Looking to make some good cash on this puppy :-)
News from Canada NewsWire
VVC Exploration Corp. to acquire Beaver Brook Antimony Mine for CDN $17,000,000
18:48 EDT Friday, September 05, 2003
Symbol: VVC - TSX-VEN
TORONTO, Sept. 5 /CNW Telbec/ - VVC EXPLORATION CORP. ("VVC" or the "Company") is pleased to announce it has entered into an agreement to acquire all the assets of the Beaver Brook Antimony Mine (the "Mine") in Gander Newfoundland for $17,000,000.
The Mine, previously owned by Roycefield Resources Ltd. ("Roycefield"), is among the world's largest undeveloped antimony deposits outside of China and South Africa. Once in full production, the Mine could supply nearly up to 5% of world's annual demand and be the only operating antimony mine in North America. The United States is the world's largest consumer of antimony.
The Mine is located in central Newfoundland, approximately 60 km southwest of Gander. The site is accessible by way of an upgraded 40 km, all weather road from the Trans Canadian highway. The property is serviced by a 66 KV transmission power line.
The most important use of antimony is as a hardener in lead for storage batteries. The metal also finds applications in solders and other alloys. Antimony trioxide is the most important of the antimony compounds and is primarily used in flame-retardant formulations. These flame-retardant applications include such markets as children's clothing, toys, aircraft and automobile seat covers.
This year antimony has fluctuated between a low of approximately US $2,100 per tonne to a high of US $2,600 per tonne. Published prices are now in the US $2,300 per tonne range and global demand is expected to grow at approximately 3.5% per year.
This acquisition will allow VVC EXPLORATION CORP. to graduate from the junior exploration stage to that, of a full fledged production company. VVC expects to generate significant cash flow from the mine as early as the first year of operation, which should also enable VVC to pursue other major projects already underway. VVC is extremely proud of this project that should result in the creation of at least (60) fulltime jobs at the mine site.
The Beaver Brook antimony project was developed between 1994-1998. Antimony ("Sb") was discovered in mineralized zones outlined through approximately 25,000 meters of drilling which developed a resource estimated to be approximately 1,942,650 tonnes grading 4.32% Sb (source: MRB & Associates and Roycefield).
In 1998, a 450 ton per day ("tpd") mill was erected. Mine development included a 515 meter, 16 degree production ramp and 313 meters of drifts. Total development costs were approximately $22 million.
After a very short period of test operations which processed approximately 20,000 tonnes of development muck grading 5%Sb in 1998, the operation was suspended and the mine placed on care and maintenance due to adverse antimony market conditions prevailing at the time. China is the world's largest source of Antimony and, the success of its export control system together with the accidental flooding of two major antimony mines in Guangxi province, resulted in a decline of 30% in worldwide antimony production for the year 2002, this trend has continued in 2003. The significant shortage of antimony production resulted in an increase in antimony prices to the US $2,000 range.
The Mine has been kept under care and maintenance since the operations were suspended in 1999. The mill and office facilities are generally in the same condition as at the time production was suspended and most of the equipment and records are available for the resumption of operations. The general condition of the mine facilities and the status of the mine lease and permits will allow for a restart of production in about six months from the start of activity.
Watts, Griffis and McOuat Limited ("WGM"), an international engineering and geological consulting firm based in Toronto, has completed a "Scoping Study" of the operation to analyze the viability of re-starting the operation. This preliminary review of the antimony resources at the Mine, the general condition of the established mine, mill and supporting infrastructure and the current price and projected trend in the antimony market were all positive. WGM has estimated the approximate capital cost of the rehabilitations and additions to the surface facilities to sustain a 450 tpd operation based on in house data and experience with similar scopes of work.
The scoping study assumed the mining and milling of 150,000 tons per year (tpy) with the mill operating on a 24 hour schedule for 350 days per year to produce antimony in a concentrate for downstream processing offsite. It is estimated that the mine would employ a workforce of approximately 60 persons from the Gander area who would travel to the minesite on a daily basis. This preliminary assessment indicates the project would have a 27.1% Internal Rate of Return (IRR) at current antimony prices with the concentrates smelted in Canada. A sensitivity study also shows that IRR could grow to 46.1% with a 20% increase in the antimony price to US $2,850 per tonne.
WGM's scoping study is based on mining costs and productivities at operations of similar scale, and on the indicated geometry of the currently identified East Zone upper and lower level mineralized zones and have used a total estimated resource of 1,040,000 tonnes grading 4.45% Sb for a projected seven year mine life. The most recent resource estimates were prepared by MRB & Associates, based on the original Roycefield data and are defined in the following categories: Measured resource of 1,478,044 (at) 4.58% Sb, Indicated resource of 487,606 (at) 3.45% (minus ore developed of 23,000 tons (at) 5.00% Sb for a total of 1,942,650 (at) 4.32%. WGM is reasonably confident that some of these resources, which are outside of the currently proposed mining area, could be upgraded and eventually added to the reserve base and may significantly extent the mine life provided the underlying economic factors remain constant.
WGM recommends the completion of a feasibility study to develop a detailed mine plan, complete a comprehensive marketing study and upgrade the resources to the proven and probable level. WGM proposes that as part of this program an additional 16,220 metres of diamond drilling be conducted both for in-fill drilling of the upper and lower east zone and exploration of the potential of the west zone to add to future reserves. The recommended drilling and feasibility study is estimated to cost approximately $2.1 million and will require approximately 5-6 months to complete. One of the first steps will be to dewater, rehabilitate and extend the existing underground openings, to provide access for in-fill drilling of the lower zone and the detailed sampling and study required to complete the mine planning.
Subject to the feasibility study and government approvals production of concentrate at the Beaver Brook mining operation is scheduled to be restarted in the first half of 2004. The cost to rehabilitate the surface facilities is approximately $1,350,000 and an additional $1,300,000 in underground development is required to restart operation at the Mine. VVC Exploration Corp. expects to lease much of the underground mining equipment which has an estimated capital cost of $1,300,000. VVC and WGM share the common view that there are a number of areas of the project that would benefit from further study or basic engineering to enhance the overall control over operating costs and to maximize return on investment and ensure competitive long term market position. These are expected to be clearly be defined by the recommended feasibility study.
The technical aspects of this news release was reviewed by independent (QP) Joe Hinzer of WGM.
A finder's fee of 1,700,000 shares will be payable in respect of the acquisition subject to regulatory acceptance.
The Company is currently negotiating private placements of up to $4.0 million at terms in accordance with the policies of the TSX Venture Exchange, of which 1.5 million will be on a flow-through basis.
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this news release.
On behalf of the Board of Directors
(Signed)
Michel Lafrance, Secretary-Treasurer
For further information: Serge Gauthier, President, (418) 953-7177, investors@vvcexploration.com |
