AuRico Reports 2012 Reserve & Resource Update and Kemess Feasibility Study Results

TORONTO, March 26, 2013 /PRNewswire/ --

 

AuRico Gold Inc. (TSX: AUQ) (NYSE: AUQ), ("AuRico" or the "Company") today reported its updated Reserves and Resources, as at December 31, 2012.

Mineral Reserves and Resources (as at December 31, 2012)

(Detailed Mineral Reserve and Resource tables can be found at the end of this press release)

Highlights

As at December 31, 2012, the Company is reporting:

  • Proven and Probable Mineral Gold Reserves of 6.8 million gold ounces, a 1.69 million ounce increase over 2011, primarily driven through reserve additions reported from the Kemess Underground Project.
  • Reserves were essentially unchanged at the Young-Davidson mine with grades increasing by 1.6%.
  • Reserves decreased by 6% at the El Chanate mine, however reserve grades increased by 3.1%.

Gold Reserves by asset are summarized in the table below:

                              Proven and Probable Mineral Reserves[1]
                           Gold ounces (000's)[1]                       g/t
                                                Change                            Change
    December 31        2012         2011         (%)          2012      2011       (%)
    Young-Davidson    3,804        3,831        (0.7%)        2.60      2.56       1.6%
    El Chanate        1,204        1,284        (6.2%)        0.67      0.65       3.1%
    Kemess
    Underground       1,805          -           100%         0.56       -         100%
    Total             6,813        5,115         33%          1.05      1.47      (29%)
    [1] Detailed mineral reserve and mineral resource tables follow at the end of this
    press release.


In addition to gold reserves, the Company has also reported copper reserves of:

  • 619 million pounds at the Kemess Underground Project at a reserve grade of 0.28%, using a copper price of $3.00 per pound.

"The Company's efforts have been focused on improving the quality of our asset base and this focus extended to improving the quality of our reserve base as well. We have adopted a conservative approach by holding cutoff grades constant, which has resulted in higher grade and higher margin reserve ounces," stated Scott Perry, President and Chief Executive Officer. He continued, "The Company will continue to adopt this conservative view going forward and will balance exploration efforts with mine life to ensure we optimize value for those additional ounces, particularly at the long-life Young-Davidson mine."

As at December 31, 2012 the Company is also reporting the following mineral resources:

  • Measured and Indicated gold resources of 1.8 million gold ounces,at a grade of 0.71 g/t; and
  • Inferred gold resources of 1.4 million gold ounces,at grades of 1.78 g/t.

Gold mineral resources by asset are summarized in the table below:

                    Gold Resources (in thousands of gold ounces)[1]
    December 31, 2012             Measured & Indicated             Inferred
    Young-Davidson                        855                       1,260
    El Chanate                             41                           6
    Kemess Underground                    854                         125
    Orion (50%)                            65                          10
    Total                               1,815                       1,400
     [1] Detailed mineral reserve and mineral resource tables follow at the end of
         this press release.


The Company is also reporting by-product mineral resources:

  • Indicated by-product resources including:
    • 5.5 million silver ounces from the Orion Project (50% basis) at a grade of 309 g/t; and
    • 346 million pounds of copper from the Kemess Underground Project at a grade of 0.24%.
  • Inferred by-product resources including:
    • 275,000 ounces of silver from the Orion Project (50% basis) at a grade of 95 g/t; and
    • 46 million pounds of copper from the Kemess Underground Project at a grade of 0.21%.

Kemess Underground Feasibility Study

The results from the Kemess Underground feasibility study outline the development of an underground block cave operation with average annual production of 105,000 ounces of gold and 44 million pounds of copper at cash costs of $213 per ounce of gold, net of by-product credits, over a mine-life of approximately 12 years.

Feasibility Study Highlights

Highlights of the feasibility study, which employs base case commodity price assumptions of $1,300 per ounce for gold, $3.00 per pound for copper and $23 per ounce for silver and an exchange rate of US$/CDN$1.00, are as follows: 

  • Average annual production of 105,000 ounces of gold and 44 million pounds of copper at a net cash cost of $213 per ounce of gold, net of by-product credits
  • A total of 1.3 million ounces of gold and 563 million pounds of copper production over an approximate 12-year mine-life.
  • Pre-commercial production capital cost of $452 million.
  • Sustaining capital costs of $181 million during the life of the mine, including $35 million in closure costs.
  • Pre-tax operating cash flow of $1.1 billion.
  • After-tax net present value ("NPV") of $134 million based on a 5% discount rate.
  • After-tax internal rate of return ("IRR") of approximately 10% with a 3.5-year payback on the initial capital cost from the start of commercial production.
  • The project has significant leverage to higher metal prices. At $1,650 per ounce gold and $3.67 per pound copper, Kemess Underground is expected to generate an after-tax IRR of 18%.
  • The envisaged Kemess Underground block cave operation would leverage the existing infrastructure and mill facilities at the Kemess South mine including an area previously permitted for tailings storage in the Kemess South Pit.

The after-tax, NPV and IRR for the Kemess Underground Project, using a range of gold and copper prices, are shown below.

                               Base Case                              Spot
                                Prices      3-Year Trailing Prices   Prices
            Au         $/oz      1,300              1,488            1,650
            Cu         $/lb      3.00                3.68             3.67
            Ag         $/oz      23.00              28.80            30.75
    NPV 0% (After tax) $MM        390                769              891
          NPV 5%       $MM        134                372              449
         NPV 10%       $MM        (7)                151              202
           IRR          %         10%                16%              18%


The Company intends to pursue strategies at Kemess that enhance intrinsic value, such as permitting and additional exploration outside existing reserves, to further develop the optionality of this asset.

The feasibility study was prepared by SRK Consulting (Canada) Inc. ("SRK") and a technical report in compliance with National Instrument 43-101 will be filed on SEDAR at http://www.sedar.com within the next 45 days and will also be available on AuRico's website at http://www.auricogold.com.

Chris Bostwick, Senior Vice President, Technical Services for AuRico Gold Inc. has reviewed the scientific and technical information contained within this press release and serves as the Qualified Person as defined by National Instrument 43-101.

Reserves and Resources (as of December 31, 2012)

                                                               Total Proven and Probable
                      Proven Reserves      Probable Reserves           Reserves
                                   Gold                  Gold
                    Tonnes  Gold    oz.  Tonnes  Gold     Oz.   Tonnes    Gold    Gold Oz.
                   (000's) (g/t) (000's) (000's) (g/t) (000's)  (000's)   (g/t)   (000's)
    El Chanate      36,845  0.68    801  19,015  0.66     403   55,859     0.67    1,204
    Young-Davidson
    - Surface        3,934  1.28    162   2,491  1.36     109    6,425     1.31      271
    Young-Davidson
    - Underground    4,547  2.97    434  34,490  2.80   3,100   39,037     2.82    3,534
    Total
    Young-Davidson   8,481  2.19    596  36,981  2.70   3,209   45,462     2.60    3,804
    Kemess
    Underground
    (KUG)                -     -      - 100,373  0.56   1,805  100,373     0.56    1,805
    AuRico - Total  45,326  0.96  1,397 156,369  1.08   5,417  201,695     1.05    6,813


 

                                                               Total Measured and Indicated
                    Measured Resources    Indicated Resources           Resources
                                    Gold                  Gold
                    Tonnes  Gold     oz.  Tonnes  Gold     Oz.   Tonnes    Gold    Gold Oz.
                   (000's) (g/t) (000's) (000's) (g/t) (000's)  (000's)    (g/t)   (000's)
    El Chanate       1,233  0.31      12   2,235  0.40      29   3,468     0.37       41
    Young-Davidson
    - Surface           98  1.60       5     193  1.76      11     291     1.70       16
    Young-Davidson
    - Underground      877  4.17     118   8,654  2.59     722   9,531     2.74      839
    Total
    Young-Davidson     975  3.91     123   8,846  2.58     733   9,821     2.71      855
    Kemess
    Underground
    (KUG)                -     -       -  65,432  0.41     854  65,432     0.41      854
    Orion (50%)          -     -       -     554  3.66      65     554     3.36       65
    AuRico - Total   2,208  1.90     135  77,067  0.68   1,680  79,274     0.71    1,815


 

                                    Inferred Resources
                                 Tonnes   Gold   Gold oz
                                 (000's)  (g/t)  (000's)
    El Chanate                       409   0.48       6
    Young-Davidson - Surface          31   0.99       1
    Young-Davidson - Underground  13,983   2.80   1,259
    Total Young-Davidson          14,014   2.80   1,260
    Kemess Underground (KUG)       9,969   0.39     125
    Orion (50%)                       91   3.33      10
    AuRico - Total                24,483   1.78   1,400


 


                           Copper Reserves & Resources
                           Tonnes   Copper  Copper lbs
    Kemess                 (000's)   (%)      (000's)
    Probable Reserves      100,373   0.28    619,151
    Indicated Resources     65,432   0.24    346,546
    Inferred Resources       9,969   0.21     46,101


 

                               Silver Resources
                           Tonnes  Silver  Silver Oz.
    Orion                 (000's)  (g/t)    (000's)
    Indicated Resources     554     309      5,503
    Inferred Resources       91      95        275

 

Notes:      

  • Mineral Reserves and Resources have been stated as at December 31, 2012.
  • Mineral Resources are in addition to Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability when calculated using Mineral Reserve assumptions. Reserves have been reported in accordance with NI 43-101, as required by Canadian securities regulatory authorities. In addition, while the terms "Measured", "Indicated and "Inferred" Mineral Resources are required pursuant to NI 43-101, the SEC does not recognize such terms. Canadian standards differ significantly from the requirements of the SEC, and mineral resource information contained herein is not comparable to similar information regarding mineral reserves disclosed in accordance with the requirements of the SEC. Investors should understand that "Inferred" Mineral Resources have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. In addition, investors are cautioned not to assume that any part or all of AuRico's Mineral Resources constitute or will be converted into Reserves.
  • Following the completion of a joint venture agreement, Minera Frisco has a 50% interest in the Orion Project.
  • Mineral resource tonnage and contained metal have been rounded to reflect the accuracy of the estimate, and numbers may not add due to rounding.


 

The following metal prices were used for the calculation of Reserves and Resources:


                                Reserves                          Resources
                   USD  Au $/oz   Ag $/oz   Cu $/lb     Au $/oz     Ag $/oz    Cu $/lb
    El Chanate          $1,400        -          -      $1,600          -          -
    Young Davidson      $1,400        -          -      $1,600          -          -
    Kemess Underground  $1,300   $23.00      $3.00             $13.00 NSR
    Orion                    -        -          -        $850     $13.00          -


 

 

Reserves and Resources were prepared under the supervision of the following Qualified Persons:

                                   Resources                        Reserves
    El Chanate           Jeffrey Volk, CPG, FAusIMM,      Chris Sharpe, P.Eng, Manager
                       Director Reserves and Resources,      Mining, AuRico Gold Inc.
                              AuRico Gold Inc.      Young Davidson
      - Open Pit         Jeffrey Volk, CPG, FAusIMM,       Chris Sharpe, P.Eng, Manager
                       Director Reserves and Resources,      Mining, AuRico Gold Inc.
                              AuRico Gold Inc.      Young Davidson
      - Underground      Jeffrey Volk, CPG, FAusIMM,       Chris Bostwick, FAusIMM, SVP
                       Director Reserves and Resources,        Technical Services,
                              AuRico Gold Inc.                   AuRico Gold Inc.    Kemess Underground   Jeffrey Volk, CPG, FAusIMM,         Chris Bostwick, FAusIMM, SVP
                       Director Reserves and Resources,        Technical Services,
                              AuRico Gold Inc.                   AuRico Gold Inc.    Orion                Jeffrey Volk, CPG, FAusIMM,
                       Director Reserves and Resources,
                              AuRico Gold Inc.   


 

About AuRico Gold

AuRico Gold is a leading Canadian gold producer with mines and projects in North America that have solid production growth and exploration potential. The Company is focused on its core operations including the Young-Davidson gold mine in northern Ontario and the El Chanate mine in Sonora State, Mexico. AuRico's project pipeline also includes advanced development opportunities in Canada and Mexico. AuRico's head office is located in Toronto, Ontario, Canada.

For further information please visit the AuRico Gold website at http://www.auricogold.com or contact:

Cautionary Statement

Certain information included in this news release constitutes forward-looking statements, including any information as to our projects, plans and future financial and operating performance. All statements, other than statements of historical fact, are forward-looking statements. The words "expect", "believe", "anticipate", "will", "intend", "estimate", "forecast", "budget", "schedule" and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to: changes to current estimates of mineral reserves and resources; fluctuations in the price of gold; changes in foreign exchange rates (particularly the Canadian dollar, Mexican peso and U.S. dollar); the impact of inflation; changes in our credit rating; any decision to declare a quarterly dividend; employee relations; litigation; disruptions affecting operations; availability of and increased costs associated with mining inputs and labor; development delays at the Young-Davidson mine; operating or technical difficulties in connection with mining or development activities; inherent risks associated with mining and mineral processing; the risk that the Young-Davidson, and El Chanate mine and may not perform as planned; uncertainty with the Company's ability to secure capital to execute its business plans; the speculative nature of mineral exploration and development, including the risks of obtaining necessary licenses and permits; contests over title to properties; changes in national and local government legislation in Canada, Mexico and other jurisdictions in which the Company does or may carry on business in the future; risk of loss due to sabotage and civil disturbances; the impact of global liquidity and credit availability and the values of assets and liabilities based on projected future cash flows; risks arising from holding derivative instruments; business opportunities that may be pursued by the Company. Many of these uncertainties and contingencies can affect our actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements are not guarantees of future performance. All of the forward-looking statements made in this press release are qualified by these cautionary statements. Specific reference is made to the most recent Form 40-F/Annual Information Form on file with the SEC and Canadian provincial securities regulatory authorities for a discussion of some of the factors underlying forward-looking statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.

Cautionary Note to U.S. Investors Concerning Measured, Indicated and Inferred Resources

This press release uses the terms "measured," "indicated " and "inferred" resources. We advise readers that while those terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted into mineral reserves. United States investors are also cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally mineable.


For further information:

Scott Perry
President & Chief Executive Officer
AuRico Gold Inc.
+1-647-260-8880

Anne Day
Vice President, Investor Relations and Communications
AuRico Gold Inc.
+1-647-260-8880

(AUQ. AUQ)


SOURCE AuRico Gold Inc.



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