contingency 87,570 ————————————————————————— TOTAL INITIAL ESTIMATED CAPITAL 794,983 ————————————————————————— Sustaining Capital US$ ’000 ————————————————————————— Mining equipment 262,714 ————————————————————————— Crushing 62,400 ————————————————————————— Conveying 73,058 ————————————————————————— Stacking 57,987 ————————————————————————— Plant site 43,214 ————————————————————————— Tailings 104,642 ————————————————————————— TOTAL ESTIMATED SUSTAINING CAPITAL 604,015 —————————————————————————
Approximately $200 million is expected to be incurred in year 5 forin-pit crushing and conveying.
Environmental & Permitting
the Project is currently in the early stages of an environmentalassessment process involving both federal and provincial governmentagencies and will be a state-of-the-art operation designed to meetand exceed health, safety and environmental requirements in Canada.
Knight Piesold initiated the environmental studies for the AjaxProject in 2007, including ground and surface water quality andquantity, climatology, fish and fish habitat, wildlife, andvegetation studies. the environmental study suggests that provenmitigation methods will be effective in controlling environmentaleffects. Acid base accounting was carried out as part of theenvironmental baseline study, and the results indicate that the wasterock and ore are not acid generating.
Abacus submitted a Project Description to the BC EnvironmentalAssessment Office (EAO) and the federal Canadian EnvironmentalAssessment Agency (CEAA) in early 2011. the project description wasaccepted by EAO on February 25, 2011 and on March 16, 2011 by CEAA.
the provincial Environmental Assessment Office issued an Order underSection 10 of the Environmental Assessment Act on February 25, 2011indicating that the Project must proceed through the provincialEnvironmental Assessment review. the CEAA commenced a comprehensivestudy on may 25, 2011 and posted a Notice of Commencement on the CEAARegistry on may 31, 2011. a federal project agreement was signed onAugust 17, 2011. the draft Project Application InformationRequirements (dAIR) was provided to the EAO and CEAA on August 12,2011 for distribution to the Technical Working Group. the ProponentApplication/ Environmental Impact Statement (EIS) is expected to besubmitted in 2012.
Local Resources/Infrastructure
Local resources necessary for the exploration, development, andoperation of the Ajax property are located in Kamloops. Kamloops hasa resource-based economy and is a transportation hub for the CanadianNational Railway (CNR) and Canadian Pacific Railway (CPR). Numerousservice and supply companies which service resource industries areestablished in Kamloops, including several diamond drillingcompanies, light-to heavy equipment contractors and a metallurgicaltesting laboratory. Highway 1 services Kamloops and Highway 5 issituated within 6 km of the Ajax property. There is also an airportwith daily scheduled flights to Vancouver, Calgary, Kelowna andPrince George.
Exploration/History
Abacus acquired the Afton property in 2002 from Teck Ltd. Historicdrilling on the Ajax property was concentrated in the areas of theopen pit mines that were in production in the 1980s and 1990s. AftonMines Ltd., controlled by Teck, commenced production at Ajax East andAjax West in 1989. Production was suspended in 1991 due to low metalprices. a second period of production began in 1994 and was againsuspended in 1997. During the periods of production, it is estimatedthat 17 Mt was mined and 13 Mt milled.
Abacus undertook drilling campaigns from 2005 to 2010 consisting ofdiamond drilling, more recently targeting extensions ofmineralization along strike and to depth. the approximate drillspacing is 50 x 50 m in the areas of mineralization.
Conference call Details
a conference call to discuss the results of the Ajax ProjectFeasibility Study has been scheduled for Wednesday, December 21, 2011at 4:30pm ET (1:30pm PT). Dial-in numbers for North America are: tollfree 1-866-226-1792 or 416-340-2216; for International1-800-9559-6849. To access the simultaneous webcast, visit AbacusMining’s website at amemining.com . a playback version will beavailable until Friday, January 13, 2012 at 1-800-408-3053 (N.a. tollfree) or 905-694-9451 using the pass code 2014266.
in may 2010, Abacus commissioned a team of engineering consultants tocomplete the Ajax Project Feasibility Study in accordance withNational Instrument 43-101. Tetra Tech was retained as the leadconsultant for the Study.
the mineral resources and reserves for the Ajax Project wereestimated by AMEC Americas Ltd. (AMEC) under the direction of TimothyO. Kuhl R.M. and Ramon Mendoza Reyes, P.Eng. mr. Kuhl as a qualifiedperson for the purposes of National Instrument 43-101, has reviewedand verified the data that pertains to the resources in this pressrelease. mr. Mendoza Reyes as a qualified person for the purposes ofNational Instrument 43-101, has reviewed and verified the data thatpertains to the reserves in this press release.
the technical information in this news release has been reviewed andapproved by Hassan Ghaffari, P.Eng., Senior Engineer with Tetra Techand overall manager for the Feasibility Study, and by Dave Laudrum,P.Geo., Abacus’s Chief Geologist and qualified person for the AjaxProject, both of whom are qualified persons within the meaning ofNational Instrument 43-101.
the NI 43-101 Technical Report will be available on the Company’swebsite ( amemining.com ) and on SEDAR ( sedar.com ).
On Behalf of the Board,
ABACUS MINING AND EXPLORATION CORPORATION
James D. Excell, President & CEO
Forward-Looking Information
This release includes certain statements that are deemed”forward-looking statements”. all statements in this release, otherthan statements of historical facts, that address events ordevelopments that Abacus Mining and Exploration Corp. (the “Company”)expects to occur, are forward-looking statements. Forward-lookingstatements are statements that are not historical facts and aregenerally, but not always, identified by the words “expects”,”plans”, “anticipates”, “believes”, “intends”, “estimates”,”projects”, “potential” and similar expressions, or that events orconditions “will”, “would”, “may”, “could” or “should” occur.although the Company believes the expectations expressed in suchforward-looking statements are based on reasonable assumptions, suchstatements are not guarantees of future performance and actualresults may differ materially from those in the forward-lookingstatements. Factors that could cause the actual results to differmaterially from those in forward-looking statements include changesto commodity prices, mine and metallurgical recovery, operating andcapital costs,foreign exchange rate, and ability to obtain requiredpermits on a timely basis including permission from Kinder Morgan tohave access to the pipeline right-of-way, exploitation andexploration successes, and continued availability of capital andfinancing, and general economic, market or business conditions.Investors are cautioned that any such statements are not guaranteesof future performance and actual results or developments may differmaterially from those projected in the forward-looking statements.Forward-looking statements are based on the beliefs, estimates andopinions of the Company’s management on the date the statements aremade. Except as required by applicable securities laws, the Companyundertakes no obligation to update these forward-looking statementsin the event that management’s beliefs, estimates or opinions, orother factors, should change.
neither TSX Venture Exchange nor its Regulation Services Provider (asthat term is defined in the policies of the TSX Venture Exchange)accepts responsibility for the adequacy or accuracy of this release.
Contacts: Abacus Mining & Exploration Corporation James D. Excell President & CEO Abacus Mining & Exploration Corporation Donna Yoshimatsu Director, Investor Relations (647) 345-0826 amemining.com
SOURCE: Abacus Mining and Exploration Corp.
mailto: mailto: amemining.com
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