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ANTILLES GOLD LIMITED — Capital/Financing Update 2011
Mar 21, 2011
64277_rns_2011-03-21_68d2205d-307d-41f5-a1b2-c28d9353d591.pdf
Capital/Financing Update
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Registered Office: Level 2 12 O’Connell Street Sydney NSW 2000 Australia
Tel: 61 2 4861 1740 Fax: 61 2 4861 7665
Email: [email protected]
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ABN : 48 008 031 034
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ASX / Media Release
22 March 2011
ENVIROGOLD REPORTS IMPROVED AZUAY PROJECT ECONOMICS FOLLOWING REVISED SCOPING STUDY
HIGHLIGHTS:
-
Production from Papercorp and Pinglio underground mines to be expanded in two stages;
-
Substantial reduction to equity requirement;
-
EnviroGold could book after tax profits of approximately US$250 million over 14 year mine life at US$1000 per oz gold;
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Increasing to US$365 million at US$1200 per oz gold;
-
Primary source of funding generated by Company’s Las Lagunas project.
Australian-based mineral resources company, EnviroGold Limited ( ASX: EVG ) ( EnviroGold or the “Company” ) has revised the Scoping Study for its 65%-owned Azuay gold project in Ecuador following a decision to undertake the proposed expansion of production from the Papercorp and Pinglio underground mines in two stages. This is expected to substantially reduce the equity requirement and risk profile of the US$92 million project, which is targeting approximately 100,000 oz gold production per year by mid 2014.
The revised development concept will involve a progressive increase in the mining rate from mid 2012 to achieve ore production of 25,000t/month within six months. The ore will be trucked approximately 20km to a process plant and tailings dam site.
The first stage of development will involve the construction of a gravity circuit to extract up to 50% of the contained gold, which is free milling. Gold production is expected to ramp up to approximately 50,000 oz per year from commissioning around June 2013.
Free cash flow from this production will be applied to the second stage of the development. This will require the addition of an Albion oxidation plant combined with a standard carbon-in-leach circuit to extract the balance of gold, which is contained primarily in refractory ore. The second stage is expected to be commissioned in late 2014 and result in total gold production increasing to around 100,000 oz per year.
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A drilling program has commenced within the mines, and subject to the results confirming the advice of geological consultants that near mine expansion should yield a 4mt mining target grading from 10g/t Au to 12g/t Au (refer ASX announcement 25 October 2010), a development decision could be made in mid 2012.
A summary of the results of the Scoping Study for the Azuay project is attached.
Features include:
| Mining Rate | 300,000tpa | ||
|---|---|---|---|
| Life of Mine (4.0mt) | 14 years | ||
| Gold Production (head grade 11g/t) | |||
| Phase 1 | July 2013 - December 2014 | 53,000 oz/yr | |
| Phase 2 | January 2015 - June 2027 | 96,000 oz/yr | |
| Operating Costs | |||
| Phase 1 | July 2013 - December 2014 | US$502/oz | |
| Phase 2 | January 2015 - June 2027 | US$391/oz | |
| EnviroGold Funding | Requirements | ||
| Equity | December 2010 to March 2011 | US$1.3 million | |
| April 2011 to June 2012 | US$5.2 million | ||
| Loans | June 2012 to December | 2013 | US$10.1 million |
| US$1000/oz Au | US$1200/oz Au | ||
| Project After Tax Profits | US$381.5 million | US$561.4 million | |
| Project Average Annual After Tax Profits | US$27.3 million | US$40.1 million | |
| Current NPV Project | (10% discount) | US$116.3 million | US$185.9 million |
| Current NPV EnviroGold’s interest | US$82.1 million | US$127.8 million |
Mr Brian Johnson, Executive Chairman of EnviroGold Limited, said that the Company will provide US$5.2 milion of equity for the Azuay project over the next 15 months (in addition to US$1.3 million already contributed) and a further US$10.1 million of shareholder loans by December 2013, if the project proceeds as expected.
“If the project proceeds, the Company has the potential to book after tax profits of approximately US$250 million over the 14 years following commissioning, at a gold price of US$1000 per oz gold. At a gold price of US$1200 per oz gold, the Company’s share of profits could jump to US$365 million,” Mr Johnson said.
Funding will be sourced primarily from cash generated by the Las Lagunas project in the Dominican Republic which is expected to commence gold and silver production in January 2012.
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The Azuay project is at the centre of a highly mineralised gold belt with the Papercorp and Pinglio mines surrounded by reported NI43-101 (Canadian JORC equivalent) compliant resources of over 15 million oz of gold (refer ASX Announcement 24 November 2010).
The Azuay process plant and tailings dams will be designed to permit expansion to accommodate increased tonnage of ore sourced from the adjoining San Gerardo property which is under a three year purchase option to EnviroGold (100%). The 2200 ha concession hosts high grade vein sets in five underground workings with similar ore to that in the Papercorp and Pinglio mines.
An exploration program on the San Gerardo lease will commence later this year and focus on these prospects as well as the open-pit potential of five identified areas of mineralised hydrothermal breccias, and a 80ha area of copper-gold-molybdenum mineralisation.
Ends
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ENVIROGOLD (AZUAY) SA PAPERCORP – PINGLIO MINE EXPANSION
SCOPING STUDY – SUMMARY OF RESULTS – MARCH 2011
PHASE 1
DEVELOPMENT COST ESTIMATE
| ID | AREA DESCRIPTION | ITEM No. |
ITEM DESCRIPTION | ESTIMATE USD |
|---|---|---|---|---|
| A | FEASIBILITY STUDY | 01 04 05 06 07 08 09 10 |
Costs to Date Resource Drilling and Definition Metallurgical Testwork Program Feasibility Study - Process Plant Feasibility Study - Mining Feasibility Study - Tailings Feasibility Study - Social / Environmental Plant/Tailings Site Option SUB TOTAL - FEASIBILITYSTUDYCOSTS |
1,300,000 |
| 3,150,000 | ||||
| 150,000 | ||||
| 500,000 | ||||
| 500,000 | ||||
| 100,000 | ||||
| 100,000 | ||||
| 50,000 | ||||
| 5,850,000 | ||||
| B | PREDEVLOPMENT | 01 02 03 |
Plant/Tailings Site Purchase Earthworks/Access Roads Engineering - Process Plant SUB TOTAL - PREDEVELOPMENT COSTS |
450,000 |
| 100,000 | ||||
| 1,500,000 | ||||
| 2,050,000 | ||||
| C | CONSTRUCTION | 01 02 03 04 05 06 07 08 09 10 12 13 14 15 |
Mechanical Equipment (Supply) Transportation Earthworks/Roadworks Tailings Dam (Phase 1) EPCM Concrete Work (Supply and Install) Tank and Chute Plate Work (Supply and Install) Structural Steel (Supply and Install) Mechanical Equipment (Installation) Pipeworks (Supply and Install) Electrics and Instrumentation Cabling (Installation) Mine Development, Infrastructure and Equipment Plant Mobile Equipment Consumables Spares SUB TOTAL - CONSTRUCTION COSTS |
4,946,000 |
| 600,000 | ||||
| 300,000 | ||||
| 2,500,000 | ||||
| 1,000,000 | ||||
| 400,000 | ||||
| 750,000 | ||||
| 300,000 | ||||
| 1,500,000 | ||||
| 500,000 | ||||
| 8,000,000 | ||||
| 400,000 | ||||
| 500,000 | ||||
| 500,000 | ||||
| 22,196,000 | ||||
| D | INFRASTRUCTURE | 01 02 03 04 05 06 07 08 |
Electrical Power Supply Substation Yard (Switch/Transformer) MCC Buildings and Control Room Electrical MCC and Control Room Equipment Buildings Laboratory and Laboratory Equipment Boundary and Security Fencing Access Roads Upgrade SUB TOTAL – INFRASTRUCTURECOSTS |
500,000 |
| 800,000 | ||||
| 100,000 | ||||
| 2,500,000 | ||||
| 300,000 | ||||
| 250,000 | ||||
| 100,000 | ||||
| 250,000 | ||||
| 4,800,000 | ||||
| Carrier forward | 34,896,000 |
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| ID | AREA DESCRIPTION | ITEM No. |
ITEM DESCRIPTION | ESTIMATE USD |
|---|---|---|---|---|
| Brought forward | 34,896,000 | |||
| E | PROJECT MANAGEMENT& ADMINISTRATION | 3,100,000 | ||
| F | CONTINGENCY 10% (A to E) |
3,800,000 | ||
| G | ACQUISITION COSTS | 3,500,000 | ||
| H | FINANCING COSTS | 01 | Bank Fees/Legal | 1,000,000 |
| 02 | Bank Interest | 1,346,000 | ||
| 03 | Shareholders Interest | 736,000 | ||
| SUB TOTAL – FINANCING COSTS | 3,082,000 | |||
| TOTAL DEVELOPMENT COST | 48,378,000 |
FUNDING - USD
| EQUITY EnviroGold (65%) 6,500,000 Minorities (35%) 3,500,000 SHAREHOLDERS LOANS EnviroGold (65%) 5,120,000 Minorities (35%) 2,657,000 PROJECT FINANCE TOTAL |
10,000,000 7,877,000 30,501,000 |
|---|---|
| 48,378,000 |
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OPERATING PARAMETERS – PHASE 1
| OPERATING PARAMETERS – PHASE 1 | OPERATING PARAMETERS – PHASE 1 |
|---|---|
| PROCESS PLANT OPERATION SUMMARY Parameter Unit Value |
|
| Annual Throughput t/a Gold Grade g Au/t Gold Recovery % Gold Production oz/a Gold Price US$/oz |
300,000 |
| 11 | |
| 50.0% | |
| 53,049 | |
| 1000 |
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NOTES: Process Plant assumptions:
| Annual Design Throughput, tpa | 300,000 |
|---|---|
| Crushing Circuit Design Throughput, tph | 68 |
| Crushing Circuit Availability, h/a | 4380 |
| Grinding Circuit Design Throughput, tph | 37.5 |
| Grinding Circuit Availability, h/a | 8000 |
| Smelts, batch/week | 14 |
| PROJECT OPERATING COST ESTIMATE SUMMARY | PROJECT OPERATING COST ESTIMATE SUMMARY | PROJECT OPERATING COST ESTIMATE SUMMARY | |
|---|---|---|---|
| Operation Costs | US$/a | US$/t | US$/oz |
| Mining Costs | |||
| Contract Services | 15,000,000 | 50.00 | 282.76 |
| Road Maintenance | 600,000 | 2.00 | 11.31 |
| Ore Haulage | 1,800,000 | 6.00 | 33.93 |
| Exploration | 2,100,000 | 7.00 | 39.59 |
| SubTotal - Mining | 19,500,000 | 65.00 | 367.59 |
| Process Plant Costs | |||
| Consumables | 1,793,167 | 5.98 | 33.80 |
| Power - Mains | 1,615,200 | 5.38 | 30.45 |
| Contract Services | 1,001,000 | 3.34 | 18.87 |
| Maintenance Spares | 550,000 | 1.83 | 10.37 |
| Mobile Plant Lease | 152,000 | 0.51 | 2.87 |
| Labour | 984,471 | 3.28 | 18.56 |
| Expat. Management | 950,000 | 3.17 | 17.91 |
| Refinery | 65,894 | 0.22 | 1.24 |
| Sub Total-Process | 7,111,732 | 23.71 | 134.06 |
| Total -Operating Cost | 26,611,732 | 88.71 | 501.65 |
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PHASE 2
DEVELOPMENT COST ESTIMATE
| ID | AREA DESCRIPTION | ITEM No. |
ITEM DESCRIPTION | ESTIMATE USD |
|---|---|---|---|---|
| A | FEASIBILITY STUDY | 05 06 08 |
Metallurgical Testwork Program Feasibility Study - Process Plant Feasibility Study - Tailings SUB TOTAL - FEASIBILITYSTUDYCOSTS |
200,000 |
| 500,000 | ||||
| 100,000 | ||||
| 800,000 | ||||
| B | PREDEVLOPMENT | 03 04 |
Licence Fee – Albion Process Technology Engineering - Process Plant SUB TOTAL - PREDEVELOPMENT COSTS |
2,000,000 |
| 2,500,000 | ||||
| 4,500,000 | ||||
| C | CONSTRUCTION | 01 02 03 04 05 06 07 08 09 10 13 14 15 |
Mechanical Equipment (Supply) Transportation Earthworks Tailings Dam (Phase 2) EPCM Concrete Work (Supply and Install) Tank and Chute Plate Work (Supply and Install) Structural Steel (Supply and Install) Mechanical Equipment (Installation) Pipeworks (Supply and Install) Electrics and Instrumentation Cabling (Installation) Mobile Plant Consumables Spares SUB TOTAL - CONSTRUCTION COSTS |
13,560,000 |
| 750,000 | ||||
| 150,000 | ||||
| 2,500,000 | ||||
| 1,500,000 | ||||
| 3,000,000 | ||||
| 1,800,000 | ||||
| 750,000 | ||||
| 1,500,000 | ||||
| 600,000 | ||||
| 200,000 | ||||
| 500,000 | ||||
| 500,000 | ||||
| 27,310,000 | ||||
| D | INFRASTRUCTURE | 02 03 04 05 06 07 |
Substation Yard (Switch/Transformer) MCC Buildings and Control Room Electrical MCC and Control Room Equipment Buildings Laboratory and Laboratory Equipment Boundary and Security Fencing SUB TOTAL – INFRASTRUCTURECOSTS |
800,000 |
| 100,000 | ||||
| 1,500,000 | ||||
| 80,000 | ||||
| 150,000 | ||||
| 150,000 | ||||
| 2,780,000 | ||||
| E | PROJECT MANAGEMENT& ADMINISTRATION | 1,800,000 | ||
| F | CONTINGENCY 10% (A to E) |
3,719,000 | ||
| G | ACQUISITION COSTS | - | ||
| H | FINANCING COSTS | 01 | Bank Fees/Legal | 1,000,000 |
| 02 | Bank Interest | 1,338,000 | ||
| 03 | Shareholders Interest | 699,000 | ||
| SUB TOTAL – FINANCING COSTS | 3,037,000 | |||
| TOTAL DEVELOPMENT COST | 43,946,000 |
FUNDING - USD
EQUITY
Retained Earnings Phase 1 SHAREHOLDERS LOANS EnviroGold (65%) Minorities (35%) PROJECT FINANCE
5,327,000 4,955,000 2,668,000 7,623,000 30,996,000 TOTAL 43,946,000
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OPERATING PARAMETERS – PHASE 2
| OPERATING PARAMETERS – PHASE 2 | OPERATING PARAMETERS – PHASE 2 |
|---|---|
| PROCESS PLANT OPERATION SUMMARY Parameter Unit Value |
|
| Annual Throughput t/a Gold Grade g Au/t Gold Recovery % Gold Production oz/a Gold Price US$/oz |
300,000 |
| 11 | |
| 90.0% | |
| 95,488 | |
| 1000 |
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NOTES: Process Plant assumptions:
| Annual Design Throughput, tpa | 300,000 |
|---|---|
| Crushing Circuit Design Throughput, tph | 68 |
| Crushing Circuit Availability, h/a | 4380 |
| Grinding Circuit Design Throughput, tph | 37.5 |
| Grinding Circuit Availability, h/a | 8000 |
| CIL Circuit Solids Conc., % w/w | 35 |
| CIL Product WAD Cyanide Conc., ppm | 250 |
| Elution Column Carbon Batch Size, t | 2 |
| Carbon Strip Frequency, strips/week | 5 |
| PROJECT OPERATING COST ESTIMATE SUMMARY | PROJECT OPERATING COST ESTIMATE SUMMARY | PROJECT OPERATING COST ESTIMATE SUMMARY | |
|---|---|---|---|
| Operation Costs | US$/a | US$/t | US$/oz |
| Mining Costs | |||
| Contract Services | 15,000,000 | 50.00 | 157.09 |
| Road Maintenance | 600,000 | 2.00 | 6.28 |
| Ore Haulage | 1,800,000 | 6.00 | 18.85 |
| Exploration | 2,100,000 | 7.00 | 21.99 |
| Sub Total-Mining | 19,500,000 | 65.00 | 204.21 |
| Process Plant Costs | |||
| Consumables | 7,463,745 | 24.88 | 78.16 |
| Power - Mains | 5,790,400 | 19.30 | 60.64 |
| Contract Services | 1,156,000 | 3.85 | 12.11 |
| Maintenance Spares | 1,000,000 | 3.33 | 10.47 |
| Mobile Plant Lease | 152,000 | 0.51 | 1.59 |
| Labour | 1,184,515 | 3.95 | 12.40 |
| Expat. Management | 950,000 | 3.17 | 9.95 |
| Refinery | 118,609 | 0.40 | 1.24 |
| SubTotal - Process | 17,815,269 | 59.38 | 186.57 |
| Total -Operating Cost | 37,315,269 | 124.38 | 390.79 |
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Underground exploration drilling – Papercorp mine, Ecuador
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Exploration Camp – Azuay gold project, Ecuador
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ABOUT ENVIROGOLD
EnviroGold Limited (ASX code: "EVG") is an Australian based mineral resource company using patented next generation technology to extract gold and silver from metallurgically complex mineral resources in Latin America.
EnviroGold has agreements with Xstrata Technology to use its ground-breaking Albion Process Technology which enables EnviroGold to extract gold and silver from refractory ore or mine tailings and eliminate the threat of acid mine drainage, resulting in a net benefit to the environment.
EnviroGold is also applying its expertise to securing gold and silver production from the mining of oxide or sulphidic ore using traditional gravity, carbon-in-leach, or heap-leaching processing.
The Company’s key projects are:
Dominican Republic
Las Lagunas Gold Tailings Project (100%)
- reprocessing of high grade refractory tailings from the Pueblo Viejo gold mine is expected to commence in December 2011, at the annual rate of 65,000 oz of gold and 600,000 oz of silver (JORC Inferred Resource of 5.137 Mt of tailings at 3.8 g/t gold and 38.6 g/t silver) (621,000 oz of gold and 6,400,000 oz of silver).
Ecuador
Azuay Gold Mining Project (earn-in 65%)
- planned expansion of Pinglio and Papercorp small scale underground mines in 2012-2013 to produce 50,000 oz of gold per year, and to 100,000 oz per year by end 2014.
San Gerardo Gold Mining Project (purchase option 100%)
- planned exploration program of highly prospective 2200ha concession in 20112013, to establish a resource sufficient to support an open pit mining operation with the potential to produce 100,000 oz of gold equivalent per year.
EnviroGold is also actively pursuing additional gold projects in the Dominican Republic, Ecuador and Peru.
Enquires: Mr Brian Johnson Mr James Tyers Executive Chairman Director of Operations E-mail: [email protected] E-mail: [email protected] Ph: +61 2 4861 1740 Ph: +61 2 4861 1740 Fax: +61 2 4861 7665 Fax: +61 2 4861 7665
Media: David Brook Professional Public Relations E-mail: [email protected] Ph: +61 8 9388 0944 Mob: +61 (0) 415 096 804
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Competent Person Statements
Ecuador
The technical information in this release relating to the Ecuador gold projects was compiled by Mr Dale Schultz, Managing Director of Buscore Consulting Ltd, who is a consultant to the EnviroGold Group and is a member of the Association of Professional Engineers and Geoscientists of Saskatchewan (APEGS) which is ROPO accepted for the purpose of reporting in accordance with Appendix 5A of the ASX listing rules. Mr Schultz has sufficient experience relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the ‘Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Schultz consents to the inclusion in the report of the matters based on information in the form and context in which it appears.
Las Lagunas, Dominican Republic
The technical information in this release relating to the Dominican project is based on information compiled by Rick Adams, BSc MAusIMM MAIG, Director Geological Resource Services who is a consultant to EnviroGold Limited. Mr Adams is a Member of The Australasian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Adams consents to the inclusion of the matters in the report based on information in the form and context in which it appears.
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