[dehai-news] Sunridge Gold Announces Positive Feasibility Study For The Debarwa Deposit, Asmara Project, Eritrea

From: Tsegai Emmanuel <emmanuelt40_at_gmail.com_at_dehai.org>
Date: Mon, 14 May 2012 09:45:27 -0500

> Monday, May 14, 2012
> Sunridge Gold Announces Positive Feasibility Study For The Debarwa Deposit, Asmara Project, Eritrea
> Sunridge Gold Corp. (SGC:TSX.V/SGCNF:OTCQX) is pleased to announce the completion and positive results of an independent feasibility study (the "Study") by lead engineer SENET (Pty) Ltd. ("SENET") for its 100% owned Debarwa volcanogenic-massive-sulphide (VMS) copper-gold-zinc deposit, part of the Asmara Project, Eritrea. The Study has concluded that operating Debarwa as a stand-alone mining operation is economically viable. The recently commenced feasibility study on the Asmara North deposits will also examine the integration of the Debarwa deposit with the Asmara North deposits into one operation.
>
> On May 2, 2012, Sunridge announced the positive results of a pre-feasibility study on the Asmara North deposits which integrated the Debarwa deposit into a single mining and processing operation. The pre-feasibility study considered the trucking of ore from the Debarwa deposit approximately 40 kilometers south of Emba Derho to a centralized operating facility located near the Emba Derho deposit. The pre-feasibility study showed very robust economics with a Net Present Value of $555 million using a 10% discount rate. This Debarwa feasibility study, in contrast, considers the technical and economic viability of operating Debarwa as a stand-alone operation with its own processing plant and ancillary facilities. Based on the results of the feasibility study now underway (known as the "Asmara Project Feasibility Study") Sunridge will make the decision as to whether Debarwa would be best be operated as a stand-alone mine or as ore feed to the proposed central milling facilities near Emba Derho.
>
> Debarwa Feasibility Study Base Case Highlights:
> Net Present Value ("NPV") of $71 million at a 10% discount (pre-tax base case) (NPV _at_ 0% discount - $129 million)
> Internal rate of return (IRR) -- 41%
> Payback -- 1.1 years (from start of production)
> Base Case metal prices used - US$3.28/lb copper, US$1,111/oz gold, US$21.00/oz silver
> Initial capital cost estimate - $140 million including contingency and owner's costs
> On site operating costs - $73.09 per tonne average through life of mine
> Average annual metal production -
> 35.1 million pounds (15,932 tonnes) of copper
> 16,500 ounces of gold
> 271,000 ounces of silver
> Total metal production --
> 116 million pounds (52,576 tonnes) of copper
> 78,000 ounces of gold
> 1.3 million ounces of silver
> Life of Mine -- 4.7 years (from start of production)
> A Debarwa stand-alone operation provides the Company the opportunity of generating cash flow earlier than if Debarwa were integrated with the Asmara North deposits. The ultimate decision will be made when the Asmara Project Feasibility Study is completed in 2013.
> Michael Hopley, President and CEO of Sunridge Gold states, "The completion of the Debarwa feasibility study demonstrates that the Debarwa deposit can be operated as an economically viable stand-alone open-pit mine. The choice to advance Debarwa separately from the northern deposits provides Sunridge the opportunity for earlier production and cash-flow from the high-grade copper ore at Debarwa. Management will review all options upon completion of the Asmara Project Feasibility Study which is being conducted concurrently with the application for permitting and a mining license at Debarwa."
>
> Mining
>
> Based on a series of trade-off studies the Study has concluded that Debarwa is best mined by open-pit methods up to a maximum rate of 7.5 million tonnes of rock (ore and waste) per annum of open pit mining. The open pit is estimated to contain 1.3 million tonnes of ore and 18 million tonnes of waste rock at an overall strip ratio of 14.3:1 waste tonnes to ore tonnes.
>
> Open pit mining of pre-strip waste rock and stockpiling of Oxide and Transitional gold bearing ores commences 15 months prior to Phase I process plant production start-up and the costs of pre-stripping are included in the capital costs. Mining is completed at the end of year 3 of the process schedule.
>
> Production
>
> Mining and production (processing) at Debarwa takes place over 4.7 years and is divided into 2 phases as follows:
> Phase I, DSO, Supergene and Primary copper ores (Year 1 -- Year 3.3)
> Phase II Oxide and Transitional gold and silver ores (Year 3.3 to Year 4.7)
> Phase I production has direct shipping ore (DSO) and Supergene ore mined and processed concurrently followed by Primary ore. DSO is a high grade zone of the supergene ore, averaging 16% copper. The DSO is crushed to minus three quarter inch (-20mm) and directly shipped to a smelter. Supergene and Primary ores are processed using conventional flotation to produce a copper concentrate with gold and silver credits. No zinc is recovered in the process as the zinc resources currently do not warrant a zinc recovery plant. Phase I processing will utilize the same crushing and ball milling circuit which includes primary and secondary crushing followed by ball milling.
>
> Phase II processing of stockpiled Oxide and Transitional ores uses the same crushing and milling circuit followed by carbon-in-leach (CIL) processing to produce a gold and silver doré for shipping to a refinery.
>
> Management estimates that initial production and shipping of DSO ore at Debarwa could commence in the fourth quarter of 2014. This allows time for completion of the required environmental work, publication of the Social and Environmental Impact Assessment (SEIA), permitting, financing, waste rock pre-stripping and construction.
>
> Debarwa Phase I - DSO, Supergene and Primary Copper Ore (Year 1 -- Year 3.3)
> DSO mined and shipped at a rate of 90,000 tonnes per year for 1.4 years
> DSO operating costs average $57.87 / tonne (includes mining, crushing, bagging, assay and G&A)
> Supergene and primary copper ores processed at a rate of 270,000 tonnes per year using flotation for 3 years
> Phase I Supergene ore recoveries average 86% copper, 57% gold, 59% silver
> Phase I Supergene operating costs average $77.07 / tonne (includes mining, process, assay and G&A)
> Phase I Primary ore recoveries average 66% copper, 36% gold, 44% silver
> Phase I Primary operating costs average $74.24 / tonne (includes mining, process, assay and G&A)
> Phase I copper concentrate average -- 23% copper, 6.9 g/t gold, 187 g/t silver
> Phase I production rate averages 35.1 million pounds of copper, 11,200 ounces of gold and 281,000 ounces of silver per year
> Phase I operating costs average $71.59 / tonne (includes mining, process, assay G&A) for combined DSO, Supergene and Primary production
> Debarwa Phase II - Oxide and Transition Gold and Silver Ores (Year 3.3 to 4.7)
> CIL processing at a rate of 270,000 tonnes per annum
> Phase II recoveries average 87% gold and 78% silver
> Phase II operating costs average $76.72 / tonne (includes mining, process, assay G&A)
> Phase II production averages 29,200 ounces of gold and 250,000 ounces of silver per year
> Table 1 is a summary of the Production Schedule for Phase I and Phase II.
>
> Table 1: Production Schedule
>
> Phase I
> Phase II
>
> Year 1 -
> Year 3.3
> Year 3.3 -
> Year 4.7
> Tonnes per year
> 270,000
> 270,000
> Million pounds copper per year
> 35.1
> -
> Ounces of gold per year
> 11,240
> 29,181
> Ounces of silver per year
> 280,600
> 250,401
>
>
> Financial Analysis (all $ equals US dollars)
>
> The base case uses constant metal prices of $3.28/lb copper, $1,111/oz gold and $21.00/oz silver, which are derived from the 5 year average prices as of April 25, 2012.
>
> Table 2: Sensitivity to Metal Prices
>
> Base Case Prices
> 5 year Average
> 3 year Average
> Metal Prices
> Current Metal Prices
> April 25 2012
> NPV _at_ 10% discount (Pretax)
> $71 million
> $97 million
> $135 million
> IRR _at_ 10%
> 41%
> 50%
> 62%
> NPV _at_ 0% discount (Pretax)
> $129 million
> $169 million
> $226 million
> Payback (from start of production)
> 1.1 years
> 1.0 years
> 0.9 years
> Mine Life (from start of production)
> 4.7 years
> 4.7 years
> 4.7 years
>
>
> Metal Prices
>
> Copper
> $3.28/lb
> $3.47/lb
> $3.75/lb
> Gold
> $1,111/oz
> $1,335/oz
> $1,629/oz
> Silver
> $21/oz
> $25/oz
> $30.18/oz
>
>
> Operating Costs
>
> On site operating costs average $73.09 per tonne through life of mine.
>
> Table 3: Average Operating Costs ($ per tonne ore processed)
>
> Phase I
> Phase II
>
> Year 1 -
> Year 3.3
> Year 3.3 --
> Year 4.7
> Mining ore processed
> $27.47
> $27.47
> Process ore processed
> $31.75
> $35.80
> Assay & G&A ore processed
> $12.37
> $13.44
> TOTALS
> $71.59
> $76.72
>
>
> Capital Costs
>
> Initial capital costs are projected at $140.5 million (including pre-strip mining of $27.3 million, owner's costs of $15.1 million and a contingency of $7.8 million). The expansion capital for Phase II (gold CIL plant) is an additional $18.8 million, this is included as part of sustaining capital requirements.
>
> Closure costs are estimated at an additional $16.5 million.
>
> Table 4: Capital Costs
>
> Phase I
> Phase II
>
> Capital costs
> Expansion capital
> costs funded by cash
> flow
>
> Year 1 --
> Year 3.3
> Year 3.3 --
> Year 4.7
>
> $ million



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Received on Mon May 14 2012 - 11:14:40 EDT