Duluth Metals new NI 43-101 Preliminary Economic Assessment confirms higher production rate and positive economics with current metal prices
Tue Nov 25, 6:30 AM
ca.news.finance.yahoo.com
TORONTO, Nov. 25 /CNW/ - Duluth Metals Limited ("Duluth Metals") (TSX: DM.TO) (TSX: DM-U.TO) is pleased to announce that results from a new NI 43-101 Preliminary Economic Assessment ("PEA or Scoping Study") prepared by the internationally respected consulting firm Scott Wilson Roscoe Postle Associates ("Scott Wilson RPA") have confirmed the potential of the Nokomis Deposit to support a 40,000 tonne per day ("tpd") mining operation, even in a very low metal price environment. The new PEA examined the economics of developing and mining the Nokomis Deposit, a large polymetallic deposit in Minnesota, at a rate of 40,000 tpd over a range of metal prices as low as 1.55/lb Cu; $4.90/lb Ni; $10.00/lb Co; $795/oz Pt; $295/oz Pd; $600/oz Au. The Company is in a good cash position and intends to pursue future development of the project in a responsible fashion while preserving its cash.
The new independent NI 43-101 Scoping Study was completed by Scott Wilson Roscoe Postle Associates ("Scott Wilson RPA"). Holger Krutzelmann, P.Eng., Jason Cox, P.Eng., and Richard Routledge, P.Geo., of Scott Wilson RPA are the Independent Qualified Persons who are responsible for the report.
Three different economic cases are highlighted by Scott Wilson RPA: Low
Metal Price Case of 1.55/lb Cu; $4.90/lb Ni; $10.00/lb Co; $795/oz Pt;
$295/oz Pd; $600/oz Au; Base Price Case 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 Price
Case* as of January 13, 2008 of $3.31/lb Cu, $12.70/lb Ni, $47/lb Co,
$1,559/oz Pt, $376/oz Pd, $895/oz Au: (all monetary units are in $US)
-------------------------------------------------------------------------
Production Market Price Case
Rate @ Low Metal Base (as of Jan. 13,
40,000 tpd Price Case Price Case 2008)*
-------------------------------------------------------------------------
Undiscounted Net
Present Value $4.901 Billion $8.214 Billion $20.983 Billion
-------------------------------------------------------------------------
Net Present Value @
10% $672 Million $1.598 Billion $5.144 Billion
-------------------------------------------------------------------------
Average Annual
Cash Flow $283 Million $434 Million $1.014 Billion
-------------------------------------------------------------------------
Internal Rate of
Return (IRR) 16.2% 23.0% 41.4%
-------------------------------------------------------------------------
Capital Cost $1.332 Billion $1.332 Billion $1.332 Billion
-------------------------------------------------------------------------
Payback Period 6 years 4 years 2 years
-------------------------------------------------------------------------
Annual Metal 181.7 million 181.7 million 181.7 million
Production lbs copper; lbs copper; lbs copper;
42.3 million 42.3 million 42.3 million
lbs nickel; lbs nickel; lbs nickel;
251,000 ozs TPM 251,000 ozs TPM 251,000 ozs TPM
-------------------------------------------------------------------------
* Scott Wilson RPA used Market Prices on January 13, 2008 in the
earlier NI 43-101 Report dated January 22, 2008.
Highlights from the three economic scenarios in the Scott Wilson RPA
report are as follows:
- Base Case Pre-tax Net Present Value of $1.598 Billion at a 10%
discount rate, and a pre-tax IRR of 23% from total underground mine
production of 282 million tonnes at a grade of 0.21% Ni, 0.68 % Cu,
0.47 g/t Pd, 0.21 g/t Pt, 0.10 g/t Au, and 0.10 % Co.
- Average annual pre-tax operating cash flow over life of mine ("LOM")
for the Base Price Case of $434 Million per year, the Low Metal Price
Case of $283 Million, and $1.014 Billion per year for the Market
Price Case.
- Payback on a pre-production capital expenditure of $1.332 Billion,
including contingency of $174 Million, in 4 years for the Base Case,
in 6 years for the Low Metal Price Case, and in 2 years based on the
Market Price Case.
- Total undiscounted pre-tax operating cash flow of $9.880 Billion
(base case), and $6.568 Billion (low price case), and $22.649 Billion
(market price case) yielding a 23% IRR for the Base Case, 16.2% IRR
for Low Metal Price Case, and a 41.4% IRR for the Market Price Case.
- Average annual production of 181.7 million lbs. of copper;
42.3 million lbs. of nickel; 783,000 lbs. of cobalt; 157,000 oz of
palladium, 69,000 oz of platinum and 25,000 oz of gold.
- Revenue is derived 41% from copper, 39% from nickel, 1% from cobalt,
and 19% from platinum, palladium, and gold.
- Taking into account by-product credits, as a copper producer, cash
operating costs are negative ($0.72) per lb Cu Base Case, ($0.09) per
lb Cu Low Price Case and ($2.36) per lb Cu 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
($3.61) per lb Ni Base Case, ($2.15) per lb Ni Low Price Case and
($11.62) per lb Ni Market Price Case for each pound of nickel
produced.
- Scott Wilson RPA has scoped a concept of mining based on a
40,000 tonnes/day operation over a 22 year mine life. This proposed
operation mines 282 million tonnes, which is less than half the
resource estimate published by Scott Wilson RPA on July 18, 2008.
"This 40,000 Tonne per day study highlights the scalability of the Nokomis Deposit and its potential to be one of the world's low cost producers. In this environment of extremely low metal prices, we are encouraged at how the Nokomis business model holds together," said Christopher Dundas, Chairman of Duluth Metals Limited. "Our Company is focused on preserving cash and is determined to come out of the world economic crisis with a powerful asset and a strong development project."
Scott Wilson RPA reports their model is sensitive to higher grade and world metal prices. As reported in our recent press releases including our most recent October 27, 2008 release, Duluth Metals is currently focused on identifying and understanding the controls of higher grade zones and optimizing the development of the expanding Nokomis Deposit.
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 Preliminary Economic Assessment will be filed within 45 days on SEDAR and posted on the Company's web page (www.duluthmetals.com) upon receipt from Scott Wilson RPA.
David Oliver, P. Geo. and Nokomis Project Manager for Duluth Metals Limited 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
please contact 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 |
