CORRECTION: Esperanza Updates Cerro Jumil's Preliminary Economic Assessment
14 Septembre 2011 - 6:24PM
Marketwired Canada
The following corrects and replaces the release issued earlier today, Sept. 13,
2011 on behalf of Esperanza Resources Corp. In the first table the values listed
for IRR and NPV (5%) were listed incorrectly in both sections.
Esperanza Resources Corp. (TSX VENTURE:EPZ)(PINK SHEETS:ESPZF) is pleased to
provide the results of a recently completed Preliminary Economic Assessment
(PEA) for its 100% owned Cerro Jumil gold project in Morelos, Mexico. The study
was completed by Golder Associates with assistance from Mine Development
Associates (mine design, costing and planning) and Lyntek Inc. (plant design and
costing).
The results of the study provide confidence that the project can be economically
viable, and the Company now plans to initiate a full feasibility study with a
goal of ultimately advancing Cerro Jumil to production. "We are very pleased
with the results of the study and believe it shows a technically
straight-forward and economically robust project. We also believe that
Esperanza's current and future drill programs will continue to add new gold
resources. Esperanza's plan is to move the project into a full feasibility study
to be completed in 2012," said Bill Pincus, Esperanza's President.
The study has evaluated two options for open-pit mining and heap-leach gold
recovery. The first option considers two stages of crushing prior to heap-leach
treatment and is considered the Base Case. The second option considers direct
heap-leach treatment of run-of-mine (ROM) ore without crushing. This study
updates and significantly expands upon a previous PEA published in 2009.
Key results from the study are highlighted below (All amounts in this news
release are in US Dollars):
-- Base-Case at $1150/oz Gold Price (After Tax)
-- IRR 26%
-- NPV (5%) $122 million
-- At Near Current Gold Prices ($1700/oz) (After Tax)
-- IRR 53%
-- NPV (5%) $309 million
-- Average Gold Production 103,000 ounces per year
-- Overall Strip Ratio 2.2:1 Waste:Ore
-- Gold Recovery 75%
-- Cash Operating Costs $499 per ounce produced
-- Mine Life 6 years
-- Initial Capex $114 million (includes prestrip)
Esperanza is currently midway through a 15,000 meter expansion and in-fill drill
program and results to date have been positive (see news release of July 26,
2011: http://www.epzresources.com/release.php?R_ID=275). Drilling at Cerro Jumil
has shown a good history of upgrading inferred resources to the measured and
indicated categories and the Company anticipates that this will continue to be
the case. Resource expansion by further drilling will also become a priority.
Recent mapping and sampling of the greater Cerro Jumil concessions (15,025
hectares) reveals ten target areas that warrant further exploration. All areas
have been mapped and sampled. Most are perceived to be drill-ready, pending
appropriate permissions and permits. There are four target areas adjacent to or
in close proximity to the known resource, which could conceivably be included
within its direct operations. In addition, there are six target areas outside of
the known Cerro Jumil resource area. The current drill program will test the
adjacent targets. The Company has begun seeking permits and community approvals
to drill the additional six targets. Currently the average discovery cost at
Cerro Jumil has been less than $10 per ounce.
Esperanza is well-funded with $23 million in its treasury. This is more than
sufficient for continued drilling and feasibility studies.
Summary of Base Case and ROM Economic Models
The Base Case assumes a conventional open-pit, heap-leach operation using
company-owned mining equipment. Mined rock will be hauled to a stock-pile prior
to two stages of crushing to reduce the size to a nominal maxium size of 55mm
(approx. 2"). From there it will be conveyed to the leach pad and irrigated with
recovery solutions. Gold will be recovered from pregnant solutions utilizing
carbon adsorption, subsequent electrowinning and on-site smelting to produce a
dore. This will be shipped off-site for final refining.
The run-of-mine alternative models a direct mine-feed of assumed maxium size of
610 mm (24"). This is directly fed to the heap leach pads without crushing by
mine haul trucks. Material is then distributed on the pad by bull dozers. The
mine plan and gold recovery process from pregnant solutions is the same as the
Base Case alternative.
The property is easily accessed and has excellent infrastructure. A hydrological
study conducted for the Company has determined that the underlying aquifer is
under-utilized and that sufficient water can be easily developed by establishing
a well system.
Highlights of the Base Case and the ROM alternatives are presented as follows:
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Cerro Jumil PEA Summary
September 2011
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50 mm Crush Run-of-
Base C Assumptions (Base Case) Mine
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Mineral Resources in Mine Plan (000) M&I Inf. Same
Au (000 ounces) 741 82
Ag (000 ounces) 1,635 3,114
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Average Grade M&I Inf. Same
Au g/tn 0.72 0.40
Ag g/tn 1.6 15.2
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Annual Throughput (million tn/yr) 7.3 7.3
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Average Mining Rate (tpd) 20,000 20,000
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Mine Life (yrs) 6 6
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Average Annual Production (gold ounces 000) 106 92
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Gold Recovery 75% 65%
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Silver Recovery 25% 25%
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Waste to Ore Strip ratio 2.2 2.2
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Gross Revenue ($1150/oz) ($ million) $ 735 $ 640
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Operating Costs - net of silver credit ($/oz
Au) $ 499 $ 477
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Total Capital (excludes initial working
capital) ($ million) $120.6 $106.6
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Economic Indicators (After Tax)
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Gold Price ($/oz) $ 1150 $ 1150
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Silver Price ($/oz) $ 21 $ 21
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Royalty Rate 3% 3%
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NPV (0%) ($ million) $ 186 $ 161
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NPV (5%) ($ million) $ 122 $ 107
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IRR 27% 26%
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For mine planning purposes as used in this Preliminary Economic Assessment
a 0.20 g/tn cut-off-grade was used.
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The preliminary economic assessment is preliminary in nature, and includes
inferred mineral resources that are considered too speculative geologically to
have the economic considerations applied to them that would enable them to be
categorized as mineral reserves, and there is no certainty that the preliminary
economic assessment will be realized.
Resources in Design Pit
The study is based on the mineral resource announced on Sept. 16, 2010 (see news
release of Sept. 16, 2010: http://www.epzresources.com/release.php?R_ID=237)
which includes 935,000 gold equivalent ounces in the measured and indicated
categories, and 252,000 gold equivalent ounces in the inferred category. It does
not include the results of any drilling subsequent to that date. Mine planning
was completed using pit shells that assumed a $1060 gold price. The mine plan is
the same for the crush and ROM alternatives. Total in-pit resources after design
criteria are applied are as follows:
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Cerro Jumil In-Pit Resources
PEA Pit Design
September 2011
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Contained Contained
Tonnes Au grade Ag grade Au (000 Ag (000
(millions) (g/tn) (g/tn) ounces) ounces)
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Measured and Indicated 31.9 0.72 1.6 741 1,635
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Inferred 6.4 0.4 15.2 82 3,114
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Mineral resources that are not mineral reserves do not have demonstrated
economic viability.
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The gold and silver production forecast assumes a 105 day leaching cycle
consisting of 45 days of primary leaching and 60 days of secondary leaching to
achieve full recovery.
Operating and Capital Costs
Cash operating costs net of silver credits are estimated to be $499 and $477 per
ounce of gold produced for the Base Case and ROM alternatives respectively. On a
unit basis, operating costs are projected to be $5.75 and $4.37 per tonne mined
for the Base Case and ROM alternatives.
Initial capital expenditures for the Base Case are expected to be $114 million
including waste pre-stripping. Initial working capital sufficient for six months
of operation is estimated to be $13.6 million. Sustaining capital expenses
including closure costs are estimated to be $7 million. These capital costs are
considered to have an accuracy of +/- 35% and include a contingency 20-25% for
processing, pad construction and infrastructure.
The table below provides a summary of operating and capital costs:
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Cerro Jumil Projected Operating and Capital Costs
September 2011
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Operating Costs 50 mm Crush Run-of-Mine
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Mining ($/tn) $ 1.40 $ 1.40
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Processing ($/tn) $ 3.62 $ 2.24
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General & Admin ($/tn) $ 0.73 $ 0.73
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TOTAL Cost ($/tn) $ 5.75 $ 4.37
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Transportation & Refining ($/oz) $ 3.13 $ 3.19
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Capital Costs ($ million)
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Initial Capital
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Mine Development (Prestrip) $ 10.5 $ 10.5
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Mine Equip/Infrastructure $ 52.0 $ 52.0
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Plant/Infrastructure $ 32.1 $ 18.1
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Leach Pads $ 17.4 $ 17.4
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Owner Costs $ 1.6 $ 1.6
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TOTAL Initial Capex. $113.6 $ 99.6
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Working Capital $ 13.6 $ 13.6
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Sustaining Capital
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Mine Equip $ 1.8 $ 1.8
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Leach Pad $ 3.0 $ 3.0
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Owner Costs $ 0.2 $ 0.2
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Closure Costs $ 2.0 $ 2.0
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TOTAL Sustaining Capex $ 7.0 $ 7.0
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Metal Price Sensitivity
The sensitivity of the project to metal prices is illustrated by the following
table. The Base Case metal price of $1150/ounce gold is the trailing three-year
average price.
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Cerro Jumil Gold Price Sensitivity
September 2011
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Gold Price ($/oz) $ 950 $1050 $1150 $1250 $1350 $1450 $1550 $1700
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Base Case
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NPV (0%) ($M) $ 100 $ 143 $ 186 $ 229 $ 272 $ 315 $ 358 $ 423
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NPV (5%) ($M) $ 54 $ 88 $ 122 $ 156 $ 190 $ 224 $ 258 $ 309
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IRR 15% 21% 26% 31% 36% 41% 46% 53%
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ROM
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NPV (0%) ($M) $ 91 $ 126 $ 161 $ 196 $ 231 $ 266 $ 302 $ 354
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NPV (5%) ($M) $ 51 $ 79 $ 106 $ 134 $ 162 $ 190 $ 218 $ 260
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IRR 16% 21% 27% 32% 37% 42% 47% 54%
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Qualified Persons
The Preliminary Economic Assessment was prepared by Golder Associates under the
supervision of Ernest Schonts who is an independent "qualified person" for
purposes of Canadian National Instrument 43-101. Other independent qualified
persons who worked on this report are Tom Dyer of Mine Development Associates,
Doug Maxwell of Lyntek Inc. and Dean Turner, Independent. They have all given
their consent for this news release.
About Esperanza
Esperanza is focused on advancing the development of its principal property, the
wholly-owned Cerro Jumil gold project in Morelos State, Mexico. It is also
actively investigating 11 other exploration interests in Peru and Mexico. In
October of 2010 it announced a strategic investment which resulted in a 28%
interest in Global Minerals Ltd. (TSX VENTURE:CTG), owner of the Strieborna
silver/copper project in Roznava, Slovakia.
QUALIFIED PERSON: William Bond, CPG and Vice-President for Exploration,
Esperanza Resources is the Qualified Person (QP) under NI 43-101 responsible for
the Cerro Jumil exploration program. He has verified the drill results and other
data disclosed in this news release, including sampling, analytical and test
data. Field work has been conducted under his supervision. All samples were
submitted to ALS Chemex laboratories for analysis in Vancouver, Canada. Gold
samples were analyzed by fire assay and atomic absorption spectroscopy with a 30
g nominal sample weight. Silver is analyzed by induction coupled plasma - atomic
emission spectroscopy (ICP-AES). A description of quality control and quality
assurance protocols can be found at: http://www.epzresources.com/protocols.php.
SAFE HARBOUR: Some statements in this release are forward-looking in nature. The
United States Private Securities Litigation Reform Act of 1995 provides a "safe
harbour" for certain forward-looking statements. Such statements include
statements as to the potential of the Cerro Jumil property, the ability to
finance further exploration, permit drilling and other exploration work, and the
availability of drill rigs.
The forward-looking statements involve risks and uncertainties and other factors
that could cause actual results to differ materially, including those relating
to exploration and bringing properties into production. Please refer to a
discussion of some of these and other risk factors in Esperanza's Form 20-F
filed with the U.S. Securities and Exchange Commission. The forward-looking
statements contained in this document constitute management's current estimates
as of the date of this release with respect to the matters covered herein.
Esperanza expects that these forward-looking statements will change as new
information is received and that actual results will vary, possibly in material
ways. Forward-looking statements are based on the beliefs, expectations and
opinions of management on the date the statements are made, and the company does
not assume any obligation to update forward-looking statements if circumstances
or management's beliefs, expectations or opinions should change. For these
reasons, investors should not place undue reliance on forward-looking
statements.
The terms "measured resource", "indicated resource" and "inferred resource" used
in this news release are Canadian geological and mining terms as defined in
accordance with National Instrument 43-101, Standards of Disclosure for Mineral
Projects under the guidelines set out in the Canadian Institute of Mining,
Metallurgy and Petroleum (the "CIM") Standards on Mineral Resources and Mineral
Reserves, adopted by the CIM Council as may be amended from time to time by the
CIM. We advise U.S. investors that while such terms are recognized and permitted
under Canadian regulations, the SEC does not recognize them. U.S. investors are
cautioned not to assume that any part or all of the mineral deposits in the
measured and indicated categories will be converted into reserves.
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