NPV Ranges from $396M to $618M. IRR Ranges from 20.9% to 31.8%.
Shares Issued and Outstanding: 37,912,878
TSX: NOM
BVL: NOM
VANCOUVER and LIMA, Peru, Nov. 5 /CNW/ - Norsemont Mining Inc. ("the Company") (TSX: NOM, BVL: NOM) today announced that SRK Consulting (SRK) has completed the scoping study for Constancia copper project in southern Peru. The scoping study considers an open pit mining operation using a standard milling and froth flotation plant to produce high grade copper and molybdenite concentrates. The study is based on geological information and metallurgical testing available at the time of reporting, price quotations for major equipment and mining components, including owners' fleet, and estimates of long-term prices for copper, molybdenum and silver. Exploration drilling at the Constancia project is continuing and the Company believes that the potential exists to significantly increase the current resource.
For economic evaluation purposes, the scoping study focused on three operating scenarios: a 30,000 tonne per day (t/d) stand-alone case (SA), a 30,000 t/d expandable to 55,000 t/d case (EX), and a 55,000 t/d stand-alone case (SA). Based on the current resource, the corresponding life of mine (LOM) for the 30,000 t/d and 55,000 t/d stand alone cases are 20 and 12 years, respectively.
Estimated production for the 55,000 t/d SA case is approximately 112,218 tonnes per year of copper recovered over the first five years, with a LOM annual average production of 90,411 tonnes. For the 30,000 t/d SA case estimated production is 72,814 tonnes per year of copper recovered during the first five years, with a LOM annual average of 53,598 tonnes. During the feasibility study the expansion of the 30,000 t/d EX case to 55,000 t/d in year 6 or 7 will be reviewed together with the 55,000 t/d SA case.
Based on a discount rate of 8 percent and a payback period which incorporates a two year start up, the Constancia project's Internal Rate of Return (IRR) and corresponding Net Present Value (NPV) for the three operating scenarios are as follows:
Description 30,000 t/d SA 30,000 t/d EX 55,000 t/d
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With With With
Without 25% Without 25% Without 25%
Contingency Cont. Cont. Cont. Cont. Cont.
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NPV @ 8% $473M $404M $467M $396M $618M $530M
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IRR 26.7% 21.4% 26.1% 20.9% 31.8% 25.3%
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Payback from
start of
construction 6 years 7 years 6 years 7 years 5 years 6 years
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Note: The cash flow values presented account for post tax and royalty
payments.
The cash flow analysis used long-term price assumptions of $1.80 per
lb Cu, $12 per lb Mo, and $11 per oz Ag. To provide an appreciation of the
influence of metal prices to the project cash flow, a sensitivity analysis has
been conducted modifying the copper price. The results of the sensitivity
analysis based on copper prices at $1.60 per lb, $1.80 per lb and $2.00 per lb
are as follows:
Description 30,000 t/d SA 30,000 t/d EX 55,000 t/d
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Cu price $1.60 $1.80 $2.00 $1.60 $1.80 $2.00 $1.60 $1.80 $2.00
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NPV
@ 8% $255M $404M $552M $247M $396M $544M $345M $530M $715M
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IRR 17% 21.4% 25.5% 16.5% 20.9% 24.9% 19.9% 25.3% 30.3%
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Payback from
start of
construc-
tion 8 7 6 8 7 6 7 6 5
years years years years years years years years years
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Note: 1. Cash flow values are presented accounting for a 25% overall
contingency and discount rate of 8%.
2. The cash flow values presented account for post tax and royalty
payments.
Cash operating costs net of credits are estimated at $0.74 per lb over the 20-year project life for the 30,000 t/d SA case and $0.67 per lb over the 12-year project life for the 55,000 t/d SA case. Capital expenditure estimates (inclusive of a 25 percent contingency) for the three operating scenarios are US$605.6M, US$617.3M and US$739.7M for the 30,000 t/d SA, 30,000 t/d EX to 55,000 t/d and 55,000 t/d SA, respectively.
Based on the positive results of the scoping study, Norsemont will now advance the Constancia project to feasibility. Negotiations with engineering consultants for the feasibility study and environmental impact assessment are underway and formal contracts are expected to be finalised by the end of the year.
During the next several months, detailed budgeting and preliminary geotechnical field programs will be undertaken to establish a firm foundation for the feasibility study, which is expected to commence during the second quarter of 2008. Infill drilling on the Constancia and San Jose zones is continuing, with the conclusion of the 42,000-meter program expected by year-end. Exploration drilling at the Constancia project will continue during 2008 and the Company believes that the potential exists to significantly increase the current resource.
Norsemont Mining Inc.
Norsemont Mining is a Canadian mineral exploration and development company focused on the Constancia Cu-Mo-Ag deposit in southern Peru, 70 percent of which has been optioned from Rio Tinto Plc and 30 percent of which has recently been acquired from Mitsui. The Constancia Project has a 43-101 compliant indicated resource of 70M tonnes (0.8 Billion lbs Cu) and an inferred resource of 250M tonnes (2.8 Billion lbs Cu).
Constancia Project
The Constancia project is located approximately 600 kilometers southeast of Lima, within the Yauri-Andahuaylas metallogenic belt, hosting several large copper-molybdenum-silver and gold porphyry deposits including Antapaccay (Xstrata) and Los Chancas (Grupo Mexico), as well as copper skarn deposits including Tintaya (Xstrata) and Las Bambas (Xstrata). The property is accessed by several roads, and is within 60 kilometers of a railroad. Elevation ranges from 4,000 to 4,700m, and several small permanently flowing rivers are present in the area.
Qualified Persons and Data Verification
---------------------------------------
The independent Qualified Persons (QP) for the purpose of National Instrument 43-101, Standards of Disclosure for Mineral Projects, who have reviewed and approved this release, are:
(a) for the copper project (Scoping Study): (i) Raúl Paredes L.(mining
reserve estimates, mine plan, mine capital and operating costs
process and infrastructure engineering and cost estimation);
(ii) Snowden (property description and location, accessibility,
history, geological setting, deposit types, mineralization,
exploration, drilling, sampling method and sample preparation,
analyses and security, data verification); (iii) George Even, of SRK
Consulting, Santiago, Chile (geotechnical assessment); and
(iv) Adam Johnston of Transmin, Lima, Peru (mineral processing and
metallurgical testing); and
(b) for the portion of the mineral resource estimate that is based on the
technical report dated May 9 2007 filed at www.sedar.com May 10,
2007, entitled "Constancia Project Technical Report", by Dr Warwick
Board of Snowden Mining Industry Consultants Inc., Vancouver, Canada;
R. Baxter President and COO of Norsemont Mining; and Adam Johnston of
Transmin, Lima, Peru.
Snowden is the independent QP, as defined under NI 43-101, responsible for the quality control and verification of the drill hole data used by Snowden in the resource estimates. The estimates, projections and conclusions summarised in this release are subject to important qualifications, assumptions and exclusions, all of which will be set out in a Technical Report, which will be filed at www.sedar.com within the prescribed 45-day period. To fully understand the summary information contained in this release, the full Technical Report should be read in its entirety when posted on SEDAR.
All $ amounts are in 2007 US Dollars. IRR & NPV calculations are calculated on a real after tax basis for 100% ownership interest (and therefore before Canadian taxes, if any) assuming all-equity financing.
ON BEHALF OF THE BOARD OF DIRECTORS,
Robert W. Baxter
President
Norsemont Mining Inc.
Cautionary Notices:
This news release contains certain forward-looking statements that involve risks and uncertainties, such as statements of Norsemont's plans, objectives, strategies, expectations and intentions. The words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions, as they relate to Norsemont, or its management, are intended to identify such forward-looking statements. Many factors could cause Norsemont's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. The forward-looking statements included in this news release represent Norsemont's views as of the date of this news release. While Norsemont anticipates that subsequent events and developments may cause its views to change, it specifically disclaims any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing its views as of any date subsequent to the date of this news release. All subsequent written and oral forward-looking statements attributable to Norsemont or persons acting on its behalf are expressly qualified in their entirety by this notice.