Winspear completes first phase of value recognition program
- July 2000 Scoping Study Increases Mineable Tonnage to 39.5 Million
Tonnes at 1.70 Carats per Tonne
- Expansion From 3,000 to 6,000 Tonnes Per Day Funded Out of Cash Flow
From Operations
- Drilling Program Underway - Four Rigs Drilling, a Fifth Being Mobilized
- Conference Call Tuesday, July 11, 2000 at 4:30 PM Eastern Daylight Time
(EDT)
VANCOUVER, July 11 /CNW/ - Winspear Diamonds Inc. (WSP-TSE) is pleased to
announce the results of the July 2000 Scoping Study for the Snap Lake Diamond
Project. The mineable tonnage is estimated at 39.5 million tonnes of
kimberlite at an average diluted mine grade of 1.70 carats per tonne,
containing a total of 67 million carats. The July 2000 Scoping Study was
prepared by MRDI Canada (MRDI), a division of AGRA Simons Limited.
With the increase in mineable tonnage from the Pre-Feasibility Study, the
economics improve significantly. Total projected revenues increase to C$11.5
billion. Estimated pre-tax cash flow is C$7.24 billion and total after-tax
cash flow is C$3.99 billion. The net present value of the after-tax cash flow,
discounted at 8%, is C$1.38 billion. The after-tax discounted cash flow rate
of return (DCFROR) is calculated as 39.4% with a payback period of 3.4 years.
Mine throughput expands to 6,000 tonnes per day and mine life is extended from
12 to 21 years.
<<
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July 2000
Scoping Study Pre-Feasibility Study
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Study Parameters
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Mineral resource (tonnes) 37.8 million 12.4 million
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Grade (carats per tonne) 1.98 cpt 1.98 cpt
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Mineable tonnage (tonnes) 39.5 million 12.6 million
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Diluted mine grade
(carats per tonne) 1.70 cpt 1.75 cpt
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Recovered carats 67 million 22 million
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Value per carat* C$171 (US$118) C$171 (US$118)
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Ultimate throughput
(tonnes per day) 6,000 tpd 3,000 tpd
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Operating costs (per tonne) C$88/t C$94/t
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Initial capital - 2001-02 C$289 million C$269 million
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Expansion capital - 2004-06 C$230 million -
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Maximum mining depth below surface 750m 370m
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Economics
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Revenue C$11.5 billion C$3.8 billion
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Pre-tax cash flow C$7.24 billion C$2.24 billion
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Cash flow after tax C$3.99 billion C$1.22 billion
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DCFROR 39.4% 37.6%
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Net present value (5%) C$2.01 billion C$0.75 billion
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Net present value (8%) C$1.38 billion C$0.56 billion
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Mine life 21 years 12 years
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Pay back period 3.4 years 2.1 years
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>>
The information in the above table is for 100% of the Snap Lake Diamond
Project.
* Exchange Rate: US$1.00 equals C$1.45
"The July 2000 Scoping Study confirms that the Snap Lake Diamond Project
is one of the most important undeveloped diamond projects in the world," said
Randy Turner, President and Chief Executive Officer of Winspear "We are
excited by the results in this study and anticipate providing updates as more
results of our Value Recognition Program become available. From here we are
moving ahead to prepare a bankable feasibility study reflecting these new
results."
Details of the First Phase of the Value Recognition Program (VRP)
Resource Base:
The July 2000 Scoping Study is based on a mineral resource of 37.8
million tonnes with a grade of 1.98 carats per tonne. This study incorporates
the drilling information outside of the Pre-Feasibility Study mineable tonnage
as well as the 35 step-out holes drilled since June 1999. This brings the
number of kimberlite intersections drilled to 224. The mineable tonnage is
derived by including mine dilution and subtracting tonnage contained in
pillars. The mineable tonnage for that portion of the kimberlite dyke greater
than 2m in thickness has increased from 12.6 to 27.6 million tonnes. The
remaining 11.9 million tonnes represents kimberlite ranging from 1-2m
thickness for which increased dilution has been allowed.
The attached map shows in Areas A and B the mineable tonnage from the Pre-
Feasibility Study and July 2000 Scoping Study, respectively.
Mine Plan:
The Pre-Feasibility Study was based on mining to a depth of about 370m
below surface. In the July 2000 Scoping Study MRDI extended mining to a depth
of about 750m with ore hoisting via a vertical shaft beginning in 2006. In
recognition of the expanded mineral resource, MRDI has proposed that mine
throughput increase from 3,000 tonnes per day to 6,000 tonnes per day. The
mine life estimate has also increased from 12 to 21 years.
The July 2000 Scoping Study is based on the development of the Snap Lake
Diamond Project in two stages. Initial development would achieve a throughput
of 3,000 tonnes per day (tpd) by the end of 2003 (in accordance with the Pre-
Feasibility Study). The second phase would see development of shaft access on
the north shore of Snap Lake, allowing two primary access points and
throughput to be increased to 6,000 tpd by the end of 2006.
Cost Estimates:
With the expansion of the mineral resource and the associated need for
expanded mine works and processing facilities, capital costs are estimated to
be C$289 million initially, with expansion capital requirements in years 2004
through 2006 of C$230 million which will be funded out of cash flow from
operations. Overall operating costs are estimated to be C$88 per tonne and
include mining, processing, freight and general and administrative costs. In
the Pre-Feasibility Study, MRDI estimated that the initial capital cost for
the Snap Lake Diamond Project would be C$269 million. Operating costs for the
3,000 tonnes per day base case were estimated at C$94 per tonne.
Details on the Second Phase of Value Recognition Program
As announced on July 5, 2000, Winspear has also undertaken an aggressive
drill program of step-out holes to the northeast, east and southeast of the
known extent of the kimberlite dyke. Four drills are currently operating,
while a fifth drill is being mobilized and will begin drilling soon. The
attached map shows the drill target areas of the Value Recognition Program.
Results of this drilling will be used to update the July 2000 Scoping Study.
Conference Call Details
Shareholders are encouraged to participate in a conference call later
today, the purpose of which will be to elaborate on the July 2000 Scoping
Study. Interested parties can enter the call, set to commence at 4:30 p.m.
(Eastern Daylight Time) July 11, 2000, at any time after 4:15 p.m. (EDT).
Participants outside North America: 1-416-641-6674
Participants inside North America: 1-800-379-5831
As demand may exceed available lines, the call will be available for
replay for seven days following the original transmission by dialing in North
America 1-800-558-5253. Outside of North America, please call 1-416-626-4100.
As part of its ongoing efforts to inform investors and other interested
parties of Winspear's activities relating to the Value Recognition Program,
the Company will be posting a transcript of this session on its web site at
www.winspear.com.
The Toronto Stock Exchange has not approved or disapproved the form or
content of this news release
Winspear relies on litigation protection for "forward looking"
statements. The July 2000 Scoping Study provides an estimate of the potential
of the Snap Lake Diamond Project. There is no certainty that further analysis
and data will result in realization of the estimated potential. |
