Sherwood Reports Results of Pre-feasibility Study for Expansion of Minto Copper-Gold Mine
December 12, 2007
News Release #07-36
Increased Copper and Gold Production Supported by Study, Commencing Immediately
VANCOUVER, BRITISH COLUMBIA – Sherwood Copper Corporation (SWC: TSX-V) today announced results of an independent pre-feasibility study for the expansion of the Minto copper-gold mine in the Yukon. This study increases reserves and lays out a path for significantly increased copper production, commencing immediately, and enhanced project economics.”The completion of a pre-feasibility study that incorporates the Area 2 deposit, which was discovered and defined in 2006, represents another significant milestone in Sherwood’s relentless pursuit of value,” said Stephen Quin, President & CEO. “We have taken an exploration concept and, within 20 months, converted it into a reserve that supports a 45% increase in mill throughput and a 43% increase in total project copper and gold production with increased copper and gold production commencing immediately. Given the very encouraging exploration in 2007, there would appear to be excellent opportunities for further resource additions that could potentially support additional production expansions or an increased mine life.”
The Pre-feasibility Study technical report (“PFS”) lays out the basis for production from the Area 2 deposit at a higher mill throughput than was defined in the 2006 detailed feasibility study completed by Hatch Ltd. (“DFS”), the results of which were announced on August 28, 2006. The PFS also incorporates a number of additional post-DFS optimizations. Highlights of the PFS, as compared to the DFS include the following:
– Processing increased to 3,500 tpd from 2,400 tpd;
– Higher metal production commences in 2008 as a result of processing higher grades first;
– 43% increase in total copper and gold produced in concentrates;
– 39% increase in pre-tax net present value at a 7.5% discount rate, 75% after tax;
– 41% pre-tax IRR, 35% after tax based on $2/lb copper price plus completed forward sales;
– 52% pre-tax IRR, 46% after tax based on forward copper price plus completed forward sales.
The PFS represents an interim update on the Minto Project with resource estimates as of the end of 2006 and costs as of the end of 2007. However, continued exploration success in 2007, which could result in further reserve increases beyond those outlined in the PFS, and other optimization opportunities, suggest that additional value remains to be extracted from the Minto Project and Sherwood will continue to pursue the crystallization of these value opportunities.
Basis of Pre-feasibility Study
In 2006, Sherwood identified and defined a promising deposit, Area 2, located immediately south of the Minto Main pit and drilled it to NI43-101 resource standards in 2006 with 79 holes totalling 18,134 m of diamond drilling, resulting in approximately the same drill spacing as the Minto Main deposit. The Area 2 mineral resource was sufficiently promising to commission the independent PFS completed under the supervision of SRK Consulting (Canada) Ltd. (“SRK”). In addition to looking at the economic potential of the Area 2 deposit, the study was expanded to incorporate several other concurrent Minto Project improvements that were identified post-DFS, including:
– Implementation of coarser initial grinding in conjunction with a regrind of rougher cell concentrates;
– Increase in mill capacity to 3,500 tonnes per day;
– Rescheduling of open pit to maximize up-front grades;
– Utilization of grid electrical power;
– Review of waste rock and tailings deposition options;
– Optimization of the pit slopes for the Main pit based on new geotechnical data and analysis;
– Improved recoveries for partially oxidized material.
It is envisioned that, based on the results of this study, Minto Explorations (“MintoEx”) will seek amendments to its current operating permits from the Yukon government in order to increase production and modify operating parameters to accommodate these and other proposed operational improvements.
Lions Gate Geological Consulting Inc. (“LGGC”), in conjunction with SRK, conducted the mineral resource estimate for the Area 2 deposit. LGGC and SRK have reviewed pertinent geological information in sufficient detail to support the data incorporated into the resource estimate. SRK was actively involved during the estimation process, provided guidance with geostatistical analyses of copper and gold, estimation parameters to be used, and validated the copper and gold block models. The previously disclosed mineral resources for the main Minto and Area 2 deposits (as of March 2007) are summarized below and are detailed in the table attached (see news releases dated February 26, 2007 and July 10, 2006 for additional details).
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