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TORONTO, May 30 /CNW/ - COGITORE Resources Inc. (the "Company") (WOO: TSX-V) announces that engineering firm GENIVAR has delivered preliminary results of a feasibility study on the company's 100% owned Estrades Mining Lease in northwestern Quebec. The study consists of an exhaustive evaluation of all costs involved with rehabilitating the former producing Estrades mine, mining ore zones to a depth of 415 metres, trucking the ore to a custom mill, producing and smelting three base metal concentrates, and including costs of reclamation work at the end of mining operations. The full feasibility report will be filed on SEDAR in due course.
Following a positive scoping study completed in 2006 by Met-Chem Canada Inc., the Company completed some critical in-fill drilling and then commissioned a NI43-101 compliant independent resource calculation, which was delivered by Scott-Wilson RPA in late 2006. Given the encouraging results of the resource calculations, and in light of then prevailing zinc prices and also of existing underground and surface infrastructure, the Company commissioned GENIVAR to undertake a full feasibility study on the Estrades project. The preliminary financial and sensitivity analysis prepared by GENIVAR shows that the project has interesting economic potential but is extremely sensitive to the exchange rate and to metal prices, particularly to the price of zinc. To a lesser but still significant extent, the project is also sensitive to zinc concentrate treatment charges, to gold prices and to the price of diesel fuel for onsite power generation and long haul trucking.
After reviewing the results, the Board and management of the Company recognized that, although the deposit could become a very valuable asset in the future, it is marginal at today's zinc price and thus concluded that it was not in the best interests of Company shareholders to move ahead with the project at this time. Given the detailed engineering work done by GENIVAR and issuance of a government Certificate of Authorization, the Company is, however, in a good position to resume the study and the project could move ahead quickly if warranted. The Company will continue monitoring zinc prices and the availability of nearby custom milling facilities.
Mr. Mark Goodman, Executive Chairman of the Board states "since engaging GENIVAR to undertake this study the price of zinc has declined over 50% from $US2.00 to $US0.90, the Canadian dollar has traded up to $US1.09 and the cost of diesel fuel has approximately doubled. While the feasibility study showed positive rates of return under certain circumstances, the Board deemed the timing of placing this zinc deposit into production as unfavourable and consequently has deferred the decision to move ahead until zinc market conditions improve."
In the mean time, the Company will focus its efforts in the area on exploring for additional deposits of the Estrades-type, namely volcanogenic massive sulphide deposits with high precious metal contents. In that respect, the adjoining Caribou Property was acquired in 2007 and promising coincident targets were identified this past winter (see press release of May 28, 2008).
Dr. Gerald Riverin, Cogitore's President and CEO notes that "independent of market conditions, the discovery of another massive sulphide lens enriched in base and precious metals would have a dramatic positive impact on the risk profile of returning the Estrades mine to production.
"A combination of two or more deposits sufficient to justify a relatively short hydro line and/or central mill would dramatically improve the economic threshold for the district."
Work is carried out by the personnel of Cogitore Resources Inc., under the supervision of Gerald Riverin, PhD, P.Geo. He is a qualified person (as defined by National Instrument 43-101) and has more than 30 years of experience in VMS exploration.
The Company has developed a strategic focus on base metal exploration in prospective areas that also feature infrastructure favourable for mining development. Accordingly, it will focus its work in the Abitibi Belt of Quebec and Ontario, and in the Central Belt of Newfoundland.
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%SEDAR: 00020132E