SAS announces positive pre-feasibility study for Taylor and a significant overall increase in SAS resources and reserves for 2011
TORONTO, Feb. 16, 2012 /CNW/ - St Andrew Goldfields Ltd. (TSX-SAS), ('SAS' or the 'Company') is pleased to release the highlights of a pre-feasibility study ('PFS') for its Taylor Project which includes an updated resource estimate and a reserve calculation for the West Porphyry Zone ('WPZ').
SAS also reports an increase in measured and indicated mineral resources of 322,000 ounces of contained gold, and 962,000 ounces of contained gold in the inferred resources category, along with an increase in mineral reserves of 128,000 ounces of contained gold for 2011 over the 2010 mineral reserves and resources (excluding reserves depletion due to 2011 mining activities).
Highlights:
-- Taylor pre-feasibility outlines a pre-tax Net Present Value
('NPV')(at an average long-term gold price of US$1,319 and at a
5% discounted rate) of $12 million, and a pre-tax Internal Rate
of Return of 22%.
-- Addition of probable mineral reserves at Taylor of 985,000
tonnes grading 5.45 g/t Au for 173,000 ounces of contained gold
for the West Porphyry Zone.
-- Total measured and indicated mineral resources of 38.3 million
tonnes at an average grade of 2.58 g/t Au for 3.1 million
ounces of contained gold.
-- Inferred mineral resources of 16.2 million tonnes at an average
grade of 3.97 g/t Au for 2.1 million ounces of contained gold.
'The significant increase of approximately one million ounces in our level of resources from all categories is clearly demonstrating that our exploration efforts are paying off', said Jacques Perron, President & CEO of SAS. 'When you consider that SAS only started to seriously commit to sizeable exploration programs in 2010, these results are confirming the potential of our land position in this great gold camp. Our activities have resulted in a significant increase in overall resources for SAS, and allowed us to advance the Taylor Project through the pre-feasibility stage. We have focused our work at Taylor only on the West Porphyry zone. As we move the project forward, we will have opportunities to work on the other areas at Taylor with the objective of improving the overall results. We look forward to a solid year of production, focused exploration, and advancing Taylor towards production.'
Taylor Pre-feasibility Study
SAS conducted a drilling program in 2011 in preparation of a pre-feasibility study for the Taylor Project. As part of the pre-feasibility study, an updated mineral resources estimate was compiled for the Taylor Project for both the West Porphyry and Shoot Zones in order to gain greater confidence in the continuity of the mineralized zones; however, only the WPZ was looked at for the PFS. The revised mineral resources estimate outlined 2,625,000 tonnes at an average grade of 5.42 g/t Au for 457,000 ounces of gold in the measured and indicated categories, and 1,929,000 tonnes at an average grade of 3.96 g/t Au for 246,000 ounces of gold in the inferred category.
For the WPZ, the updated mineral resources estimate outlined 1,929,000 tonnes grading 5.50 g/t Au for 341,000 ounces of contained gold in the measured and indicated category, and 1,910,000 tonnes grading 3.95 g/t Au for 243,000 ounces of contained gold in the inferred category. Measured and indicated mineral resources at the WPZ were converted into probable mineral reserves; resulting in 985,000 tonnes at an average grade of 5.45 g/t Au for 173,000 ounces of gold.
Highlights of Pre-feasibility Study
-- Mineral reserves for the West Porphyry Zone are amenable to
underground mining methods and processing at the Company's Holt
Mill for the recovery of gold, with an estimated recovery rate
of 94.5%.
-- Dilution is estimated from 9% to 50% depending on the geometry
of the ore blocks. A cut-off grade was calculated for each
stope included in the mine plan.
-- The project has a production mine life of 4 years at an average
mill throughput of 675 tonnes per day ('tpd')
-- Estimated total capital costs for the project mine life amount
to $48 million, and the average total unit operating cost over
the mine life is estimated to be $150 per tonne milled
(inclusive of royalties).
-- Using an average long-term gold price of US$1,319 per ounce and
a C$:US$ exchange rate of 0.995, the undiscounted pre-tax cash
flow for the Project is $20 million. The pre-tax NPV at a 5%
discounted rate is $12 million, and the pre-tax Internal Rate
of Return is 22%.
-- Average annual gold production during operation is 41,000
ounces per year, at a Total Cash Cost of US$903 per ounce of
gold produced. The mine life capital unit cost is US$293 per
ounce of gold produced, resulting in a Total Production Cost of
US$1,197 per ounce of gold produced (inclusive of royalty).
-- The Taylor Project is subject to royalties with various parties
amounting to a 2% Net Smelter Return royalty. Franco Nevada
Corporation holds the majority of these royalty claims.
The technical work leading to the pre-feasibility study is conservative, in the opinion of SAS. Opportunities for improvement may come from the following areas:
-- The impact on the mill capacity by displacing ore from the
Hislop Mine with ore from Taylor will result in higher tonnes
per hour; this should translate to an overall increase in
tonnage over the year, and may result in a reduction in
operating and unit costs.
-- The life of mine gold price of US$1,319 per ounce is modest in
comparison to the current and forecasted price of gold.
Assuming a gold price of US$1,600 per ounce, the undiscounted
pre-tax cash flow for the project becomes $70 million. The
pre-tax NPV at a 5% discounted rate would be $50 million, and
the pre-tax Internal Rate of Return 56%.
-- A conservative analysis was used for the estimation of the
resources and the conversion of resources to reserves. As the
project advances underground, re-interpretation may lead to
better grade, additional resources, and additional reserves.
-- This study only looks at the WPZ; additional upside is possible
with further exploration and additional work on the Shoot Zone.
A stepped approach will be taken in order to improve the quality of information prior to allocating capital expenditures on the development and production activities at the WPZ. Once underground access is re-established, SAS will validate its geological model by initiating a bulk sampling program. A National Instrument 43-101 compliant technical report will be available under the Company's profile on SEDAR at www.sedar.com and on the Company's website at www.sasgoldmines.com on or before March 30, 2012.
The Taylor Project is located on the western end of the Company's land package approximately 70 km west of Holt Mill. For more information on location, property description and geology, see the 'Taylor Project', on the Company's website at www.sasgoldmines.com.
2011 Year End Statement of Mineral Resources and Mineral Reserves
SAS reports mineral reserves of 0.7 million ounces of gold within measured and indicated mineral resources of 3.1 million ounces of gold plus inferred mineral resources of 2.1 million ounces of gold as of December 31, 2011, as outlined in the tables below:
Mineral Resources (as of December 31, 2011)
Measured Indicated Inferred
Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces
('000) (g/t Au ('000) (g/t Au ('000) (g/t Au
Au) ('000 Au) ('000 Au) ('000
oz) oz) oz)
Holt 2,981 5.45 522 2,801 6.29 567 4,836 5.75 894
Mine
Holloway 396 4.53 58 352 4.60 52 3,024 5.10 496
Mine
Hislop 37 1.43 2 5,686 1.95 357 5,338 1.80 309
Mine
Taylor 0 0.00 0 2,625 5.42 457 1,929 3.96 246
Project
Aquarius 0 0.00 0 23,111 1.50 1,106 502 0.80 14
Project
Clavos 26 7.80 6 117 8.10 31 529 6.50 110
Project
At 3,440 5.32 588 34,692 2.31 2,570 16,158 3.98 2,069
December
31,2011
At 2,654 5.21 445 33,564 2.22 2,392 9,383 3.67 1,106
December
31, 2010
Notes:
a) Mineral Resources are inclusive of Mineral Reserves;
b) Mineral Resources were estimated according to CIM Definition
Standards - For Mineral Resources 2010;
c) Mineral Resources for Holloway and Holt were estimated using an
average long-term gold price of US$1,200 per ounce and an
exchange rate of $1.00 = US$0.98;
d) Mineral Resources for Holloway and Holt were estimated at a
cut-off grade of 3.0 g/t Au;
e) Mineral Resources for Hislop were estimated at a cut-off grade
of 0.94 g/t Au, and uses an average long-term gold price of
US$950 per ounce and an exchange rate of $1.00 = US$0.85;
f) There was an ore stockpile consisting of approximately 37,000 t
grading 1.40 g/t Au from Hislop at December 31, 2011;
g) Mineral Resources for Taylor were estimated using a cut off
grade of 2.5 g/t Au, and uses an average long-term gold price
of US$1,200 per ounce using an exchange rate of $1.00 = US$0.98
h) Mineral Resources for Aquarius are as of the October 2, 2006,
RPA Technical Report. Mineral Resources were calculated using a
long term gold price of US$500 per ounce and an exchange rate
of $1.00 = US$0.90. No cut-off grade is applied because of
uncertainty about selectivity within the deposit;
i) Mineral Resources for Clavos are as of the October 2, 2006, RPA
Technical Report. Mineral Resources were estimated at a cut-off
grade of 4.0 g/t Au, using a long-term gold price of US$500 per
ounce. Mineral Resources for the Clavos Project do not reflect
development activities in the mineralized areas from October
2006 until May 2007;
j) The Clavos Project was optioned to Sage Gold Inc. in 2010
whereby Sage Gold Inc. can earn-in a 60% interest in the
property by completing $3.0 million of exploration and paying
approximately $260,000 (in cash and shares) to SAS over a three
year period;
k) Tonnes and gold ounce information is rounded to the nearest
thousands as such, rows and columns may not add exactly due to
rounding.
Mineral Reserves (as of December 31, 2011)
Proven Probable Proven& Probable
Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces
('000) (g/t Au ('000) (g/t Au ('000) (g/t Au
Au) ('000 Au) ('000 Au) ('000
oz) oz) oz)
Holt 860 4.92 136 1,548 5.61 279 2,408 5.36 415
Mine
Holloway 153 4.26 21 70 4.35 10 224 4.29 31
Mine
Hislop 37 1.43 2 1,498 1.89 91 1,534 1.88 93
Mine
Taylor 0 0 0 985 5.45 173 985 5.45 173
Project
At 1,050 4.70 159 4,101 4.19 553 5,151 4.29 711
December
31, 2011
At 982 4.25 134 4,399 3.76 532 5,382 3.85 666
December
31, 2010
Notes:
a) Mineral Reserves are included within the Mineral Resources;
b) Mineral Reserves were estimated according to CIM Definition
Standards - For Mineral Reserves 2010;
c) Mineral Reserves for Holloway Holt and Hislop were estimated
using an average long-term gold price of US$1,100 per ounce and
an exchange rate of $1.00 = US$0.98;
d) Mineral Reserves for Holloway and Holt were estimated using a
cut-off grade of 3.5 g/t Au;
e) Mineral Reserves for Hislop were estimated using a cut-off
grade of 1.7 g/t Au;
f) There was an ore stockpile consisting of approximately 37,000 t
grading 1.40 g/t Au from Hislop at December 31, 2011;
g) Mineral Reserves for Taylor were estimated using a cut off
grade of 3.5 g/t Au, an average long-term gold price of
US$1,319 per ounce and an exchange rate of $1.00 = US$0.99
h) Tonnes and gold ounce information is rounded to the nearest
thousands as such, rows and columns may not add exactly due to
rounding.
Holt Mine ('Holt')
Mineral reserves at Holt showed a total decrease of approximately 94,000 ounces of gold due to mining operations (approximately 35,000 ounces), as well as updated information resulting in re-calculations in the various mining zones (mainly the re-classification of probable reserves at the Tousignant Zone, into the indicated resource category). The mineral resources at the Holt Mine saw a significant increase of approximately 645,000 ounces of inferred mineral resources mainly from additional drilling conducted at Zone 4.
Holloway Mine ('Holloway')
Mineral reserves for Holloway increased from approximately 18,000 ounces of gold to approximately 31,000 ounces of gold due mainly to the conversion of mineral resources at the Smoke Deep Zone ('Smoke Deep'). During 2011, SAS conducted definition drilling on the western portion of Smoke Deep which resulted in the conversion of inferred resources into the measured and indicated category and then into proven and probable reserves. Concurrently, approximately 4,000 ounces were mined from Smoke Deep. Inferred resources increased by approximately 287,000 ounces due mainly to the addition of resources at the Deep Thunder Zone.
Hislop Mine ('Hislop')
Mineral reserves for Hislop decreased as a result of mining operations (23,484 ounces of gold mined during 2011), as well as a result of the updated resource model and pit-design. The measured and indicated mineral resources also decreased as a result of mining operations and the updated resource model.
Qualified Persons
The revised calculation of Mineral Resources completed by the Company as well as the exploration programs on the Company's various mineral properties are under the supervision of Craig Todd, P.Geo, the Company's Exploration Manager. The calculation of Mineral Reserves and the Taylor pre-feasibility study was completed by the Company under the supervision of Pierre Rocque, P.Eng, the Company's Director of Engineering. Messers. Todd and Rocque are qualified persons as defined by NI 43-101, and have reviewed and approved this news release.
About SAS
SAS (operating as 'SAS Goldmines'), is a gold mining and exploration company with an extensive land package in the Timmins mining district, north-eastern Ontario, which lies within the Abitibi greenstone belt, the most important host of historical gold production in Canada. SAS is focussed on developing its assets in the Timmins Camp, with three producing mines and aggressive exploration activities across 120km of land straddling the Porcupine-Destor Fault Zone.
FORWARD-LOOKING INFORMATION
This news release contains forward-looking information and forward-looking statements (collectively, 'forward-looking information') under applicable securities laws, concerning the Company's business, operations, financial performance, condition and prospects, as well as management's objectives, strategies, beliefs and intentions. Forward-looking information is frequently identified by such words as 'may', 'will', 'plan', 'expect', 'estimate', 'anticipate', 'believe', 'intend' and similar words referring to future events and results, including with respect to the resource and reserve calculations at the Company's projects; the advancement of the Taylor Project towards production and the recovery rates, mine life, production levels, capital costs, cash operating costs and the rate of return therefrom, and the potential enhancement thereof; the completion of a bulk sampling program at the Taylor Project, and the timing thereof; and the availability of a NI 43-101 technical report on the Taylor Project, and the timing thereof. This forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied by the forward-looking information. Factors that may cause actual results to vary materially include, but are not limited to, uncertainties relating to the interpretation of the geology, continuity, grade and size estimates as well as recoverability of the mineral reserves and resources; unanticipated operational and technical difficulties which could increase operating and capital costs; changes in the availability of qualified personnel; fluctuations in gold prices and exchange rates; insufficient funding or delays or inability to raise additional financing on satisfactory terms if required; changes in laws, regulations and the risks of obtaining necessary licenses and permits; changes in general economic conditions and changes in conditions in the financial markets. Such forward looking information is based on a number of assumptions, including but not limited to the level and volatility of the price of gold, the accuracy of reserve and resource estimates and the assumptions on which such estimates are based, the ability to achieve capital and operating cost estimates, the ability of the Company to retain and attract qualified personnel, the sufficiency of the Company's cash reserves and operating cash flow to complete planned development and exploration activities, the availability of additional financing on acceptable terms if and as required and the level of stability of general business and economic conditions. Should one or more risks and uncertainties materialize or should any assumptions prove incorrect, then actual results could vary materially from those expressed or implied in the forward-looking information and accordingly, readers are cautioned not to place undue reliance on this forward-looking information. SAS does not assume the obligation to revise or update this forward-looking information after the date of this release or to revise such information to reflect the occurrence of future unanticipated events, except as may be required under applicable securities laws. A more detailed description of these risks and uncertainties are can also be found in the Company's Annual Information Form obtained on SEDAR at www.sedar.com.
St Andrew Goldfields Ltd.
CONTACT: about St Andrew Goldfields Ltd., please contact:
Tel: 1-800-463-5139 or (416) 815-9855; Fax: (416) 815-9437;
Website: www.sasgoldmines.com
Suzette N Ramcharan
Manager, Investor Relations
Email: sramcharan@sasgoldmines.com
Jacques Perron
President & CEO
Email:jperron@sasgoldmines.com
Ben Au
CFO, VP Finance & Administration
Email:bau@sasgoldmines.com
