Duluth Metals NI 43-101 Scoping Study confirms Nokomis as a large, very low cost producer
Tue Jan 22, 7:31 AM
ca.news.finance.yahoo.com
TORONTO, Jan. 22 /CNW/ - Duluth Metals Limited ("Duluth Metals") (TSX: DM.TO) (TSX: DM-U.TO) today announced the receipt of the independent NI 43-101 Technical Report on its Preliminary Economic Assessment or Scoping Study on its Nokomis Deposit located near Ely, Minnesota from Scott Wilson Roscoe Postle Associates ("Scott Wilson RPA"). The Scoping Study confirms robust economics and the Study's economic parameters indicate the potential for the Nokomis Project to be one of the world's lowest cost copper-nickel producers operating on a large scale over a very long period of time. Graham G. Clow, P.Eng. of Scott Wilson RPA is the Independent Qualified Person who is responsible for the report.
The following are the financial highlights on the Scott Wilson RPA model using base case prices of $1.75/lb Cu; $7.00/lb Ni; $10.00/lb Co; $1,100/oz Pt; $350/oz Pd; $600/oz Au; and market prices as of January 13, 2008: (all monetary units are in $US)
- Pre-tax Net Present Value of $792 million at a 10% discount rate, and
a pre-tax IRR of 21% from total underground mine production of
172 million tonnes at a grade of 0.22% Ni, 0.70% Cu, 0.42 g/t Pd.
0.19 g/t Pt, 0.10 g/t Au, and 0.01% Co.
- Average annual pre-tax operating cash flow over life of mine ("LOM")
for the base case of $219 Million per year and $540 Million per year
for current market prices.
- Payback on a pre-production capital expenditure of $915.7 Million,
including contingency of $116.2 Million in 4 years for the base case
and 2 years based on current market prices.
- Total undiscounted pre-tax cash flow of $4.3 Billion (base case) and
$12.3 Billion (market price case), yielding a 21.0% IRR for the base
case and a 47.3% IRR for the market price case.
- Average annual production of 100,200,000 lbs. of copper;
23,800,000 lbs. of nickel; 430,000 lbs. of cobalt; 75,000 oz of
palladium, 33,000 oz of platinum and 13,000 oz of gold.
- Revenue is derived 42% from copper, 40% from nickel, 1% from cobalt,
and 17% from platinum, palladium, and gold.
- Taking into account by-product credits, as a copper producer, cash
operating costs are negative ($0.44) base case and ($2.08) current
market price case for each pound of copper produced. Alternately, as
a nickel producer, with copper considered as a by-product, cash
operating costs are negative ($2.21) base case and ($9.97) current
market price for each pound of nickel produced.
- Scott Wilson RPA has scoped a concept of mining based on a
20,000 tonnes/day operation over a 25 year mine life. This proposed
operation mines 172 million tonnes, which is less than half the
resource estimate published by Scott Wilson RPA on August 8, 2007.
- Scott Wilson RPA recommends the Project be immediately advanced to
pre-feasibility stage, including examination of the benefits of
increasing the production rate above the base case of
20,000 tons/day, and delineating higher grade feed for the early
years in order to optimize the project economics.
"We are extremely pleased the Scoping Study has confirmed the world class potential of the Nokomis Project and its potential to be one of the world's lowest cost producers," said Dr. Henry Sandri, President & CEO of Duluth Metals Limited. "With the additional results from our 2007-2008 drill program, including 41 holes since last May, we will be significantly expanding our resource. Taking into account our existing NI 43-101 qualified resource (see Scott Wilson RPA Technical Report - August 8, 2007) of 347 million tonnes (Indicated) and 108 million tonnes (Inferred) and our current drilling and recognizing a very short pay back period of 2 to 4 years (depending on the base case or market price case), we can envision the global resource under the base case assumptions being economic with low cost operations over a 50 to 70 year time horizon."
Scott Wilson RPA reports their model is sensitive to higher grade and world metal prices. As reported in our press release dated December 10, 2007, Duluth Metals is currently focused on identifying higher grade zones and expanding the size of the global resource. Currently five drills are turning on the Nokomis Project within the Company's Maturi Extension Properties. The Company has reported information on holes up to MEX 68, and has an additional 20 holes in the drilling and assay pipeline. The current +200,000 foot program is a combination of in-fill and step-out drilling together with large diameter PQ drilling in order to assemble bulk tonnage material for further metallurgical testing.
"During pre-feasibility we will be seeking to optimize the economics by delineating early stage higher grade feed, studying the impact of increasing the scale of operation to potentially 40,000 tons/day, confirming much larger Indicated and Inferred Resources, and converting a significant portion of those resources to Measured," stated Dr. Sandri.
The economic analysis contained in this press release is based, in part, on Inferred Resources, and is preliminary in nature. Inferred Resources are considered too geologically speculative to have mining and economic considerations applied to them and to be categorized as Mineral Reserves. There is no certainty that the reserves development, production and economic forecasts on which this Preliminary Assessment is based will be realized.
The full scoping study Technical Report will be posted on SEDAR and the Company's web page (www.duluthmetals.com) upon receipt from Scott Wilson RPA.
David Oliver, P. Geo. and Nokomis Project Manager is the Qualified Person, in accordance with NI 43-101 of the Canadian Securities Administrators, and is responsible for the technical content of this press release and quality assurance of the data and analytical results.
About Duluth Metals
Duluth is committed to acquiring, exploring and developing copper, nickel and platinum group metal (PGM) deposits. Duluth's principal property is the Nokomis Deposit located within the rapidly emerging Duluth Complex mining camp in northeastern Minnesota. The Duluth Complex hosts one of the world's largest undeveloped repositories of copper, nickel and PGMs, including the world's third largest accumulation of nickel sulphides, and one of the world's largest accumulations of polymetallic copper and platinum group metals.
This document may contain forward-looking statements (including "forward-looking statements" within the meaning of the US Private Securities Litigation Reform Act of 1995) relating to Duluth's operations or to the environment in which it operates. Such statements are based on operations, estimates, forecasts and projections. They are not guarantees of future performance and involve risks and uncertainties that are difficult to predict and may be beyond Duluth's control. A number of important factors could cause actual outcomes and results to differ materially from those expressed in forward-looking statements, including those set forth in other public filings. In addition, such statements relate to the date on which they are made. Consequently, undue reliance should not be placed on such forward-looking statements. Duluth disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, save and except as may be required by applicable securities laws.
Contacts
Mara Strazdins
Director of Corporate Communications
at mstrazdins@duluthmetals.com or at (416) 369-1500 or Henry Sandri
President and CEO
at hsandri@duluthmetals.com
Minnesota corporate office: telephone (651) 389-9990
Web Page: www.duluthmetals.com |
