Excelsior Mining Corp. (TSX VENTURE:MIN)(FRANKFURT:3XS)(OTCQX: EXMGF)
("Excelsior" or the"Company") is pleased to announce the results of a
comprehensive Prefeasibility Study ("PFS") on the North Star Deposit of the
Gunnison Copper Project, located in southern Arizona. The PFS was completed by
M3 Engineering & Technology Corporation ("M3") of Tucson, AZ and is effective as
of January 13, 2014. The National Instrument ("NI") 43-101 compliant Report (the
"Report") summarizing the results of the PFS will be filed on SEDAR and
Excelsior's website within 45 days of this news release. Results of the PFS
disclosed in this press release are in USD and pre-tax (except where otherwise
indicated).
Highlights of the North Star Gunnison Copper Project PFS "Acid Plant" option
include:
-- Pre-tax Net Present Value ("NPV") of $1.24 billion (after-tax $0.826
billion) at a 7.5% discount rate (using a copper price of $2.75/lb)
-- Pre-tax Internal Rate of Return ("IRR") of 59.7% (after-tax 44.7%)
-- Pre-tax payback period of 1.8 years (after-tax 2.4 years)
-- Initial estimated capital cost (excluding sustaining capital) of $284.74
million
-- Average life-of-mine operating costs of US$0.68 per pound
-- Other costs of $0.12 per pound, including Royalties of $0.029 per pound
-- Annual production rate of 110 million pounds of copper for the first 14
years, then declining for a 20 year mine life, with a total of 1.682
billion pounds of copper produced over the life of the mine.
"The completion of a positive Prefeasibility Study is a significant de-risking
event in Excelsior's development and we are very pleased with the results. The
results surpass the robust economic potential indicated by the 2011 Preliminary
Economic Assessment and support copper extraction of the North Star Deposit
through in-situ recovery with the potential to generate exceptional financial
returns," says Mark J. Morabito, Chairman of Excelsior. "With initial production
expected to commence in Q4 2016 we are looking forward to beginning the next
phase of development."
Commenting on the results, President and CEO, Stephen Twyerould said, "With the
completion of this major milestone, the commercial case for the Gunnison Copper
Project has grown even stronger. The Prefeasibility Study has confirmed the
robust economics and technical viability for what has the potential to be one of
the lowest cost copper producers in North America."
Financial Analysis
As highlighted in the tables below, the PFS demonstrates robust project
economics in both the "Acid Plant" and "Non-Acid Plant" scenarios, with the Acid
Plant option adding an additional $174.2 million to the project pre-tax NPV.
Based on an initial annual production rate of 110 million pounds, the PFS
indicates that including an Acid Plant as a component of the project, generates
a pre-tax NPV of $1.24 billion, at a cash flow discount rate of 7.5%. The
pre-tax IRR for this option is 59.7% with a payback period of 1.8 years. On an
after-tax basis, the PFS shows an NPV7.5 of $825.83 million, IRR of 44.7% and a
payback period of 2.4 years.
Without an Acid Plant, the project still has a significant pre-tax NPV7.5 of
$1.06 billion and an IRR of 61.4%, (after-tax NPV7.5 of $721.41 million and an
IRR of 46.1%). The after-tax analysis is based on a number of assumptions which
will be fully set out in the Report. The level of accuracy of the PFS is
considered to be +/-20%.
Both scenarios used the following parameters over the 20 year life of the project:
-- copper selling price of $2.75 per pound,
-- total copper recovery of approximately 47% (based on a combination of
metallurgical recovery and sweep efficiency),
-- average of 8.14 pounds of acid consumed for every pound of copper
produced,
-- acid price of $45.70/ton for the Acid Plant option and $125/ton for the
Non-Acid Plant option,
-- state tax rate of 6.97%, and
-- a federal tax rate of 35%.
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PRE-TAX Acid Plant Non-Acid Plant
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IRR 59.7% 61.4%
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Payback (years) 1.8 1.5
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NPV (million $)
Discount Rate
0% 2,377.9 1,961.7
5% 1,525.7 1,295.1
7.5% 1,238.6 1,064.3
10% 1,013.4 880.8
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AFTER-TAX Acid Plant Non-Acid Plant
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IRR 44.7% 46.1%
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Payback (years) 2.4 2.0
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NPV (million $)
Discount Rate
0% 1,625.4 1,360.0
5% 1,028.8 887.2
7.5% 825.8 721.4
10% 666.0 588.8
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Total initial capital expenditures for the "Acid Plant" option (including
contingency) are estimated at $284.74 million. Sustaining capital, which
includes the acid plant built in year three, water treatment facilities and
production wellfield are estimated at $602.4 million. Net closure costs are
estimated at $44.5 million. For the "Non-Acid Plant" option, total initial
capital expenditures (including contingency) are estimated at $284.74 million.
Sustaining capital, which includes the water treatment facilities and production
wellfield are estimated at $528.8 million. Net closure costs are estimated at
$42.3 million.
The PFS assumes a copper selling price of $2.75/lb. Average life-of-mine
operating direct cash costs are estimated at $0.68/lb for the "Acid Plant"
option and $0.98/lb for the "Non-Acid Plant" option.
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Acid Plant Non-Acid Plant
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Copper Cathode sold (MMlb) 1,682 1,682
Copper Price ($/lb) 2.75 2.75
Gross Revenue (million $) 4,625.9 4,625.9
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Operating Costs (million $) Cost/lb (million $) Cost/lb
Production (Wellfield) 449.3 0.27 935.5 0.56
SXEW 355.7 0.21 367.6 0.22
Water Treatment Plant 198.5 0.12 198.5 0.12
G&A 147.3 0.09 147.3 0.09
Direct Operating Cash Costs 1,150.7 0.68 1,648.8 0.98
Royalties 48.3 0.03 48.3 0.03
Other Production Expenses 161.8 0.09 153.5 0.09
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Initial Capital Costs (million $) Cost/lb (million $) Cost/lb
Production (Wellfield) 75.3 0.04 75.3 0.04
SXEW + Infrastructure 186.3 0.11 186.3 0.11
Owners Costs 23.2 0.01 23.2 0.01
Sub-total Initial Capital Costs 284.7 0.17 284.7 0.17
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Sustaining Capital Costs (million $) Cost/lb (million $) Cost/lb
Production (Wellfield) 440.2 0.26 440.2 0.26
Plant + Infrastructure 162.2 0.10 88.6 0.05
Sub-total Sustaining Capital 602.4 0.36 528.8 0.31
Costs
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Taxes 752.5 0.45 601.7 0.36
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Mineral Resources and Mineral Reserves
Mineral Resource Estimate
The mineral resource estimate for the North Star Deposit is based on results
from 88 drill holes totalling 129,272 feet (ft). The estimate is consistent with
the CIM definitions referred to in NI 43-101. Mr. Herb Welhener, RM-SME, of
Independent Mining Consultants, Inc. ("IMC") of Tucson, Arizona is a Qualified
Person as defined by NI 43-101 and is responsible for reviewing and approving
the mineral resource and mineral reserve estimates and the QA/QC associated with
the estimates. Mr. Welhener is independent of the Company. He has verified,
reviewed and approved the technical disclosure contained in the 'Mineral
Resources and Mineral Reserves' section of this news release and the underlying
sampling, analytical and test data. The mineral resource estimate has been
prepared using a 0.05% Total Cu cut-off grade and is effective as of January 13,
2014.
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North Star Resources (Oxide and Transition at 0.05% cut-off)
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Pounds of Cu
Category Short Tons (million) Total Copper % (million)
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Measured 158 0.38 1,205
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Indicated 525 0.26 2,704
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Total M&I 683 0.29 3,909
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Inferred 338 0.21 1,397
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The mineral resource estimate is contained within a block model of the North
Star deposit covering a surface area of 3.30 square miles and to a maximum depth
of 2,575 feet below the topographic surface.
The major geologic formations and oxidization types are incorporated into the
block model based on the drill hole intercept data. The total copper grades are
estimated using an ordinary kriging estimation technique from 25 ft drill hole
composite data. The grade estimate for the sedimentary units uses a 700 ft
circular by 50 ft search distance dipping 30 degrees east to parallel the
general dip of the sedimentary units. The grade estimation respected the
contacts of the various sedimentary units. The 700 ft distance is 70% of the
variogram range. The total copper grades in the non-sedimentary units were
estimated using a 500 ft spherical search. No copper grades are estimated in the
overburden or un-mineralized rock units. Copper grade estimates based on eight
or more holes are classified as Measured, grades based on three to seven holes
are Indicated and grades based on less than three holes are Inferred.
All samples are prepared from manually split half-core sections on site in
Arizona. Split drill core samples are then sent to Skyline Assayers &
Laboratories in Tucson, Arizona for Total Copper and Sequential Copper analyses.
Standards, blanks, and duplicate assays are included at regular intervals in
each sample batch submitted from the field as part of an ongoing Quality
Assurance/Quality Control Program.
Mineral Reserve Estimate
The PFS mineral reserve is based on an economic analysis of the mineral resource
using the costs developed during the 2011 PEA, test work to estimate the
recovery factors and a $2.75/lb copper price. The economic optimization was
performed on Measured and Indicated Resources. EBIT (earnings before interest
and tax) was calculated on a block by block basis based on economic parameters.
Consistent blocks (in vertical and horizontal directions) at a cut-off grade of
0.05% total Cu with a positive EBIT values that were greater than the capital
cost of drilling and establishing the wells required for each column of blocks
were included in the reserve. Total Cu% was selected for the mineral reserve
estimate. The mineral reserve was estimated after applying engineering and
operational design parameters which removed the thinner and deeper portions of
the mineral resource. Internal dilution has been included in the final mineral
reserve estimate. IMC is of the opinion that the mineral reserve estimate
derived in this PFS reasonably quantifies the economical ore mineralization of
the North Star Deposit. The reserve estimate is as of January 13, 2014 and the
mineral reserves presented in the table below are included in the mineral
resource estimate set out above.
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North Star Mineral Reserves (Oxide and Transition at 0.05% cut-off)
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Pounds of Cu
Category Short Tons (million) Total Copper % (million)
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Probable 632 0.29 3,614
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Excelsior is not aware of any environmental, permitting, legal, title, taxation,
socio-political, marketing or other issues which may materially affect the
mineral resource and mineral reserve estimates. The production schedule of the
PFS recovers approximately 47% of the mineral reserve.
Project Summary
The Gunnison Copper Project is located in a remote section of Cochise County
about 65 miles east of Tucson, Arizona in the Johnson Camp Mining District. The
property is within the copper porphyry belt of Arizona. The focus of the project
is the North Star deposit, which currently hosts a total Measured and Indicated
mineral resource of 3.91 billion pounds of copper (683 M tons at 0.29%) and an
Inferred mineral resource of 1.40 billion pounds of copper (338 M tons at
0.21%). The Probable mineral reserves for the North Star Deposit are 3.61
billion pounds of copper (632 M tons at 0.29%). This oxide and transition
portion of the mineral reserve has the potential to be mined using in-situ
recovery methods.
The proposed project, as stated in the PFS, includes the following components:
-- The North Star copper deposit.
-- The Wellfield including injection, recovery, observation and perimeter
wells and related infrastructure.
-- The acid plant, including sulfur and sulfuric acid handling and
cogeneration plant.
-- Processing infrastructure including a Solvent Extraction/Electrowinning
("SXEW") Plant and pipe corridors.
-- Water treatment facility and facility ponds.
-- Ancillary infrastructure to support the mine and process plant
(electrical substation, administration/office buildings and transmission
lines).
-- The rail infrastructure and rail car storage.
The proposed project will produce 110 million pounds of copper per year for the
first 14 years, then declining to year 20. Processing will take place at the
Gunnison site and will involve solvent extraction and electrowinning to produce
pure copper cathode sheets.
Technical Report and Qualified Person
An NI 43-101 Technical Report will be filed on SEDAR and on Excelsior's website
within 45 days of the date of this news release. The Report will consist of a
summary of the Prefeasibility Study. The Report is being prepared under the
supervision of Conrad Huss, P.E. of M3 Engineering & Technology Corporation,
Tucson, Arizona, who is a qualified person that is independent of the Company.
The Report will also receive contributions from the following additional
qualified persons, who are also independent of the Company:
-- Dr. Ronald J. Roman of Leach, Inc., Tucson, Arizona (metallurgy and
leaching recovery).
-- Peter Lenton, P.E. of Haley & Aldrich, Phoenix, Arizona (hydrology,
extraction methods, production schedule).
-- Peter Lemke, P.E. of Golder Associates Inc., Lakewood, Colorado (water
treatment and related facilities).
-- Mr. Herb Welhener, RM-SME, of IMC of Tucson, Arizona (geology, mineral
resource and reserve).
Each of the qualified persons has reviewed and approved the technical
information contained in this news release that is relevant to his area of
responsibility and verified the data underlying such technical information.
About Excelsior
Excelsior is a mineral exploration and development company that is advancing the
Gunnison Copper Project. The Excelsior management team consists of experienced
professionals with proven track records of advancing mining projects into
production.
Prior to the release of the Report on the PFS results, additional information
about the Gunnison Copper Project can be found in the technical report filed on
SEDAR at www.sedar.com entitled: "Gunnison Copper Project Preliminary Economic
Assessment, NI 43-101 Technical Report" dated November 18, 2011.
For more information on Excelsior, please visit our website at
www.excelsiormining.com.
ON BEHALF OF THE EXCELSIOR BOARD
Stephen Twyerould, President & CEO
Cautionary Note Regarding Forward-Looking Information
This news release contains "forward-looking information" concerning anticipated
developments and events that may occur in the future. Forward looking
information contained in this news release includes, but is not limited to,
statements with respect to: (i) the estimation of mineral resources and mineral
reserves; (ii) the robust economics, potential returns associated with the
Gunnison Project, (iii) the technical viability of the Gunnison Project; (iv)
the market and future price of copper; (v) expected infrastructure requirements;
(vi) the results of the PFS including statements about future production, future
operating and capital costs, the projected IRR, NPV, payback period,
construction timelines, permit timelines and production timelines for the Kami
Property, (vii) expected acid consumption rates; and (viii) the ability to mine
the Gunnison Project using in-situ recovery mining techniques.
In certain cases, forward-looking information can be identified by the use of
words such as "plans", "expects" or "does not expect", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not
anticipate", or "believes", or variations of such words and phrases or state
that certain actions, events or results "may", "could", "would", "might" or
"will be taken", "occur" or "be achieved" suggesting future outcomes, or other
expectations, beliefs, plans, objectives, assumptions, intentions or statements
about future events or performance. Forward-looking information contained in
this news release is based on certain factors and assumptions regarding, among
other things, the estimation of mineral resources and mineral reserves, the
realization of resource and reserve estimates, copper and other metal prices,
the timing and amount of future exploration and development expenditures, the
estimation of initial and sustaining capital requirements, the estimation of
labour and operating costs, the availability of necessary financing and
materials to continue to explore and develop the Gunnison Project in the short
and long-term, the progress of exploration and development activities, the
receipt of necessary regulatory approvals, the completion of the permitting
process, the estimation of insurance coverage, and assumptions with respect to
currency fluctuations, environmental risks, title disputes or claims, and other
similar matters. While the Company considers these assumptions to be reasonable
based on information currently available to it, they may prove to be incorrect.
Forward looking information involves known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
the Company to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking information. Such
factors include risks inherent in the exploration and development of mineral
deposits, including risks relating to changes in project parameters as plans
continue to be redefined including the possibility that mining operations may
not commence at the Gunnison Project, risks relating to variations in mineral
resources and reserves, grade or recovery rates resulting from current
exploration and development activities, risks relating to the ability to access
infrastructure, risks relating to changes in copper and other commodity prices
and the worldwide demand for and supply of copper and related products, risks
related to increased competition in the market for copper and related products
and in the mining industry generally, risks related to current global financial
conditions, uncertainties inherent in the estimation of mineral resources,
access and supply risks, reliance on key personnel, operational risks inherent
in the conduct of mining activities, including the risk of accidents, labour
disputes, increases in capital and operating costs and the risk of delays or
increased costs that might be encountered during the development process,
regulatory risks, including risks relating to the acquisition of the necessary
licenses and permits, financing, capitalization and liquidity risks, including
the risk that the financing necessary to fund the exploration and development
activities at the Gunnison Project may not be available on satisfactory terms,
or at all, risks related to disputes concerning property titles and interest,
environmental risks and the additional risks identified in the "Risk Factors"
section of the Company's reports and filings with applicable Canadian securities
regulators.
Although the Company has attempted to identify important factors that could
cause actual actions, events or results to differ materially from those
described in forward-looking information, there may be other factors that cause
actions, events or results not to be as anticipated, estimated or intended.
Accordingly, readers should not place undue reliance on forward-looking
information. The forward-looking information is made as of the date of this news
release. Except as required by applicable securities laws, the Company does not
undertake any obligation to publicly update or revise any forward-looking
information.
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, and no securities
regulatory authority has either approved or disapproved of the contents of this
release.
FOR FURTHER INFORMATION PLEASE CONTACT:
Excelsior Mining Corp.
JJ Jennex
Vice President, Corporate Affairs
604-681-8030 x240
info@excelsiormining.com
www.excelsiormining.com
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