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NEWS RELEASE TRANSMITTED BY CCNMatthews
FOR: HIGH RIVER GOLD MINES LTD.
TSX SYMBOL: HRG
JUNE 14, 2004 - 16:40 ET
High River Gold Releases Bankable Feasibility Study
Results for the Taparko-Bouroum Gold Project
TORONTO, ONTARIO--(CCNMatthews - Jun 14, 2004) - (TSX:HRG) - High
River Gold Mines Ltd. ("High River") is pleased to release the
results of the recently completed bankable feasibility study for
the combined Taparko-Bouroum Gold Project, located in Burkina
Faso, West Africa. High River owns an 80% interest in the 1,204
square kilometre Taparko property with the Government of Burkina
Faso holding the remaining 20% interest (5% of which is
participating). The Bouroum property is held by AXMIN Limited;
negotiations are currently underway regarding the possible
acquisition by High River of AXMIN's interest in Bouroum. There
are a number of deposits on both properties of which six will be
exploited, three located on each of Taparko and Bouroum.
During 2003, High River initiated a feasibility study utilizing a
combination of international and in-house engineering expertise
to meet international standards as well as Burkina Faso
regulatory and permitting requirements. Financial analysis
highlights from the Feasibility Study are presented in Table 1,
results including IRR and NPV are presented in Table 2 and
operating highlights underlying the study are presented in Table
3. Talks are well advanced with financial institutions to secure
debt funding for the project.
/T/
Table 1. Financial Analysis Highlights.
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Average Cash Cost per ounce of gold (US$) $204
Government Royalty per ounce of gold (3%) $10.50
Average Operating Cost per tonne of ore (US$) $17.24
Capital Expenditures (US$)(1) $51.9 million
Sustaining Capital (US$) $ 4.0 million
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(1) Includes 10% Contingency
The project is Value Added Tax (VAT) Exempt during the
development and construction phase.
Table 2. Financial Analysis Results (IRR and NPV)
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Gold Price
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$350/oz $400/oz $450/oz
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Internal Rate of Return (IRR) 15.5% 24.6% 32.9%
Net Present Value (US $): (0%) $38.0 $65.8 $93.9
(5%) 20.4 41.3 62.3
(10%) 8.6 24.7 40.8
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Table 3. Operating Highlights.
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Measured and Indicated Resources(1)
- Taparko 10.5 million tonnes @ 2.7 g Au/t
- Bouroum 2.2 " " @ 3.1 g Au/t
Ore Reserves(1)
- Taparko 6.8 " " @ 2.8 g Au/t
- Bouroum 861,000 tonnes @ 3.97 g Au/t
Mine Life 7.6 years
Average O/P Stripping Ratio (W/O)
- Taparko 4.36 : 1
- Bouroum 7.21 : 1
Processing Plant Throughput
(tonnes/year) 1.0 million
Overall Gold Recovery
(Taparko/Bouroum)
- Oxide 97.5 / 97.4%
- Transition 94.1 / 90.0%
- Sulphide 90.5 / 84.3%
Total Gold Produced 684,700 oz.
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(1) Mineral resource and reserve estimates are in accordance with
National Instrument 43-101.
/T/
Project Schedule
The current project schedule is presented in Figure 1. Commercial
production is expected to be reached during the fourth quarter of
2005, after a one and a half year construction period. This is
based on all permits and debt financing being in place by the end
of the second quarter of 2004.
/T/
Figure 1. Project Schedule.
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Component 2004 2005
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Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
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Detailed Engineering x x
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Procurement x x x
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Site Preparation x
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Roads x x x x
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Mine Development x x
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Processing Plant Construction x x x x
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Infrastructure Facilities x x x x
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Tailings Storage Construction x x x
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Electrical/Power x x x x
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Commissioning x
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Commercial Production x
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/T/
Overview
The Bankable Feasibility study for the 1.0 million tonnes per
year Taparko-Boroum Project was prepared by a number of
independent consulting organizations and High River Gold
personnel. The Qualified Person in charge of the overall
execution of the feasibility study is Daniel G. Vanin, P. Eng.,
High River's Chief Operating Officer. The geology and mineral
resource estimate, open pit optimization, mineral reserves and
mining sections were provided by SRK (Canada) Inc., Toronto,
Canada. Geotechnical evaluations were performed by Golder
Associates, Canada. Metallurgical testwork was performed by
Lakefield Research, South Africa and SAG mill sizing work was
performed by Minnovex, Toronto, Canada. Processing plant and
infrastructure requirements assessments were performed by
Metallurgical Design and Management, South Africa, with tailings
storage and water management portions provided by ECMP, South
Africa. Roche Limited, Consulting Group, Canada prepared the
environmental sections. Remaining portions were prepared by High
River Gold.
The Taparko-Bouroum Mine is planned to be an open pit operation
using excavators, a loader and trucks. The processing plant will
be comprised of crushing, a semi-autogenous/ball mills
combination for grinding, gravity concentration and
carbon-in-leach (CIL) gold extraction. Gold is recovered from
carbon by pressure stripping and electrowinning, with gold
smelted into dore bars on site.
Mineral Resource/Reserve Estimation
During 2003, SRK conducted an audit of the resources in the
Taparko-Bouroum Deposits. 3-D wireframe models were created from
a GEMCOM database which for the Taparko Zones contains in excess
of 680 core and reverse circulation drill holes and 107 surface
trenches. The current database for the Bouroum Property consists
of 295 core and reverse circulation holes. Grade capping for the
deposits were determined and varied between 15 grams Au per tonne
and 40 grams Au per tonne. A cut-off grade of 1 gram Au per tonne
was used to define the mineralized envelope and preserves
continuity while ensuring all potentially economic mineralization
is included in the wireframe models.
The mineral resources have been calculated consistent with "CIM
Standards on Mineral Resources and Reserves - Definitions and
Guidelines" the report of the Standing Committee on Reserve
Definitions dated October, 2000. At a 1 gram Au per tonne cut-off
grade, the Indicated Mineral Resources are estimated at 10.5
million tonnes at an average grade of 2.7 grams Au per tonne for
Taparko and 2.2 million tonnes at an average grade of 3.1 grams
Au per tonne for Bouroum.
Mineral Reserves
The mineral reserves were developed by SRK using Whittle 4X open
pit optimization software, with a mining rate of 1.0 million
tonnes of ore per year. The optimized pit shell was then adjusted
to include haul roads and minimum mining widths for equipment.
The mineral reserves at $US350 per ounce of gold and including 10
percent dilution are:
/T/
Taparko 6.75 million tonnes 2.78 g Au/t 604,270 ounces
contained gold
Bouroum 861,000 tonnes 3.97 g Au/t 109,993 ounces
contained gold
/T/
Mining
Mining operations will be carried out in six open pit operations,
three at Taparko and three at Bouroum. Ore and waste will be
mined using primarily two excavators, one loader as required and
ten haul trucks, all diesel operated. The excavator will be
equipped with 5 cubic metre buckets, the loader with a 6.5 cubic
metre bucket and the trucks will be 54 tonnes capacity. All ore
and waste (except the Saprolite waste) will be drilled and
blasted. Ore will be hauled by truck to the processing plant. Ore
from Bouroum will be trucked approximately 45 kilometres to the
Taparko processing plant for treatment. Waste rock will be placed
in waste stockpiles located adjacent to open pit operations. The
mine production schedule is based on mining 1.0 million tonnes of
ore per year. The resulting mine life is approximately 7.6 years.
The Bouroum operations are mined over 3 years with a total
average stripping ratio of 7.21. The Taparko operations extend
over the total mine life with an average stripping ratio of 4.36.
Metallurgy
The Taparko-Bouroum deposits are a combination of lower
grade/medium volume (Taparko) orebodies and higher grade/low
volume (Bouroum) orebodies. The ore exhibits no refractory
characteristics. Ores consist of oxide, transition and sulphide
mineralization.
Extensive past testwork had been performed on Bouroum ores. The
feasibility study testwork focused on Taparko material with only
variability work performed on the smaller Taparko deposits and
also on Bouroum ore (because of past testwork). Metallurgical
testing has shown the ore to be amenable to cyanide leaching and
concentrating of free gold by gravity separation. The feasibility
testwork was performed by Lakefield Research, South Africa.
Overall processing plant gold recoveries for oxide, transition
and sulphide materials are expected to be 97.5 / 97.4%, 94.1 /
90.0% and 90.5 / 84.3% for Taparko and Bouroum ores respectively.
Processing
The processing plant will crush the ore and grinding will utilize
a semi-autogenous mill followed by secondary ball mill grinding.
A gravity recovery circuit, for recovery of free gold in the
grinding section, will produce a gravity concentrate.
Subsequent gold extraction will be by carbon-in-leach using
cyanide, pressure stripping of gold from the carbon,
electrowinning of gold from solution and refining to produce gold
dore bars.
The plant and infrastructures have been designed to allow for an
expansion.
Tailings and Water Management
Tailings will be placed as a slurry and solids settled out, in an
impoundment area lined with an HDPE geomembrane. The facility
will include a perimeter dam. Water will flow to a return water
reservoir where the water will be pumped back to the processing
plant for reuse.
Process and potable water for the project will be provided from a
new reservoir on the Taparko property fed from the existing
Yalogo Reservoir, nine kilometres from the mine property. Potable
water will be provided from wells drilled on the Taparko and
Bouroum Properties.
Infrastructure and Services
The mine is located 200 kilometres north east of the capital city
of Ougadougou, via a 100 kilometre paved road and 100 kilometre
gravel road. Both are serviceable for the project. Freight
destined for the mine will arrive at the port of Tema in Ghana
and be trucked from there.
Electrical power will be provided by on site diesel generators
with a total operating capacity of 8.4 mW. Other services
facilities to be constructed on site include a main entrance
security building, mine maintenance shop, warehouse,
administration building, security and changehouse building for
the processing plant, fuel and lubricants storage and
distribution, explosives magazines, water collection and
treatment networks, sanitary landfill and sewage treatment
facilities. A camp to accommodate and provide meals for the
employees will be built and include kitchen, catering and
recreational facilities
Environmental Management
An Environmental Impact Assessment study was carried out by Roche
Limited and local Burkina Faso consultants. All sources of impact
were assessed and impacts minimized in the design and operations
phase. Off-site and on-site monitoring will be undertaken during
the life of the mine and audits of performance provided by
external organizations.
Capital Expenditure Estimates
The total capital expenditure required for the project is
forecast at US $51.9 million. The breakdown of capital
expenditures, with a contingency of 10% included, is shown in
Table 4.
/T/
Table 4. Capital Expenditures
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Component Cost (US $ millions)
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Infrastructure 3.6
Open Pit Equipment and Facilities 8.8
Processing Plant 11.9
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Tailings & Water Management 6.7
Power & Communications 5.5
General & Administration 2.9
Construction & Shipping 12.5
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TOTAL EXPENDITURES US $51.9
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/T/
Operating Cost Estimates
Total average cash costs, including royalty, for the life of the
mine are US $214 per ounce of gold. The average operating cost
per tonne of ore is US $17.24. Unit operating costs are shown in
Table 5.
/T/
Table 5. Unit Operating Costs
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Component Cost (US $/t)
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Mining 6.06
Processing 8.21
General & Administration 2.53
Other (Fees,etc.) 0.44
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TOTAL OPERATING COST per tonne US $17.24
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/T/
Expansion Strategy
High River has designed the Taparko facility with a longer term
operation in mind with the belief there is excellent potential to
define additional satellite deposits. High River controls,
directly or indirectly through an agreement with Jilbey Gold
Exploration Ltd., in excess of 3500 square kilometres of
prospective property within trucking distance of the planned
Taparko mill. The agreement with Jilbey provides High River with
back-in and operatorship rights on discoveries within trucking
distance of the mill and a right of first refusal on discoveries
outside trucking distance.
A sensitivity study, using a gold price of US $400 per ounce,
more than doubles the gold resource to 1.3 million ounces for the
three Taparko pits. This significantly increased resource at US
$400 gold demonstrates the potential for expanded production
and/or an extended mine life at Taparko.
Forward-Looking Statements
This report contains forward-looking statements based on current
expectations. These forward-looking statements entail various
risks and uncertainties that could cause actual results to differ
materially from those reflected. Risk and uncertainties about the
Company's business are more fully discussed in the Management's
Discussion and Analysis published in the Company's Annual Report
and Annual Information Form.
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
High River Gold Mines Ltd.
David Mosher
President and CEO
(416) 947-1440
(416) 360-0010 (FAX)
or
High River Gold Mines Ltd.
Don Whalen
Chairman
(416) 947-1440
(416) 360-0010 (FAX)
highrivergold@hrg.ca
www.hrg.ca
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