Queenstake Magistral feasibility study results amended
Queenstake Resources Ltd QRL
Shares issued 30,000,000 May 24 close $0.14
Thu 25 May 2000 News Release
Mr. Chris Davie reports
The feasibility study on the Magistral project, situated in Sinaloa state,
Mexico, conducted by Kappes Cassiday and Associates of Reno, and Pincock
Allen and Holt of Denver, is now complete.
The study is based on the open-pit mining and heap leach treatment of 6.15
million tonnes ore at an average grade of 1.86 grams per tonne gold at a
production rate of one million tonnes per year. The ore will be mined from
four discrete pits known as San Rafael, Samaniego Hill, Sagrado Corazon and
Lupita. Historic tailings in the Samaniego area will also be mined and
retreated. Production from the currently known reserve will total 268,500
ounces over seven years at a recovery of 72.9 per cent. Potential exists
for the discovery of additional resources both in the area of the existing
defined pits and in other as yet undrilled structures.
Proven and probable ore reserves determined by PAH are as follows:
Contained
Tonnes Grade ounces Strip
Area 000s g/t gold gold ratio
San Rafael 1,284 2.25 92,900 5.2
Samaniego
Hill 3,127 1.93 193,800 7.3
Sagrado
Corazon 582 1.39 26,000 1.4
Lupita 997 1.37 44,100 4.2
Tailings 166 2.17 11,600 0.0
Total 6,156 1.86 368,400 5.6
Capital requirements for the project in the preproduction and first year of
operation, based on the use of suitable used mining equipment, total
$13.7-million (U.S.), of which $0.8-million (U.S.) is value added tax (IVA)
and will be refunded during the first year of operation. An additional
$0.9-million (U.S.) will be required as working capital. Over the life of
the project, an additional $3.4-million (U.S.) in capital will be required.
Ore will be crushed to 80 per cent -12.5 (not -25 as reported May 23)
millimeters and truck stacked in eight-metre lifts; agglomeration is not
necessary. Based on metallurgical test work, recoveries are estimated to
range from 63 per cent for the Samaniego tailings to 76 per cent for San
Rafael ores and to average 72.9 per cent.
Operating costs net of IVA and fuel tax, both refundable, are as follows:
U.S.$ per U.S.$ per
Tonne ore ounce gold
Mining $ 4.49 $ 101
Processing 2.31 53
Lab and water 26 cents 6
General and
administrative 89 cents 20
Total 7.95 180
Results of an economic analysis of the project performed at a $300 gold
price demonstrate a net undiscounted cash flow of $27.9-million (U.S.) on a
pretax basis before preproduction capital cost of $13.7-million (U.S.) and
working capital of $0.9-million (U.S.). The break even gold price is $249.
Other results of the economic analysis are as follows:
Pretax Aftertax
net present net present
Discount value value
rate U.S.$x1000 U.S.$x1000
0% $ 13,297 $ 10,463
10% 4,669 3,158
(not 4,451 (not 2,840
as reported as reported
May 23) May 23)
Internal rate
of return 20.5% 17.7%
A detailed project development schedule has been developed which indicates
that approximately nine months will be required from the time detailed
engineering begins until the start of operations and 11 months until the
first production of gold from the project.
Queenstake president, Chris Davie, commented: "The potential of the project
to demonstrate a robust rate of return has been realized. We believe that
the project should attract project financing on competitive terms and look
forward to building the project over the coming year. We are particularly
pleased that publication of these results allows shareholders and analysts
to assess the value of the company's major asset."
WARNING: The company relies upon litigation protection for
"forward-looking" statements. |
