Positive feasibility study at El Rosario
Consolidated Magna Ventures Ltd CMV
Shares issued 20,187,176 Apr 9 close $0.35
Tue 14 Apr 98 News Release
Mr Bradley Aelicks reports
A positive feasibility report has been completed on the El Rosario
copper-magnetite project in northern Sinaloa State, Mexico. The study
reports a minimum ten-year mine life at a production rate of 154 tonnes per
day.
The feasibility study focused on the copper-rich portion of the magnetite
skarn and identified a deposit of 507,000 tonnes grading 0.91% Cu and 52.6%
Fe (73% magnetite) with credits of 7.1 g/t Ag and 0.07 g/t Au. The deposit
sits on top of a hill and will be mined by open pit methods with a
stripping ratio of only 0.12:1 over the life of the mine. The feasibility
study is essentially a base case scenario and a significant resource of
magnetite lies outside of the copper-rich zone. Total magnetite resources
(measured), including the copper-rich zone, currently stand at 1,770,000
tonnes grading 47.7% Fe (66% magnetite). Additional zones of magnetite +/-
copper mineralization are known within a few hundred metres of this, but
are not included in the resource figures.
As the mill facility already exists, only a small expansion is required to
achieve start-up within 4-5 months of bank financing. The construction
phase will include the addition of a second ball mill and a magnetic
separator at the plant. Capital costs for the mine and mill are estimated
at US$3.3 million, assuming all new equipment. Magna has initiated
discussions with financing groups in order to obtain the US$4 million debt
financing required for the project.
The mill is presently being used to custom-mill ore from small high grade
mines in the area. As such, only minor changes to the existing permits will
be required for the new milling operation. New permits will be required for
the mine. It is estimated that permitting will be complete by the end of
the construction period.
The El Rosario mine will produce a very high grade of magnetite, used as a
heavy media separator in coal-washing plants. It is capable of exceeding
the specifications of all of the coal-washing plants that the company has
contacted to date, and is believed to be one of the best products in this
market in North America. The company is negotiating with coal companies in
Mexico, Australia and Canada for supply contracts for the magnetite.
Similarly, negotiations are under way with Mexican smelters to buy the
copper-silver-gold concentrate.
Infrastructure at the project is excellent as the mill is on a paved
highway, only 15km from a railhead and 130km from a deep-water port.
Electricity is supplied from the existing power grid, water from the nearby
Rio Choix, and labour from a population base in excess of 10,000 within a
few kilometres.
Metallurgical test work, including a pilot plant bulk sample of magnetite,
has indicated recoveries of 73.2% for the copper and over 92% for the
magnetite. Both concentrates are exceptionally clean, with no deleterious
substances. Owing to the high magnetite content of the ore, the amount of
tailings produced will be minor and because of the high calcite content, no
acid drainage will be produced.
The feasibility document delivered by Rescan projected pre- and post-tax
rates of return for the 154 tpd operation at 33.0% and 26.1%, respectively,
with payback estimated at three years. The base case scenario will generate
approximately US$1.2 million pre-tax per year for the company to explore
the porphyry copper potential of the 15,000 hectare El Rosario property, as
well as the company's other exploration properties in Mexico.
A sensitivity analysis on the various economic parameters has shown that
the returns could be increased substantially by using used equipment to
lower the capital costs and by mining a higher grade of copper
mineralization in the first few years. There is also significant potential
to improve the economics by expanding the production of magnetite.
Commodity prices used in the feasibility study include US$0.80/lb for
copper, US$300/oz for gold, US$6.10/oz for silver and US$85.00/tonne for
magnetite. The long-term stability of the price of magnetite will smooth
the cycles of the other commodity prices such that the risk to the company
is lowered.
A production decision at El Rosario would elevate Consolidated into the
ranks of the junior producing companies and ensure a stable base from which
the company can grow.
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