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NEWS RELEASE TRANSMITTED BY CCNMatthews
FOR: HIGH RIVER GOLD MINES LTD.
TSX SYMBOL: HRG
JUNE 15, 2004 - 14:33 ET
High River Gold Releases Bankable Feasibility Study
Results For The Berezitovy Gold Project
TORONTO, ONTARIO--(CCNMatthews - Jun 15, 2004) (TSX:HRG) - High
River Gold Mines Ltd. ("High River") and its Russian subsidiary,
OJSC Buryatzoloto ("Buryatzoloto"), are pleased to release the
results of the recently completed bankable feasibility study for
the Berezitovy Gold Project, located in the Amur Oblast of
southern Siberia, Russia. In 2002, High River acquired a 100%
interest in the Berezitovy property, which contains a
gold-polymetallic deposit approximately 900 metres in length and
up to 150 metres in width at its thickest sections. The project
has excellent logistics and High River is planning to develop the
project jointly with Buryatzoloto. Buryatzoloto will be the
operator.
During 2003, High River and Buryatzoloto initiated a feasibility
study utilizing a combination of International and Russian
engineering expertise to meet international standards as well as
Russian regulatory and permitting requirements. Financial
analysis highlights from the Feasibility Study are presented in
Table 1, IRR and NPV calculations are presented in Table 2 and
operating highlights underlying the study are presented in Table
3. Talks have begun 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$) $171
Government Royalty per ounce of gold (6%) $21
Average Operating Cost per tonne of ore (US$) $12.52
Capital Expenditures (US$)(1) $58.9 million
Sustaining Capital (US$) $ 4.2 million
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1. Includes 10% Contingency and US $10.0 million of recoverable
Value Added Tax (VAT).
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) 16.2% 21.9% 27.2%
Net Present Value (US $): (0%) $72.3 $103.9 $135.4
(5%) 37.9 60.4 82.9
(10%) 16.3 32.9 49.5
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Table 3. Operating Highlights
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Measured and Indicated Resources(1) 14 million tonnes @ 2.52 g Au/t
& 12.70 g Ag/t
Ore Reserves(1) 13.9 million tonnes @ 2.32 g
Au/t & 11.71 g Ag/t
Mine Life 9 years
Average O/P Stripping Ratio (W/O) 6.2:1
Processing Plant Throughput
(tonnes/year) 1.5 million
Overall Gold Recovery 87%
Overall Silver Recovery 30%
Total Gold Produced 907,000 oz.
Total Silver Produced 1,572,000 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 at the beginning of the year
2006, after a one and a half year construction period. This is
based on all permits and 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 X
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Roads X X X X X
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Mine Development X X X X
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Processing Plant Construction X X X X
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Infrastructure Facilities X X X X X
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Tailings Storage Construction X X X X X
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Electrical/Power X 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 1.5 million tonnes per
year Berezitvoy Project was prepared by AOA Buryatzoloto using a
number of independent consulting organizations. The Qualified
Person is Daniel G. Vanin, P. Eng., High River's Chief Operating
Officer. The geology and mineral resource estimate sections were
prepared by Roscoe Postle Associates Inc. of Toronto, Canada.
Open pit optimization, mineral reserves and mining sections were
provided by Micon International Limited, Toronto, Canada.
Processing plant and infrastructure requirement assessments were
performed by OAO Sibgiprozoloto, Novisibirsk, Russian Federation.
Sibgiprozoloto utilized Russian Federation consultants OAO
Vostsibenergoset, OOO Mostdorproekt and OAO Irgiredmet for
external power supply, property access and process plant
flowsheet design, respectively.
The Berezitovy Mine is planned to be a conventional open pit
operation using electric shovels and diesel trucks. The
processing plant will be comprised of crushing, a
semi-autogenous/ball mill combination for grinding, gravity
concentration and carbon in pulp (CIP) 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, Roscoe Postle conducted an audit of the resources in
the Berezitovy Deposit. A number of 3-D wireframe models were
created from a GEMCOM database which contains 17,942 assay
records in 199 diamond drill holes and 23 trenches, and from
underground development 134 cross-cut traverses and 414 drift
face and wall traverses. A 35 grams Au per tonne cutting factor
was used for the South Zone and 20 grams Au per tonne for the
North Zone. A cut-off grade of 0.5 grams 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 economic cut-off grade was 1.7 grams Au
per tonne, based on cost, revenue and recovery parameters.
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 0.9 grams Au per tonne
cut-off grade, the Indicated Mineral Resources are estimated at
14 million tonnes at an average grade of 2.52 grams Au per tonne
and 12.70 grams Ag per tonne.
Mineral Reserves
The mineral reserves were developed by Micon International using
Whittle 4X open pit optimization software, with a mining rate of
1.5 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 US $350 per ounce of gold and including
10 percent dilution are:
/T/
13.9 million tonnes 2.32 g Au/t 1.04 million ounces
contained gold
11.71 g Ag/t 5.2 million ounces
contained silver
/T/
Mining
Ore and waste will be mined using five electric shovels in ore
and waste and fourteen diesel haul trucks. The shovels will be
equipped with 5 cubic metre buckets and the trucks will be 45
tonnes capacity. All ore and waste will be drilled and blasted.
Ore will be hauled by truck to the processing plant one kilometre
distance or to a run of mine stockpile. A low-grade stockpile
(1.23 million tonnes ultimately) will also be created adjacent to
the processing plant. Waste rock will be placed in one of two
waste stockpiles, one to the north (69 million tonnes) and one to
the south (20 million tonnes) of the open pit mine. At the
planned production rate, the resulting mine life is approximately
nine years. Over this mine life the average waste to ore
stripping ratio is 6.2:1, which requires an overall average daily
production rate of 27,900 tonnes of material moved. The maximum
daily production rate will be 45,000 tonnes. Ore potential exists
at depth to extend the mine life along with processing of the low
grade stockpiled ore.
Metallurgy
The Berezitovy deposit is gold-silver-zinc-lead polymetallic, low
sulphide type mineralization with sulphide content in the range
of 5 to 10 percent. The ore is classified as primary (sulphide)
or oxidized, with the oxidized component comprising less than 7
percent of the total ore reserves.
Metallurgical testing has shown the ore to be amenable to cyanide
leaching and concentrating of free gold by gravity separation. In
January 2003, a 3.5 tonne bulk sample was tested by OAO
Irgiredmet, Russian Federation and a smaller sample was sent to
SGS Lakefield Research, Ontario, Canada for confirmatory
testwork. Subsequently a 300 tonne sample was tested at a pilot
plant in the Russian Federation. The bulk and pilot plant tests
confirmed and recommended that processing utilize gravity
separation and cyanide leaching. Overall gold and silver
recoveries are expected to be 87 and 30 percent respectively.
Processing
The processing plant will crush the ore and grinding will utilize
a semi-autogenous mill (SAG) 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 pulp leaching
using cyanide, pressure stripping of gold from the carbon,
electrowinning of gold from solution and refining to produce gold
dore bars.
Tailings and Water Management
Tailings will be filtered and stockpiled in a semi-dry storage
facility located 950 metres from the processing plant. The
facility will include a perimeter dam. The tailings with up to
13.6 percent moisture, created by the cyanide detoxification
process, will be placed in the facility. The small amount of
released water will be returned to the processing plant. Tailings
will be placed in the facility using conveyors and radial
stackers, with levelling by bulldozer. Process and potable water
for the project will be provided from a reservoir created in the
nearby Orogzhan Stream and from wells drilled nearby to the
reservoir.
Infrastructure and Services
The region where the mine is located is accessed by rail and
road. The main rail connection is provided by the Trans Siberian
railway to the town of Urusha, population 4,700. Access to the
site is by winter and summer road systems of 69 and 112
kilometres, respectively.
There is surplus, reliable, low cost hydroelectric power in the
region. A main power line extends to Skovorodino where a main
substation is located. A 101 kilometre 110 kW powerline from
Skovorodino will be constructed to supply power to the project.
Other service facilities to be constructed on site include mine
maintenance shop, vehicle garage, warehouse, administration
building, 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
will include kitchen, catering and recreational facilities.
Freight and personnel destined for the mine will arrive at a
receiving and transfer facility located in Urusha. This facility
will mainly facilitate transfer of freight from rail to truck for
materials transport to the mine.
Environmental Management
An Environmental Impact Assessment study was carried out by
Buryatzoloto and other 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 $58.9 million, including US $10 million in Value
Added Tax which is recoverable from operating cashflows. The
breakdown of capital expenditures is shown in Table 4.
/T/
Table 4. Capital Expenditures.
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Component Cost
(US$ millions)
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Permitting, Engineering, Misc. 3.0
Infrastructure 7.4
Open Pit Facilities 11.3
Processing Plant 21.8
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Tailings & Water Management 2.7
Power & Communications 5.5
Support Vehicles 0.9
Urusha Transfer Centre 1.2
Contingency 5.1
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TOTAL EXPENDITURES US $58.9
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/T/
Operating Cost Estimates
Total average cash operating costs for the life of the mine are
US $171 per ounce of gold. Total average cash costs, including
the royalty based on a US $350 gold price, are US $192 per ounce
of gold. The average operating cost per tonne of ore is US
$12.52. 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 2.88
Processing 6.20
General & Administration 2.05
Other (Fees, etc.) 1.39
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TOTAL OPERATING COST per tonne US $12.52
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/T/
Exploration
In addition to the known deposit, the property provides
significant exploration potential. A number of satellite targets,
identified by geochemical and electromagnetic methods, will be
explored in the future.
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
www.hrg.ca
or
High River Gold Mines Ltd.
Don Whalen
Chairman
(416) 947-1440
www.hrg.ca
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