Coventry Resources Inc. (TSX-V:CYY, ASX:CYY) (the “Company”) is
pleased to announce the results of an independent, National
Instrument 43-101 compliant Preliminary Economic Assessment ("PEA")
for the Cameron Gold Camp ("Cameron" or the "Project") located in
northwestern Ontario, Canada. The PEA was prepared by Lycopodium
Minerals Pty Ltd (“Lycopodium”) with input from its Toronto and
Perth offices to evaluate the conceptual development of a mine and
centralized processing plant at Cameron. AMC Consultants Pty Ltd.
(“AMC”) (geotechnical and mining), Knight Piésold (tailings dam and
environment) and DataGeo Geological Consultants (Resource and
Geology) also contributed to the study. All dollar amounts in this
release are stated in US currency. The disclosure set forth below
is derived from the PEA unless otherwise expressly noted.
PEA HIGHLIGHTS:
- Base case pre-tax NPV of $111 million,
20.1% IRR (at $1,472/oz gold); Pre-tax NPV of $205 million, 31.2%
IRR (at $1,700/oz gold) at a discount rate of 5%
- Base case after-tax NPV of $79 million,
17.0% IRR (at $1,472/oz gold); After-tax NPV of $143 million, 25.7%
IRR (at $1,700/oz gold) at a discount rate of 5%
- Initial 10 year mine life producing
604,673 ounces of gold from only the Cameron and Dubenski gold
deposits
- Average annual production of 61,000
ounces of gold at an average cash cost of $852/oz; Average open-pit
diluted grade of 1.96 g/t Au, average diluted underground grade of
2.60 g/t Au
- Life of mine gold recoveries averaging
91.5%
- Significant potential to increase grade
in the first two years and extend mine life through additional
exploration and resource development success at nearby satellite
prospects owned by the Company
- Estimated initial development capital
expenditure of $110 million, including 20% contingency
- High level of confidence with Measured
and Indicated resources accounting for 75% of the total material
included in the PEA:
- Cameron Gold Deposit open pit (47%
Measured, 52% Indicated and 1% Inferred)
- Dubenski Gold Deposit open pit (88%
Indicated and 12% Inferred)
- Cameron Gold Deposit underground (3%
Measured, 25% Indicated and 72% Inferred)
- 2,750 tonne per day (1 million tonne
per annum) conventional crush, grind, and CIL processing route
- Definitive Feasibility Study (“DFS”) to
be completed by the end of 2013.
"The preliminary economic study provides a solid base from which
to further develop the potential of a rapidly evolving,
district-wide production camp centered around Cameron, and
represents a major milestone for the Company. Along with our plans
for continued exploration at the numerous satellite prospects in
the area, we believe that the economics, favourable location and
infrastructure at Cameron make it a compelling development project
moving forward,” stated Michael Naylor, President and CEO of
Coventry Resources Inc. “In management’s view, the economics
determined in the PEA provide a strong incentive to undertake
further geotechnical, metallurgical and engineering studies and
commence permitting with the objective to complete a definitive
feasibility study by the end of 2013.”
In addition to the currently defined project at Cameron, the
Company has a number of high grade gold prospects and exploration
targets within close proximity (10 km) that warrant further
exploration, including the Dogpaw Gold Prospect (“Dogpaw”) and the
McLennan Gold Prospect (“McLennan”) where a number of high grade
historical drill intercepts have been recorded. The Company has
commenced a Mineral Resource Estimate at Dogpaw, which is due for
completion by the end of the March quarter, and it is anticipated
that a diamond drilling program will commence at McLennan in
February 2013 (refer to Exploration Potential section below). It is
expected that continued exploration results and a pending Resource
Estimate for Dogpaw will be incorporated into the upcoming
definitive feasibility study. Management anticipates that the
inclusion of additional resources from these adjacent target areas
will have a positive effect on the economics of the rapidly
evolving Cameron Gold Camp Project.
Further opportunities to substantially improve the economics at
Cameron include:
- Further planned geotechnical drilling
to lower the strip ratio by optimising pit wall angles. Pits were
designed with conservative slope angles due to limited geotechnical
data.
- Optimization of mine scheduling,
including results of upcoming exploration and pending resource
estimates at satellite prospects in the area.
- Optimization of processing costs and
metallurgy, including refining power costs ($0.10/kWh used in the
PEA) and reduction in milling consumables, in particular
cyanide.
PROJECT OVERVIEW
The Cameron Gold Camp is located in northwestern Ontario,
approximately 80km southeast of the city of Kenora, and is 100%
owned by Coventry. The Project boasts excellent infrastructure,
including high-voltage grid power lines within 30 km of the
Project.
Initial development of the Cameron Gold Camp will be as a
combined open-pit and underground operation, including open pit and
underground material from the Cameron Gold Deposit, as well as open
pit material from the satellite Dubenski Gold Deposit. Ore will be
processed through a conventional crush, grind and carbon in leach
(“CIL”) processing circuit. The Base Case (Case A) operating
parameters, utilizing the three year trailing average gold price of
$1,472/oz, are set out below:
Case A Metrics ($1,472/oz Au) – Base Case Total
Payable Gold Production 604,673 ounces Gold Price – Optimised Pit
Model 1,392 Cut-off Grade – Open Pit 0.48 g/t gold (Cameron) and
0.53 g/t gold (Dubenski) Cut-off Grade – Underground 1.75 g/t gold
Recovery 91.5% Average Annual Payable Gold Production 61,000 ounces
Average Cash Costs $852/ounce Life of Mine 10 years Net Pre-Tax
Operating Income $207 million Initial Capital Cost $110 million
Sustaining Capital (including underground) $63 million
Open Pits Tonnes Mined 6,561,661 Average Diluted
Grade 1.96 Average Strip Ratio 8.5 Contained Ounces 412,656
Underground Tonnes Mined 2,970,973 Average Diluted
Head Grade 2.60 Contained Ounces 248,188 Note: This
PEA is preliminary in nature as it includes inferred mineral
resources (25%) that are considered too speculative geologically to
have the economic considerations applied to them that would enable
them to be categorized as mineral reserves at this time, and as
such there is no certainty that the preliminary assessment and
economics set forth in the PEA will be realized. The authors of
this Technical Report believe the Project should be taken to the
next level of engineering study and economic assessment, being a
Feasibility Study. Mineral resources that are not mineral reserves
do not have demonstrated economic viability.
FINANCIAL MODEL AND ECONOMIC SENSITIVITY
Under the Base Case (Case A: $1,472/oz gold price), the
Project’s pre-tax discounted (5%) net present value (NPV) is US$111
million with a pre-tax internal rate of return ("IRR") of 20.1% on
an unleveraged 100% equity basis. The after-tax NPV (5%) is $79
million, with a 17.0% IRR.
Sensitivity results of Case B ($1,600/oz gold price) and Case C
($1,700/oz gold price) are outlined in the table below:
Pre-Tax After-Tax Parameter
Unit Results
Results Case A ($1,472 oz Au) – Base Case NPV
(undiscounted) M$ 207 155 NPV (5% discount rate) M$ 111 79 IRR
% 20
17 Case B ($1,600/oz Au) NPV (undiscounted) M$ 284 207 NPV
(5% discount rate) M$ 164 115 IRR %
27 22 Case C ($1,700/oz Au)
NPV (undiscounted) M$ 344 247 NPV (5% discount rate) M$ 205
143 IRR % 31
26
CAPITAL COST
Estimated initial development capital is expected to be $110
million, including a 20% contingency. A detailed breakdown of the
projected capital to construct Cameron is detailed in the following
table:
Cost Area
US$000 Mining Infrastructure
1,452 Treatment Plant and Services 51,094 Infrastructure 12,849
Tailings Storage 2,721 Construction Indirect Costs 5,890 EPCM
11,481 Contingency (20%) 17,073 Owners Costs /
Pre-production 6,216 Working Capital 1,307
Total Initial Capital 110,084
MINING
A combined mining schedule was developed incorporating the
Cameron open pit, Cameron underground and Dubenski open pit
deposits. The schedule anticipates a 1.0 Mt/y mill feed rate
over an initial 10 year mine life.
A staged approach to mining will begin with open pit mining at
Cameron, followed by open pit mining from the Dubenski Gold
Deposit, located 10 km from Cameron. Open pit mining will use a
conventional open pit truck and excavator method. Pits were
designed with conservative slope angles due to limited geotechnical
data. The strip ratio averaged 8.5:1, with open pit production of
412,656 oz Au at an average grade of 1.96 g/t Au.
At the Cameron Gold Deposit, a portal would be established in
year four to support underground development. This would be
fully-funded from incoming cash flows from open pit production.
Underground production via sub-level open stoping is anticipated to
begin in year five, producing 248,188 oz Au. The diluted grade
during the first year of underground production will be 2.85 g/t
Au, and will average 2.60 g/t Au over the underground mine life.
Further optimisation of the geological resource model is required
which would utilize a more selective modeling technique better
suited to underground mining.
PROCESSING AND METALLURGY
Plant operations involve a conventional three-stage crushing
circuit followed by ball milling to P80 passing 75 micron,
pre-leach aeration and direct cyanidation to process 2,750 tpd (1.0
Mt/y) of mill feed. Average annual gold production is estimated to
be 61,000 oz at an average cash cost of $852/oz.
Salient outcomes from the leach testwork are as follows:
- The Cameron Gold Deposit contains
moderately abrasive, competent material with a comparatively low
Bond ball mill index
- Ore is free-milling with a high gold
recovery from direct cyanidation with moderate reagent
consumption
- Testwork results indicate that an
overall gold recovery of 91.5% is expected, including allowance for
tailings solution losses
- To the extent known, no processing
issues or deleterious elements have been identified that could have
a significant effect on potential economic extraction
- Samples taken from the Dubenski Gold
Deposit yielded similar metallurgical results to those from the
Cameron Gold Deposit and no processing compatibility issues are
expected.
ENVIRONMENTAL, PERMITTING AND LOCAL COMMUNITY
ACTIVITIES
The Company is continuing its environmental baseline studies,
initiated in the fall of 2010. Environmental studies to date have
generated suitable data supporting the permitting process and
suggest that no fatal flaws are indicated at the Cameron Gold Camp
Project.
The Canadian Environmental Assessment Agency (CEAA), with
involvement from other associated Federal authorities, will be
responsible for the Environmental Assessment (“EA”) process and
determining the level of assessment required to meet Federal EA and
permit requirements. Other permits, approvals and regulatory
requirements from the Province of Ontario will also be
necessary.
The Company expects to file its Project Description to initiate
the EA process with the CEAA and Ministry of Northern Development
and Mines (MNDM) in the first quarter of 2013. Further clarity on
permitting requirements for the Project will become apparent
through the EA process.
Engagement with First Nations and local communities is an
important component of the permitting process and is ongoing.
Since acquiring the Cameron Gold Camp Project, Coventry has
proactively engaged with First Nations. Communication both written
and in person has either been through local tribal council or
directly with band council leadership or community members. The
Company has openly and regularly shared information, employed First
Nation members and provided assistance for training and community
initiatives such as sports teams and prospecting courses. The
Company has utilized First Nation cooperative contractors in
exploration activities on a number of occasions.
The Company will continue to maintain its good relationship with
First Nation communities proximal to the Project through continued
dialogue on advancing mining and exploration at Cameron.
EXPLORATION POTENTIAL
Significant potential exists within the Cameron Gold Camp
Project for the discovery of additional mineral resources to
supplement those currently identified. The primary focus of
exploration in 2013 will be the delineation of shallow, high-grade
resources proximal to the Cameron Gold Deposit.
To view the graphic associated with this
release, please click on the following link:
http://www.usetdas.com/pr/coventryresources01152013-figure1.jpg
Figure 1 - Location of Deposits and Prospects at the
Cameron Gold Camp Project.
At the West Cedartree Gold Project, significant, shallow,
high-grade gold mineralization identified in drilling from previous
explorers is contained in the Dogpaw, McLennan and Robertson
Prospects. The Company has commenced a independent Mineral Resource
Estimate for the Dogpaw Prospect, which is due for completion by
the end of the first quarter of 2013. The Company also plans to
begin a follow-up diamond drilling program to extend the known
mineralization at all three prospects during the first quarter of
2013.
In addition to the known prospects above, the West Cedartree
Gold Project is yet to be systematically explored using geochemical
till sampling to target structurally favourable corridors
highlighted in detailed high-resolution airborne magnetic data,
which has proven to be a highly effective method to identify gold
anomalism and to increase the probability of the discovery of
additional mineral resources.
The Cameron Gold Project contains more than 41 known gold
occurrences and prospects. During 2012, 36 reverse circulation (RC)
drill holes and more than 90 overburden pit samples were collected
in the western part of the Cameron Gold Project resulting in the
identification of 11 anomalies, including two anomalies located
immediately along strike of the Cameron Gold Deposit of a similar
geochemical tenor (Figure 2). These are considered high-priority
targets for further evaluation and there is significant potential
to delineate additional resources at some of these targets, which
may extend the life of a mining operation at the Cameron Gold
Camp.
To view the graphic associated with this
release, please click on the following link:
http://www.usetdas.com/pr/coventryresources01152013-figure2.jpg
Figure 2 - Total Magnetic Intensity (TMI) image around
the Cameron Gold Deposit with interpreted major structures and the
location of recently defined gold-in-till anomalies from RC and pit
sampling.
MINERAL RESOURCES
The PEA assumes that both open pit and underground mining
methods would be used for resource extraction. Tables 1(a) and 1(b)
summarize the current mineral resource estimates, which forms the
basis of the PEA.
Table 1(a) - NI 43-101 and JORC-Code
Compliant Mineral Resource Statement, Cameron Gold Deposit*
Cut-off Resource Classification
Tonnes Gold
Grade (g/t Au) Gold Ounces 1.0 g/t
Measured 2,472,000
2.68 213,000 Indicated
4,724,000 2.33
354,000
Measured + Indicated
7,196,000 2.45
567,000 Inferred
12,226,000 2.11
829,000
*Mineral resources are not mineral reserves and do not have
demonstrated economic viability. All figures are rounded to reflect
the relative accuracy of the estimate.
Table 1(b) - NI 43-101 and JORC-Code
Compliant Mineral Resource, Dubenski Gold Deposit*
Cut-off Resource Classification
Tonnes Gold
g/t Gold Oz 1.0 g/t
Indicated 806,000
2.28 59,000
Inferred 392,000 1.44
18,200
*Mineral resources are not mineral reserves and do not have
demonstrated economic viability. All figures are rounded to reflect
the relative accuracy of the estimate.
ABOUT COVENTRY RESOURCES INC.
Coventry Resources Inc. is advancing the Cameron Gold Camp in
northwestern Ontario, Canada towards production. In addition to the
existing resource, Coventry has identified a number of exploration
targets along the Cameron shear zone and at its highly prospective
Rainy River District properties where the Company believes it can
continue to expand Coventry’s resource base. The Company is led by
a strong management team with the proven ability to develop,
finance and operate mining projects.
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.
QUALIFIED PERSONS
The Cameron Gold Camp Project PEA results were reviewed by
Lycopodium Minerals Pty Ltd under the direction of Process Manager,
David Gordon, an Independent Qualified Person as defined by NI
43-101. The scientific and technical information in this release
has been reviewed and approved by Peter Ball AusIMM-CP of DataGeo
Geological Consultants, Stephen Mlot, of AMC Consultants Pty Ltd
and David Morgan of Knight Piésold, all of whom are Independent
Qualified Persons within the meaning of NI 43-101. The PEA
technical report will be filed on Sedar within 45 days.
Tony Goddard, VP Exploration and Director of Coventry Resources
Inc. is the Company’s Qualified Person responsible for the contents
of this press release and has reviewed the information in the
release and confirmed that it is consistent with that provided by
the independent Qualified Person responsible for the PEA Study.
The Mineral Resource Estimates were prepared by Mr Peter Ball
who is a Chartered Professional and Member of the Australasian
Institute of Mining and Metallurgy. Mr Ball is the Director of
DataGeo Geological Consultants. Mr Ball has sufficient experience
which is relevant to the style of mineralization and type of
deposit under consideration and to the activity which he is
undertaking to qualify as a Competent Person as defined in the 2004
Edition of the ‘Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves and a Qualified Person
as defined in Canadian National Instrument 43-101 (Standards of
Disclosure for Mineral Projects). Mr Ball consents to the inclusion
in the announcement of the matters based on his information in the
form and context in which it appears.
The information in this announcement that relates to Exploration
Results is based on information compiled by or under the
supervision of Anthony Brendon Goddard. Mr Goddard is Technical
Director of Coventry Resources Inc. and a Member of the Australian
Institute of Geoscientists. Mr Goddard has sufficient experience
which is relevant to the style of mineralization and type of
deposit under consideration and the activity he is undertaking to
qualify as a Competent Person as defined in the 2004 Edition of the
“Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves” and a Qualified Person as defined in
Canadian National Instrument 43-101 (Standards of Disclosure for
Mineral Projects). Mr Goddard consents to the inclusion in the
announcement of the matters based on his information in the form
and context in which it appears.
FORWARD LOOKING STATEMENTS
This news release may contain "forward-looking statements"
and/or "forward-looking information" within the meaning of
applicable securities regulations in Canada and the United States
(collectively, forward-looking information"). Any forward-looking
information contained in this news release is made as of the date
of this news release. Except as required under applicable
securities legislation, Coventry Resources Inc. (“Coventry”) does
not intend, and does not assume any obligation, to update this
forward-looking information. Forward-looking information includes,
but is not limited to, statements with respect to mineral resource
estimates, drill plans, planned work programs, future upgrading of
mineral resources and expected outcomes. Often, but not always,
forward-looking information can be identified by the use of words
such as "plans", "expects, "is expected", "budget", "scheduled",
"estimates", “forecasts", "intends", "anticipates", or "believes",
or the negatives thereof or variations of such words and phrases or
statements that certain actions, events or results "may", "could",
"would", "might", or "will" be taken, occur or be achieved.
Any forward-looking information contained in this news release
is based on certain assumptions that Coventry believes are
reasonable, including, with respect to any mineral resource
estimates, the key assumptions and parameters on which such
estimates are based, that the current price of and demand for gold
will be sustained or will improve, that general business and
economic conditions will not change in a material adverse manner,
that financing will be available if and when needed on reasonable
terms, that supplies, equipment, personnel, permits and local
community approval required to conduct Coventry’s planned
exploration and development activities will be available on
reasonable terms and that Coventry will not experience any material
accident, labour dispute, or failure of equipment.
However, forward-looking information involves known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of Coventry to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking information. Such
factors include, among others, risks and uncertainties relating to
the actual results of exploration activities being different than
anticipated, cost of labour increasing more than expected, cost of
equipment or materials increasing more than expected, fluctuations
in the price of gold and other commodities, currency fluctuations,
mineral resources not being as estimated, unexpected variations in
mineral resources, grade or recovery rates, risk of accidents,
labour disputes and other risks generally associated with mineral
exploration and unanticipated delays in obtaining or failing to
obtain governmental or community approvals or financing. Although
Coventry 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 to not be as
anticipated, estimated or intended. There can be no assurance that
forward-looking information will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Readers are cautioned not to place
undue reliance on forward-looking information due to the inherent
uncertainty thereof.
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