Amarillo Gold Corp.: Positive Economics from Pre-feasibility Study of Mara Rosa Gold Project Received
VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 28, 2011) - Amarillo Gold Corp. (TSX VENTURE:AGC) ("Amarillo" or the "Company") is pleased to release the summary economic results derived from a 43-101 compliant, pre-feasibility Study ("PFS") of Amarillo's 100% owned Posse gold deposit in the state of Goias, Brazil. The PFS is being completed by Coffey Mining International, the lead consultant on the project, and will be posted in full on SEDAR within 45 days.
Highlights of the economic model, and a summary description of the project, follow. (all currency in $US unless otherwise stated):
Proven and Probable reserves of 17.1MT @ 1.72 g/t and 945,200 ounces of contained gold. After processing 869,600 ounce of gold will be recovered.
Initial 7 year mine life with 2.5MT per year throughout, comprising a 12hour pre-oxidation stage feeding a conventional CIL gold recovery circuit.
Average gold production of 124,000 ounces per year.
Average total cash operating cost of $524/ounce (on-mine costs $464/ounce with the balance comprising refining, royalties, insurance, transport, security costs, etc).
Total gross revenue of $1.044 billion assuming a gold price of $1200/ounce.
Pre-Tax Net Present Value at a 5% discount rate ("NPV5") of $283M and an IRR of 37.9% based on a gold price of $1200/ounce.
After Tax NPV5 of $178M and an IRR of 26.6% based on a gold price of $1200/ounce
Estimated start-up capital of $184M which includes $5.4M working capital.
Recommendation to proceed to Feasibility Study ("FS").
Buddy Doyle, CEO and President of the Company, stated, "Amarillo is pleased to have reached this milestone through the efforts of Frank Baker, our project manager, our staff and the consortium led by Coffey Mining International. We are also pleased with the very positive outcome of the PFS. The project economics have improved over those presented in our 2008 Preliminary Economic Assessment ("PEA") (See news release March 13th 2008). The improved results were achieved even after a sizable increase in the capital expenditure ("CAPEX") (PEA CAPEX = $80M, PFS = $184M). The superior economic results arise from better metallurgical recoveries, higher gold prices and increased annual through-put as compared to the PEA. The PFS CAPEX now includes Pre-Strip costs, owner operated equipment, and power line construction. The CAPEX estimate is supported by an extensive review of mining project costs in Brazil and the magnitude is comparable to other projects of our size and scope. This level of detailed engineering work conducted in the PFS has covered much of the work usually incorporated in a FS, and a number of key FS level components are already underway, including, environmental, hydrological, metallurgical and geotechnical studies. We expect the FS to be completed during 2012. The next step after completion of the FS would be the decision to become the next Brazilian-based producer of greater than 100,000 ounces per year, a task that is projected to be achievable by 2014."
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