International Minerals Corporation (the "Company" or "IMZ") announces updates for its 40%-owned Inmaculada gold-silver project in Peru ("Inmaculada").
The Company was informed by Hochschild Mining plc (60% owner and the mine operator) on November 22, 2012 (Thanksgiving Day, USA) of certain changes with respect to the anticipated timeline for commencement of production and an expected increase in initial capital costs for Inmaculada.
Recent regulatory changes to the permitting process in Peru have dictated that the final mill construction permit for Inmaculada is now expected in the second half of 2013 and therefore the commencement of production will be delayed from the end of December 2013 to early in the second half of 2014.
Initial capital costs, including currency adjustments caused by the strengthening Peruvian currency and construction-delay related costs, are now estimated to have increased by about 17% from the January 2012 feasibility study estimate of $315 million to approximately $370 million. This increase is not inconsistent with other mining projects at this stage of development.
Based on Hochschild's revised capital cost estimate for Inmaculada of $370 million, IMZ's share of initial capital costs would increase by approximately $22 million, from $90 million (based on the January 2012 feasibility study) to approximately $112 million. Based on current projections, the Company believes that this increase in capital costs can be funded from existing cash and expected cash flow from operations.
It is also worth noting that the January 2012 feasibility study assumed that Inmaculada would be ramping-up production in 2014 and would produce approximately 50% of its full-year production mill capacity (estimated for 2014 at 70,000 ounces of gold and 1.7 million ounces of silver compared to average annual production of 124,000 ounces of gold and 4.2 million ounces of silver, both on a 100% project basis). The projected delay in the start of production until early in the second half of 2014 may therefore not have a significant effect on the overall cash flow generated by Inmaculada for the full 2014 calendar year as Hochschild have indicated that the ramp-up phase of production could be reduced due to the longer lead time now available for mine development.
The technical disclosure in this news release has been reviewed by IMZ's Qualified Person, VP Corporate Development, Nick Appleyard.
Hochschild Mining does not accept any responsibility for the adequacy or inadequacy of the disclosure made in this news release and any responsibility is hereby disclaimed in all respects.