Excelsior Releases Updated Prefeasibility Study Post-Tax NPV of $829 Million and Initial Capital Costs Reduced by 84% to $45.9 Million
February 9, 2016
Excelsior Mining Corp. (TSX-V: MIN) (FSE: 3XS) (OTCQX: EXMGF) ("Excelsior" or the “Company”) is pleased to announce the results of a comprehensive Updated Prefeasibility Study (“Updated PFS”) on the North Star Deposit of the Gunnison Copper Project, located in Cochise County, southeastern Arizona. The project is designed as a copper in-situ recovery (“ISR”) mine using solvent extraction-electrowinning (“SX-EW”). The Updated PFS was completed as a result of the recent acquisition of the Johnson Camp Mine (“JCM”) and staged production approach which have dramatically lowered initial capital costs to $45.9 million. Excelsior has also made progress on its permitting process and an update is included below in this news release.
Updated Prefeasibility Study Results
Highlights of the North Star Gunnison Copper Project Updated PFS (United States dollars)
The Updated PFS was completed by M3 Engineering & Technology Corporation (“M3”) of Tucson, AZ and is effective as of February 9, 2016. The technical report (the “Report”) summarizing the results of the Updated PFS, and prepared in accordance with National Instrument (“NI”) 43-101, will be filed on SEDAR and Excelsior’s website within 45 days of this news release. Results of the Updated PFS disclosed in this press release are in United States Dollars.
As highlighted in the tables below, the Updated PFS demonstrates excellent project economics. Based on an initial production rate of 25 million pounds per annum, the Updated PFS base case generates a post-tax NPV of $829 million (at a cash flow discount of 7.5%), an IRR of 45.8% and a payback period for initial capital of 2.6 years. This financial analysis is based on a number of assumptions which will be fully set out in the Report.
The base case uses the following parameters over the 27-year mine life:
The Company has also evaluated a secondary case without an Acid Plant. In this case the project still retains strong economics, highlighted by a pre-tax NPV7.5 of $1.0 billion and an IRR of 58.18% (post-tax: NPV7.5 of $706 million and IRR of 46.2%). Total initial capital expenditures remain the same as the “Acid Plant” scenario. Total sustaining capital costs over the life of the mine are $657 million, which includes production wellfield expansion, SX-EW expansion and water treatment facilities. Average life-of-mine operating direct cash costs are estimated at $1.02/lb for the “Non-Acid Plant” option with an All-In Cost of $1.53 per pound.
Comparison Between 2014 PFS and 2016 Updated PFS
A direct comparison of the results on a post-tax basis from the 2014 PFS and the 2016 Updated PFS are provided in the table below.
Mineral Resources and Mineral Reserves
Mineral Resource Estimate
The total mineral resource estimate for the North Star Deposit is based on results from 122 drill holes totalling 158,785 feet and is effective as of June 1, 2015. The estimate is classified as a measured, indicated or inferred mineral resource, consistent with the CIM definitions referred to in NI 43-101. Excelsior is not aware of any environmental, permitting, legal, title, taxation, socio-political, marketing or other issues which may materially affect its estimate of mineral resources.
All samples were prepared from manually split half-core sections on site in Arizona. Split drill core samples were then sent to Skyline Assayers & Laboratories (“Skyline”) in Tucson, Arizona, an independent laboratory, for Total Copper and Sequential Copper analyses. Skyline is accredited with international standard ISO/IEC 17025:2005 General Requirements for the Competence of Testing and Calibration Laboratories. Total Copper, Acid Soluble Copper and Cyanide Soluble Copper were analyzed. Excelsior has no relationship with Skyline Labs other than Skyline being a service provider. Standards, blanks, and duplicate assays are included at regular intervals in each sample batch submitted from the field as part of an ongoing Quality Assurance/Quality Control Program.
Mr. Michael M. Gustin, with the independent firm Mine Development Associates (MDA) of Reno, Nevada, is a Qualified Person as defined by NI 43-101 and is responsible for this mineral resource estimate. He has verified, reviewed and approved the technical disclosure contained in this section of the news release. Mr. Gustin has verified the data underlying the results by reviewing the drilling, sampling, assay, and quality assurance and quality control data, as well as the geologic interpretations completed by Excelsior.
Mineral Reserve Estimate
The Updated PFS mineral reserve is based on an economic analysis of the mineral resource using a copper price of $2.75/lb and key parameters developed from prior test work, the 2014 PFS and the most recent test work completed in 2015. The economic optimization was performed on Measured and Indicated Resources at a cut-off grade of 0.05% total Cu. EBIT (earnings before interest and tax) was calculated on a resource block by block basis using the key economic and technical parameters. For a column of resource blocks to be included in the reserve, the capital costs of establishing the wells for those blocks would have to be less than the combine EBIT for the same blocks. The mineral reserve was estimated after applying engineering and operational design parameters which removed the thinner and deeper portions of the mineral resource. Internal dilution has been included in the final mineral reserve estimate. MDA is of the opinion that the mineral reserve estimate derived in this Updated PFS reasonably quantifies the economical mineralization of the North Star Deposit. The reserve estimate is as of June 1, 2015 and the mineral reserves presented in the table below are included in the mineral resource estimate set out above.
Permitting & Timeline
An Aquifer Protection Permit (APP) and Underground Injection Control Permit (UIC) are the two primary operating permits that Excelsior needs to acquire prior to commencing operations. Excelsior has submitted permit applications to both the Arizona Department of Environmental Quality (ADEQ) and to the Environmental Protection Agency (EPA). The ADEQ is responsible for issuing the APP and the EPA is responsible for issuing the UIC. Excelsior is working with both the ADEQ and the EPA and expects to receive draft permits by early 2017. Subsequent to a public review period, Excelsior anticipates receiving all operating permits by mid-2017. Because of Excelsior’s recent purchase of the Johnson Camp Mine, the construction timeline has been shortened and Excelsior is forecasting the commencement of production by early 2018.
Stephen Twyerould added, “Over the past twelve months we have completed our metallurgical and hydrological programs in preparation for the feasibility study, the results of which have been included in this Updated PFS and have been used to support our permit applications. What remains is the necessary engineering to complete the full feasibility study, which we expect to complete by the end of the year, and to obtain our operating permits in a timely manner. Based upon what we believe to be one of the most environmentally friendly copper mining projects in the world today, we look forward to working with the State and Federal regulatory agencies, stakeholders and local communities to deliver long needed economic growth for southeastern Arizona.”
Technical Report and Qualified Person
The Report will be filed on SEDAR and on Excelsior’s website within 45 days of the date of this news release. The Report will consist of a summary of the Updated PFS. The Report is being prepared under the supervision of Conrad Huss, P.E. of M3 Engineering & Technology Corporation, Tucson, Arizona, who is a qualified person that is independent of the Company. The Report will also receive contributions from the following additional qualified persons, who are also independent of the Company:
Each of qualified persons has reviewed and approved the technical information contained in this news release that is relevant to their area of responsibility and verified the data underlying such technical information.
Retention of a Market-Maker
The Company also announces that, subject to regulatory approval, it has retained Venture Liquidity Providers Inc. (“VLP”) to initiate its market making service to provide assistance in maintaining an orderly trading market for the common shares of the Company.
The market making service will be undertaken by VLP through a registered broker, W.D. Latimer Co. Ltd., in compliance with the policies of the TSX Venture Exchange and other applicable legislation. The Company will pay VLP CDN$5,000 per month from its current cash on hand. The engagement is for a period of 12 months, but can be terminated without penalty by either party at any time with written notice. The Company and VLP act at arm’s length, and VLP has no present interest, directly or indirectly, in the Company or its securities. The finances and the shares required for the market making service are provided by W.D. Latimer. The fee paid by the Company to VLP will be for services only.
About Excelsior Mining
Excelsior is a mineral exploration and development company that is advancing the Gunnison Copper Project. The Excelsior management team consists of experienced professionals with proven track records of advancing mining projects into production.
Prior to the release of the Report on the Updated PFS results, additional information about the Gunnison Copper Project can be found in the technical report filed on SEDAR at www.sedar.com entitled: “Gunnison Copper Project, NI 43-101 Technical Report, Prefeasibility Study” dated February 14, 2014.
For more information on Excelsior, please visit our website at www.excelsiormining.com.
ON BEHALF OF THE EXCELSIOR BOARD
For further information regarding this press release, please contact:
Excelsior Mining Corp.
Cautionary Note Regarding Forward-Looking Information
In certain cases, forward-looking information can be identified by the use of words 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" suggesting future outcomes, or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. Forward-looking information contained in this news release is based on certain factors and assumptions regarding, among other things, the estimation of mineral resources and mineral reserves, the realization of resource and reserve estimates, copper and other metal prices, the timing and amount of future exploration and development expenditures, the estimation of initial and sustaining capital requirements, the estimation of labour and operating costs, the availability of necessary financing and materials to continue to explore and develop the Gunnison Project in the short and long-term, the progress of exploration and development activities, the receipt of necessary regulatory approvals, the completion of the permitting process, the estimation of insurance coverage, and assumptions with respect to currency fluctuations, environmental risks, title disputes or claims, and other similar matters. While the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.
Forward looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include risks inherent in the exploration and development of mineral deposits, including risks relating to changes in project parameters as plans continue to be redefined including the possibility that mining operations may not commence at the Gunnison Project, risks relating to variations in mineral resources and reserves, grade or recovery rates resulting from current exploration and development activities, risks relating to the ability to access infrastructure, risks relating to changes in copper and other commodity prices and the worldwide demand for and supply of copper and related products, risks related to increased competition in the market for copper and related products and in the mining industry generally, risks related to current global financial conditions, uncertainties inherent in the estimation of mineral resources, access and supply risks, reliance on key personnel, operational risks inherent in the conduct of mining activities, including the risk of accidents, labour disputes, increases in capital and operating costs and the risk of delays or increased costs that might be encountered during the development process, regulatory risks, including risks relating to the acquisition of the necessary licenses and permits, financing, capitalization and liquidity risks, including the risk that the financing necessary to fund the exploration and development activities at the Gunnison Project may not be available on satisfactory terms, or at all, risks related to disputes concerning property titles and interest, environmental risks and the additional risks identified in the “Risk Factors” section of the Company’s reports and filings with applicable Canadian securities regulators.
Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking information. The forward-looking information is made as of the date of this news release. Except as required by applicable securities laws, the Company does not undertake any obligation to publicly update or revise any forward-looking 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, and no securities regulatory authority has either approved or disapproved of the contents of this release.