(Source: MARKETWIRE)
Robert Pease, President and CEO of Terrane Metals Corp. ("Terrane"
or the "Company") (TSX VENTURE: TRX) is pleased to announce results
of the Feasibility Update Study (the "2009 Study") for the Company's
100%-owned Mt. Milligan Copper-Gold Project (the "Project"), British
Columbia, Canada. The 2009 Study was prepared by Wardrop, a Tetra
Tech Company ("Wardrop") to update a 2008 Feasibility Study (the
"2008 Study") to construct a 60,000 tonnes per day copper flotation
process plant and open pit mine at Mt. Milligan (see Press Release
dated March 31, 2008). The 2009 Study is a key component of a 14
month - $21.5 million Modified Project Execution Plan to advance the
Project through the completion of key pre-construction-related
activities (see Press Release dated December 8, 2008).
The 2009 Study is based on Proven and Probable reserves of 482
million tonnes averaging 0.20% Cu and 0.39 g/t Au. It incorporates
additional mine planning, engineering, detailed design, updated cost
estimation and purchase orders for long-lead equipment into the 2008
Study. Recommendations from the British Columbia Environmental
Assessment Certificate, as issued on March 18, 2009, and a federal
Environmental Assessment approval, which is expected in Q4 2009, are
included in the cost estimates. Several critical path components of
the Project including Tailing Storage Facility, access road and power
line are now construction-ready. Subject to financing and receipt of
certain permits and approvals, the Project is positioned for a Q1
2010 construction decision.
HIGHLIGHTS
- Gold in reserves +31% to 6.0 million oz
- Copper in reserves +33% to 2.1 billion lb
- Mine life +45% to 22 years
- Life-of-Mine strip ratio steady at 0.84/1
- Capital cost steady at $915 million
- Payback 4.1 years
- Pre-Tax Internal Rate of Return 17.2%
- Net Present Value (5%) $1.05 billion
All figures in CDN$ unless otherwise noted. The NI 43-101 Technical
Report for the 2009 Study will be filed on SEDAR by October 23, 2009.
An Executive Summary of the 2009 Study is available at
http://www.terranemetals.com/i/pdf/2009study.pdf.
The first six years of the mine plan have been designed to accelerate
the extraction of near-surface and higher-grade gold reserves (Table
1). Gold production will average 262,100 oz per year and account for
55% of the revenue. Net of a copper credit, gold production cash cost
is negative US$ 8 per oz.
Over the 22 year life-of-mine (LOM) gold production will average
194,500 oz per year and account for 51% of the revenue. Net of a
copper credit, LOM gold production cash cost is US$ 51 per oz.
Table 1 Metal Production, Revenue and Cash Cost
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BASE CASE
Milling Rate 60,000 tonnes/day Years LOM
(US$800/oz Au, US$2.00/lb Cu, FX 0.85) 1 - 6 1 - 22
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AVERAGE ANNUAL
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Metal Production
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Gold (oz) 262,100 194,500
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Copper (lb, million) 89 81
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Revenue (%)
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Gold 55 51
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Copper 45 49
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Cash Cost Net of Credit
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Gold 1 oz (US$/oz) -8 51
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Copper 1 lb (US$/lb) -0.40 0.17
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Robert Pease, President and CEO, Terrane stated: "Fourteen months ago
Mt. Milligan was a great project. Today, with reduced technical and
capital cost risk, increased mine life and enhanced sustainability
for the region, it is even better. Backed by six million
"shovel-ready" ounces and a 22 year reserve base, it is one of the
largest undeveloped gold reserves in Canada. With a market
capitalization of approximately US$44 per reserve ounce, Mt. Milligan
and Terrane are well-positioned for growth."
Chuck Jeannes, President and CEO, Goldcorp Inc. stated: "We are very
pleased with the Feasibility Update Study. Not only did it hold the
line on costs but it also significantly boosted reserve ounces and
mine life. Terrane has clearly grown Mt. Milligan into a major,
construction-ready, copper-gold project with an opportunity for
outstanding net operating margins. Goldcorp, as majority shareholder,
remains committed to working closely with the Terrane Board of
Directors to unlock value for all shareholders at Mt. Milligan."
CONFERENCE CALL
Terrane will host a conference call on Thursday October 15, 2009 at
8:00am PDT to discuss the 2009 Study. A recording of the call will be
available on the Company's website. Toll Free Dial-in Numbers (within
the US and Canada): 1 800 918 9482. International Dial-in Number: 1
212 231 2919.
KEY 2009 STUDY UPDATES
- Optimized open pit Reserves with updated net smelter return (NSR)
cut-off, metal prices and foreign exchange rate (FXR) as shown
below:
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NSR cut-off Gold Copper FXR
BASE CASE (US$/t) (US$/oz) (US$/lb) (US$/C$)
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2009 Study 4.10 690 1.60 0.85
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2008 Study 4.20 550 1.60 0.89
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- Increased gold in reserves by 31% to 6.0 million oz, copper in
reserves by 33% to 2.1 billion lb and mine life by 45% to 22.1 years
with no significant change in Project footprint or initial capital
cost
- Optimized design of the open pit, Tailing Storage Facility (TSF),
process plant and site layouts. Completed basic engineering of the
open pit and process plant
- Completed Issue for Construction (IFC) documentation for access
road, power line, plant site and initial phase of the TSF
- Placed purchase orders on long-lead mills, crushers, mill motors
and the main transformer, representing 15% of total initial Project
capital cost
- Updated cost estimates to Q3 2009, which confirmed capital cost and
reduced operating cost
- A recommendation to proceed with detailed engineering, procurement,
construction and commissioning to target commercial production in Q1
2013.
MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES
The Mt. Milligan copper-gold porphyry deposits contain a Measured and
Indicated Mineral Resource of 706.7 Mt at 0.18% Cu and 0.33 g/t Au,
containing 2.84 billion lb copper and 7.50 million oz gold (Table 2).
The Mineral Resource was tabulated within a conceptual open pit at a
US$4.10/t NSR cut-off value using US$2.00/lb Cu and US$800/oz Au.
The Mineral Resource estimate is NI 43-101 compliant and is based
upon a geologic block model that incorporated over 180,000 individual
assays from 220,200 m of core drilling in 969 drill holes. Assay data
density is sufficient for feasibility-level estimation with drill
hole spacing of 25 m to 50 m within both the Main and SS Zones.
