- Pre-tax IRR of 26.4% -
- Pre-tax NPV7% of $433M -
TORONTO, April 3, 2013 /CNW/ - Aldridge Minerals Inc. (TSX Venture: AGM) ("Aldridge" or the "Company") is pleased to announce results of the Feasibility Study for its Yenipazar gold and polymetallic VMS deposit in central Turkey (the "Feasibility Study"). All dollar figures in this news release are stated in United States ("US") dollars.1
"The results of the Feasibility Study confirm our view that Yenipazar is a highly attractive project with robust economics that validates the effort we have made to advance Yenipazar since the Preliminary Economic Assessment of 2010," commented Aldridge's President & CEO Mario Caron. "The strong results pave the way for the completion of additional technical work while we advance the project financing and enter the development stage in the coming months."
|Base Case Economics||Pre-tax||After-tax||Capital Costs (US$ millions)|
|IRR||26.4%||22.5%||Mine Development, Plant & Equipment||$278|
|Total pre-production CAPEX||$382|
|Base Case Pricing Assumptions||Total average cost per tonne of ore||$29.15|
|Silver ($/oz)||$28.00||Mining / Milling|
|Copper ($/lb)||$3.00||Mine life (years)||12|
|Lead ($/lb)||$0.95||Strip ratio (inc. pre-stripping)||4.3:1|
|Zinc ($/lb)||$0.90||Nominal throughput (tonnes per annum)||2.5M|
|Gold (oz)||Silver (M oz)||Copper (M lbs)||Lead (M lbs)||Zinc (M lbs)|
|Life of Mine||696,482||21.2||120.1||368.0||563.8|
|1||The complete NI 43-101 compliant technical report will be available on SEDAR and the Company website within 45 days. Interested parties are encouraged to read the entire report. The following news release contains excerpts from the report.|
|2||Average production for Years 2 - 10 (Year 1 includes 6 months of ramp-up; Year 11 production is from the milling of a combination of sulphide ore and some stockpiled oxide ore; Year 12 production is solely from the milling of stockpiled oxide ore).|
The Yenipazar project is located approximately 220 kilometres southeast of Ankara, the capital of Turkey, 60km south of Yozgat, the provincial centre and approximately 120 kilometres northwest of Kayseri, a city of one million people. The project is well served by existing infrastructure, including paved roads, a railroad, and will be connected to the national power grid.
With the benefit of Turkey's excellent infrastructure that is already in place, the majority of the capital expenditures will be spent on developing the project. The pre-production capital costs for the Yenipazar project summarized below are estimated to be $382 million and are based on first quarter 2013 US$ costs. No estimates for escalation or foreign exchange fluctuation have been included in the capital costs.
|Capital Cost||US$ millions|
|Mine Development, Plant & Equipment|
|Process plant equipment||$55|
|Process plant & infrastructure||$119|
|Owner's cost (including land acquisition)||$31|
|Total pre-production CAPEX||$382|
The project requires additional sustaining capital of $58 million, largely to purchase additional mining equipment in Years 1 and 7 ($22 million), for additional tailings management work in Year 3 ($12 million), and for mine closure in Year 12 ($24 million). The sustaining capital requirements are reflected in the financial model.
The shallow nature of the ore body and the flat topography of the project footprint and surrounding area allow the Company to benefit from the lower operating costs associated with conventional open-pit mining methods. Operating costs for the tailings management facility have been estimated at approximately $11 million during the 12-year life of the project. G&A includes on-site costs as well as a portion of the costs incurred at the Company's corporate office in Ankara. Total operating costs per ore tonne for the project have been estimated as follows:
|Operating Cost (LOM)||$/tonne of ore|
|Total Operating Cost||$29.15|
The mineral reserves for the Yenipazar project comprise three different mineralization types to be mined and processed:
- oxide mineralization (11% of total);
- copper-enriched mineralization (9% of total); and
- sulphide mineralization (80% of total).
The processing characteristics of each are slightly different with the oxide zone yielding three payable metals (Au, Ag, Pb); while the copper-enriched and sulphide zones will yield five payable metals (Au, Ag, Cu, Pb, Zn).
The mineral reserve is the portion of the mineral resource that has been identified as mineable within a design pit. The overall pit slope criteria that were used for designing the pit ranged from 26° to 35° in the upper slope (weakened and weathered rock) and from 39° to 49° in the lower slope (competent rock). The strip ratio for the deposit is 4.3:1 including the pre-stripping and drops to 4.0:1 when pre-stripping is excluded. The mineral reserve incorporates ore criteria such as mining recovery, mining losses and dilution. A mining loss factor of 3% and a dilution factor of 14.8% were applied to each ore type.
The Probable mineral reserves are summarized in the table below:
- The mineral reserves are based on NSR cut-off values of USD $17/t for oxide and USD $20/t for copper-enriched and sulphide mineralization.
- The reserve estimate is based on an updated resource estimate (see news release dated November 26, 2012).
- The mineral reserves in this press release were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council.
The mining method proposed for the Yenipazar project will be a conventional open-pit mine. An owner-operated fleet of 90-tonne trucks and 10-m3 hydraulic excavators will be used to mine the ore and waste materials. Drilling and blasting of ore and waste rock will be required, while overburden materials will be free digging. The organic top soil component of the overburden will be segregated and stockpiled separately. These temporary top soil stockpiles will eventually be removed when the material is used as part of the closure plan to cap the tailings dam, waste rock dump, and other disturbed areas.
In order to distribute the waste stripping quantities over time and to allow faster access to better grade ore, the pit has been subdivided into four phases that are mined sequentially. Mining may occur in multiple phases simultaneously, depending on the respective strip ratios of ore to waste on the mining benches.
As part of the Feasibility Study, an extensive testwork programme was undertaken in order to establish the process design parameters, formulate the process flowsheet, select equipment, evaluate ore variability and confirm metallurgical recoveries.
Based on the findings of this testwork programme the process plant design parameters were determined. The design basis of the selected process is based on whole ore processing at a nominal throughput of 2.5 million tonnes per annum. The process plant and design, as detailed in the Feasibility Study, is based on conventional crushing and grinding followed by a gravity circuit where most of the gold and a portion of the silver are recovered. The gravity circuit is followed by sequential flotation of copper, lead, and zinc.
80% of the ore tonnage mined consists of sulphide ore while copper-enriched and oxide ore make up 9% and 11% of the total respectively. Some oxide ore is milled in Year 1 during plant commissioning and ramp-up and the remaining oxide is processed in Years 11 and 12. Sulphide and copper-enriched ore is essentially milled in the year that it is mined.
The mill ramp-up rate increases gradually over the first 6 months of operations with full production reached in Month 7. The total tonnage processed in Year 1 is 2.06 million tonnes compared with 2.5 million tonnes in full production. A summary of the milling schedule is included in Appendix B.
The metallurgical testwork conducted by SGS to-date indicates the following recoveries by ore type. Additional variability testwork was performed on sulphide ore mined and processed in the first four years of operations. The results of this testwork are not shown below, but are reflected in the financial model.
Sulphide (Year 5 onwards)
Copper / Gold
Lead / Silver
Sulphide Recoveries: Potential Upside
Metallurgical testing indicates potential to increase recoveries of lead, silver and gold in the sulphide ore. After leaching of gold in the gravity circuit, significant optimization of lead and silver recoveries may be achieved by single stage flotation of the leach residue (containing lead and silver) before it joins the lead flotation circuit. Additional gold may be recovered by floating pyrite in the zinc tailings and subsequently leaching gold from the pyrite. Confirming these potential improvements is a priority following the completion of the Feasibility Study.
Copper-Enriched (reflecting limited testwork to date)
Copper / Gold
Lead / Silver
Oxide (testwork still under review)
Copper / Gold
Lead / Silver
The Company will produce four products: a doré, a copper / gold concentrate, a lead / silver concentrate, and a zinc concentrate. The grades of the concentrates are summarized in the table below. Occasional levels of deleterious elements can be expected in the concentrates and a penalty may be incurred due to higher than ideal levels of lead in the copper / gold concentrate. All three concentrates will be marketable.
|Copper / Gold Concentrate||26% Copper|
|Lead / Silver Concentrate||56% Lead|
|Zinc Concentrate||53% Zinc|
Average annual production for Years 2 - 10 by metal and product is as follows:
|Copper / Gold Concentrate||6,896||0.3||11.2|
|Lead / Silver Concentrate||10,404||1.2||33.8||3.3|
|% of Revenue||34.7%||20.8%||12.9%||12.3%||19.3%|
The proposed mine development involves the construction of an open pit mine, a waste rock dump ("WRD"), a processing plant and a tailings management facility ("TMF") together with the construction of a supporting road infrastructure and various mine-related utilities.
The port of Iskenderun, which has been identified by the logistics study as the preferred port for the shipping of concentrates, is located approximately 500 kilometres to the south of the project on the Mediterranean Sea. The concentrates will be trucked on existing roads approximately 75 kilometres southwest of the project to a railhead in Himmetdede, where they will then be sent by rail the remaining distance to the port.
The project will be connected to the national grid with the construction of a 17 kilometre 154 kV power line.
To satisfy the lining requirements under Turkish legislation, the TMF will be equipped with a composite lining system constructed from a compacted clay layer sourced from the open pit overburden sediments, a geomembrane layer, and a drainage system. The TMF design incorporates a system to divert water from the valley above the facility, underneath the WRD and around the open pit, from where it will flow down the valley.
Tailings from the plant will be pumped to the TMF situated approximately 500 metres south of the plant, where it will be hydraulically deposited. The operating phase of the TMF will commence with commissioning of the plant and first deposition of tailings on the facility. Tailings will be pumped from the plant to the TMF via a slurry delivery pipeline and will initially be deposited from the top of the TMF starter wall into the basin of the lined facility. The maximum height between the crest of the TMF raise and the valley floor will be approximately 38 metres.
The Yenipazar project is located in a gently inclined valley that is drained by a small creek. The open pit, the WRD and the TMF will all be located in the valley and will thus intersect surface water courses as well as the groundwater in the underlying geological formations.
Studies conducted to date indicate that run-off from the WRD is relatively inert and therefore it should be possible to dispose of this water to the environment with little or no treatment. A source of fresh make-up water will be required from outside the mine works, particularly during the first year of mining when the TMF is charged-up and water from pit seepage is predicted to become available only towards the end of Year 1 of mining. However, after the first year of mining, clean water from an outside source is only likely to be required to supply potable water to the mine camp and surrounding villages. Testing has demonstrated that nearby aquifers have the potential to supply the required amount of water for these purposes.
The Company, in consultation with its corporate advisors, estimates the effective net profit royalty (revenues less operating expenses) to the Turkish government amounts to approximately 1.6%.
In addition to the Turkish government royalty, the Yenipazar project is subject to a 6% net profit interest ("NPI", revenues less operational expenses) to Alacer Gold Corp. ("Alacer") until revenues of US$165 million are generated, and a 10% NPI from there on.
The Turkish government has legislated certain investment incentives designed to promote investment in specific industries and regions of Turkey. The Company has evaluated these investment incentives in consultation with its corporate advisors, and has determined that the Yenipazar project will qualify for the following incentives on successful application and receipt of an investment incentives certificate:
- Reduced corporate tax
- VAT exemption
- Exemption from custom duties
- Support for interest payments
- Social security premium employer share elimination
For the purpose of the Feasibility Study, the Company has only incorporated the corporate tax rate reduction and the VAT exemption into the economic analysis. Under the incentive program, the Company would receive income tax savings equal to 40% of the depreciable capital cost required to build the Yenipazar project. Approximately 90% of the total capital costs are depreciable. The income tax savings will be received via a corporate income tax rate reduction from 20% to 4%. For example, for every $100 million of allowable capital cost, the corporate income tax savings would be $40 million, which enhances the after-tax cash flow of the project.
Economic Analysis: Base Case Metal Prices
The Company has determined to present three economic scenarios using the base case metal pricing assumptions described on Page 1. The first scenario is on a pre-tax project basis and does not reflect the Alacer NPI. The second scenario includes the NPI and the third scenario includes both the NPI and applicable taxes. All scenarios demonstrate robust economics.
|Pre-NPI, Pre-Tax||After-NPI, Pre-Tax||After-NPI, After-Tax|
Economic Analysis: Base Case Metal Prices Minus 10%
In the interest of further demonstrating the strength of the Yenipazar project, the scenarios below outline the effect of a 10% reduction to base case metal prices on the economics of the project.
|Base Case Minus 10% Pricing Assumptions|
|Gold ($/oz)||Silver ($/oz)||Copper ($/lb)||Lead ($/lb)||Zinc ($/lb)|
|Pre-NPI, Pre-Tax||After-NPI, Pre-Tax||After-NPI, After-Tax|
Sensitivity Analysis (Base Case)
The graph below shows the sensitivity of NPV7 (Pre-Tax, Pre-NPI) to capital costs, operating costs, and revenue using base case metal prices. The value of the project is more sensitive to revenue than to capital and operating costs. Additional sensitivity analyses are included in Appendix A. http://files.newswire.ca/899/AldridgePDF.pdf
In accordance with Turkish law, an Environmental Impact Assessment ("EIA") report on the Yenipazar project must be submitted for approval by the Turkish government. The EIA approval process involves the filing of an initial application defining the scope of the proposed project (completed), a public consultation process (completed), and a final submission. In parallel with the EIA, Aldridge is also preparing an Environmental and Social Impact Assessment report in accordance with international standards. The Company expects to submit its Turkish EIA by early Q3 2013 and will also proceed to apply for operating, construction and other required permits following receipt of the EIA permit.
Once initiated, it is estimated that construction will take approximately 21 months and will be followed by a 2-month period of plant commissioning and production ramp-up estimated to take 6 months. Full commercial production will follow thereafter.
Aldridge management will host a conference call today, Wednesday April 3, 2013 at 10:00 am (Eastern) to discuss the Feasibility Study. Mr. Mario Caron, President and CEO, will chair the call. All interested parties can join the conference call by dialing 1-888-231-8191 or 1-647-427-7450. Please dial in 15 minutes prior to the call to secure a line. The conference call will be archived for replay until April 11, 2013 at midnight. To access the archived conference call, please dial 1-855-859-2056 or 416-849-0833 and enter the reservation code 26651214.
Qualified Persons for the Feasibility Study
The Feasibility Study was compiled by Jacobs Minerals Canada Inc., a subsidiary of Jacobs Engineering Group Inc., with contributions from Golder Associates (UK) Ltd., P&E Mining Consultants Inc., SGS Mineral Services UK, SRK Consulting (Turkey and UK), and others. The complete NI 43-101 compliant technical report will be available on SEDAR and the Company website within 45 days. The complete report details the extent of the study, the assumptions made in analyzing the data provided, the risks inherent in such projects and remaining work necessary to validate the project feasibility.
The review and approval of the following Qualified Persons, as defined in NI 43-101, of the information contained in this news release was limited to their designated areas of responsibility as outlined below:
|Qualified Persons*||Establishment||Areas of Responsibility|
|Mr. Eugene Puritch, P. Eng.||P&E Mining Consultants Inc.||
Resource and Reserve Estimation
Capital and Operating Cost (Mining)
Graham Holmes, P. Eng.
Tim Hayes, P. Eng.
Alexander Duggan, P. Eng.
|Jacobs Minerals Canada Inc.||
Processing and Plant
Infrastructure and Project Execution
Capital and Operating Cost (Plant)
Economic Analysis** and Sensitivities
|William Harding FGS||SRK Consulting (UK) Ltd.||Water Management|
MIMMM, C. Eng.
Hendrik J. H. (Hans) Otto Pr.
|Golder Associates (UK) Ltd.||
Geotechnical (Plant, Mine, Tailings)
Capital and Operating Cost (Tailings Management)
Mike Hallewell, B.Sc,
F.M.E.S., C. Eng.
|SGS Mineral Services UK Ltd.||Metallurgical Testwork (Recoveries)|
|Reliance on Other Experts||Mineral Services LLC||Marketing|
|* fulfills requirements of NI 43-101|
|** input from all parties|
Aldridge is a near development stage mining company focused on advancing its Yenipazar polymetallic VMS deposit (Au, Ag, Cu, Pb, Zn) in Turkey - a country that is committed to developing its natural resources and is rapidly emerging as an economic powerhouse. Following completion of the Feasibility Study, the Company's most significant objective of 2013 is to obtain the project financing needed to build the Yenipazar project and thereafter commence production. The project financing may include some combination of equity, senior debt, metal streaming and off-take agreements.
Caution Regarding Forward-Looking Information
This news release includes certain forward-looking statements within the meaning of Canadian securities laws. Forward-looking statements involve risks, uncertainties and other factors that could cause actual results, performance, prospects and opportunities to differ materially from those expressed in such forward-looking statements. Forward-looking statements in this news release, include, but are not limited to, economic performance and future plans and objectives of Aldridge. Any number of important factors could cause actual results to differ materially from these forward-looking statements as well as future results. Although Aldridge believes that the assumptions and factors used in making the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed timeframes or at all. Aldridge disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Appendix A: Selected Sensitivities
Table 1: Sensitivity of IRR (Pre-Tax, Pre-NPI) to Operating Costs and Revenue
Table 2: Sensitivity of NPV (7%) (Pre-Tax, Pre-NPI) to Operating Costs and Revenue
|US$ millions||Operating Costs|
Table 3: Sensitivity of NPV (7%) (Pre-Tax, Pre-NPI) to Operating Costs and Total Capital Cost
|US$ millions||Operating Costs|
|Total Capital Cost||90%||521.1||496.4||471.6||446.8||422.0|
Appendix B: Summary Milling Schedule
|Summary by Ore|
|Milled From Mine||261.0||261.0|
|Milled From Stocks||2,951.2||150.1||697.4||2,103.7|
|Milled From Mine||2,306.0||649.0||196.0||364.8||398.3||42.4||22.2||486.4||11.3||132.5||3.1|
|Milled From Stocks||184.3||184.3|
|Milled From Mine||23,390.3||788.0||2,304.0||2,135.3||2,101.9||2,457.3||2,477.9||2,013.6||2,488.8||2,367.6||2,496.8||1,759.2|
|Milled From Stocks||73.4||30.1||43.4|
SOURCE Aldridge Minerals Inc.
Image with caption: "Sensitivity Analysis (Base Case) (CNW Group/Aldridge Minerals Inc.)". Image available at: http://photos.newswire.ca/images/download/20130403_C2104_PHOTO_EN_25062.jpg