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Lone Pine Property Positive Preliminary Economic Assessment Net Present Value of $505 Million on the Alaskite Zone | Northern BC Business
Home » Mining » Lone Pine Property Positive Preliminary Economic Assessment Net Present Value of $505 Million on the Alaskite Zone

Lone Pine Property Positive Preliminary Economic Assessment Net Present Value of $505 Million on the Alaskite Zone

January 21, 2011
Lone Pine Property Positive Preliminary Economic Assessment Net Present Value of $505 Million on the Alaskite Zone


Bard Ventures Ltd. (“Bard” or the “Company”) wishes to announce that it has received a positive Preliminary Economic Assessment (“PEA”) on the Lone Pine property covering the Molybdenum (“Mo”), Copper (“Cu”) rich Alaskite Zone (the “Property”). The Property is located approximately 15 kilometers north-northwest of Houston, British Columbia. The independent PEA was prepared by PE Mining Consultants Inc. (“PE”), of Brampton, Ontario., with EHA Engineering Ltd. (“EHA”) providing the metallurgical components. All currency amounts in this news release are in Canadian dollars unless otherwise indicated.

Conclusions and Recommendations

PE concludes that the Property has favourable economic potential as an open pit mine producing Mo and Cu concentrates. The base case economic analysis contemplates an average life-of-mine strip ratio of 5:1 (including the pre-stripping), a 40,000 tonnes per day mill feed rate and a 12 year mine life. Pre-production capital expenditures, including contingencies, are estimated to be $435 million. The Property has an estimated pre-tax net present value (“NPV”) of $505 million (at a 5% discount rate) and an internal rate of return (the “IRR”) of 12.4% using a base case Mo price of US$19.00 per pound and Cu price of US$3.00 per pound. These prices correspond to the approximate three year trailing average prices of these metals as of December 31, 2010.

The estimated average resource grades including mine dilution and losses and the Life-of-Mine metal production from the Property, are listed in the following table:

PE notes that the PEA is preliminary in nature and its mineable tonnage includes Inferred Resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the projections in a preliminary assessment incorporating these resources will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The potentially mineable mineral resources in this press release were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions.

PE recommends that the Company advance the project with additional exploration and delineation drilling, as well as with studies in metallurgical, geotechnical and environmental matters, with the intention to continue the project to the feasibility stage.

Economic Analysis

The economic analysis uses a simple pre-tax cash flow model where undiscounted revenues during the 12 year mine life are projected on an annual basis. The mine would produce a Mo concentrate and a Cu concentrate. The currency exchange rate used was $0.95USD/$1.00CDN.

Highlights:

  • Total Undiscounted Cash Flow of $1,234 million
  • With a 5% Discount Rate (base case): $505 million
  • With a 7% Discount Rate: $321 million
  • With a 10% Discount Rate: $112 million
  • Internal Rate of Return of 12.4%
  • Project payback period from start of production is 8.6 years
  • Maximum negative cumulative cashflow of $624 million occurs in the fourth year of production

The following sensitivity table demonstrates the positive effect on project economics if higher Molybdenum prices are realized during the 12 year mine life:

Sensitivity of Project Economics to Mo Prices at Various Discount Rates

Development Plan

The mine has been planned as a conventional open-pit mining operation producing 40,000 tonnes per day of mill feed at full production. The plan anticipates mining 14.0 million tonnes of ore annually based on a 350 day operating year. The stripping ratio for the first 7 years of operation (excluding prestripping of some 10 million tonnes) is approximately 7.0:1 but reduces to an average of 1.8:1 for the remaining 5 years of operations. Overall pit slopes have been designed at approximately 50 degrees.

Drilling will be carried out by electric, track mounted drill units. Operating bench heights of 15 metres have been assumed for the ore and waste mining operations. Electric hydraulic shovels with 327 tonne waste haul trucks and 222 tonne ore haul trucks are contemplated for this operation, with annual total material movement of up to 114 million tonnes (325,000 tonnes per day).

Mining operations will commence with an initial mill feed grade of 0.035% Mo, which increases as the mine deepens. In the last 7 years of the mine life, the average Mo grade will be approximately 0.091%. Cu grades will remain relatively constant throughout the mine life at approximately 0.034%. The project is expected to produce 214 million pounds of Mo and 72 million pounds of Cu over a 12 year mine life. Process recoveries of 85% for Mo and 65% for Cu were utilized in the cash flow model while the metal payables were 98.5% for Mo and 85% Cu.

The mine plan contemplates transporting the resource by truck to a primary crushing and processing plant near the open pit. The processing plant will utilize the conventional processes of crushing, grinding and froth flotation to produce separate concentrates of Cu and Mo. The plant tailings will be pumped to a tailings management facility. Waste rock will be deposited in an adjacent rock storage facility.
Estimated mine closure and site rehabilitation cost allowances have been included in the economic analysis. During mine operation, health and safety and environmental protection costs, including effluent treatment, have also been estimated.

Eugene Beukman, President and Chief Executive Officer of the Company stated: “The PEA ascribes an estimated pre-tax NPV to the Property of approximately $505 million, using a discount rate of 5%. The Molybdenum price used in this PEA was US$19.00 per pound, which approximates the December 31, 2010 three year trailing average price. We are very encouraged by these results and we still believe we can improve the project economics through continued infill drilling of Inferred Resources and in further exploration of the Quartz Breccia Zone and 61 Zone on the Property, which are in close proximity to the area evaluated by the PEA. In addition, we are strongly optimistic that the price of Molybdenum which will actually be realized during the proposed mine life, will be significantly higher than utilized in this PEA. This would result in a substantially higher NPV and the IRR. Bard will continue to advance this strategic deposit which is well located in terms of ideal infrastructure, secure land tenure in a politically stable geographic location.”

The Property has an ideal location for operations with established infrastructure including:

  • Highway 16;
  • a natural gas pipeline;
  • a major hydro power transmission line and transformer sub-station; and
  • is located only 15 kilometers from the CN rail line in Houston, BC.

Bard is earning a 100% interest in the Property under the terms of an option agreement (the “Agreement”) (see News Release dated September 15, 2006). All conditions have been met and the Property remains in good standing with the vendors. The Company will earn its 100% interest in terms of the Agreement. The Lone Pine exploration work is being conducted under the supervision of Qualified Person, Rick Kemp, P.Geo., Vice-President-Exploration of Bard.

Qualified Persons and Report

The PEA technical report, titled “Technical Report, Preliminary Economic Assessment, Lone Pine Project, Houston, BC” will be prepared in compliance with National Instrument 43-101 and filed on SEDAR at www.sedar.com within 45 days of this news release.

PE Mining Consultants Inc. is an internationally recognized, well established geological and mine engineering consulting firm specializing in the areas of NI 43-101 geological reports, resource estimates, preliminary economic analyses of mining projects and preliminary feasibility studies. This PEA was completed under the direction of Eugene Puritch, P.Eng. and Kirk Rodgers, P.Eng. of PE who were responsible for mine design, production scheduling and overall financial analysis.

Alfred Hayden, P. Eng. of EHA was responsible for metallurgical process capital and operating costs.

Each of the individuals named above is a Qualified Person, as defined in National Instrument 43-101; is independent of the Company; and is responsible for the technical disclosure contained in this news release. Eugene Puritch, P.Eng has reviewed and approved the contents of this press release.

On behalf of:

Bard Ventures Ltd.

“Eugene Beukman”

Eugene Beukman, President

For further information please visit our website at www.bardventures.com

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This release includes certain statements that may be deemed to be “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. All statements in this release, other than statements of historical facts, that address future production, reserve potential, exploration and development activities and events or developments that the Company expects, are forward-looking statements. Although management believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance, and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploration and development successes, continued availability of capital and financing, and general economic, market or business conditions. Please see our public filings at www.sedar.com for further information.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Article source: http://www.bardventures.com/s/NewsReleases.asp?ReportID=438954

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