Sulliden Announces Results of Shahuindo Feasibility Study
TORONTO, Sept. 26, 2012 /CNW/ - Sulliden Gold Corporation Ltd. ("Sulliden", or the "Company") (TSX: SUE) (BVL: SUE) (OTCQX: SDDDF) announces the results of a positive Feasibility Study by Kappes, Cassiday & Associates and Mine Development Associates to develop the epithermal gold and silver deposit located on its 100% owned Shahuindo property in Peru.
Highlights of the Feasibility Study 1, 2:
- Pre-production capital costs of $131.8 million3
- 10,000 tonnes per day operation producing 87,700 oz of gold equivalent per annum4
- Pre Tax Internal Rate of Return of 52.2%
- After Tax Internal Rate of Return of 37.8%
- Total cash operating costs of $552/oz gold 5
- LOM average gold grade of 0.84 g/t and average silver grade of 9.50 g/t
The Feasibility Study demonstrates a straightforward mining project including a shallow open pit mine with a heap leach and a conventional carbon adsorption (Adsorption-Desorption-Recovery (ADR) plant) processing plant for precious metal recovery. The project requires initial capital of $131.8 million that will support a mining rate of 3.65 million tonnes per year, producing gold at an average cash cost of $552 per ounce and average annual production of 87,700 gold equivalent ounces. Highlights of the project performance are summarized in Table 1.
The mining scenario presented in the Feasibility Study considers only approximately 40% of the gold ounces from the total oxide mineral resource (see Mineral Resource press release from September 5, 2012). Although the mineral resources currently outlined on the property could support a significantly higher mining rate and production profile, it is the Company's preference to build a low capital cost and smaller footprint operation. This initial mining scenario will act as a foundation for future production growth and will also provide the Company with the opportunity to fund future expansions from internally generated cash flow.
Peter Tagliamonte, President and CEO, commented "The completion of the Feasibility Study marks an important milestone towards our goal of becoming a gold producer. We are pleased to be able to deliver an initial project study with modestly sized capital costs that we believe should provide faster cash flow generation, expeditious permitting, and a shorter construction schedule. Future growth is anticipated once in production and we plan to fund this expansion from internal cash flows."
The Technical Report will be posted on Sulliden's website at www.sulliden.com and on SEDAR at www.sedar.com, within 45 days following this news release.
Table 1 - Base Case Operating Highlights and Project Performance of Feasibility Study
| Financial Analysis | |
| Internal Rate of Return (IRR), Pre-Tax | 52.2 % |
| Internal Rate of Return (IRR), After-Tax 6 | 37.8 % |
| Average Annual Cash Flow, Pre-Tax | $ 70.1M |
| Net Present Value @ 5%, Pre-Tax | $ 382.9M |
| Average Annual Cash Flow, After-tax | $ 52.1M |
| Net Present Value @ 5%, After-Tax | $ 248.6M |
| Gold Price Assumption ($/Ounce) 2 | $ 1,415 |
| Silver Price Assumption ($/Ounce) 2 | $ 27 |
| After-tax Pay Back Period | 2.2 years |
| Capital Costs 3 | |
| Pre-Production Capital | $ 131.8M |
| Working Capital and initial fills | $ 8.5M |
| Sustaining Capital (life of mine) | $ 47.8M |
| Operating Costs (Average life of mine) 8 | |
| Mining | $ 5.66/Tonne Processed |
| Processing | $ 4.51/Tonne Processed |
| G&A | $ 1.77/Tonne Processed |
| Total Operating Cost/Tonne Ore 7 | $ 11.94/Tonne Processed |
| Total Cash Operating Costs (per oz of gold) | $ 552/Ounce |
| Cash Operating Costs before royalty | $ 523/Ounce |
| Production Data | |
| Life of Mine | 10.4 Years |
| Mine Throughput (Ore) | 3.65 M TPY / 10,000 TPD |
| Metallurgical Recovery Au | 85.8% |
| Average Annual Gold Production | 84,500 Ounces |
| Metallurgical Recovery Ag | 15% |
| Average Annual Silver Production | 167,200 Ounces |
| Total Gold Produced (AuEq) | 909,500 Ounces |
| Average LOM Strip Ratio (waste:ore) | 1.91:1 |
Additional Technical Information Related to the Feasibility Study
Financial Analysis
Projected prices of $1,415 per ounce of gold and $27 per ounce of silver were used as the base case in the Feasibility Study. These figures are three-year trailing average prices at August 31, 2012. The financial analysis for the base case indicates a project with a pre-tax IRR of 52.2% generating $ 52.1 million average annual after-tax cash flow with a payback period of 2.2 years. The table below outlines metal price sensitivities for the Shahuindo Project.
Table 2 - Metal Price Sensitivity Table
| Gold Price (US$/oz) |
Silver Price (US$/oz) 9 |
IRR Pre-Tax (%) |
IRR After-Tax (%) |
Cash Costs per oz Au 5 |
Payback After-tax (Yrs) |
| $900 | $17 | 19.0% | 13.5% | $509 | 4.8 |
| $1,100 | $21 | 33.2% | 23.9% | $524 | 3.2 |
| $1,300 | $25 | 45.6% | 33.0% | $541 | 2.5 |
| $1,500 | $29 | 56.9% | 41.3% | $559 | 2.0 |
| $1,415 (Base Case) |
$27 (Base Case) |
52.2% | 37.8% | $552 | 2.2 |
| $1,765 (Spot Price10) |
$34 (Spot Price 10) |
70.8% | 51.5% | $585 | 1.7 |
Project Location and Infrastructure
The Shahuindo Project is comprised of approximately 9,200 hectares of mining concessions and 10,800 hectares on option and is situated in a prolific geological gold belt in the Department of Cajamarca in northern Peru. The Project is approximately 80 kilometers (2.5 hour drive) from the city of Cajamarca, which hosts a pool of experienced workers and suppliers and acts as the main service center for the many mine operations in the region. In 2011, a main North-South running national high-tension electric transmission line was installed within the east side of the Shahuindo property. Electric power for the Project will be provided via a switchyard and substation connection to this line.
Geology
The Shahuindo property is located in the regional flexure of a thrust and fold belt that contains a large-scale epithermal gold and silver system that extends over an area of 8 km by 4 km and vertically to a depth of at least 400 metres. The current oxide mineral resource outcrops on surface and extends to an average depth of 150 metres along a 3.8 km strike length of one of these fault systems named the "Central Corridor". The oxide mineralization in the Central Corridor is followed by a thin transition layer with non-oxidized material continuing below it at depth. Good gold grades continue to depth, but, due to the non-oxidized nature of the mineralization, a different processing method would be required.
Mining
Oxide ore is forecasted to be mined in a shallow open pit with an owner operated mining fleet. Mining bench height will be 8 meters. The life of mine stripping ratio is 1.91:1. Ore will be trucked to a crushing and agglomeration facility near the mine where it will be crushed to 100% passing 32mm; agglomerated with cement; and conveyed to the leach pad. Waste from the mine will be sent to a single dump located adjacent to the mine.
Metallurgy and Processing
Gold mineralization at the Shahuindo property occurs as very fine particles dispersed in iron oxides that are typically associated with structural features such as breccias and contact points between sediments and porphyries. The ore at Shahuindo exhibits very good gold recovery with conventional heap leach cyanidation. Gold and silver are recovered from a heap leach solution with a carbon adsorption facility (ADR plant). Column leach tests returned average gold recoveries of 89% and demonstrated rapid leach characteristics, with 85% of gold recovered in first 20 days. Metal recovery values used in the Feasibility Study were calculated using test work results that were adjusted to compensate for actual heap performance with gold recovery set at 86% and silver recovery at 15% for oxide ore. In order to ensure and maintain consistent precious metal recoveries, the treatment circuit incorporates primary and secondary stage crushing circuits as well as agglomeration with cement.
Mineral Resources and Reserves
The Feasibility Study considers a new mineral resource estimate that was calculated based on a block model that includes assay data from 750 drill holes totaling 132,000 metres. Please refer to the Company's press release dated September 5, 2012 for more details.
The Feasibility Study mine plan has a life of mine average gold grade of 0.84 g/t and an average silver grade of 9.50 g/t.
Table 3 - Mineral Resource Summary
| Gold contained (ounces) |
Gold grade (g/t) |
Silver contained (ounces) |
Silver grade (g/t) |
Tonnes (t) | Gold grade Eq.g/t |
|
| Total Measured & Indicated Mineral Resources | 2,438,000 | 0.52 | 33,370,000 | 7.1 | 147,310,000 | 0.54 |
| Measured Mineral Resources | ||||||
| Oxide (Reported at 0.2 g/t AuEq cut-off) | 766,000 | 0.59 | 10,530,000 | 8.1 | 40,500,000 | 0.62 |
| Mixed (Reported at 0.35 g/t AuEq cut-off) | 19,000 | 0.75 | 850,000 | 33.7 | 780,000 | 0.964 |
| Indicated Mineral Resources | ||||||
| Oxide (Reported at 0.2 g/t AuEq cut-off) | 1,624,000 | 0.48 | 21,080,000 | 6.3 | 104,840,000 | 0.51 |
| Mixed (Reported at 0.35 g/t AuEq cut-off) | 29,000 | 0.77 | 910,000 | 23.8 | 1,190,000 | 0.92 |
| Total Inferred Mineral Resources | 1,628,000 | 0.71 | 46,560,000 | 20.4 | 71,000,000 | 1.20 |
| Inferred Mineral Resources | ||||||
| Oxide (Reported at 0.2 g/t AuEq cut-off) | 124,000 | 0.40 | 1,330,000 | 4.3 | 9,570,000 | 0.42 |
| Mixed(Reported at 0.35 g/t AuEq cut-off) | - - | 0.68 | 10,000 | 12.2 | 20,000 | 0.76 |
| Sulphide (Reported at 0.5 g/t AuEq cut-off) | 1,504,000 | 0.76 | 45,220,000 | 22.9 | 61,410,000 | 1.20 |
Notes related to the Mineral Resource Table:
Please note that mineral resources are not mineral reserves and do not have demonstrated economic viability. Rounding of the numbers in the mineral resources listed above may cause apparent inconsistencies.
Table 4 - Mineral Reserve Summary
| Gold contained (ounces) |
Gold grade (g/t) |
Silver contained (ounces) |
Silver grade (g/t) |
Tonnes (t) |
Gold grade Eq.g/t |
AuEq Ounces |
|
| Total P&P Mineral Reserves | 1,022,000 | 0.84 | 11,561,000 | 9.5 | 37,847,000 | 0.85 | 1,032,000 |
| Oxide | 1,015,000 | 0.84 | 11,404,000 | 9.4 | 37,589,000 | 0.85 | 1,026,000 |
| Mixed 11 | 6,000 | 0.76 | 157,000 | 18.9 | 258,000 | 0.78 | 6,000 |
| Proven Mineral Reserves | |||||||
| Oxide | 434,000 | 0.90 | 5,008,000 | 10.4 | 14,994,000 | 0.91 | 438,000 |
| Mixed 11 | 4,000 | 0.71 | 93.000 | 17.6 | 165,000 | 0.72 | 4,000 |
| Total | 437,000 | 0.90 | 5,102,000 | 10.5 | 15,159,000 | 0.91 | 441,000 |
| Probable Mineral Reserves | |||||||
| Oxide | 582,000 | 0.80 | 6,396,000 | 8.8 | 22,595,000 | 0.81 | 588,000 |
| Mixed 11 | 3,000 | 0.87 | 64,000 | 21.3 | 93,000 | 0.89 | 3,000 |
| Total | 584,000 | 0.80 | 6,459,000 | 9.4 | 22,688,000 | 0.81 | 591,000 |
Notes related to the Mineral Reserve Table:
Mineral reserves are reported based on open pit mining within designed pits based on variable gold g/t cutoff grades where Oxide: 0.35, 0.35, 0.30, 0.35, 0.30, 0.30 for Phases 1, 1B, 2, 3, 4, and 5 respectively; and Mixed: 0.35, 0.35, 0.33, 0.35, 0.33, 0.33 for Phases 1, 1B, 2, 3, 4, and 5 respectively. These phases represent the sequential operational phases of the mine. The mineral reserves incorporate estimates of dilution and mining losses. The cut-off grade and pit designs are considered appropriate for long term metal prices of US$1,340/oz gold and US$25/oz silver. Rounding of the numbers in the mineral reserves listed above may cause apparent inconsistencies.
Next Steps
The completion of the Feasibility Study marks an important milestone in the development of the Shahuindo Project. The next important step for the Company will be the completion and submission of the Environmental and Social Impact Assessment (ESIA) Report as part of the Project's permitting process. The submission of this report to the Peruvian Ministry of Energy and Mines is expected before the end of December 2012. With the completion of the Feasibility Study, the Company will now move debt financing discussions forward with major mobile equipment manufacturers for the mobile equipment fleet of the mine.
Notes to this press release
- All currency figures are expressed in US dollars, unless noted otherwise.
- Base Case gold and silver prices for the feasibility study are the three-year trailing average of Au $1,415 oz and Ag $27 oz at August 31, 2012. Please see caution regarding forward-looking information.
- The pre-production and sustaining capital costs do not include the refundable 18% IGV tax (Value Added Tax); and the sustaining capital does not include the salvage value of plant and equipment or the reclamation and closure costs.
- The gold equivalent ounces are calculated using the three-year trailing average of Au $1,415 oz and Ag $27oz at August 31, 2012 for a gold:silver price ratio of 52.4. That is, 52.4 oz of silver is equal in value to 1 ounce of gold.
- Cash operating costs per ounce represent the mine site operating costs such as mining, processing, metal transport, refining, administration, government imposed royalties and government imposed 8% worker's profit sharing, net of silver by-product sales revenue and are exclusive of amortization, reclamation, capital, and exploration and development costs. Due to the inclusion of royalties and the 8% workers profit sharing in cash costs per ounce, cash costs increase or decrease as the price of gold fluctuates up or down.
- All after-tax values listed in this press release reflect the new royalty and tax regime implemented by the Peruvian Government in October 2011.
- Number does not include Au/Ag refining charges or Peruvian government royalty and 8% workers profit sharing.
- Numbers based on 10.4 years of production life.
- Silver prices in first four cases are based on gold to silver price ratio of 52.4
- Spot prices as of September 24, 2012
- The Mixed material is classified as a transition zone that contains both oxide and sulphide material. The higher cut-off grade used to determine economical value takes into account the lower metallurgical recoveries that were observed in the metallurgical test results of the transitional material. Mixed ore will be processed as oxides.
Qualified Person
The Feasibility Study was prepared by Kappes, Cassiday & Associates under the supervision of Mr. Carl Defilippi and the Mineral Reserve calculation was completed under the supervision of Thomas L. Dyer, PE, from Mine Development Associates, both independent Qualified Persons as defined under National Instrument 43-101. Joe Milbourne, Vice President of Operations and Technical Services for Sulliden is the Company's designated Qualified Person for the purposes of the Feasibility Study. Messrs. Defilippi, Dyer and Milbourne have reviewed and approved the scientific and technical contents of this press release.
About Sulliden
Sulliden Gold Corporation Ltd. is a Canadian precious metals company focused on the exploration and development of its wholly owned Shahuindo Gold and Silver Project, located in a prolific gold producing district in northern Peru. Sulliden is listed on the Toronto (TSX) and Lima (BVL) stock exchanges under the symbol SUE, as well as the premier tier of the U.S. Over-the-Counter (OTC) market (OTCQX) under the symbol SDDDF. For more information about Sulliden, please visit www.sulliden.com.
On behalf of Sulliden Gold Corporation Ltd.:
| Peter Tagliamonte | Stan Bharti | |||
| President and CEO | Chairman | |||
Caution regarding forward-looking information:
This press release contains "forward looking information" within the meaning of applicable Canadian securities legislation. Forward looking information includes without limitation, statements regarding the results of the feasibility study, next steps for the property, progress in development of mineral properties, projected capital and operating expenses, future metal prices, the future financial or operating performance of the Company and anticipated production schedule. Generally, forward looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Estimates underlying the results of the feasibility study arise from engineering, geological and costing work of KCA, MDA and the Company. See the technical report relating to the feasibility study for a description of all relevant estimates, assumptions and parameters. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, geopolitical and social uncertainties; the actual results of current exploration activities; other risks of the mining industry and the risks described in the annual information form of the Company. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information 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 information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.
SOURCE: Sulliden Gold Corporation Ltd.
Toronto, Canada Head Office
Caroline Arsenault
Investor Relations Manager
(416) 861-5805
65 Queen Street West, Suite 800
Toronto, Ontario M2H 2M5
Lima, Peru Head Office
Javier Fernandez-Concha Stucker
General Manager, Peru
(511) 651-2500
Calle San Martín 845, oficina 201
Miraflores - Lima 18
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