The mineral resources are reported at a cut-off grade to reflect the "reasonable prospects" for economic extraction. This estimate of the Kitsault molybdenum deposit is based open pit extraction and Avanti and AMEC has not considered underground mining methods for deeper portions of the deposit. Although silver has been reported in the mineral resource, it has not been included in the economic analysis or the reserve statement below. There is sufficient metallurgical testwork to suggest it could be an economic contributor but this work has not yet reached the feasibility level of confidence. The recovery of silver remains a potential project upside contributor, as well as the opportunity of conversion of Inferred to higher confidence categories through additional drilling. Additional drilling will continue through the 2011 field season in parallel with Basic and Advanced Engineering studies
AMEC conducted a complete re-evaluation of all old historic and recent drilling information and recalculated the mineral resources from first principals. 10 holes from the previous database were not used in the calculation because of inability to verify core quality (recoveries) and assay methods.
The Kitsault mine Mineral Reserves have been prepared in accordance with NI 43-101 standards and CIM Definition Standard (2010). This statement has been prepared by Mr. Ryan W. Ulansky (P.Eng.) of AMEC, a QP as defined in NI 43-101. These reserves are sufficient for 16 years of operation at an annual production rate of 40,000 t/d.
The single ultimate pit will be mined in six phases, with elevated cut-offs in the early years and low grade stockpiling. A bulk mining approach has been selected, mining on 10m benches. The selected mining fleet features one 26 m3 rope shovel, one 28 m3 electric hydraulic shovel, one 18 m3 front end loader, and up to ten 218-tonne haul trucks with related support equipment. Benches will be drilled with 8 m by 8 m production drill patterns and wall control patterns as required. The holes will be loaded and shot with a 70% emulsion/30% ANFO blend blasting agent. Ore control will be based on blasthole samples assayed for molybdenum.
Waste rock will be stored in an expansion to the existing Patsy Waste Management Facility. Low grade ore will be stockpiled throughout the mine life on the top of the existing Clary Waste Management Facility. This ore stockpile will be reclaimed and processed during the last two years of the operation.
The proposed concentrator in this study is based on an annual resource throughput rate of 14.6 Mt, or 40,000 tpd at 92% plant availability, for the production of a molybdenum concentrate. The processing plant is expected to operate 24 hours/day, 365 days/year. Over the life of mine, the processing plant will produce an estimated 326,150 t of molybdenite concentrate grading 52% Mo. The molybdenum recovery is variable with the average estimated at 89.9%.
The proposed process design is based on historical testwork results, the results from a recent (2009 and 2010) test program and utilizing plant data from the previous Kitsault concentrator operations. Plant design, principally the crushing-grinding circuit has been revised to reflect current technologies using a primary crusher-SAG-ball mill configuration. The process design is composed of the following unit processes:
- Primary crushing using a gyratory crusher;
- Grinding using a SAG-ball mill-pebble crusher configuration with cyclones for flotation feed size classification;
- Rougher and scavenger flotation;
- Five stages of cleaner flotation with three stages of regrinding;
- Final molybdenum concentrate thickening, leaching for the removal of contaminants, and the filtering, drying and packaging of the final concentrate; and
- Flotation to produce desulfidized tailings which will have a portion cycloned for dam construction and the remainder will be deposited by gravity into an on-site Tailings Management Facility (TMF). Pyritic tailings will be deposited in a separate submerged cell in the TMF to prevent oxidation.
Initial capital costs are estimated at $770 million, which includes $50 million for mobile mining equipment. Preproduction stripping costs of $13 million are reflected in the initial operating costs. Life of Mine sustaining mine capital was estimated to be $50 million, which is comprised mainly of mobile equipment and TMF embankment ongoing construction. All capital costs are [+/-15%] in this estimate.
LOM unit cash operating costs are US$7.64/t milled and operating costs for the processing plant are estimated at $4.36/t milled (±15% accuracy). General and administrative costs have been estimated at $1.00/t milled.
The FS economic model for the base case in this study assumes a LOM average molybdenum price of $16.76/lb for revenue purposes, as projected by CPM Group.
The after-tax NPV at an 8% discount rate over the estimated mine life is $798 million. The after-tax IRR is 26.8%. Payback of the initial capital investment is estimated to occur in 2.6 years after the start of production
The analysis suggests that the project is most sensitive to exchange rates followed by commodity prices. The Project is least sensitive to operating and capital costs.
The NI 43-101 Preliminary Feasibility Study, Avanti Mining Inc., Kitsault Molybdenum Property, British Columbia, Canada was prepared by industry consultants, all of whom are independent of Avanti Mining Inc. and are QP's under National Instrument 43-101. The QP's have reviewed and approved this news release.
Source: Avanti Mining Inc.