CALGARY, Jan. 12 /PRNewswire-FirstCall/ -- Vannessa Ventures Ltd. (VVV, TSX Venture Exchange) ("Vannessa" or the "Company") is pleased to announce the results from the Feasibility Study ("Study") on the Crucitas gold project located in northern Costa Rica which is held by the Company's wholly owned subsidiary, Industrias Infinito S.A. ("Infinito"). The Study shows the Crucitas project to be a low strip ratio operation with relatively low initial capital, mining costs of $ 300 per ounce and an internal rate of return of 26 percent.
The Company has in place an Exploitation Permit which provides the rights to mine the Crucitas Exploitation Concession comprising 1,200 hectares. The Company has Environmental Approval to mine the saprolite material and has commenced the process of preparing material required to apply for Environmental Approval to mine the hard rock material as well. The results of the Study reported below include mining both the saprolite and the hard rock material.
In addition to the Exploitation Permit on the 1,200 hectares associated with the Crucitas project, the Company holds fifteen times this amount of ground, or 18,000 hectares in Exploration Concessions adjacent to the Crucitas Concession. The Company reported on one of these areas called Conchudita in a news release dated September 12, 2006. During 2007 the Company will evaluate the opportunities for continued development work in the extensive Exploration Concession areas surrounding Crucitas.
As part of final mine design, additional definition drilling around the proposed Crucitas orebody is anticipated in early 2007. The Company will increase drill density in saprolite, which also has the potential of better defining approximately 36,000 oz of inferred resources which are included in the current pit area but are not included in mineable reserves or in the project economics.
GENERAL
Vannessa through its subsidiary Infinito, contracted with Micon International Limited ("Micon") to conduct a feasibility study for the Las Crucitas Gold Project ("Crucitas project"). Portions of the study were contracted directly by Vannessa to Golder Associates Ltd. ("Golder") and to Systemes Geostat International Inc. (Geostat). All dollar figures are United States Dollars.
Highlights from the Micon study:
- Gold price in study - $550/oz
- Indicated Resources - 984,941 oz of gold
- Inferred Resources - 496,072 oz of gold
- Mineable Reserves - 687,200 oz of gold
- Low Strip Ratio - 1.4 (t waste per t of ore)
- Cash Costs (LOM average) - $299.48/oz
- Capital Costs (Initial) - $47 million
- IRR (after tax) - 26%
- Project construction - 16 months
The feasibility study provides a description of the geology, reserves, mining and milling operations, tailings facilities, services and other facilities, together with the associated capital and operating costs, required to develop the Crucitas Project. The study establishes the mining plan and associated equipment fleet, processing requirements, details the tailings and water management systems, determines the necessary site infrastructure and presents the environmental, permitting and socio-economic considerations in undertaking the project.
All costs are estimated in United States dollars as of the first quarter of 2006. No allowance has been made for cost escalation or devaluation of the Colon versus the US dollar. The exchange rate used in the conversion of the local, Costa Rican currency is 1 US dollar = 480 Colones (cents). A gold price of $US 550 per ounce is assumed.
Construction and expenditure schedules are presented. Capital and operating costs are estimated to be within an accuracy of +/-15%. Financial and sensitivity analyses are also presented.
LOCATION
The Crucitas gold deposit is located in north central Costa Rica, in Alajuela province. The project lies 105 km north of the capital of San Jose, and 16 km north east of the small town of Coopevega.
RESOURCES
In June of 2005, Vannessa awarded System Geostat International Inc (Geostat) a mandate to update its Crucitas mineral resource model and to prepare a Technical Report according to the National Instrument 43-101 in Canada. The full Geostat Report, dated February 26th, 2006, is available for viewing on SEDAR. The Resources in and outside the structures are basically split in two categories: Indicated and Inferred. Geostat is of the opinion that there are no Measured Resources in the Crucitas project at the moment, based on the CIM definition recommended by the NI 43-101. The report prepared by Geostat was prepared by, or under the supervision of, Pierre-Jean Lafleur, P.Eng., who is an independent Qualified Person as defined by NI 43 -101.
The total Indicated Resources above the 0.5 g Au/t cut-off grade are estimated to contain 25.1 millions tonnes at 1.22 g Au/t (985 thousand gold ounces) and at 3.17 g Ag/t (2.56 million silver ounces) in both Fortuna and Botija pits, in and out of the structures, as shown in Table 1.
Table 1
Estimated Indicated Mineral Resources at Crucitas
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Material/Zone Tonnes Gold Silver Gold oz Silver oz
(g/t) (g/t)
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Saprolite
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Total In Structure 3,528,630 1.6 1.91 181,422 217,052
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Total Out of Structure 638,472 0.64 1.00 13,224 20,443
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Total Saprolite 4,167,102 1.45 1.77 194,646 237,495
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Hard Rock
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Total In Structure 16,540,075 1.32 3.51 700,919 1,863,994
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Total Out of Structure 4,378,546 0.63 3.25 89,376 457,617
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Total Rock 20,918,621 1.18 3.45 790,295 2,321,611
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Total 25,085,723 1.22 3.17 984,941 2,559,105
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The total Inferred Resources above the 0.5 g Au/t cut-off grade are estimated to contain 12.6 million tonnes at 1.23 g Au/t (496,000 gold ounces) and at 3.14 g Ag/t (1.27 million silver ounces) in the Inferred category for Fortuna, Botija and Fuentes in and out of the structures, as shown in Table 2.
Table 2
Estimated Inferred Resources
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Material/Zone Tonnes Gold Silver Gold oz Silver oz
(g/t) (g/t)
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Saprolite
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Total In Structure 2,261,899 1.48 2.75 107,707 199,698
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Total Out of Structure 721,185 0.69 1.02 16,065 23,566
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Total Saprolite 2,983,084 1.29 2.33 123,772 223,265
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Hard Rock
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Total In Structure 7,081,264 1.42 3.52 322,579 801,190
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Total Out of Structure 2,502,871 0.62 3.02 49,721 243,025
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Total Hard Rock 9,584,135 1.21 3.39 372,300 1,044,215
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Total 12,567,219 1.23 3.14 496,072 1,267,479
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MINING
Mining will be by the open pit method with conventional shovel and truck operations.
Table 3
Economic Parameters used in Open-Pit Optimization
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Criteria Material Type Value
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Mining Saprolite 1.30 $/tonne
Operating Costs ----------------------------------
Hard Rock 1.47 $/tonne
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Processing Costs Saprolite 5.65 $/tonne ore
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Hard Rock 7.57 $/tonne ore
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G & A Costs Saprolite 1.73 $/tonne ore
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Hard Rock 2.50 $/tonne ore
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Processing Recovery Saprolite 96 %
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Hard Rock 91.5 %
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Mine Call Factor (1) - 96 %
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1. Includes 5% dilution or ore tonnes and subtracting 4.76% of diluted
ore as a mining loss
The open-pit optimization for the Crucitas project was carried out using the Geotech International mineral resource block model and Surpac Lerchs-Grossman pit optimization software. Economic parameters as shown in Table 3 were applied to the mineral resource block model to create an economic optimized pit shell.
Recommendations for pit wall inclinations and bench configurations were provided by Golder Associates, based upon slope design investigations performed in the adjacent Fortuna and Botija open pit mining areas.
The probable ore reserve estimate as of March 2006, prepared by Micon is based upon a gold price of $550 per oz, is presented in Table 4. The probable reserves are included as part of the estimated indicated resources shown in Table 1.
Table 4
Probable Reserves, Mineable
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Ore Gold Silver Strip Total
Tonnes Grade Gold Grade Waste Ratio Tonnes
(Kt) (g/t) (000's oz) (g/t) (Kt) (Kt)
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Fortuna
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Saprolite 2,270.4 1.46 106.8 1.76 3,001.7 1.6 5,802.4
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Hard Rock 7,681.6 1.43 352.7 3.58 9,307.9 1.2 17,098.4
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Total 9,951.9 1.44 459.6 3.20 12,309.6 1.3 22,900.8
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Botija
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Saprolite 1,316.1 1.51 63.9 1.93 1,669.9 1.5 3,258.1
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Hard Rock 3,645.9 1.40 163.8 3.85 6,137.2 1.7 9,883.0
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Total 4,962.0 1.43 227.7 3.36 7,807.1 1.6 13,141.1
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Total
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Total 4,914.0 1.43 687.2 3.25 20,116.7 1.4 36,042.0
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Mining operations, utilizing an Infinito owned and operated equipment fleet, was compared to utilizing a mining contractor to supply the major equipment fleet and conduct the mining operation. The contractor alternative was selected as the preferred option and has been used in the project economics due primarily to the reduced capital expenditures on major mining equipment outweighing the increased cost of operations associated with utilizing a contractor. In addition, a mining contractor will bring experienced management and key employees to initiate mine operations and to assist with the training of the local work force.
A mining production schedule was prepared for the estimated mineable reserves with the use of MineSched scheduling software. The mining production schedule was designed to deliver a nominal feed rate of ore to the processing plant daily while maintaining a balanced strip-ratio of ore and waste production from the mine. The mine will operate 20 hours per day with one day shift supplying ore directly to the mill, or an adjacent stockpile area near the mill, which will supply feed during the night shift, or when weather or other conditions impede mining production.
MINERAL PROCESSING
Micon selected a plant capable of processing 5,000 t/d of competent ore for the basis of the design criteria. Any saprolite mixture with the competent ore allows for an increase in the actual throughput capability. The leach and CIP circuits are designed to handle a maximum of 7,500 t/d during periods when almost 100% Saprolite is being treated.
The expected average recovery is 92.6% for gold and 50.0% for silver over the mine life. Saprolite yields the highest gold recovery at 96.0% compared with hard rock at 91.5%. Recovery figures for silver are approximate, based on a limited number of determinations.
TAILINGS AND WATER MANAGEMENT
The tailing facility will create a storage area of approximately 165 ha with storage capacity to contain 15 Mt of tailings and some 12 Mt of waste rock produced during production.
At the end of mining operations, the pond water will continue to be completely contained within the basin and excess pond water will continue to be treated prior to release to the environment until such time as the water quality has stabilized and treatment is no longer required. Once the basin pond water meets applicable water quality standards; the tailings will be flooded with a minimum 1.0 m water cover and all runoff from the facility will discharge through the permanent spillway.
POWER SUPPLY
A 14 kV mono-phase power line presently ends some 7 km from Crucitas. This line will be extended to the small settlement of Crucitas and will be utilized as a power source during construction. It has been determined that the normally used supply voltage of 25 kV will not be adequate for the load (estimated at 5.4 MW) and it is planned to build a new 69 kV line from the Muelle substation to Crucitas, a distance of approximately 80 km.
INFRASTRUCTURE
The Coopevega road will be the main access to the Crucitas Project and the upgrading of this road is one of the responsibilities of the company set out in the environmental operating permit. An alternative route via Concho and Llano Verde has been upgraded by the government, and this will offer an alternative route if required. The Crucitas Project has the possibility of using an existing airstrip, which is 8 km from the mill site along the road to Concho, but no plans have been made to upgrade this. Ground transport will be used for shipping gold (insurance will be provided by the shipper). With an upgraded road, travel time by car to the mine will not be unreasonably long.
Service buildings will be erected at the site and will include some of the existing buildings, which will be upgraded or expanded to suit the project requirements.
ENVIRONMENTAL MANAGEMENT
The Environmental Management Plan (EMP) was one of the most important sections of the EIS. The Crucitas EMP contains individual proactive management plans. It includes forestry, wildlife habitat, wastewater treatment, acid rock drainage prevention and control, surface water management, erosion control, environmental monitoring and reclamation/closure plan.
The reclamation process will be consistent with local land use objectives and Equator Principles. The goals are to mitigate the effects of land disturbances by minimizing potential adverse effects to water resources, minimizing or eliminating public safety hazards, providing long term stable landform configurations and reclaiming surface disturbances for beneficial use consistent with local land use practice. It is anticipated that the site will be returned to productive land uses to include managed forestry and wildlife habitat.
SOCIO-ECONOMIC
A number of socioeconomic studies have been completed for the proposed project area. These include land use, landscape characterization, socioeconomic characterization, social profiles, and public opinion studies. Although most of these studies were conducted in 1996, changes have not been significant in the socioeconomic status of the towns and villages in northern Costa Rica. Some minor additional work has been carried out more recently and with these, sufficient supporting information for an Environmental Impact Study (EIS) was available. Ongoing studies form a part of the responsibilities of the company during construction and mine operation.
A public meeting held in 2004, attended by approximately 1200 people, found broad local support for the project. A substantial public relations effort using the press, radio and television is being maintained by the company to ensure that the local population is fully informed of development of the project and this will be maintained throughout the duration of the project.
Potential socioeconomic benefits include the creation of direct and indirect jobs; and revenues developed from property, sales, and income taxes; improvements of roads; development of trade; employee training; training of the youth; and support of schools and rural organizations by the company and its employees.
PROJECT CAPITAL COST
The project initial capital cost, estimated by Micon, is summarized in Table 5.
Table 5
Summary of Estimated Capital Costs
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Item Estimated Capital Cost
($US)
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Direct Costs
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Mining 400,000
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Process Plant 21,958,173
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Tailings Management Facilities (preproduction) 3,340,000
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Power Transmission Line 2,570,000
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Sub-Station 1,439,335
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Infrastructure 4,051,492
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Effluent Treatment 500,000
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Sub-Total Direct Costs 34,259,000
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Item Estimated Capital Cost
($US)
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Indirect Costs
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Owner's Costs 1,905,312
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Insurance 445,000
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EPCM 3,404,464
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Field Indirects 177,500
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Reagents and Wear Parts Stock 851,000
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First Fills 277,633
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Spare Parts 770,000
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Vendor Assistance 50,000
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Wet Commissioning 377,523
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Sales Tax on buildings and materials 260,000
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Contingency 4,254,000
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Sub-Total Indirect Costs 12,773,000
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TOTAL ESTIMATED CAPITAL COSTS 47,031,000
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The Company has already purchased the ball mill and SAG mill that will be utilized in the processing plant and this machinery is being stored in California awaiting shipment to Costa Rica. The Company has also purchased or secured land required for mining and infrastructure and the land needed for the tailings facility
These costs include all direct and indirect costs plus a contingency allowance. Mining capital costs include mobilization of the contractor and materials for technical control of the contracted mining.
The direct construction costs presented in this table include all areas of the project requiring initial capital expenditures. All costs include equipment, material and labor. Equipment items purchased in Costa Rica are costed exclusive of sales tax, from which Vannessa expects to be exempt. Sales tax at 13% is applied to approximately $2 million of purchases representing the cost of materials for the camp and related buildings.
The indirect costs include all construction related items such as engineering, procurement, construction management, construction equipment, personnel transportation, room & board, freight, first reagents fill, capital spares, etc.
Sustaining capital is estimated over the mine life for tailings dam raising and infrastructure items replacement. Allowances for project closure at $3 million, and an estimated salvage value of $1.5 million, are included.
PROJECT OPERATING COSTS
The project operating costs, as estimated by Micon, have been developed on an annual basis recognizing the variation in the processed ore tonnes and saprolite: hard rock ratio. Averaged over the mine life, the operating costs are as shown in Table 6.
Table 6
Summary of Operating Costs
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Item Saprolite Hard Rock Total
($/t) ($/t) ($/t)
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Mining, per tonne rock (waste and ore) 2.18 1.66 1.78
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Processing (ore processed) 4.86 6.61 6.19
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G&A (ore processed) 2.29 2.79 2.67
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Total, per ore tonne (ore processed) 13.15
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ECONOMIC AND FINANCIAL ANALYSIS
The summary results of the analysis, as prepared by Micon, are presented in Table 7. The base case assumes mining of the saprolite ore plus the hard rock ore.
Table 7
Economic Evaluation (100% Equity)
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Base Case
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Life of mine operating cost, $/t ore 13.15
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Pre-production capital cost, $ 47,031,000
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Total Gold Produced, oz 636,530
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Cash Cost (Mine Life Average) $/oz Au 299.48
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Ore Mined tonnes 14,914,000
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Average Grade g/t 1.43
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Stripping Ratio (Mine Life) 1.42
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Gold Price $/oz 550
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Cashflow pre-tax $ 84,935,000
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Cashflow after tax $ 61,179,000
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IRR, after tax 26.00
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NPV 10%, after tax 24,528,000
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Payback period years 3.0
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SENSITIVITY ANALYSIS
Micon Prepared a sensitivity analysis on the total ore base case indicating the following in Table 8.
Table 8
Sensitivity Analyses
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Description Favourable Change Base Case Unfavourable Change
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Gold Prices +15% 633 550 -15% 468
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IRR 38.43 25.99 12.01
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Cash Flow 97,128,000 61,179,000 25,070,000
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NPV10% 46,210,000 24,528,000 2,794,000
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Capital Costs,
life of mine -15% 50,285,000 59,159,000 +15% 68,033,000
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IRR 33.42 25.99 20.41
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Cash Flow 68,016,000 61,179,000 54,342,000
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NPV10% 30,920,000 24,528,000 18,135,000
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Operating Expenses $/t -15% 10.88 13.15 +15% 14.72
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IRR (before
depreciation) 32.68 25.99 18.63
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Cash Flow 82,002,000 61,179,000 40,356,000
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NPV10% 36,703,000 24,528,000 12,352,000
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The sensitivity analysis reveals that the project is most sensitive to gold prices, followed by operating costs and finally to capital costs.
GOLD SALES
Gold cathode production, including the contained silver, will be smelted on a weekly basis and transported initially to San Jose with final refining to be carried out by Johnson Matthey, Canada.
CONCLUSION
The project construction period is expected to be 16 months. During construction the labor force on-site is expected to peak at 270 workers.
Ian Ward P. Eng., President of Micon, who is an independent Qualified Person as defined by NI 43-101, prepared or supervised the preparation of material on behalf of Micon.
Vannessa Ventures Ltd. is a mineral exploration and development company located in Calgary, Alberta with properties primarily in Costa Rica, Guyana and Brazil.
VANNESSA VENTURES LTD.
John Morgan
President
"The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release."
CONTACT: VANNESSA VENTURES LTD., Suite 220, 1010 - 1st Street S.W., Calgary, AB, T2R 1K4, Tel: (403) 444-5191, Fax: (403) 444-5190
