Benz Completes San Javier Project Preliminary Economic Assessment
May 22 2014 - 5:45PM
Marketwired Canada
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Benz Capital Corp. (the "Corporation" or "Benz") (TSX VENTURE:BZ) today
announced the results of an independent Preliminary Economic Assessment ("PEA")
for the San Javier project (the "Project") located near the village of San
Javier, Sonora, Mexico. Benz has entered into an option agreement with Tusk
Exploration Ltd. pursuant to which it may acquire up to a 100% interest in the
Project (the "Transaction").
The PEA, prepared by JDS Energy and Mining Inc. ("JDS"),was initiated to apply
economic considerations to the Project's recently announced mineral resource in
order to convert it to a National Instrument 43-101 compliant ("NI 43-101") PEA
that estimates the Project's technical and economic potential.
Highlights
-- Mine life of eight and a quarter years with an average of 20 million
pounds of payable copper production per year;
-- Net present value ("NPV"), at a constant US$3.05/pound copper price and
a 7.0% discount rate, of $67 million ("M");
-- Pre-Tax Internal Rate of Return ("IRR"), at a constant US $3.05/pound
copper price, of 23%, and Post-Tax Internal Rate of Return ("IRR") of
18%;
-- Mineral Resources of 28.5 million tonnes grading 0.30% copper head grade
(Acid Soluble + Cyanide Soluble), for a contained 192 million pounds of
copper;
-- Life of mine ("LOM") capital cost of $113 million, including 20% of
contingency;
-- LOM all-in cash cost of US$1.60/pound of payable copper (including
project and the Mexican mining royalties);
-- Pay-back period of 3 years.
"The San Javier Project PEA represents a key milestone for Benz to complete its
detailed due diligence and continue developing the project towards full
feasibility study and construction. The PEA details an optimized mine plan with
strong cash flow considering any of the last four-years copper prices
scenarios," stated Miloje Vicentijevic, Benz President and CEO.
Assuming an average copper price of $3.05/lb, San Javier has an estimated $130 M
pre-tax cash flow, $67 M pre-tax net present value ("NPV") at a 7% discount rate
and an $82 M pre-tax NPV at a 5% discount rate. The PEA cash flow is presented
at the project level and does not include any other corporate obligation.
Mineral Resources
The mineral resource estimate which forms the basis of the PEA is as follows:
----------------------------------------------------------------------------
Metric Tonnes Cu (AS+CN) Grade
Open Pit Resource (M) (%) %
----------------------------------------------------------------------------
Cerro Verde Indicated 26.10 0.298 98%
Inferred 0.61 0.241 2%
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Total 26.71 0.297
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La Trinidad Indicated 0.00 0%
Inferred 1.77 0.433 100%
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Total 1.77 0.433
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Total Indicated 26.10 0.298 92%
Inferred 2.38 0.384 8%
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Total 28.48 0.305 100%
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The PEA is preliminary in nature and includes 8% of inferred mineral resources
in the mine plan that are considered too speculative geologically to have
economic considerations applied to them that would enable them to be categorized
as mineral reserves. There is no certainty that the preliminary economic
assessment will be realized. Mineral resources that are not mineral reserves do
not have demonstrated economic viability.
Pit Optimization - Summary of Whittle Parameters/Inputs used for PEA
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Item Unit Value
----------------------------------------------------------------------------
Metal Price
----------------------------------------------------------------------------
Copper US$/lb 2.85
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Costs
----------------------------------------------------------------------------
Reference Mining Cost US$/mined tonne 1.61
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Processing Cost US$/milled tonne 3.31
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G&A US$/milled tonne 0.39
----------------------------------------------------------------------------
Processing
----------------------------------------------------------------------------
Acid Soluble Recovery % 90
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Cyanide Soluble Recovery % 90
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Other Parameters
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Pit slope angles degrees 45
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Mining Recovery % 100
----------------------------------------------------------------------------
Annual Plant Throughput Mtpa 3.5
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Discount Rate % 8
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Mine Planning
The San Javier mine plan is designed to recover a total of 28.5 million tonnes
of mineralized material containing 192 million lbs of copper over an eight year
period. Recovery of copper continues into year 9 as the leaching process is
completed. Key projected production schedule, at the mining rate of 10 kt per
day of plant feed material, are summarized below.
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Contained
Leachable
Period Material Mined Grade Copper
----------------------------------------------------------------------------
Resource Waste SR AS+CN Total
(year) Tonnes Tonnes W : R % Mlbs
----------------------------------------------------------------------------
-1 0.88 3.15 3.61 0.433 8.4
----------------------------------------------------------------------------
1 3.50 5.93 1.69 0.408 31.5
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2 3.50 5.94 1.70 0.309 23.8
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3 3.50 5.96 1.70 0.335 25.9
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4 3.50 4.46 1.28 0.283 21.8
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5 3.50 3.00 0.86 0.260 20.1
----------------------------------------------------------------------------
6 3.50 2.51 0.72 0.262 20.2
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7 3.50 2.50 0.72 0.258 19.9
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8 3.10 2.81 0.90 0.291 19.9
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Total 28.48 36.26 1.27 0.305 191.5
----------------------------------------------------------------------------
Mining Operations
A standard truck and shovel, open pit mine plan was developed for the San Javier
Project to deliver 3.5 million tonnes of ore per year at a strip ratio of 1.27.
For a typical year the total material movement is about 7.6 million tonnes and
varies between 6 and 9.4 million tonnes. The mine will operate 24 hours per day
for 350 days per year. It is currently assumed that each day will consist of two
twelve hour shifts. Four mining crews will be required to cover the operation.
The mining operation will be conducted by conventional open pit mining methods,
including drilling and blasting the mineralized and waste rock, loading the
material with hydraulic shovels or wheel loaders, and hauling with fixed frame
mining trucks. Dozers, graders, and water trucks will maintain working areas at
the loading faces and waste dumps and also maintain haulage roads.
The mining equipment will be contractor owned operated.
Metallurgy and Processing
Testwork to date consisting of bottle roll and column tests have supported a
recovery of 90% of both Acid and Cyanide soluble Copper. A total recovery of 87%
was estimated to account for the scale factor to commercial production. Acid
consumptions have been estimated at 20 kg per tonne based on the column test
results.
Mill feed material is planned to be mined and processed at a rate of 10,000
metric tonnes per day. Primary crushing is planned to be done with a gyratory
crusher, followed by secondary and tertiary crushers to a final particle size of
80% passing 12 mm. Crushed material will be agglomerated with a solution
containing sulfuric acid and water and then placed on a lined single-use pad via
grasshopper conveyors. Pregnant solution containing the recovered copper will be
collected and processed through a solvent extraction plant where the copper will
be recovered from the leach solution into a recirculating organic stream.
Raffinate from the solvent extraction - electrowinning plant (SXEW) will be
recycled to the heap leach. Copper will be transferred from the loaded organic
stream by contact with a strip solution in the stripping section of the solvent
extraction plant. Copper cathode of high purity will be recovered from the
filtered strip solution by electrolysis.
Life of Mine Production and Processing Schedule
----------------------------------------------------------------------------
Parameter Unit Value -2 -1 1 2 3 4
----------------------------------------------------------------------------
ROM Mined Mt 28.5 0.9 3.5 3.5 3.5 3.5
Waste Mined Mt 36.3 3.2 5.9 5.9 6.0 4.5
----------------------------------------------------------------------------
Total Mined Mt 64.7 0.0 4.0 9.4 9.4 9.5 8.0
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Plant Throughput ktpd 10.0 10.0 10.0 10.0 10.0 10.0
Strip Ratio W:O 1.27 3.61 1.69 1.70 1.70 1.28
----------------------------------------------------------------------------
Cu Head Grade AS % 0.23% 0.25% 0.28% 0.24% 0.29% 0.23%
----------------------------------------------------------------------------
Cu Head Grade CN % 0.07% 0.18% 0.12% 0.07% 0.04% 0.05%
----------------------------------------------------------------------------
Cu Cathode
----------------------------------------------------------------------------
Cu AS Recovered % 87% 87% 87% 87% 87% 87% 87%
Mlbs 126.2 0 4.2 19.1 16.3 19.8 15.5
----------------------------------------------------------------------------
Cu CN Recovered % 87% 87% 87% 87% 87% 87% 87%
Mlbs 40.5 0 3.1 8.4 4.4 2.8 3.5
----------------------------------------------------------------------------
Payable Cu Mlbs 166.6 27.8 22.4 22.1 19.9
----------------------------------------------------------------------------
---------------------------------------------------------------------
Parameter Unit Value 5 6 7 8 9
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ROM Mined Mt 28.5 3.5 3.5 3.5 3.1 0.0
Waste Mined Mt 36.3 3.0 2.5 2.5 2.8 0.0
---------------------------------------------------------------------
Total Mined Mt 64.7 6.5 6.0 6.0 5.9 0.0
---------------------------------------------------------------------
Plant Throughput ktpd 10.0 10.0 10.0 10.0 10.0
Strip Ratio W:O 1.27 0.86 0.72 0.72 0.90
---------------------------------------------------------------------
Cu Head Grade AS % 0.23% 0.19% 0.18% 0.20% 0.22%
---------------------------------------------------------------------
Cu Head Grade CN % 0.07% 0.07% 0.08% 0.06% 0.07%
---------------------------------------------------------------------
Cu Cathode
---------------------------------------------------------------------
Cu AS Recovered % 87% 87% 87% 87% 87% 87%
Mlbs 126.2 12.5 12.4 13.4 13.0 0.0
---------------------------------------------------------------------
Cu CN Recovered % 87% 87% 87% 87% 87% 87%
Mlbs 40.5 4.9 5.2 3.9 4.4 0.0
---------------------------------------------------------------------
Payable Cu Mlbs 166.6 17.8 17.5 17.4 17.3 4.3
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Capital Costs
The following table summarizes capital expenditures including sustaining capital
for leach pad expansion and closure costs. It is assumed that mining would be
done with an open pit mining contractor rather than an owner operated
production. Opportunities to further reduce initial capital cost may include the
incorporation of locally available used plant equipment.
----------------------------
Year
----------------------------------------------------------------------------
Area Unit Value -2 -1 4 9
----------------------------------------------------------------------------
Mine Development US$ M 6.21 6.21
Mine Contract Mob/Demob US$ M 0.24 0.24
Plant and Infrastructure US$ M 44.12 8.82 35.30
Leach Pad US$ M 16.86 3.06 7.13 6.68
Crush/Stack Initial Ore US$ M 1.98 1.98
Indirects US$ M 21.37 2.14 19.23
Closure US$ M 3.00 3.0
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Total Pre-Contingency Capital
Costs US$ M 93.8 14.0 70.1 6.7 3.0
----------------------------------------------------------------------------
Contingency (20%) US$ M 18.8 2.8 14.0 1.3 0.6
----------------------------------------------------------------------------
Total Capital Costs US$ M 112.5 16.8 84.1 8.0 3.6
----------------------------------------------------------------------------
Operating Costs
Average Life of Mine Unit Operating Costs by Major Area:
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Area Unit Cost Estimate
----------------------------------------------------------------------------
Mining Cost $/tonne mined $1.54
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Processing Cost $/tonne processed $3.47
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SX-EW $/Cu lb $0.20
----------------------------------------------------------------------------
G&A $/tonne processed $0.44
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Total Operating Costs $/tonne processed $8.30
----------------------------------------------------------------------------
Economics
The following table summarizes the economic and production assumptions
associated with the PEA:
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Item Unit LOM Value
----------------------------------------------------------------------------
Cu Price $/lb 3.05
----------------------------------------------------------------------------
Mineralized Material Mined M tonnes 28.5
Waste Mined M tonnes 36.3
----------------------------------------------------------------------------
Total Mined M tonnes 64.7
----------------------------------------------------------------------------
Plant Throughput ktpd 10
Strip Ratio W:O 1.27
----------------------------------------------------------------------------
Cu Head Grade AS % 0.23%
----------------------------------------------------------------------------
Cu Head Grade CN % 0.07%
----------------------------------------------------------------------------
Recovery to Cu Cathode
----------------------------------------------------------------------------
Cu AS Recovered M lbs 126.2
----------------------------------------------------------------------------
Cu CN Recovered M lbs 40.5
----------------------------------------------------------------------------
Payable Cu M lbs 166.6
----------------------------------------------------------------------------
Cu Revenues from Cu Cathode $ 508.2
----------------------------------------------------------------------------
Freight Shipping & Refining $/Cu lb 0.03
M $ 5.00
----------------------------------------------------------------------------
Royalty Cost % Gross Value 1.0%
M $ 5.03
----------------------------------------------------------------------------
NSR M $ 498.2
$/tonne 17.49
$/pay lb 2.99
----------------------------------------------------------------------------
Total Operating Costs M $ 236.3
$/tonne 8.30
----------------------------------------------------------------------------
Net Operating Income M $ 261.9
$/tonne 9.20
----------------------------------------------------------------------------
EBITDA Royalty (7.5%) M $ 19.6
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Total Capital Costs M $ 112.5
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The following table summarizes the economic key performance indicators
associated with the Cerro Verde and La Trinidad open pit designs, with the PEA:
----------------------------------------------------------------------------
Net Pre-Tax Net After-Tax Pre-Tax After-Tax Pre-Tax After-Tax
Cash Flow Cash Flow NPV 7% NPV 7% IRR IRR
----------------------------------------------------------------------------
(US$ M) (US$ M) (US$ M) (US$ M)
----------------------------------------------------------------------------
129.7 92.3 67.2 42.3 23.3% 18.1%
----------------------------------------------------------------------------
Risk and Opportunities
The major risk areas identified in the PEA are
1. Copper price. The economics are most sensitive to metal price and
recovery;
2. Process recovery and acid consumption must be verified with additional
Metallurgical testing;
3. Securing an adequate water supply;
4. Cyanide soluble copper recovery timing;
5. Capital overruns for the pad construction based on availability of
suitable construction material.
Several opportunities to improve the project include:
1. Optimization of the mine plan with additional input of geotechnical
information to maximize pit slopes;
2. Reduction of capital costs by sourcing local capital equipment.
3. Location and definition of additional nearby resources to increase
throughput.
4. Purchasing used equipment to reduce initial capital cost.
Technical Report
A NI 43-101 compliant Technical Report related to the mineral resources reported
herein, will be filed under Benz's profile on SEDAR at www.sedar.com within 45
days.
Quality Assurance and NI 43-101 Compliance
Wayne Corso, P.E., JDS VP Engineering and an independent "Qualified Person"
under NI 43-101 has verified the technical and scientific information and
prepared economic analysis included in this news release. There are no known
legal, political, environmental, or other risks that could materially affect the
potential development of the Project.
Transaction Remains Conditional
At this time, the Transaction remains subject to a number of conditions and
approvals, including completion of due diligence investigations to the
satisfaction of Benz by June 15, 2014, acceptance by the TSX Venture Exchange
and approval of the shareholders of Benz.
About the Corporation
Benz is a junior mining company focused on the exploration and development of
mineral properties located in the Americas. Its strategic vision is to become a
profitable mining producer providing value for all stakeholders. For more
information, please refer to the Company's website at www.benzcapital.com.
This news release contains statements about the Corporation's expectations
regarding the Transaction and the Project that are forward-looking in nature
and, as a result, are subject to certain risks and uncertainties. Although the
Corporation believes that the expectations reflected in these forward-looking
statements are reasonable, undue reliance should not be placed on them as actual
results may differ materially from the forward-looking statements and there can
be no assurance that such expectations will prove to be correct. Factors that
could cause the actual results to differ materially from those in
forward-looking statements include failure to complete the Transaction for any
reason whatsoever, including that the shareholders and/or regulators may not
approve the Transaction, and the potential development of the Project to a
producing mine may not occur as planned or at all. The forward-looking
statements contained in this news release are made as of the date hereof, and
the Corporation undertakes no obligation to update publicly or revise any
forward-looking statements or information, whether as a result of new
information, future events or otherwise, except as required by applicable
securities laws. The forward-looking statements contained in this news release
are expressly qualified by this cautionary statement.
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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Benz Capital Corp.
Miloje Vicentijevic
President and Chief Executive Officer
604.689.9266
604.689.9232 (FAX)
www.benzcapital.com
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