Aurcana Corporation ("Aurcana" or the "Company") is pleased to announce it has received a positive Pre-Feasibility Study ("PFS") on its 100% owned Shafter Silver Mine, located in Presidio County, south-west Texas. The study shows that with the incorporation of a decline to access the deposit, a production rate of 1500 tons per day (TPD) can be achieved. At this rate it is estimated that capital payback will be achieved in under 2 years with approximately 7.75 million ounces of silver produced during this period. The company is now moving forward on a full feasibility study, and final permitting.
The full report will be available on the Aurcana website (www.aurcana.com) and on SEDAR (www.sedar.com).
Highlights of the Pre-Feasibility Study results include:
(All amounts are in US$ unless otherwise stated.)
Revenue has been calculated on the base case, the three-year average silver price of $13.55 per ounce as of April 2009, as published by the London Metal Exchange. Only the Measured and Indicated resources are used in the study for PFS design, economics, and life of mine.
|Sensitivity to Silver Price||Units||Base -$1||Base Case||Base +$1||Base +$2|
|Pre-Tax, Net Present Value (NPV)||US$M||$10||$23||$36||$48|
|Pre-Tax, Internal Rate of Return (IRR)||%||15%||25%||35%||44%|
|Mine Cash Cost||US$/ton||$55||$55||$55||$55|
The Shafter Project contains an estimated Measured and Indicated 24.6 million ounces Silver (2,900,000 tons at 8.48 oz per ton), and an Inferred 22.8 million ounces Silver (2,167,000 tons at 10.52 oz per ton) (at 4.0 opt silver cut-off) Only the Measured and Indicated resources are used in the PFS design, economics, and life of mine studies. Future plans will include upgrading the Inferred resources through an underground diamond drill program once access is established to accommodate an efficient infill drill program.
The PFS estimates production, capital and operating cost parameters and project economics. An optimized mine design which includes a decline for mechanized equipment will allow earlier access to higher grade ore, and support for a 1500 TPD operation. The central location of the decline will result in an improved start-up rate, and will lead to balanced production from all the known zones. Mechanized mining, instead of the previously proposed conventional mining using the existing shaft has increased the capital and operating costs, however these cost increases have been offset by increased daily production rate, improved recoveries and the current higher silver price. The PFS indicated that more work is warranted to select the best option for cyanide removal and destruction, and tailings disposal method.
Silver was mined in the Shafter region from 1883 until 1942 from the Presidio deposit, when the mine was closed, by the War Act. Historically reported total production during that period was 35 million ounces of silver from 2.3 million tons of ore, at an average grade of 15.24 ounces per ton. The historic Presidio mine workings total close to 100 miles of drifts and stopes and include 3 shafts that were used for production. This infrastructure will be integrated into the current mine planning with the shafts serving as ventilation shafts for the new decline, some of the workings will be used as pilot headings to access remnant blocks of ore left behind by the previous operators and provide access for underground diamond drilling, and a number of the old stopes will be utilized for waste rock storage. Goldfields carried out exploration east of the Presidio Mine from 1978 to 1982, and outlined a new deposit which they named the Shafter deposit. Their work included a 1,050 foot shaft serviced by a 80 ton per hour hoist and 5,100 feet of underground development which will be utilized in the later stages of the proposed mine plan to reduce haulage distances.
Aurcana acquired the Shafter Silver Mine in July, 2008. All necessary infrastructure is in place with a major power line and paved highway crossing the property, and an electrical sub-station on site.
A N.I. 43-101 compliant report on the resource estimate for the Shafter Silver Mine located in south-west Texas, was prepared by Tetra Tech Inc of Golden Colorado. The full report can be viewed on the Aurcana website (www.aurcana.com) or on Sedar (www.sedar.com). An economic cut off of four ounces per ton was selected for use in the pre-feasibility study, based on the current strong silver price.
Tetra Tech 43-101 Compliant Resource
|Resources||Tons||Silver oz/ton||Contained Silver Ounces|
|Measured and Indicated||2,900,000||8.48||24,600,000|
Assumes a 4.0 opt silver cut-off
The pre-feasibility study selected the mechanized room and pillar extraction method, and will use a decline to access the deposit, the decline will facilitate the efficient movement of supplies and large equipment for production. The existing exploration shaft will be used for reducing haulage distance by hoisting ore from the lower part of the mine and emergency egress. The daily mine production is calculated at a rate of 1,500 tons per day.
The process facilities will operate at 1,500 tons per day, assuming 96 percent operating availability. Ore would be crushed in a two-stage crushing circuit to 3/8". The crushed ore would then be ground in a milling circuit and sent to thickening, cyanidation, countercurrent decantation (CCD) washing with subsequent recovery of the silver in a standard Merrill-Crowe recovery plant. The zinc-silver precipitate from the Merrill-Crowe recovery plant would be mixed with fluxing reagents and smelted to produce dore' bars. The process plant would be constructed as an open-air facility with roofs and enclosures limited to sensitive areas of the plant. The Merrill-Crowe recovery plant and the refinery would be enclosed in a building.
Tailings slurry from the CCD would be treated in a cyanide destruction circuit, utilizing the Air/SO2 Process to remove substantially all residual cyanide. After cyanide destruction, the tailings would be treated on a vacuum filter with the filter cake being stockpiled before being trucked away to a waste disposal site located on the Shafter property.
About Aurcana Corporation:
Aurcana Corporation's strategy is "Growth through Acquisition". The Shafter silver mine represents the third acquisition in two years.
The 80% owned La Negra mine in Queretaro State, Mexico, operates at 1,000 tonnes per day with silver production approaching one million ounces. The 100% owned Rosario project located in the Sierra Madre precious metals belt, Sinaloa State, Mexico, is an exploration and development project, which is currently subject to a sale agreement with Silvermex Resources Ltd. The reader should be cautioned the Company has not completed feasibility studies confirming the projected production capacity for La Negra and there is no certainty the Company's plans will be economically viable.
The results of this Pre-Feasibility Study represent the culmination of 12 months of work by Qualified persons; Sandy McVey, P.Eng of T&G Consulting, John Rozelle, P.Geo of Tetra Tech, Alexander Mitchell, P.Eng., of GBM MEC Ltd, M. John Brodie, P.Eng., of Brodie Consulting Ltd, and Martin J. Demerse, P.Eng of the Gault Group, Inc.
Andy Nichols, P.Eng. Vice President Operations for Aurcana, and a Qualified Person as defined by National Instrument 43-101, supervised the preparation of the technical information in this release.
ON BEHALF OF THE BOARD OF DIRECTORS OF
"Lenic Rodriguez", President
For further information, please visit the website at www.aurcana.com.
Lenic Rodriguez, President or
Jack Barnes, Investor Relations
Phone: (604) 331-9333
Toll Free: (866) 532-9333
Fax: (604) 633-9179
Caution Regarding Forward-Looking Statements -- This news release contains certain forward-looking statements, including statements regarding the business and anticipated financial performance of the Company. These statements are subject to a number of risks and uncertainties. Actual results may differ materially from results contemplated by the forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include unsuccessful exploration results, changes in metal prices, changes in the availability of funding for mineral exploration and development, unanticipated changes in key management personnel and general economic conditions. When relying on forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and should not place undue reliance on such forward-looking statements. The Company does not undertake to update any forward-looking statements, oral or written, made by itself or on its behalf. 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.", which has been prepared by management.