St. Augustine Gold and Copper Limited (TSX:SAU) ("St. Augustine" or
the "Company") and its joint venture partner Nationwide Development
Corp. ("NADECOR") are pleased to announce the results of the
Preliminary Feasibility Study ("PFS") on the King-king Copper-Gold
Project located in Pantukan, Compostela Valley, Philippines. The
results of the PFS show that the planned operation has favorable
economic potential, generating an estimated pre-tax net present
value ("NPV") of $2.0 billion and an estimated pre-tax internal
rate of return ("IRR") of 24.8%.
"The results of this advanced Preliminary Feasibility Study
confirm that King-king is an attractive project with robust
economics that will bring significant value to our shareholders,
our partner and the Philippines," stated Andrew J. Russell, St.
Augustine's CEO. "The strong results of the PFS pave the way for
St. Augustine and our joint venture partner NADECOR to continue the
development of King-king, including the remaining technical work
and the advancement of project financing."
"We are pleased that the millions of dollars and years of
intensive technical work that St. Augustine has invested in the PFS
have paid off and confirmed that this flagship mining project has
the potential to generate great value and thousands of jobs for the
Philippines," added Conrado T. Calalang, NADECOR's President.
The Declaration of Mine Project Feasibility ("DMPF") was
submitted to the Philippine Government in May 2012. The final
feasibility study will incorporate any required amendments to the
DMPF once comments are received from the Government's final review
of the document.
Key Project Indicators
-- Unleveraged pre-tax net present value ("NPV") of $2.0 billion and an
estimated pre-tax internal rate of return ("IRR") of 24.8%, using an 8%
discount rate, $1,250/oz gold price and $3.00/lb copper price.
-- The ore delivery and processing rate will be a designed throughput of
100,000 tonnes per day ("tpd") split between 40,000 tpd to an on-off
heap leach and 60,000 tpd to a flotation mill with agitated tails leach.
The mining rate will be approximately 178,000 tonnes per day for the 22
year mine plan. Production from the heap leach process is expected to
start one year prior to commencing mill operations.
-- Robust project economics are driven in large part by an initial five
year higher grade operation with a low strip ratio and tidewater
proximity. Average annual production during the first five years of full
production (both heap leach and mill in operation) is 270 million pounds
of copper (122,487 mt), 360,143 ounces gold (11,202 kg) and 568,958
ounces silver (17,697 kg) with an average gold equivalent total cost of
$454 per ounce.
-- Life of mine production of 3.16 billion pounds of copper (1.43 million
tonnes), 5.43 million ounces of gold (168,950 kg) and 11.65 million
ounces of silver (362,356 kg).
-- Life of mine average annual production of 138 million pounds of copper
(62,374 mt), 236,169 ounces gold (7,346 kg) and 506,504 ounces of silver
(15,755 kg) with an average gold equivalent total cost of $621 per
ounce.
-- An estimated initial capital cost of $2.04 billion including the mine,
the mill, on-off leach pad, power plant, port facility and $240 million
in contingency costs.
-- The study assumes large scale contract mining will be used during the
course of the 22 year mine plan, which reduced project initial capital
and increased mine operating cash cost. After tax economic analysis
assumes a six year income tax holiday.
The PFS was prepared by M3 Engineering & Technology
Corporation of Tucson, Arizona ("M3"). The resource, reserve, and
mine plan was developed by Independent Mining Consultants ("IMC")
of Tucson, Arizona. AMEC provided metallurgical studies,
geotechnical and tailing facility design. The Company will file the
full NI 43-101 technical report on SEDAR and the Company's website
within 45 days. All dollar figures in this news release are in 2012
USD.
Reserve Base
The table below presents the mineral reserve for the King-king
Project based on the mine and plant production schedules developed
for the study. The mineral reserve amounts to 617.9 million tonnes
at 0.300% total copper and 0.395 g/t gold.
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Tot Cu Sol Cu Gold NSR
Reserve Classification Ktonnes (%) (%) (g/t) (US$)
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Proven Mineral Reserve
Heap Leach Ore 17,791 0.340 0.197 0.132 16.53
Oxide Mill Ore 21,674 0.514 0.328 0.849 45.36
Sulfide Mill Ore 52,942 0.305 0.044 0.543 24.92
Low Grade Mill Ore 6,734 0.184 0.027 0.218 10.80
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Total Proven Reserve 99,141 0.349 0.132 0.514 26.92
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Probable Mineral Reserve
Heap Leach Ore 77,373 0.305 0.172 0.145 14.81
Oxide Mill Ore 45,440 0.393 0.259 0.745 35.30
Sulfide Mill Ore 345,715 0.288 0.037 0.398 20.48
Low Grade Mill Ore 50,247 0.191 0.023 0.211 10.93
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Total Probable Reserve 518,775 0.290 0.075 0.373 20.01
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Proven/Probable Mineral Reserve
Heap Leach Ore 95,164 0.311 0.177 0.143 15.13
Oxide Mill Ore 67,114 0.432 0.281 0.779 38.55
Sulfide Mill Ore 398,657 0.290 0.038 0.417 21.07
Low Grade Mill Ore 56,981 0.190 0.023 0.212 10.91
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Total Prov/Prob Reserve 617,916 0.300 0.084 0.395 21.12
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Mining Schedule
The PFS assumes a base case ore production rate of 100,000 tpd
considering 40 ktpd to an on-off heap leach and 60 ktpd to mill.
IMC prepared a 22 year mine plan followed by 3 years of processing
stockpiled ore. Heap leach ore declines in year 6 and is
discontinued by year 13. The mine schedule excludes inferred
mineral resources, which are considered to be waste in the mine
reserve analysis. The mine schedule has six development phases and
is optimized for metals production at the plant while maintaining
low waste to ore ratio in the early years. The availability of high
quantities of copper oxide material in the early years allows for
early development for copper heap leach processing, which starts
approximately 1 year before the mill starts. A mill ore stockpile
near the crusher will be utilized to allow 3 to 4 years of
additional mill ore processing in the later years when mine
activity is completed. The table below provides a summary of the
plant production, and illustrates the higher metal grades and lower
waste /ore ratio achieved early in the mine life:
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First 5 Years Life of Mine
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Processed Tonnes, Mill 97 million(i) 523 million
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Heap Leach 69 million 95 million
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Copper (%), Mill .44 .30
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Heap Leach .33 .31
----------------------------------------------------------------------------
Gold (g/tonne) Mill .61 .44
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Waste to Ore Ratio .75 1.06
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(i) Four years of mill production. Mill plant starts one year after heap
leach.
Development Overview
The proposed open pit mine and processing plant will produce
copper/gold/silver concentrate, copper cathode, and gold dore
bullion. Oxide ore containing significant gold and all sulfide ore
will be treated in a concentrator at 60,000 tpd. The concentrator
process will consist of crushing, grinding, gravity concentration
of free gold, and flotation of sulfide copper. An agitated leach
circuit will leach oxide copper from flotation tails. Oxide ore
containing little or no gold will be treated in a heap leach at
40,000 tpd. The heap leach process will consist of crushing,
agglomeration, and leaching utilizing on-off cells. Pregnant
solutions from the agitated leach and heap leach processes will go
to a common SX-EW facility for production of cathode copper.
Overall gold and copper recoveries from ore through dore
production, copper-gold concentrate and copper cathodes are
estimated at 73.2% and 77.5%, respectively. Total life of mine
metal production for the dual processing case (heap leach and mill)
is 3.16 billion pounds (1.43 million tonnes) of copper, 5.43
million ounces (169 tonnes) gold and 11.65 million ounces (362
tonnes) silver. A dry stack tailing facility is proposed for
handling tailings from the process plant. Tailings will be filtered
to remove moisture prior to stacking. Ore will be transported from
the primary crusher located near the mine to the mill and heap
leach area by a single aerial conveyor. The aerial design is chosen
to overcome the high relief terrain in the area. Construction of a
power station is proposed at a new coastal complex where a docking
facility will be constructed to serve the facility, along with
ancillary operations and accommodation for construction and
operating staff.
Production Rates, Capital Costs, Operating Costs, Metal Prices
and Financial Valuation
Project production, capital and operating costs, metal prices,
financials and sensitivities are shown in the table below. In the
table below, Base Case refers to the case represented in the Key
Project Indicators described above.
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15% Higher 15% Higher 15% Higher
Metal Prices OPEX Costs CAPEX Costs
Base Case Case 1 Case 2 Case 3
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Ore Production Rate LOM
(ktonnes/day) 74 74 74 74
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Projected Mine Life
(yrs) 23 23 23 23
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Metal Price Assumptions
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Copper ($/lb) 3.00 3.45 3.00 3.00
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Gold ($/oz) 1250 1438 1250 1250
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Silver ($/oz) 25.00 28.75 25.00 25.00
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Average Annual
Production
---------------------------------------------------------------------------
Gold (oz) 236,169 236,169 236,169 236,169
(kg) 7,345 7,345 7,345 7,345
---------------------------------------------------------------------------
Silver (oz) 506,504 506,504 506,504 506,504
(kg) 15,752 15,752 15,752 15,752
---------------------------------------------------------------------------
Gold Equivalent (oz) 576,326 578,715 576,326 576,326
(kg) 17,924 17,998 17,924 17,924
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Copper (thousand lbs) 137,511 138,507 137,511 137,511
(metric tons) 62,375 62,826 62,375 62,375
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LOM Revenue ($000)
---------------------------------------------------------------------------
Gold $6,489,150 $7,462,523 $6,489,150 $6,489,150
---------------------------------------------------------------------------
Silver $184,575 $212,261 $184,575 $184,575
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Copper $9,238,453 $10,703,220 $9,238,453 $9,238,453
---------------------------------------------------------------------------
Less Treatment and
Refining Charges $(548,215) ($551,701) $(548,215) $(548,215)
---------------------------------------------------------------------------
Total Revenue $15,363,963 $17,826,303 $15,363,963 $15,363,963
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Avg. Annual Net Cash
Flow ($000) Pre-Tax $248,393 $347,681 $205,498 $234,876
---------------------------------------------------------------------------
LOM Total Net Cash Flow
($000) Pre-Tax $5,713,035 $7,996,668 $4,726,473 $5,402,153
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Initial Capital ($000) $2,041,919 $2,041,919 $2,041,919 $2,348,207
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Sustaining Capital
($000) $248,591 $248,591 $248,591 $248,591
---------------------------------------------------------------------------
LOM Operating Costs
---------------------------------------------------------------------------
Mining Cost ($/tonne
mined)/($/tonne
ore)(i) 1.93/3.97 1.93/3.97 2.21/4.57 1.93/3.97
---------------------------------------------------------------------------
Process Plants
Operating Cost
($/tonne ore) 5.28 5.40 6.08 5.28
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General
Administration
($/tonne ore) 1.04 1.04 1.19 1.04
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Other ($/tonne ore) 2.51 2.68 2.56 2.51
---------------------------------------------------------------------------
Total Operating Cost
($/tonne ore) 12.80 13.09 14.40 12.80
---------------------------------------------------------------------------
Cash Cost/Gold
Equivalent oz. $621 633 699 622
---------------------------------------------------------------------------
Pre-Tax Economic
Indicators
---------------------------------------------------------------------------
NPV @ 8% ($000) $1,998,943 $3,026,107 $1,597,899 $1,738,111
---------------------------------------------------------------------------
IRR (%) 24.8% 31.8% 22.2% 21.1%
---------------------------------------------------------------------------
Payback (yrs) 2.4 1.9 2.6 2.8
---------------------------------------------------------------------------
After-Tax Economic
Indicators(ii)
---------------------------------------------------------------------------
NPV @ 8% ($000) $1,757,074 $2,655,758 $1,418,223 $1,517,826
---------------------------------------------------------------------------
IRR (%) 24.0% 30.9% 21.5% 20.3%
---------------------------------------------------------------------------
Payback (yrs) 2.4 1.9 2.6 2.8
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(i) Mine operating costs reflect higher cost contract mining.
(ii) Assumes an income tax holiday for the first six years of the project.
Opportunities
Opportunities to improve project economics are being evaluated
to be included for the feasibility study. These include the
following:
-- Continued evaluation of electric power supply options, including
discussions with independent power providers about long-term power
supply costs.
-- Completion of geotechnical work. This may allow more favourable geometry
for the tailing storage facility and reduce the volume of the compacted
tailing in the outer shell.
-- Increased metal recoveries with additional treatment to the cleaner
flotation scavenger tails, where most of the losses occur.
-- Substitution of secondary and tertiary crushing or secondary crushing
and high pressure grinding rolls for the SAG/pebble crusher circuit may
provide significant capital and operating cost savings. This change
would reduce comminution electrical power requirements with a consequent
reduction in size and capital cost of the power plant.
-- Drilling is planned to define more heap leach ore and perhaps more high
grade mill ore to add to the early part of the mine schedule.
-- There is potential for expansion of the mill in the future to process
ore at an increased rate due to potentially adding more ore to the
resource or due to higher metal prices.
NATIONAL INSTRUMENT 43-101 COMPLIANCE
The following Qualified Persons under National Instrument 43-101
("NI 43-101") have reviewed and approved the scientific, technical
and economic information contained in this news release: Joshua
Snider, P.E. of M3 Engineering and Technology, Michael G. Hester,
FAusIMM of Independent Mining Consultants, Inc.
A NI 43-101 compliant technical report entitled "King-king
Copper-Gold Project Mindanao, Philippines" dated October 12, 2010,
and prepared by Michael G. Hester, FAusIMM of Independent Mining
Consultants, Inc., Donald F. Earnest, P.G. of Resource Evaluation,
Inc. and John G. Aronson of AATA International, Inc. has been
previously filed by the Company on www.sedar.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This announcement includes certain "forward-looking statements"
within the meaning of Canadian securities legislation. All
statements, other than statements of historical fact included
herein are forward-looking statements. Forward-looking statements
involve various risks and uncertainties and are based on certain
factors and assumptions. There can be no assurance that such
statements will prove to be accurate, and actual results and future
events could differ materially from those anticipated in such
statements. Important factors that could cause actual results to
differ materially from the Company's expectations include
uncertainties related to fluctuations in gold, copper and other
commodity prices and currency exchange rates; uncertainties
relating to interpretation of drill results and the geology,
continuity and grade of mineral deposits; uncertainties relating to
the completion of a bankable feasibility study; uncertainty of
estimates of capital and operating costs, recovery rates production
estimates and estimated economic return; the need for cooperation
of the Company's joint venture partner and government agencies in
the development of the Company's mineral projects; the need to
obtain additional financing to develop the Company's mineral
projects; the possibility of delay in development programs or in
construction projects and uncertainty of meeting anticipated
program milestones for the Company's mineral projects; and other
risks and uncertainties disclosed under the heading "Risk Factors"
in the Annual Information Form dated March 22, 2013, and filed with
Canadian securities regulatory authorities on the SEDAR website at
www.sedar.com.
Contacts: St. Augustine Gold and Copper Ltd. Kristi Harvie
Manager Investor and Corporate Affairs
+1-509-343-3193kharvie@sagcmining.com TMX Equicom Marina
Proskurovsky Account Manager +1-416-815-0700 ext.
288mproskurovsky@tmxequicom.com
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