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Sherwood Reports 2007 Production Results & 2008 Production Estimate for Minto Mine
February 25, 2008
Higher Production Increases Exposure to Current High Metal Prices while Downside is Protected
News Release #08-08
VANCOUVER, BRITISH COLUMBIA – Sherwood Copper Corporation (SWC: TSX-V) today announced its operating results for 2007, which included production of 9.66 million pounds of copper in concentrate including 5.35 million pounds of copper in the fourth quarter of 2007. This production level is less than set out in the 2006 detailed feasibility study (“DFS”) but in line with revised forecasts set out in the 2007 pre-feasibility study (“PFS”) as a result of decisions to (1) process lower grades during the commissioning and ramp up of the mill in order to avoid unnecessary metal losses until recoveries reached design levels and, (2) to construct the Phase 2 mill expansion earlier than contemplated in the DFS, resulting in some production being deferred into 2008 as the plant expansion was constructed and tied in.In addition, Sherwood announced its production estimate for 2008 of approximately 55 million pounds of payable copper and 24,000 oz of payable gold, significantly higher than projected in its 2006 DFS, as a result of (1) completing the Phase 2 mill expansion earlier than planned and (2) further optimization of the open pit schedule for 2008, resulting in higher grade ore being processed sooner. In fact, for the next several months, grades mined from the pit are forecast to exceed 4% copper, but mill feed will likely be capped at 4% copper in order to not overload the circuit with too much concentrate.
“Our copper & gold production from the high grade Minto copper-gold mine was very close to the revised target for the entire year and in the first quarter of commercial production,” said Stephen Quin, President & CEO. “This is a tremendous achievement for our operating personnel, especially given the challenges inherent in commissioning a new mine and in tying in the Phase 2 mill expansion while still operating the mine,” he added. “Further, Sherwood has been successful in advancing a number of project optimizations to the point that they could be brought into our production plans, boosting metal production estimates for 2008 and beyond. Additional opportunities for further enhancements and increases in production are still being evaluated as part of Sherwood’s relentless pursuit of value.”
Sherwood’s objective for the Minto Mine is twofold: firstly to aggressively increase reserves and production in a staged manner, resulting in a natural dehedging through increased production and, secondly, to continually optimize and improve the production profile and costs of operation through its relentless pursuit of value. In both of these areas, Sherwood has made considerable progress since the DFS was published in mid-2006, but continues to strive to extract maximum value from its Minto Mine to the benefit of all stakeholders, as discussed below. In addition, Sherwood recently acquired a controlling interest in Western Keltic Mines, which owns the high grade Kutcho copper-zinc-silver-gold project in NW British Columbia. Based on what is a very similar scale of project, this acquisition provides Sherwood with the opportunity to repeat its experience at Minto to repeat the successful optimization, construction and operation at Kutcho.
As a result of the expanded production profile outlined in the recently completed PFS, forward sales now account for approximately 50% of the next four years production and approximately 32% of current life-of-mine production. This represents a marked decrease in forward sales from the previously forecast 75% of its metal production in the first four years based on production levels set out in the original DFS. A decrease in forward sales provides Sherwood with increased exposure to current high spot prices for copper, gold and silver. The percentage forward sold excludes any consideration of potential production from the Kutcho project, which is entirely unhedged. Details of the current forward sales positions on a quarterly basis are attached to this press release.
2007 Operating Results
Key operating statistics for the Minto Mine in the third and fourth quarters of 2007, and for the entire year (including waste stripping for the entire 12 months and limited concentrate production in the second quarter of 2007), are presented below. All costs and production prior to October 1, 2007 were capitalized, and commercial operations commenced on October 1, 2007.
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