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Message: Positive Preliminary Economic Assessment Study for Monument Bay
| February 17, 2009 | ||
| Rolling Rock Resources Receives Positive Preliminary Economic Assessment Study for Monument Bay | ||
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VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 17, 2009) - Rolling Rock Resources Corporation (the "Company") (TSX VENTURE:RLL) is pleased to announce the results from a positive preliminary economic assessment study (the "Study" and "PEA") of the Company's 100% owned Monument Bay gold property located in Northern Manitoba, Canada. The assessment was completed by Beacon Hill Consultants (1988) Ltd. ("Beacon Hill") of Vancouver, B.C. to the standards of NI-43-101. The Study includes over 95,000 metres of diamond drilling and some $28 million of expenditures since 2000 and comprises an inferred resource estimate and a conceptual mining plan. Highlights from this preliminary assessment are outlined below. All dollar figures are in Canadian dollars unless otherwise indicated: - Project Capital Cost of $140 million - 11 year mine life - Underground mine plan processing 1000 tonnes per day with average life of mine grade 6.33 gAu/t (gram per tonne) averaging 64,000 ounces per year - Operating cost of $106/tonne processed - An economic base case using a US$750/oz gold price gives an after tax IRR (Internal Rate of Return) of 8.14% and an undiscounted NPV (Net Present Value) of $45 million, $7.4 million discounted at 5% - Based on a gold price of US$950/oz the undiscounted NPV is estimated as $167 million with an after tax IRR of 22.48% and an NPV of $96 million with a 5% discount rate - The preliminary study recommends a 11,175 metre diamond drill program targeting 8 of the existing zones with 21 drill holes designed to further increase the inferred resource at the Monument Bay project Chief Executive Officer Scott Angus stated: "The completion of this Study marks a significant milestone for the Company that gives us a greater understanding of the upside potential and the financial parameters of this deposit. We now have a foundation with the recommendation for minimal work in potential areas to significantly increase the tonnage and grade of the deposit allowing us to advance this project to the next level." Mineral resource estimates: The estimate of the inferred resource to the standards of NI43-101, summarized in the table below, was prepared by Garth Kirham, P.Geo., P.Geoph. Associate of Beacon Hill using revised vein interpretations and constraining solids, which define the deposit more accurately. Inferred Resources for Monument Bay -------------------------------------- Cutoff Grade Quantity Grade Contained g/Au/t tonnes g/Au/t Gold ozs -------------------------------------- 2.00 12,575,000 4.22 1,706,000 -------------------------------------- 3.00 6,304,000 5.98 1,212,000 -------------------------------------- 4.00 3,583,000 7.92 912,000 -------------------------------------- 5.00 2,308,000 9.85 731,000 -------------------------------------- 6.00 1,746,000 11.26 632,000 -------------------------------------- 7.00 1,257,000 13.13 530,000 -------------------------------------- 8.00 1,010,000 14.51 471,000 -------------------------------------- 9.00 800,000 16.10 414,000 -------------------------------------- 10.00 633,000 17.84 363,000 -------------------------------------- 11.00 506,000 19.69 320,000 -------------------------------------- 12.00 402,000 21.80 282,000 -------------------------------------- Due to the uncertainty that may be attached to Inferred Mineral Resources, it cannot be assumed that all or any part of an Inferred Mineral Resource will be upgraded to an Indicated or Measured Mineral Resource as a result of continued exploration. The conceptual mine plan incorporates underground mining methods with an ore production rate of 1,000 tonne per day with an 11 year mine life. The concept strategy employs a combination of methods, with shrinkage stoping being the primary method and longhole stoping being the secondary method. The ore will be transported to the mill via the main access ramp utilizing truck haulage. Metallurgy and Plant Design: Metallurgical testwork was carried out on Monument Bay ore by the previous owners of the project (Bema Gold) at SGS Lakefield (Lakefield, Ontario) and G&T Metallurgical Services (Kamloops, BC). The ore is not difficult to treat with two potential flowsheets being viable: Direct cyanide leaching of the ore giving approximately 95% recovery, whilst flotation recovery of the ore and leaching the flotation concentrate gives a somewhat lower recovery of 92.5%. In both options significant gold can be recovered by gravity ahead of other processing. At the proposed 1000tpd treatment rate the direct leaching process has been selected. At significantly higher treatment rates, the flotation option would possibly offer some benefits. Power Supply: Electrical power supply will be provided from a grid connection to the Manitoba transmission system. Preliminary information from Manitoba Hydro indicates that there are two possibilities, namely a 25 kV supply from Red Sucker Lake about 40 kilometres away, or a 138 kV supply from God's Lake Narrows which is about 60 kilometres away. It is likely that the 25 kV supply will not be sufficient for the Monument Bay load and large motor starting duty, however further study must be carried out before this option can be eliminated. This PEA is based on selecting the 138 kV option due to its greater stability and, likely, reliability. Indicative capital costs are about $18.5 million for the 138 kV option and about $10 million for the 25 kV option. As the power tariff is higher for the 25 kV supply than the 138 kV supply, there is a payback on the additional capital cost of the 138 kV supply (about $300,000 per year). Likely construction time would be about 2 years following a full commitment to proceed. In either case, a main site substation would be required costing about $1.5 million for the 138 kV option and $500,000 for the 25 kV option. Infrastructure: An airstrip will be constructed at site to provide year-round access, while ground access will be possible by a winter road from Red Sucker Lake some 40km away. Additional facilities will consist of a camp, dry, maintenance facilities, warehouse, offices, fuel storage and explosives and cap magazines. Access roads to the facilities will be constructed. Capital and Operating Costs: Initial capital expenditures have been estimated at $140 million with ongoing capital at $18 million. Average operating costs are estimated to be $105.93/tonne of ore processed. It is expected that 708,300 ounces of gold will be produced over the eleven year mine life. Financial Analysis: A financial analysis was conducted at a gold price of US$750/oz, an exchange rate of US$1 equals CAD$1.25, a production rate of 360,000 tonnes per annum for 11 years and an overall grade of 6.33 g/t gold. The results of the analysis indicate that the property would generate an IRR of 8.14% and an undiscounted NPV of $45 million. Sensitivity analysis indicate that an increase of 5% in mining grade, a reduction of 10% in capital cost, and a reduction of 10% in operating cost could achieve a 15% IRR. An IRR of 15% may also be achievable if an additional 40% potentially recoverable mineral resource can be defined that would allow for a production rate of some 504,000 tonnes per annum. Base Case and Financial Model Table: Production rate: 1,000 tonnes per day Grade: 6.33 g/t Recoveries: 93% Output: 64,000 ounces gold per year (average) Mine life: 11 years Financial Parameters: Gold price: $750(US) per ounce Exchange rate: $1(US) equals $1.25(CAN) Capital cost: $140.1 million (CAN) Operating cost: $105.93/tonnes of ore processed (i) After tax NPV (Net Present Value) at $US750/oz gold price (taxes are approximate) NPV (0% discount) $45.0 million NPV (5% discount) $ 7.4 million After tax internal rate of return: 8.14 per cent (i) After tax NPV (Net Present Value) at $US950/oz gold price (taxes are approximate) NPV (0% discount) $164.0 million NPV (5% discount) $ 96.4 million After tax internal rate of return: 22.48 per cent W. Peter Stokes, P. Eng, President of Beacon Hill, is independent of Rolling Rock and is the qualified person in accordance with NI 43-101 and has reviewed and approved the content of this release. |
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