Ventana Announces Filing of NI 43-101 Technical Report for La Bodega Project
Ventana Gold Corp. today announced that it has filed its National Instrument 43-101 technical report in respect of its initial resource estimate and scoping study for the La Bodega project announced on November 8, 2010. Each of the initial resource estimate and scoping study, including the preliminary assessment, was independently reviewed and verified and is supported by the technical report.
As previously disclosed, the initial mineral resource estimate for the La Bodega project is 27 million tonnes grading 3.9 grams per tonne gold, 21.5 grams per tonne silver, and 0.14% copper for a total of 3.5 million ounces of gold, 19.2 million ounces of silver and 84.6 million pounds of copper, each in an inferred resource category, at a cut-off grade of 2.0 grams of gold per tonne. Mineral resources that are not classified as mineral reserves do not have demonstrated economic viability.
The initial resource estimate was as of September 18, 2010 and was based only on drilling and assay results up to such date. As stated in Ventana’s directors circular dated December 22, 2010, Ventana has drilled additional holes since September 18, 2010 and announced drill hole intercepts containing significant mineralized intervals. As also stated in Ventana’s directors circular, Ventana is optimistic that it can reach its corporate objectives of doubling its current resource base within the next 18 to 24 months and upgrading its current inferred mineral resource estimate to an indicated or measured mineral resource estimate within the next 12 to 18 months through its comprehensive drilling program. However, no assurances can be given that Ventana will achieve these corporate objectives. If additional drilling is successful in generating a sufficient quantity of measured and indicated mineral resources, Ventana currently intends to initiate a feasibility study to further assess the economic viability of the La Bodega project. The current technical report was prepared in respect of the initial estimate of inferred resources announced on November 8, 2010 and does not reflect the potential to increase that resource estimate or upgrade Ventana’s inferred mineral resource estimate to a measured or indicated mineral resource estimate.
In order to complete the preliminary assessment contained in the technical report, a conceptual mine plan was developed to estimate the tonnage and grade of a potentially economic or mineable resource. Based on the conceptual mine plan, 29.7 million tonnes of material containing 3.7 million ounces of gold, 21.2 million ounces of silver and 90.7 million pounds of copper is potentially mineable using a variable cut-off grade between 1.8 and 2.0 grams per tonne of gold only.
The scoping study and the preliminary assessment in the technical report calculated a pre-tax net present value for the La Bodega project of US$807 million at a discount rate of 5% and a pre-tax internal rate of return of 34% assuming long-term prices of US$1,000 per ounce of gold, US$17 per ounce of silver and US$3 per pound of copper. The scoping study and the preliminary assessment in the technical report also estimated an initial capital cost for the La Bodega project of US$297 million. This capital cost estimate does not include certain costs for accelerated mine development, shaft sinking, permanent shaft production equipment, acquisitions of land and rights of way, and portions of the camp complex, which Ventana anticipates will be incurred prior to any determination of the economic feasibility of the La Bodega project through the completion of the feasibility study referred to above and which are currently estimated at approximately US$45 million.
The scoping study and the preliminary assessment in the technical report are based on a mill with a capacity of 7,500 tonnes per day. As stated in Ventana’s directors circular, over the course of the next 18 months, Ventana will be reviewing options to determine if it will be possible to materially increase that production rate, with a target of 10,000 tonnes per day. No assurances can be given that Ventana can achieve such objective. The current technical report is not based on such increased production scenario and Ventana has not completed sufficient technical work or economic analysis to support the targeted production rate.
The scoping study and the preliminary assessment in the technical report are assessments that are preliminary in nature and include inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that such preliminary assessments will be realized.
The Company anticipates that its funds on hand of approximately $45 million will be used to pay the costs and expenses associated with the unsolicited offer by AUX Canada Acquisition Inc., to continue with the Company’s drilling activities on the La Bodega project, to conduct other activities in furtherance of determining the economic feasibility of that project, including exploration decline work, pilot plant acquisition, commissioning and metallurgical testing, and for general corporate purposes. Any additional funds that may be required in order to complete Ventana’s work plans described above will be financed by such means as are available at the time (including debt or equity financing in the public or private markets) depending on market conditions and other relevant factors.
