Erin Ventures Announces Positive Preliminary Economic Assessment for its Piskanja Boron Project
Victoria, British Columbia (FSCwire) - Erin Ventures Inc. [TSXV: EV] is pleased to report positive results of an Independent Technical Report and Preliminary Economic Assessment (“PEA”) for its 100% owned Piskanja boron project located in Serbia.PEA Highlights:
- Post-tax Net Present Value (NPV) (10%) of US$428M and an IRR of 64%
- Project payback of 15 months from startup
- Mine life of 21 years
- Life Of Mine (LOM) mining production of 6.9 million tonnes with an average grade of 27.8% B2O3
- Average annual production of 200,000 tonnes of sale grade colemanite and 25,000 tonnes of boric acid
- Average annual gross revenue of US$97 million
- Net operating margin of 68.7% (net of all operating costs)
- Pre-production capital cost of US$84.6 million (including boric acid production plant and contingencies)
- LOM all-in operating cost per tonne of product sold (post-tax) US$165.75
- Good potential for resource expansion
(assuming a constant price of US$400/t for colemanite - 35% purity and US$800/t for boric acid)
"We are very pleased with the positive PEA for the Piskanja Project, our premier asset. It shows Piskanja as a robust, long life, low cost mining operation, and represents a significant opportunity for our shareholders," said Tim Daniels, President and CEO of Erin Ventures. "Piskanja is demonstrating the potential for both exceptional economics in the near term as well as future added value through the expansion of our known resource at Piskanja and the discovery of new resources within the Jarandol Basin. We look forward to advancing Piskanja through the next phase based upon the encouraging conclusions in the PEA."
The PEA was prepared independently by SRK Consulting (UK) Limited ("SRK") in accordance with the guidelines of National Instrument 43-101. The PEA is preliminary in nature. It includes Inferred Mineral Resources that are currently considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as Mineral Reserves. There is no certainty that the conclusions within the PEA will be realized.
Economics:
Project economics were estimated assuming a constant price of US$400/t for colemanite (35% purity) (which is well below the recognized current market price of colemanite of approximately $500/t) and US$800/t for boric acid. Please refer to the PEA for a complete list of assumptions.
In summary, the Project has a LoM net project cashflow (pre-finance and pre-tax) of some US$1,281M which returns a post-tax NPV (10%) of US$428M and an IRR of 64%. The following table presents the summary LoM cashflow resulting from the Technical Economic Model.
| Project Cashflow | US$ Millions |
| Gross Revenue | 2,036 |
| Deductions | 109 |
| Net Revenue | 1,927 |
| Operating Costs | 528 |
| Project Capital | 85 |
| Sustaining Capital | 19 |
| Closure | 15 |
| Project Cashflow | 1,281 |
| Working Capital | 0 |
| Corporation Tax | 120 |
| Net Project Cashflow (post-tax) | 1,161 |
Sensitivities:
Discount Rate
The following table shows the pre- and post-tax NPV’s at varying discount rates.
| NPV | Pre-Tax (USD Millions) | Post-Tax (USD Millions) |
| 5% | 734 | 678 |
| 8% | 547 | 510 |
| 10% | 456 | 428 |
| 12% | 384 | 362 |
| 14% | 326 | 309 |
In summary, at an 8% discount rate the post-tax NPV increases to some USD510M and in increases further to some USD678M at a 5% discount rate.
Commodity Prices
The table below shows the impact on the post-tax NPV (10% discount rate) at specific commodity price scenarios.
| Post Tax NPV at 10% discount rate | USD Millions | |
| Commodity Price (USD/t) | ||
| Colemanite | Boric Acid | NPV |
| 300 | 700 | 270 |
| 350 | 750 | 349 |
| (base case) 400 | 800 | 428 |
| 450 | 850 | 507 |
| 500 | 900 | 586 |
Mineral Resources:
The basis for the PEA is the Mineral Resource Estimate prepared by SRK Exploration Services Ltd as set out in Erin's National Instrument 43-101 report effective October 22, 2013 , which was filed on SEDAR on December 2, 2013. Please refer to the technical report for further information regarding the mineral resource estimate, which was prepared in accordance with the Canadian Institute of Mining (CIM) “Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines”.
The maiden Mineral Resource Statement generated by SRK for the Piskanja Project is as followings:
| Mineral Resource Category | Tonnage, Mt | B2O3 Grade, % | Contained B2O3, Mt |
| Indicated | 5.6 | 30.8 | 1.73 |
| Inferred | 6.2 | 28.8 | 1.80 |
Reported at a cut-off grade of 12 percent B2O3, above a minimum mining thickness of 1 m, considering reasonable underground mining, processing and selling technical parameters and costs benchmark against similar borate projects and a selling price of US$1005/tonne (boric acid). All figures are rounded to reflect the relative accuracy of the estimates. Mineral Resources are not Mineral Reserves and do not have a demonstrated economic viability. The contained B2O3 represents estimated contained metal in the ground and has not been adjusted for metallurgical recovery, and may have discrepancies due to rounding.
Mining:
The geometry and depth of the mineralisation identified at Piskanja lends itself to an underground mining method. It is envisaged that mining will be by a combination of room and pillar and cut and fill methods and that the key underground infrastructure will comprise:
- an access decline from surface to the lowest level,
- an underground spiral ramp for accessing the upper levels,
- a footwall drive located below the RT1 seam horizon, and
- a ventilation shaft and ventilation connections from the FW drive and the spiral ramp to the south west of the orebody.
The PEA envisages a Run of Mine (RoM) average annual tonnage of 329,000 tonnes in order to produce, on average per year, some 200,000 tonnes of sale grade colemanite and 25,000 tonnes of boric acid for a period of 21 years.
Excavation is currently proposed by mechanical cutting using continuous miners and shuttle cars for transport of mineral from the working area to panel conveyor. The panel conveyor would feed the mines ore handling system that may comprise conveyor haulage to surface, or a perhaps a combination of conveyor haulage to a central point underground from where mineral would be either hoisted to surface via a hoisting shaft or trucked to surface.
In order to achieve the overall mining recovery of 75% and ensure the stability of excavated spaces it will be necessary to apply solidifying material for a backfill and certainly further geotechnical assessment inclusive of an assessment of the geometry, rock strength, and backfill characteristics will be required
Processing:
All RoM production is assumed to be fed to the Colemanite Plant for Colemanite production with the aim of upgrading this to satisfactory levels of B2O3. A constant product grade of 35% B2O3 and tails grade of 7.5% B2O3 is assumed.
The production plan calls for the production of both Colemanite concentrate and Boric Acid, the latter at a rate of 25 ktpa, and the former at a rate of approximately 200 ktpa. SRK has modelled this production scenario according to the process route shown in block form. It should be noted that further metallurgical testwork is required to confirm the amenability of the ore to this process route.
To view the graphic in its original size, please click here
Capital and Operating Costs:
Project Capital Costs
| Project Capital (USD’000) | Base Cost | Contingency | Total |
| Mining | 41,400 | 8,280 | 49,680 |
| Processing - Colemanite | 2,000 | 400 | 2,400 |
| Processing - Boric Acid | 15,000 | 3,000 | 18,000 |
| Infrastructure | 8,250 | 1,650 | 9,900 |
| Tailings | 3,814 | 763 | 4,576 |
| Total | 70,464 | 14,093 | 84,556 |
Unit Operating Costs
| Operating Costs | Unit | Base Cost | Contingency (15%) | Total |
| Mining | (USD/t mined) | 32.50 | 4.88 | 37.38 |
| Processing - Colemanite | (USD/t plant feed) | 2.00 | 0.30 | 2.30 |
| Processing - BA Plant | (USD/t plant feed) | 150.00 | 22.50 | 172.50 |
| Tailings/Waste Disposal | (USD/t tailings placed) | 0.20 | 0.03 | 0.23 |
| Infrastructure | (USD/t product) | 3.00 | 0.45 | 3.45 |
| G&A | (USD/t product) | 7.00 | 1.05 | 8.05 |
Recommendations:
SRK has discussed with Erin the work required to be done to advance the project towards the development stage. In summary the next phase of work comprises further data collection, inclusive of drilling and metallurgical testwork, followed by a pre feasibility study. All this work is scheduled to be completed by end-2015. The total budget developed for this inclusive of Erin management costs is some US$5.1 million, a split of which is set out below. The exploration drilling includes both infill and extension drilling plus specific drilling to assess the presence of faulting. The bulk sampling for the metallurgical testwork will be done via wide diameter drilling. The environmental and hydrological work will be conducted in parallel with this.
SRK is confident that the work proposed is justified by the potential of the project and that the budget allowed is reasonable given the work planned and recommends that this work is carried out as planned.
Planned Expenditure
| Item | USD 000 |
| Exploration/Resource Drilling | 2,100 |
| Bulk Sampling/Metallurgical Testwork | 800 |
| Decline Drilling | 450 |
| Environmental Studies | 150 |
| Geotechnical Testwork | 60 |
| Hydrological and Hydrogeological Analysis | 150 |
| PFS Study | 550 |
| Office Costs | 540 |
| Contingency | 300 |
| Total | 5,100 |
Key Conclusions:
The exploration work undertaken by Erin to date in combination with work undertaken on the Project by previous workers has delineated a significant borate deposit which in SRK’s opinion justifies further exploration and assessment to determine whether or not it should be advanced to the development stage.
Qualified Persons:
The technical information contained in this news release is based upon information prepared by Dr. Mike Armitage C.Eng C.Geol who is a full time employee of SRK, a Qualified Person, and independent of Erin Ventures, as defined by NI 43-101. Dr. Armitage has reviewed the contents of this press release.
James E Wallis, M.Sc. (Eng), P. Eng., a consultant to Erin, is the Qualified Person who supervised the preparation of the technical data in this news release.
The PEA will be immediately available at Erin's website (www.erinventures.com) or Erin's filed documents at www.sedar.com.
On behalf of the Board of Directors,
Blake Fallis, General Manager
About Erin Ventures Inc.
Erin Ventures Inc. is an international mineral exploration and development company with boron assets in Serbia and gold assets in North America. Headquartered in Victoria, B.C., Canada, Erin's shares are traded on the TSX Venture Exchange under the symbol "EV". For detailed information please see Erin's website at www.erinventures.com or the Company's filed documents at www.sedar.com.
Piskanja is a high-grade boron deposit with a NI 43-101 compliant mineral resource of 5.6 million indicated tonnes (30.8% B2O3), in addition to 6.2 million inferred tonnes (28.8% B2O3).
For further information, please contact:
Blake Fallis, General Manager
Phone: 1-250- 384-1999 or 1-888-289-3746
Erin’s Public Quotations
Canada
TSX Venture: EV
USA
SEC12G3-2(B)#82-4432
OTCBB:ERVFF
Europe
Berlin: EKV
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 release.
Forward Looking Statements:
This press release contains or refers to forward-looking information under Canadian securities legislation, including statements regarding the timing of future mineral resource estimates and the PEA, estimation of mineral resources, exploration results, potential mineralization, exploration and mine development plans, timing of the commencement of operations and future production and is based on current expectations that involve a number of business risks and uncertainties. The words "believe," "expect," “feel,” "plan," "anticipate," “project,” “could,” “should” and other similar expressions generally identify forward-looking statements. Forward-looking statements are subject to significant risks and uncertainties, and other factors that could cause actual results to differ materially from expected results. Readers should not place undue reliance on forward-looking statements. Factors that could cause actual results to differ materially from any forward-looking statement include, but are not limited to, failure to convert estimated mineral resources to reserves, capital and operating costs varying significantly from estimates, the preliminary nature of metallurgical test results, delays in obtaining or failures to obtain required governmental, environmental or other project approvals, political risks, uncertainties relating to the availability and costs of financing needed in the future, changes in equity markets, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the development of projects and the other risks involved in the mineral exploration and development industry, as well as those factors discussed in the section entitled "Risks of the Business" in the Company's most recent regulatory filings which are posted on SEDAR at www.sedar.com. These forward-looking statements are made as of the date hereof and the Company assumes no responsibility to update them or revise them to reflect new events or circumstances other than as required by applicable securities law. These and other factors made in public disclosures and filings by the Company should be considered carefully.
Mineral resources are not mineral reserves and do not have demonstrated economic viability. "Inferred Resources" have a great amount of uncertainty as to their existence, and economic and legal feasibility. Investors are cautioned not to assume that all or any part of an inferred mineral resource reported in this news release will ever be upgraded to a higher category or to reserves. U.S. persons are advised that while mineral resources are recognized under Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. U.S. persons are also cautioned not to assume that all or any part of an inferred mineral resource is economically or legally mineable.
