Woulfe Mining Announces Results of Preliminary Economic Assessment for its 100% Owned Muguk Gold Mine
March 14 2012 - 8:30AM
Marketwired Canada
Woulfe Mining Corp. ("Woulfe" or the "Company") (TSX
VENTURE:WOF)(OTCQX:WFEMF)(FRANKFURT:OZ4) is pleased to announce that an NI
43-101-compliant preliminary economic assessment (PEA) has been completed for
its 100% owned Muguk gold project in South Korea.
Brian Wesson, Woulfe CEO/President, comments that, "The PEA indicates that the
project is economic as it has a positive NPV. We are also excited that this was
based on mining one vein of the nine veins on the field and does not include any
of the silver. This project was Korea's largest producing gold project and by
developing the Three Brothers vein it will allow for exploration of the field
that has substantial underground development that extends across the over 1km
strike and down dip to 700 metres below surface."
The PEA indicates that Muguk is a potentially viable project that will return a
positive net discounted cash flow. No insoluble technical issues were identified
that might prevent the project proceeding.
The PEA was undertaken by AMC Consultants Pty Ltd. ("AMC") of Brisbane and was
based on a mine design and schedule underpinned by an inferred mineral resource.
The mineral resource was prepared under the direction of a Qualified Person
using accepted industry practice and has been classified and reported in
accordance with the JORC Code(1).
The Muguk gold-silver mineralization is hosted within a series of parallel,
steeply dipping quartz veins that extend discontinuously for 400-2,000 metres
along strike and to a known depth of 800 metres. The average width of the veins
is typically less than 1 metre, although the veins pinch and swell and can be up
to 2 metres in width in places. The Three Brothers Vein and the No.2 Vein are
the most significant mineralised structures in the goldfield (refer to release
dated 30 August 2011), however there are a number of other veins including
Baksan, Geumyong, and Nos 1 and 7-11 Veins which have been partly explored and
developed.
The PEA identified a mining inventory, consisting of inferred resource and
unclassified diluting material, of 728,000 tonnes grading 7.0 g/t gold. Silver
is present in the deposit, but has not been reported in the mineral resource, so
was excluded from consideration in PEA. The designed production areas are
confined to the Three Brothers Vein.
The shrink stoping mining method was selected for Muguk. Shrink stoping is a
conventional mining method that uses hand-held drilling techniques. It is well
suited to narrow vein deposits and provides the best means of minimizing
dilution. Shrink stoping was previously used with success at Muguk.
The proposed mine access strategy is by decline, using trackless rubber-tyred
trucks and loaders. Decline access is a modern and conventional approach that
offers great flexibility in production rate, and greatly simplifies the task of
moving personnel and equipment from one area of the mine to another. Decline
access to the Three Brothers Vein will substantially improve the ease with which
other nearby veins can be explored and accessed.
Realistic dilution and ore loss factors were applied to the mineral resource in
estimation of the mining inventory. Average dilution was 37%, and ore loss
(including material lost to non-recoverable pillars) of 20% was applied.
A cut-off grade of 4.3 g/t gold was determined for Muguk, and applied to the
diluted gold grade. The cut-off grade calculation assumed a gold price of
US$1,600 per ounce. Mining costs were estimated from first principles, using
South Korea labour and other input costs.
Gold and silver will be recovered in a gravity and pyrite flotation circuit. The
overall gold recovery will be approximately 96%. Approximately 40% of the
precious metals will be captured by the gravity process and processed into
gold-silver dore bars. The remaining 56% will be captured in a pyrite
concentrate, which will either be sold as a concentrate, or fed to an acid leach
for recovery of the gold and silver.
The schedule developed for the PEA is summarized below:
----------------------------------------------------------------------------
Unit Total Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7
----------------------------------------------------------------------------
Decline m 6,336 1,188 1,584 1,584 396 - - -
----------------------------------------------------------------------------
Access rehabilitation m 12,048 2,625 2,362 3,000 3,000 1,061 - -
----------------------------------------------------------------------------
Access development m 5,576 918 1,678 1,378 1,602 - - -
----------------------------------------------------------------------------
Stope production kt 728 - 73 133 145 145 145 87
----------------------------------------------------------------------------
Production Au grade g/t 7.0 - 5.4 6.5 7.1 7.2 7.5 8.1
----------------------------------------------------------------------------
Milling kt 728 - 73 128 140 140 140 107
----------------------------------------------------------------------------
Milling Au grade g/t 7.0 - 5.4 6.5 7.0 7.2 7.4 8.0
----------------------------------------------------------------------------
Recovered Au koz 158 - 12.2 25.9 30.4 31.1 32.0 26.4
----------------------------------------------------------------------------
The life of mine capital cost estimate for fixed plant items is US$60.2 million.
This includes US$20 million for the processing plant, $19.4 million for the
access decline, US$7.0 million for engineering, procurement, and construction
management and US$4.3 million for sustaining capital.
Project cash flows, expressed in millions of US dollars, are summarized below:
----------------------------------------------------------------------------
Total Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7
----------------------------------------------------------------------------
Fixed plant costs 60.2 35.0 7.3 7.4 7.3 3.0 0.2
----------------------------------------------------------------------------
Mobile plant costs 12.7 5.0 4.9 1.0 1.0 0.5 0.3
----------------------------------------------------------------------------
Operating costs 111.2 2.1 16.2 22.0 23.5 24.2 14.7 8.4
----------------------------------------------------------------------------
Revenue from gold 252.6 - 19.5 41.4 49.7 51.1 50.8 42.2
----------------------------------------------------------------------------
Net cash flow 68.6 -42.2 -8.9 11.0 16.8 22.0 36.5 33.4
----------------------------------------------------------------------------
At an assumed gold price of US$1,600 per ounce, the Muguk project returns a
substantial positive net cash flow. The undiscounted net pre-tax cash flow is
US$68.6 million. The net discounted pre-tax cash flow, using a real pre-tax
discount factor of 8%, is US$31.8 million. Payback of capital (in both
discounted and undiscounted terms) is achieved during Year 6 of operation. The
internal rate of return (IRR) is 22%.
Woulfe cautions that the PEA is preliminary in nature. It is based on an
inferred mineral resource. Inferred resources are based on limited information,
and grade continuity has been assumed, but not verified. Mineral resources are
not mineral reserves and do not have demonstrated economic viability. There is
no certainty that all or any part of the mineral resource that is the subject of
the PEA will be converted into mineral reserve. No mineral reserves were
estimated as part of the PEA.
However, the positive outcome of the PEA does provide Woulfe with the incentive
to continue to advance the Muguk project. Resource confirmation work on the
Three Brothers Vein and exploration of the numerous smaller veins within the
gold field are recommended. This work can most effectively be undertaken from
underground drill sites.
The report of the PEA in this release has been reviewed and approved in the form
and context in which it appears by Woulfe's mining advisor, Mr Edward Gleeson
MAusIMM (CP), BEng (Mining), of AMC Consultants Pty Ltd. Mr Gleeson has
appropriate qualifications and sufficient relevant experience to qualify as a
Qualified Person for the reporting of a PEA for the Three Brothers Vein of the
Muguk Gold Mine.
On Behalf of the Board of Directors
Woulfe Mining Corp.
Brian Wesson (FAusIMM), President, CEO and Director
About Woulfe Mining Corp.
Woulfe Mining Corp. is a TSX-V listed company with a diversified portfolio of
mining licenses for tungsten, molybdenum, gold, base metals and uranium-vanadium
in South Korea.
The company's current projects include the Sangdong tungsten-molybdenum mine,
historically, one of the largest tungsten mines in the world; the Muguk
gold-silver mine, formerly South Korea's largest gold mine, as well as a number
of other properties with significant known mineralization and excellent regional
exploration potential.
Woulfe has high expectations for near-term, low-cost production. The company has
assembled a highly skilled, in-country, bilingual technical team and a board of
directors with an outstanding track record of success.
Forward-looking statements and forward-looking information by their nature are
based on assumptions and involve 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 such forward-looking statements or
information. We have made certain assumptions about the forward-looking
statements and information and even though our management believes that the
assumptions made and the expectations represented by such statements or
information are reasonable, there can be no assurance that the forward-looking
statement or information will prove to be accurate. Furthermore, should one or
more of the risks, uncertainties or other factors materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described in forward-looking statements or information. These risks,
uncertainties and other factors include, among others, the following: commodity
price volatility; discrepancies between actual and estimated production, mineral
reserves and resources and metallurgical recoveries; mining operational and
development risk; litigation risks; regulatory restrictions, including
environmental regulatory restrictions and liability; risks of sovereign
investment; currency fluctuations; speculative nature of mineral exploration;
global economic climate; dilution; share price volatility; competition; loss of
key employees; additional funding requirements.
There can be no assurance that forward-looking statements or information will
prove to be accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly, you should
not place undue reliance on the forward-looking statements or information
contained herein. Except as required by law, we do not expect to update
forward-looking statements and information continually as conditions change and
you are referred to the full discussion of the Company's business contained in
the Company's reports filed with the appropriate regulatory authorities.
1. Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves, The JORC Code 2004 Edition, Effective
December 2004, Prepared by the Joint Ore Reserves Committee of the
Australasian Institute of Mining and Metallurgy, Australian Institute of
Geoscientists and Minerals Council of Australia (JORC).
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