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
----------------------------------------------------------------
----------------------------------------------------------------
BASE CASE
Milling Rate 60,000 tonnes/day Years LOM
(US$800/oz Au, US$2.00/lb Cu, FX 0.85) 1 - 6 1 - 22
----------------------------------------------------------------
----------------------------------------------------------------
AVERAGE ANNUAL
----------------------------------------------------------------
Metal Production
----------------------------------------------------------------
Gold (oz) 262,100 194,500
----------------------------------------------------------------
Copper (lb, million) 89 81
----------------------------------------------------------------
----------------------------------------------------------------
Revenue (%)
----------------------------------------------------------------
Gold 55 51
----------------------------------------------------------------
Copper 45 49
----------------------------------------------------------------
----------------------------------------------------------------
Cash Cost Net of Credit
----------------------------------------------------------------
Gold 1 oz (US$/oz) -8 51
----------------------------------------------------------------
Copper 1 lb (US$/lb) -0.40 0.17
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
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$44 per reserve ounce, Mt.
Milligan and Terrane are well-positioned for growth."
Chuck Jeannes, President and CEO, Goldcorp Inc. stated: "We are
very pleased with the Feasibility Update Study. Not only did it
hold the line on costs but it also significantly boosted reserve
ounces and mine life. Terrane has clearly grown Mt. Milligan into a
major, construction-ready, copper-gold project with an opportunity
for outstanding net operating margins. Goldcorp, as majority
shareholder, remains committed to working closely with the Terrane
Board of Directors to unlock value for all shareholders at Mt.
Milligan."
CONFERENCE CALL
Terrane will host a conference call on Thursday October 15, 2009
at 8:00am PDT to discuss the 2009 Study. A recording of the call
will be available on the Company's website. Toll Free Dial-in
Numbers (within the US and Canada): 1 800 918 9482. International
Dial-in Number: 1 212 231 2919.
KEY 2009 STUDY UPDATES
- Optimized open pit Reserves with updated net smelter return
(NSR) cut-off, metal prices and foreign exchange rate (FXR) as
shown below:
------------------------------------------------------------
------------------------------------------------------------
NSR cut-off Gold Copper FXR
BASE CASE (US$/t) (US$/oz) (US$/lb) (US$/C$)
------------------------------------------------------------
------------------------------------------------------------
2009 Study 4.10 690 1.60 0.85
------------------------------------------------------------
2008 Study 4.20 550 1.60 0.89
------------------------------------------------------------
------------------------------------------------------------
- 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. The drill hole database is supported by some
35,000 quality assurance/quality control (QA/QC) check assays.
Table 2 Mineral Resource Estimate(1) (Inclusive of Mineral Reserve)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Cu Au In-Situ Cu lb In-Situ Au oz
Category Mt (%) (g/t) (Million) (Million)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Measured 334.6 0.197 0.398 1,453 4.28
--------------------------------------------------------------------------
Indicated 372.1 0.169 0.269 1,386 3.22
--------------------------------------------------------------------------
Total Measured
+ Indicated 706.7 0.182 0.330 2,840 7.50
--------------------------------------------------------------------------
Inferred 20.5 0.154 0.205 70 0.14
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Note: (1) Mineral Resources are not Mineral Reserves and do not have
economic viability
The Mineral Reserve estimate was developed through the design of
an ultimate open pit within the Mineral Resource model. The Proven
and Probable Mineral Reserve totals 482.4 Mt at 0.20% Cu and 0.39
g/t Au, containing 2.12 billion lb Cu and 6.02 million oz gold
(Table 3). The open pit was optimized at a US$4.10/t NSR cut-off
and incorporates costing for milling, plant services, tailing
services and general and administrative (G&A) charges and at
US$1.60/lb copper, US$690/oz gold and 0.85 US$/C$ exchange
rate.
Table 3 Mineral Reserve Estimate
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Tonnes Cu Au In-Situ Cu lb In-Situ Au oz
Category (M) (%) (g/t) (Million) (Million)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Proven 274.6 0.210 0.438 1,273 3.87
--------------------------------------------------------------------------
Probable 207.8 0.187 0.322 851 2.16
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Total 482.4 0.200 0.388 2,124 6.02
--------------------------------------------------------------------------
--------------------------------------------------------------------------
The near-surface and tabular configuration of the reserves make
them well-suited to low unit cost open pit development with a
life-of-mine waste/ore ratio of 0.84/1.
A comprehensive and systematic metallurgical test work program
on composite samples representative of the mine development plan
determined that, on average, 84.1% of the copper and 71.4% of the
gold will be recovered into a clean and marketable copper
concentrate grading 26.4% Cu and 43.7 g/t Au with a minor silver
credit.
Both the Mineral Resource and Mineral Reserve take into
consideration metallurgical recoveries, concentrate grades,
transportation costs and smelter treatment charges in determining
NSR values. In addition, the Mineral Reserve incorporates
allowances for grade dilution, mining dilution and ore losses.
ENVIRONMENT & PERMITTING
The Project is in the final stages of regulatory approval. It
was reviewed under the British Columbia Environmental Assessment
Act; provincial Environmental Assessment (EA) approval was received
in March 2009. In addition, a provincial Mines Act Permit was
received in September 2009. The Project is currently being reviewed
under the Canadian Environmental Assessment Act; federal EA
approval is expected in Q4 2009. Certain permits required to
proceed to construction are anticipated by Q1 2010. All regulatory
applications and approvals have been based on the 2008 Study with a
15 year mine life. Terrane will seek appropriate regulatory
amendments if required for additional mine life, but this is not
expected to impact commencement of construction.
Approximately 400 permanent jobs will be created at the Project.
The construction workforce will average 400 workers and peak at 700
workers. Terrane is committed to maximizing local employment and
contracting opportunities and will work with community partners on
training programs to prepare local residents for employment.
INITIAL CAPITAL COST
The initial capital cost as described within this 2009 Study is
$915 million, as shown in Table 4.
The 2009 Study incorporates additional mine planning,
engineering, detailed design, updated cost estimation and purchase
orders of $137 million for long-lead equipment. The initial capital
cost includes requirements of regulatory approvals. Final designs
of several critical path components including access road, plant
site, power line and initial phase of the TSF are now
construction-ready.
Table 4 Initial Capital Cost
------------------------------------------------------------
------------------------------------------------------------
Description $ Million
------------------------------------------------------------
------------------------------------------------------------
Direct Costs
------------------------------------------------------------
Plant Site Infrastructure 26
------------------------------------------------------------
Mining and Pre-Production Development 169
------------------------------------------------------------
Process Plant 276
------------------------------------------------------------
Ancillaries 22
------------------------------------------------------------
Power Supply and Distribution 70
------------------------------------------------------------
Tailing and Water Reclaim 77
------------------------------------------------------------
Total Direct Costs 640
------------------------------------------------------------
------------------------------------------------------------
Indirect Costs
------------------------------------------------------------
Owner's Costs 26
------------------------------------------------------------
EPCM 52
------------------------------------------------------------
Other Indirect Costs 101
------------------------------------------------------------
Total Indirect Costs 179
------------------------------------------------------------
------------------------------------------------------------
Subtotal 819
------------------------------------------------------------
Contingency (11.8%) 96
------------------------------------------------------------
------------------------------------------------------------
Total Project 915
------------------------------------------------------------
------------------------------------------------------------
OPERATING COST
On site operating costs were estimated at $6.96/t of ore milled
as shown in Table 5. The 2009 Study incorporates additional mine
planning, engineering, detailed design, and updated cost
estimation. The operating cost includes requirements of regulatory
approvals.
Table 5 Operating Cost
------------------------------------------------------------
------------------------------------------------------------
Unit Cost
Area ($/t milled)
------------------------------------------------------------
------------------------------------------------------------
Mining 2.35
------------------------------------------------------------
Processing 3.89
------------------------------------------------------------
General and Administrative 0.57
------------------------------------------------------------
Plant Services 0.15
------------------------------------------------------------
------------------------------------------------------------
Total Operating Cost 6.96
------------------------------------------------------------
------------------------------------------------------------
Offsite costs contemplate delivery of copper concentrate to
Pacific Rim Asian smelters. Concentrate from the Project site will
be trucked 82 km to a storage and loadout facility at Fort St.
James and transferred onto railcars for transport to port storage
facilities at Vancouver Wharves in North Vancouver. The concentrate
is expected to be highly marketable and below penalty levels for
deleterious elements.
FINANCIAL EVALUATION
An economic evaluation was prepared for the Project based on a
pre-tax financial model. For the 22.1 year mine life and 482 Mt
Mineral Reserve, the following Base Case financial parameters were
calculated:
- 17.2% IRR
- 4.1 year payback on $915 million initial capital cost
- $1.05 billion NPV at 5.0% discount.
Three metal price scenarios and a constant FXR of 0.85 (US$/C$)
were used in the pre-tax model to evaluate sensitivity of NPV, IRR
and payback. Base Case, Base Case minus 10% and Current Case metal
prices are shown in Table 6. Project NPV, IRR and payback for all
three metal price scenarios are presented in Table 7.
Table 6 Metal Price Scenarios
------------------------------------------------------------
------------------------------------------------------------
Copper Gold Silver
Case (US$/lb) (US$/oz) (US$/oz)
------------------------------------------------------------
------------------------------------------------------------
Base 2.00 800 11.00
------------------------------------------------------------
Base -10% 1.80 720 9.90
------------------------------------------------------------
Current 2.80 1000 16.50
------------------------------------------------------------
------------------------------------------------------------
Note: Current prices are as of September 15, 2009
Table 7 Pre-Tax NPV, IRR and Payback by Metal Price Scenario
------------------------------------------------------------
------------------------------------------------------------
NPV at Selected
Discount Rates (Million $)
-------------------------- Payback
Case 8% 5% 0% IRR (%) (Years)
------------------------------------------------------------
------------------------------------------------------------
Base 619 1,047 2,392 17.2 4.1
------------------------------------------------------------
Base -10% 313 632 1,644 13.0 5.1
------------------------------------------------------------
Current 1,630 2,415 4,877 28.6 2.4
------------------------------------------------------------
------------------------------------------------------------
The financial models include working capital of $42 million,
sustaining capital of $264 million, reclamation and closure costs
of $32 million and a 2% NSR royalty.
A matrix illustrating the sensitivity of the Project economics
over a range of metal prices is shown in Table 8. All other
parameters including exchange rate, capital cost and operating
costs were fixed.
Table 8 Pre-Tax Matrix
-----------------------------------------------------
Copper Price (US$/lb)
1.50 2.00 2.50 3.00
-----------------------------------------------------
-----------------------------------------------------
700 1,025 1,911 2,798 3,783
------------------------------
295 773 1,250 1,781
------------------------------
9.1% 14.4% 18.8% 23.3%
------------------------------ ------------------
6.3 4.7 3.7 3.0 Legend
---------------------------------------- ------------------
800 1,505 2,392 3,279 4,264 NPV 0% (million C$)
------------------------------ ------------------
570 1,047 1,525 2,055 NPV 5% (million C$)
------------------------------ ------------------
12.5% 17.2% 21.4% 25.6% IRR (%)
------------------------------ ------------------
Gold Price 5.2 4.1 3.3 2.7 Payback (Years)
(US$/oz) ---------------------------------------- ------------------
900 1,986 2,873 3,760 4,745
------------------------------
844 1,322 1,799 2,329
------------------------------
15.5% 19.8% 23.8% 27.8%
------------------------------
4.4 3.6 2.9 2.4
----------------------------------------
1000 2,467 3,354 4,241 5,226
------------------------------
1,119 1,596 2,073 2,604
------------------------------
18.2% 22.3% 26.1% 30.0%
------------------------------
3.9 3.2 2.7 2.2
-----------------------------------------------------
-----------------------------------------------------
QUALIFIED PERSONS
Ms. Karla Mills, P. Eng., of Wardrop is an independent Qualified
Person as defined by NI 43-101. Ms. Mills has reviewed and approved
the contents of this news release.
Mr. Jianhui Huang, Ph.D., P. Eng., of Wardrop is an independent
Qualified Person as defined by NI 43-101. Mr. Huang has reviewed
and approved the contents of this news release.
Mr. Scott Cowie, B. Eng, MAusIMM., of Wardrop is an independent
Qualified Person as defined by NI 43-101. Mr. Cowie has reviewed
and approved the contents of this news release.
Mr. Grant Bosworth, P. Eng., of Wardrop is an independent
Qualified Person as defined by NI 43-101. Mr. Bosworth has reviewed
and approved the contents of this news release.
Mr. Herb Welhener, MMSA-QPM, of Independent Mining Consultants,
Inc. is an independent Qualified Person as defined by NI 43-101.
Mr. Welhener has reviewed and approved the contents of this news
release.
Mr. Darin Labrenz, P. Geo., of Terrane Metals Corp. is a
Qualified Person as defined by NI 43-101. Mr. Labrenz has reviewed
and approved the contents of this news release.
Mr. Jay Collins, P. Eng., of Merit Consultants International
Inc. is an independent Qualified Person as defined by NI 43-101.
Mr. Collins has reviewed and approved the contents of this news
release.
Mr. Bruno Borntraeger, P. Eng., of Knight Piesold Ltd. is an
independent Qualified Person as defined by NI 43-101. Mr.
Borntraeger has reviewed and approved the contents of this news
release.
Mr. Tim Bekhuys, RPBio., of AMEC Earth and Environmental Inc. is
an independent Qualified Person as defined by NI 43-101. Mr.
Bekhuys has reviewed and approved the contents of this news
release.
ABOUT THE COMPANY
Terrane Metals Corp. is an exploration and mine development
company focused on the Mt. Milligan copper-gold and Berg
copper-molybdenum-silver projects in British Columbia, Canada.
Goldcorp Inc. (GG: NYSE; G: TSX) owns a 60% equity interest in
Terrane on a fully diluted basis.
TERRANE METALS CORP.
Robert Pease, P.Geo, FGAC, President and CEO
Cautionary Note Regarding Forward Looking Statements
Except for the statements of historical fact contained herein,
the information presented in this News Release constitutes
"forward-looking statements" as such term is used in applicable
Canadian laws. These statements relate to analyses and other
information that are based on forecasts of future results,
estimates of amounts not yet determinable and assumptions of
management. In particular, statements concerning Mineral Resource
and Mineral Reserve estimates should be viewed as forward-looking
statements to the extent that they involve estimates of the
mineralization that will be encountered if the property is
developed. Any statements that express or involve discussions with
respect to predictions, expectations, beliefs, plans, projections,
objectives, assumptions or future events or performance (often, but
not always, using words or phrases such as "expects" or "does not
expect", "is expected", "anticipates" or "does not anticipate",
"plans, "estimates" or "intends", or stating that certain actions,
events or results "may", "could", "would", "might" or "will" be
taken, occur or be achieved) are not statements of historical fact
and should be viewed as "forward-looking statements".
Such forward looking statements, including but not limited to,
those with respect to the price of metals, the amount of estimated
mineralization and of contained metals and the timing of and
possible outcome of pending economic evaluations and other factors
and events described in this News Release, 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. Such risks and other factors include, among others, the
actual results of exploration activities; variations in the
underlying assumptions associated with the estimation or
realization of Mineral Resources and Mineral Reserves, the
conclusions of economic evaluations and possible variations in ore
grade or recovery rates; costs and timing of the development of new
deposits; availability of capital to fund programs and the
resulting dilution caused by the raising of capital through the
sale of shares; accidents, labour disputes and other risks of the
mining industry including without limitation those associated with
the environment, delays in obtaining governmental approvals,
permits or financing or in the completion of development or
construction activities, title disputes or claims limitations on
insurance coverage. 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 statements, there may be other factors that cause
actions, events or results not to be as anticipated, estimated or
intended. There can be no assurance that such statements will prove
to be accurate as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking
statements contained in this News Release and in any document
referred to in this News Release.
Forward looking statements are made based on management's
beliefs, estimates and opinions on the date the statements are made
and the Company undertakes no obligation to update forward-looking
statements if these beliefs, estimates and opinions or other
circumstances should change, except as required by applicable
law.
The TSX Venture Exchange does not accept responsibility for the
adequacy or accuracy of this release.
Contacts: Terrane Metals Corp. Rob Pease President and CEO (604)
681-9930 or Toll Free: 1 866 681 9930 Terrane Metals Corp. Ryan
King Investor Relations (604) 681-9930 or Toll Free: 1 866 681 9930
www.terranemetals.com