Red Eagle Mining Completes Preliminary Economic Assessment for the San Ramon Gold Deposit
September 19 2013 - 5:00AM
Marketwired Canada
Red Eagle Mining Corporation (TSX VENTURE:RD)(OTCQX:RDEMF) is pleased to
announce the results from a positive Preliminary Economic Assessment ("PEA") for
the San Ramon deposit on its 100% owned Santa Rosa Gold Project located in
Antioquia, Colombia. Highlights include (all amounts in US$):
-- Assuming a long-term forecast gold price of $1,300/ounce gold ("Base
Case") pre-tax Net Present Value (5%) is $153 million, Internal Rate of
Return is 47% and payback is estimated at 1.4 years;
-- Underground resources outlined in the PEA contain a portion of the
resources estimated on September 10, 2013 (see below) and include
Measured and Indicated Mineral Resources of 446,000 ounces of gold (2.7
million tonnes grading 5.10 grams gold per tonne) and Inferred Mineral
Resources of 111,000 ounces of gold (0.8 million tonnes grading 4.16
grams gold per tonne);
-- Average annual production of 51,000 ounces of gold over 10 years;
-- Project capital costs, incl. contingencies, of $84 million plus $7
million of recoverable VAT; and
-- Average cash costs of $540/ounce.
Table 1 - Summary of San Ramon Pre-Tax Economic Results by Gold Price
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Pre-Tax Alternative Case Base Case Alternative Case
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Gold Price (ounce) $1,100 $1,300 $1,500
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Net Cash Flow $113 million $211 million $308 million
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Net Present Value (5%) $75 million $153 million $230 million
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Internal Rate of Return 27% 47% 66%
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Payback 2.1 years 1.4 years 1.1 years
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Table 2 - Summary of San Ramon Post-Tax Economic Results by Gold Price
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Post-Tax Alternative Case Base Case Alternative Case
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Gold Price (ounce) $1,100 $1,300 $1,500
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Net Cash Flow $89 million $159 million $223 million
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Net Present Value (5%) $58 million $113 million $164 million
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Internal Rate of Return 23% 38% 50%
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Payback 2.5 years 1.7 years 1.4 years
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The PEA was prepared by Mine Development Associates in accordance with the
definitions in Canadian National Instrument 43-101 ("NI 43-101"). The PEA is
considered preliminary in nature. It includes Inferred mineral resources that
are considered too speculative to have the economic considerations applied that
would enable classification as mineral reserves. There is no certainty that the
conclusions within the PEA will be realised. Mineral resources that are not
mineral reserves do not have demonstrated economic viability.
Project Mineral Resources
The underground resources outlined in the PEA contain a portion of the resources
estimated on September 10, 2013 (see below), adjusted using an average cut-off
of 2.10 grams gold per tonne. Measured and Indicated material below the mining
cutoff grade inside of mineable areas were used to dilute the material processed
with an average grade of 1.51 grams per tonne. Additional internal dilution of
non-resource stated material was added at zero grade. Total dilution of 26% is
included in the minable material.
Table 3 -San Ramon Underground Resources Estimate
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Category Tonnes Gold (g/t) Gold (ounces)
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Measured 489,367 5.68 89,368
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Indicated 2,232,291 4.97 356,708
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Total M&I 2,721,658 5.10 446,076
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Inferred 831,370 4.16 111,151
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After fully studying the alternatives, a decision was made to prepare a PEA
based on an underground operation due to economic and permitting considerations.
The September 10, 2013 resource estimate is dominantly an open pit resource,
which was the initial concept, and is included here for reference only. It is
based on 45,600m in 238 core holes drilled. Approximately 75% of the resources
are Measured and Indicated with the classification primarily a function of drill
hole spacing. The block model utilises blocks that are 2m north-south by 2.5m
vertical by 2.5m east-west. For resource reporting, a cut-off grade of 0.3 grams
gold per tonne was used for potential open pit mineable material (to a maximum
depth of 330m below the surface) and a cut-off grade of 1.2 grams gold per tonne
was used for the remaining potential underground mineable material. The deposit
remains open at depth.
Table 4 -San Ramon September 10, 2013 Resource Estimate
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Category Tonnes Gold (g/t) Gold (ounces)
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Measured 1,771,000 2.00 114,000
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Indicated 8,577,000 1.77 487,000
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Total M&I 10,348,000 1.81 601,000
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Inferred 2,966,000 1.69 161,000
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The September 10, 2013 resource estimate was prepared by Michael Lindholm
C.P.G., of Mine Development Associates of Reno, Nevada, who is a Qualified
Person as defined under NI 43-101. The complete NI 43-101 Technical Report
pertaining to the updated resource estimate is available on Red Eagle Mining's
website and www.sedar.com.
Mining and Processing
The PEA is based upon San Ramon being an underground mining operation using
mechanized cut-and-fill and sublevel long-hole open stoping mining methods. It
is assumed the plant will be designed to operate at a processing rate of 1,000
tonnes per day and a total of 3.6 million tonnes of ore will be mined over 10
years at an average run of mine ("ROM") mill feed grade of 4.76 grams gold per
tonne.
The PEA also assumes that the ore will be processed using conventional whole-ore
carbon-in-leach ("CIL") producing gold dore. Expected metallurgical recoveries
for the sulphide material are 93% at an optimum P8075 micron grind size with a
total estimated 514,000 ounces of recoverable gold to be produced over 10 years.
San Ramon's projected recoverable production rates are summarised below:
Table 5 -San Ramon Projected 10 Year Annual Gold Production
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Year Tonnes Milled ROM Gold Grade (g/t) Recoverable Gold (oz)
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1 360,000 8.11 87,000
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2 360,000 6.46 70,000
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3 360,000 4.88 53,000
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4 360,000 3.95 42,000
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5 360,000 3.48 38,000
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6 360,000 3.92 42,000
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7 360,000 4.32 47,000
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8 360,000 4.08 44,000
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9 360,000 5.31 57,000
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10 360,000 3.15 34,000
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Years 1-10 3,600,000 4.76 514,000
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Capital and Operating Costs
The estimated capital and operating costs for San Ramon are summarised below.
Indirect costs include EPCM and owners costs. Capital costs have assumed that
the exploration decline planned on being developed during 2014 at an estimated
cost of $9 million will be completed and can be utilised for mine development.
Sustaining capital for underground development has been budgeted at $51 million
throughout the ten year mine life.
Table 6 -San Ramon Initial Capital Costs
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Mine Underground $16,744,000
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Mine Processing $42,878,000
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Total Direct Costs $59,622,000
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Indirect Costs $12,086,000
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Working Capital $1,964,000
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Contingency $10,992,000
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Total Capital Costs $84,664,000
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Recoverable VAT $6,783,000
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Total $91,447,000
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Table 7 -San Ramon Operating Costs
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$/Tonne
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Mining $43.28
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Processing $27.33
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Other $5.86
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Total Operating Costs $76.47
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All-in sustaining cash costs, including all project-related costs such as
sustaining capital, exploration and reclamation costs are summarised below:
Table 8 -San Ramon Cash Costs
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$/Ounce
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Cash Costs $540
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Depreciation $275
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Royalties $67
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Taxes $100
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Total All-In Costs $982
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Opportunities for enhanced economics
Any dore produced will contain silver which has not been included in the
September 2013 resource estimate or the results of the PEA.
Metallurgical test work has primarily been performed on lower grade samples
representative of grades in a potential open pit. Current test work is focused
on higher grade samples representative of underground grades. A positive head
grade recovery relationship is anticipated.
Sample gold grade decreases significantly when core recoveries are below 70%,
which may be due to washing out of gold from saprolite when drilling. Assays of
samples of saprolite may therefore be understated where core recoveries are
below 70%.
Next Steps
The planned work programme includes:
-- The current comprehensive metallurgical programme continuing throughout
the remainder of 2013 with respect to higher grade ores, commensurate
with the expected ROM grades outlined above;
-- Permitting including filing the Environment Impact Assessment, currently
being prepared by Tetra Tech, Inc.;
-- Development of the decline and planned underground development;
-- Infill drilling from the planned underground development to increase
confidence in the resource model and reduce mining risk;
-- Bulk metallurgical samples from the planned underground development;
-- Continuing advancement of engineering and feasibility; and
-- Exploration of the 350 km2 Santa Rosa Gold Project, including testing
with core drilling of a number of prospective targets identified to
date.
The complete NI 43-101 Technical Report pertaining to the PEA will be filed
within 45 days and will be available on Red Eagle Mining's website and
www.sedar.com. The technical information contained in this news release has been
reviewed and approved by Red Eagle Mining's Vice President of Exploration, Jeff
Toohey P.Eng., who is a Qualified Person as defined under NI 43-101.
The following Qualified Persons as defined under NI 43-101 are independent of
Red Eagle Mining and responsible for the Technical Report and Preliminary
Economic Assessment for the San Ramon project development:
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Qualified Person Firm Scope of Responsibility
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Mine Development Geology and Mineral
Michael Lindholm - C.P.G. Associates Resources
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Mine Development Mining, Mine Planning
Thomas Dyer - P. Eng. Associates and Financial Analysis
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Carl Defilippi - Kappes Cassiday and
Registered Member SME Associates Process Design
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W. Joseph Schlitt - Ph.D. Metallurgy and
P. Eng. Hydrometal, Inc. Processing
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About Red Eagle Mining
Red Eagle Mining Corporation is a well-financed gold exploration and development
company with an experienced mine-development team. Management is focused on
building shareholder value through discovering and developing gold projects with
low costs and low technical risks in Colombia, a jurisdiction with prolific
historic production but until recently limited modern exploration. Red Eagle
Mining is developing the 350 km2 historic Santa Rosa Gold Project located in the
Antioquia Batholith. Development will initially commence with the San Ramon
deposit where a positive Preliminary Economic Assessment supports project
advancement. Feasibility and permitting are currently underway.
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. This news release
includes forward-looking statements that are subject to risks and uncertainties.
All statements within, other than statements of historical fact, are to be
considered forward looking. Although the Company believes the expectations
expressed in such forward-looking statements are based on reasonable
assumptions, such statements are not guarantees of future performance and actual
results or developments may differ materially from those in forward-looking
statements. Factors that could cause actual results to differ materially from
those in forward-looking statements include market prices, exploitation and
exploration successes, continued availability of capital and financing, and
general economic, market or business conditions. There can be no assurances that
such statements will prove accurate and, therefore, readers are advised to rely
on their own evaluation of such uncertainties. We do not assume any obligation
to update any forward-looking statements. This news release does not constitute
an offer to sell or a solicitation of an offer to sell any securities in the
United States. The securities have not been and will not be registered under the
United States Securities Act of 1933, as amended (the "U.S. Securities Act") or
any state securities laws and may not be offered or sold within the United
States or to U.S. Persons unless registered under the U.S. Securities Act and
applicable state securities laws or an exemption from such registration is
available.
FOR FURTHER INFORMATION PLEASE CONTACT:
Red Eagle Mining Corporation
Ian Slater
Chief Executive Officer
+1 604 638 2545
info@redeaglemining.com
www.redeaglemining.com
James Beesley
Investor Relations
+1 604 682 4600
+1 855 682 4600 toll free
+1 778 389 7715 mobile
james@sequoiapartners.ca