VANCOUVER, Sept. 9 /CNW/ - Logan Resources Ltd. (TSXV:LGR) ("Logan" or the "Company") is pleased to announce that it has received an initial NI 43-101 compliant resource estimate and preliminary economic assessment for its 100% owned Brynnor Iron Deposit on Vancouver Island. The report was prepared by Peter George, B.Sc., P.Geo., of Geoex Limited. Mr. George (the "Author") is a Qualified Person as defined in NI 43-101 and has over 40 years experience in the mining industry, including extensive experience in estimation of mineral resources and economic evaluations. Much of this news release is taken directly from the report. Highlights of the report include:
- Measured plus indicated mineral resources of 7,070,000 tonnes grading
51.3% iron containing 5,750,000 tonnes of iron concentrate grading
63.7% iron.
- Inferred mineral resources of 18,620,000 tonnes grading 51.3% iron
containing 15,140,000 tonnes of iron concentrate grading 63.7%.
- The Author concludes that the property has economic potential,
subject to feasibility study capital and operating cost estimates
that confirm that the measured and indicated resources can be
categorized as proven and probable reserves.
- The Property is located 3 km south of the Alberni-Tofino Highway
(Highway 4) and is accessible by a well-maintained, all-season gravel
road that is used for logging and tourist access to Toquart Inlet.
The boat-loading site used by Noranda during mining operations in the
1960's is on Toquart Inlet, 12 road-kilometres south of the Deposit.
Power and water is readily available in the area.
- The Author concludes that the Brynnor deposit warrants additional
work that will bring it to the production decision stage. The Author
concludes that that the Preliminary Economic Assessment that has been
completed as part of the report indicates significant economic
potential for the Brynnor underground resource and recommends that a
feasibility-level estimate of capital and operating costs be prepared
as a basis for upgrading measured and indicated resources to proven
and probable reserves and for a more accurate financial evaluation.
- The Author recommends that a surface drilling program be undertaken
to upgrade a portion of the current inferred resources to indicated
resources. Twenty proposed holes totalling approximately 6,200 metres
would test the mineralization down dip from the bottom of the current
measured and indicated resource as well as along strike to the east
of the measured and indicated resource for a distance of 200 metres.
- The estimated cost of the proposed feasibility study and drilling is
approximately $1,740,000.
The Brynnor Iron Deposit was discovered in 1960 and acquired in the spring of 1960 by Noranda Mines ("Noranda"). Twenty thousand feet of surface drilling (6,100 metres) were completed and indicated a near-surface magnetite ore body containing approximately 5,000,000 short tons (4.54 million metric tonnes) with an average grade of 51% iron. In January 1961 Noranda entered into a contract with a consortium of Japanese steel mills to deliver 700,000 short tons (635,000 metric tonnes) per year of magnetite concentrates for a seven-year term.
Development commenced in May 1961 and the first shipment of ore was made on May 30, 1962. In a one-year period Noranda prepared an open pit for mining and constructed a crushing, concentrating and boat loading facility capable of producing 700,000 tonnes of magnetite concentrate per year. Total capital costs were $11 million, excluding the subsequent underground development. Based upon US Consumer Price Index inflation factors, the 1960 capital costs would be equivalent to approximately $77 million 2008 dollars.
Ongoing surface drilling in 1961-62 to the east of the open pit indicated a more steeply dipping, slightly deeper, fault offset extension of the open pit mineralization. In 1964 Noranda completed a 3-compartment shaft to a depth of 856 feet and established stations on the 400-, 600-, and 750-foot levels, with a 200,000 gallon water sump and two 1000 gallon per hour pumps on the 750 foot level. A total of 6,450 feet of drifts and crosscuts and 1,002 feet of raises were completed. Some stopes were developed, however other than development muck, no mining of underground ore was completed (Hancock 1988).
A 7-month strike from July 1966 to March 1967 stopped production. After the strike, open pit operations continued until the end of 1968 and concentrator operations were shut down on completion of milling of stockpiled ore.
Noranda removed all infrastructure and capped the shaft. The mining claims and mining permit lapsed and the current claim 404313 that covers the Deposit was staked by the Company in August 2004.
The Author relied upon data available in the B.C. Energy, Mines and Petroleum Resources assessment and library files in Victoria, British Columbia. The essential data relating to the history of the Deposit is based upon work by Noranda Mines Limited in the 1960's. In the Author's opinion it is appropriate to accept this work at face value as it was prepared by experienced Canadian mining professionals that would certainly be considered qualified persons pursuant to current NI-43-101 regulations. The historic underground cross sections used for the mineral resource estimates in this Report were for year-end 1967 and were signed and sealed by a Noranda engineer.
The Author has relied upon the capital and operating cost guidelines published by the American Institute of Mining Engineers (O'Hare and Soboleski 1992). In the Author's opinion these estimation methods are suitable for purposes of completing preliminary assessments of the economic potential of mineral deposits. The Author has used these guidelines since they were initially introduced by O'Hare in 1980 and has found them to provide cost estimates that are similar to full feasibility study estimates where operating and capital costs for such projects have been made public.
The Author did a mineral resource estimate for the open pit resource that was mined in the 1960's in order to establish a methodology to estimate the grade and tonnage of the mineral resources in the underground portion of the Brynnor deposit. A reconciliation of the Author's open pit resource estimate with the production records for the operational years of the 1960's verifies that the methodology used in estimation of the underground resource are valid.
The Author used industry standard resource estimation methods in the preparation of the resource estimate. North-south drill sections were created on 30.48-metre (100-feet) centres for the open pit mineralization and on 15.24-metre (50-feet) centres for the underground mineralization. Interpretation of the hole-to-hole correlation of mineralization was completed, polygons were established around drill hole intercepts, areas (m(2)) were established for each polygon, and volumes (m(3)) were determined based on the distance between the sections. Polygon tonnages were calculated by applying a specific gravity factor based on the ratio of magnetite to host rock in the polygon. Polygon grades were calculated based on the ratio of magnetite to host rock in the polygon.
The following table summarizes the Geoex resource estimates:
Iron
Resource Category Resource Grade Concentrate Grade
Tonnes % Iron tonnes % Iron
Measured 4,990,000 52.5% 4,110,000 63.7%
Indicated 2,090,000 48.5% 1,640,000 63.7%
Measured plus Indicated 7,070,000 51.3% 5,750,000 63.7%
Inferred 18,620,000 51.3% 15,140,000 63.7%
Resource criteria used are as follows:
Measured Resources In areas that have been drilled and where underground workings have delineated continuity of the mineralization as interpreted on drill sections, the Author is of the opinion that all resources can be categorized as Measured Resources. The maximum spacing between drill sections is 30.48 metres (100 feet) so the maximum lateral (east-west) area of influence is 15.48 metres from the plane of the section.
Indicated Resources have been estimated based upon extending measured resource blocks down dip for the same vertical distance or horizontal distance as the vertical height of the immediately adjacent measured resource block, or half way to an adjacent hole that does not contain mineralization, whichever is the lesser distance.
Inferred Resources down dip have been estimated based upon the tonnes per vertical metre of measured plus indicated resources being projected vertically for a distance equivalent to the average vertical height of the measured plus indicated resource. Similarly lateral (east-west) inferred resources have been estimated based upon the tonnes per lateral metre of measured plus indicated resources being projected laterally for a distance equal to the lateral dimensions of the measured plus indicated resource.
The Brynnor mineralization consists of massive magnetite hosted in metasomatic skarn alteration zones within limestones and calcareous tuffs of the Late Triassic Quatsino Formation in areas where the sedimentary rocks are in the contact zone of Middle Jurassic granodiorite and diorite batholithic intrusions. The measured and indicated resource has a strike length of 240 metres, a down-dip extent of 200 metres, an average true width of approximately 35 metres, and an average specific gravity of 4.0. The resource is open along strike to the east and west and down-dip.
Based on a Preliminary Economic Assessment with a ten-year mine life, the Author concludes that the Property has economic potential, subject to feasibility study capital and operating cost estimates that confirm that the measured and indicated resources can be categorized as proven and probable reserves.
The Preliminary Economic Assessment is preliminary in nature as the operating costs and capital costs are based upon generalized estimates. The first eight years of production are based upon Measured and Indicated Resources however, the last two years are based upon Inferred Resources that are considered too speculative geologically to have economic considerations applied to them that would allow them to be categorized as mineral reserves and thus there is no certainty that the preliminary assessment will be fully realized.
No dilution was applied to the resources and it is assumed that mining recovery of the resource is 90% and plant recovery of the magnetite is 95%. The cashflow projections are based upon constant 2008 dollars and no discounting was used in determining payback.
Total life-of-mine capital costs are estimated to be approximately $100 million excluding working capital. Operating costs are estimated to be $43.15 per tonne of iron concentrate or $24.45 per tonne of ore mined.
A base case iron price of US$ 131.65 per tonne is assumed based upon published international 2008 seaborne iron concentrate prices (Rio Tinto $2.067 per mtu or $131.65 for 63.7% iron concentrate). Recent opinions by knowledgeable analysts suggest that future iron concentrate prices should continue to increase, particularly for high grade, high quality magnetite concentrate of the type that the Deposit historically produced.
At $131.65 per tonne of iron concentrate grading 63.7% iron, payback will be achieved in 2 years from start of production or 4 years from start of the underground development program. Operational breakeven iron concentrate price is $45 per tonne and breakeven iron concentrate price for recovery of capital is $75 per tonne. The after tax internal rate of return is 35% and net present value at 5% and 10% discount rates is $136 million and $86 million respectively. Total tax burden was assumed to be 35% per year. Total earnings before income tax, depletion and amortization are $347 million ($40 million per year).
If operating costs are increased by 25% to $30.45 per ton of ore mined, payback will be achieved in 2.5 years from start of production or 4.5 years from start of the underground development program. Operational breakeven iron concentrate price is $55 per tonne and breakeven iron concentrate price for recovery of capital is $65 per tonne.
If life-of-mine capital costs are increased by 25% to approximately $125 million, payback will be achieved in 2.5 years from start of production or 4.5 years from start of the underground development program. Operational breakeven iron concentrate price is $55 per tonne and breakeven iron concentrate price for recovery of capital is $70 per tonne.
If both capital costs and operating costs are increased by 25%, payback will be achieved in 3 years from start of production or 5 years from start of the underground development program. Operational breakeven iron concentrate price is $55 per tonne and breakeven iron concentrate price for recovery of capital is $80 per tonne.
A minimum 8-year mine life is projected based on measured and indicated resources. Conversion of the inferred resources to measured and indicated resources would provide an additional 20 years of mine life.
Mr. Peter George, P.Geo., as a consultant to the Company and Author of the report, is the Qualified Person for the project and is responsible for the content of this press release and affirms that the technical content of this news release is an accurate representation of the technical content of the report.
Logan Resources Ltd. is a mineral exploration company that specializes in acquiring, exploring and advancing early-stage Canadian mineral properties. For more information on the Company's diversified property portfolio and the Company, please visit www.loganresources.ca, www.sedar.com and www.sec.gov websites.
Statements contained in this news release that are not historical facts are forward-looking statements, which are subject to a number of known and unknown risks, uncertainness and other factors that may cause the actual results to differ materially from those anticipated in our forward-looking statements. Although we believe that the expectations in our forward-looking statements are reasonable, actual results may vary, and we cannot guarantee future results, levels of activity, performance or achievements.
The TSX Venture Exchange has neither approved nor disapproved the information contained herein.