Dec 13, 2012 (ACCESSWIRE-TNW via COMTEX) — SOURCE:[Metal Investment News] – On December 3, 2012, Catalyst Copper (CCY-TSX.V) announced the results from the La Verde project’s NI 43-101 Technical Report, including a Preliminary Economic Assessment (PEA).
The report projects robust economics including $1.6 billion Pre Tax undiscounted cash flow, and an Internal Rate of Return (I.R.R.) of 21.2% and an 18-year Life of Mine (L.O.M.)
Physicals:
Processing rate : 30 Mtpa (80,000 tpd, nominal)
LOM tonnes processed : 587Mt @ 0.37%Cu, 0.03g/t Au, and 2.3g/t Ag
LOM Concentrate production 7.17Mt@ 26.7% Cu
LOM Contained Cu in Concentrate: 4.22 Billion lbs
Average Annual Production in Concentrate: 211Mlbs Cu, 23.8 Koz Au, and 1.63 Moz Ag
Mine Life: 18 years mining; 20 years processing
Economics:
Mining Costs (Yrs 1-7): $1.17 – 1.20 per tonne mined
Avg LOM: $1.70 per tonne mined
Processing Costs: $5.84 per tonne milled
Roasting Cost: $30.00 per tonne concentrate
G&A: $0.35 per tonne milled
Pre-Production Capital: $1,160 M
Pre Tax undiscounted cash flow: $1,625 M
Pre-tax NPV@8%: $617 M (from Year -3)
Pre-tax IRR: 21.2%
The above calculations are based on 100% interest in the La Verde project. Financial estimates are earnings before income tax, depreciation and amortization (“EBITDA”), from conservative metal prices of $2.70/lb copper, $1200/oz gold and $25/oz silver.
With more reality-based metal prices of $3.64 Cu, $1,455 Gold, $28 Silver, the economics of the project the internal rate of return almost doubles to 41.9%.
Image: http://www.accesswire.com/images/317/ccy1.jpg
The Projected NVP increases 350%.
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The proposed metallurgical plant is a conventional copper concentrator comprising crushing, grinding and flotation. Metallurgical recoveries from sulphide mineralization to concentrate, based on test work to date, are:
Table 1 Estimated Metallurgical Recoveries
Ore Type — Copper — Gold — Silver
Sulphide — 90.0% — 75.4% — 75.6%
Oxide — 50% — 75.0% — 50%
* Table 1 assumes a plant feed of an average of 30 Mta
Total mine life is expected to span approximately 20 years at a target plant throughput rate of 30 Mtpa with a total of 587 Mt of mineralized rock delivered to the plant. Copper concentrate production is estimated to average 358 thousand tonnes per year grading 26.7% Cu.
Net smelter return (NSR) calculations were undertaken on all mining blocks by taking into consideration Base Case metal prices for copper, silver and gold, smelter costs, transport costs and refining costs.
Stockpiled lower grade material is reclaimed at the most opportune time throughout the mine life to complement mill feed ore sourced directly from the open pits.
Project Highlights:
4.4 Billion lbs M & I copper resource (43-101 compliant) (@ 0.1 % COG)
3.7 Billion lbs. Inferred copper resource (43-101 compliant) (@ 0.1 COG)
Gold plus silver by-product credits
35,000 metres of recent diamond drilling completed (2010-2012)
Excellent infrastructure – power, water, rail, roads, port
Conventional open pit & metallurgy (concentrate with Au, Mo & Ag credits)
NI 43-101 resource report; including a Preliminary Economic Assessment expected in 4th quarter 2012
Proven Management Team ~ taken copper asset in Mexico from staking to Feasibility & raised $1.1 billion for construction
Services such as power, water and supplies essential to the La Verde project are in close proximity of the site; including, excellent road and rail access to the port of Lazaro Cardenas are within a few kilometers.
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The PEA indicates that key financial indicators, based on reasonable future copper prices and capital and operational cost estimates, justify advancing the Project to a Pre-Feasibility study stage.
La Verde property is subject to an option agreement with Teck Resources (TCK-NYSE) whereby Catalyst’s may earn a 60% interest in La Verde by making $10 million in exploration expenditures by December 31, 2012. CCY has already spent more than that.
Upon Catalyst earning a 60% interest, Teck has the option to increase its interest to 60% by incurring aggregate expenditures equal to two times the amount spent by Catalyst. Should Teck fail to exercise its option to earn a 60% interest, Catalyst can acquire a 100% interest in La Verde by paying to Teck US$20 million.
Mexico is a mature mining jurisdiction which generates 9% of its GDP from resource extraction. Twenty new mines have opened since 2009.
New President Enrique Peña Nieto has pledged push the GDP growth to 6%. He is considered a stabilizing influence on the foreign investment and mining.
Catalyst Copper is currently trading at .05, with 274 million shares outstanding. The Pre Tax undiscounted cash flow is 100 times larger than the market cap of $12.3 million.
