George Salamis, President and CEO of Edgewater Exploration Ltd.
("Edgewater" or the "Company") (TSX VENTURE:EDW)(OTCQX:EDWZF), is
pleased to announce results of a Preliminary Economic Assessment
("PEA") on its 100%-owned Corcoesto gold project in Galicia,
Spain.
The NI 43-101 compliant PEA study was overseen by Mr. Alan
Noble, P.E Ore Reserves Engineering Inc. of Denver, Colorado as
part of the on-going development plan on the Corcoesto Gold
Project, Northwest, Spain.
Base Case Highlights
Average Annual Gold Production 102,000/oz
Average Annual Net Revenue (US$) 60.0 Million
Life of mine Net Present Value (NPV)(US$)(5%) 206 Million
Pre-Tax Internal Rate of Return (IRR) 24%
Pre-Tax Payback (years) 3.4
Initial Open pit and underground Capital Cost (US$) 135 Million
Average Annual Cost (US$/oz) 713
Combined open pit and underground operation 9.9 year mine life
Pre-Tax Financial Models
Pre-tax financial model was completed using a base case gold
price of $1300 per ounce and an exchange rate of 1.38 Euro/$US. The
Base Case economic evaluation has an IRR of 24%, payback of capital
in 3.4 years and a NPV of $206 million at a discount rate of
5%.
The following table details Project sensitivity for two
additional metal prices;
Pre-Tax Financial Model
----------------------------------------------------------------------
Metal Price Scenarios
Units ------------------------------------------
(Base Case) Current
----------------------------------------------------------------------
Gold US$/oz 1,300 1,500 1,700
----------------------------------------------------------------------
NPV 5% 206 340 475
----------------------------------------------------------------------
Payback Years 3.4 2.5 1.9
----------------------------------------------------------------------
IRR % 24 34 43
----------------------------------------------------------------------
Initial Capital Costs for the mine and plant are estimated at
$135 million, with an additional $9 million for resource drilling,
$1.5 million to purchase part of the Lundin royalty, and $25
million (17.5%) for contingency. Working capital in the amount of
$12.5 million, sustaining capital $33 million and reclamation and
closure costs of $10.5 million are also included in the above
economic evaluation.
George Salamis stated: "Our efforts over the past 16 months have
been focused on growing the Corcoesto resource and optimizing value
for our shareholders while ensuring we follow the highest standards
of environmental stewardship at Corcoesto. We are very excited with
the outcome of the PEA and believe we will continue to add more
value as we move into the next phase of the project. The permitting
process is now well underway and will be based on the design in
this PEA. We currently have 4 diamond drills active on the project
in an effort to convert inferred resources to measured and
indicated. I am confident we will execute and exceed our
expectations. We plan to complete an additional 20,000 metres of
drilling and begin a definitive feasibility study based on the
updated resource anticipated for 2012. I am also very confident we
will be able to secure an exploitation permit on the project during
2012.
Life-of-Mine Parametres
Mill Feed Grade 1.70 g/t gold
Stripping Ratio 8.0/1
Annual Throughput 2.1 million tonnes
Milling Rate 6,000 tonnes/day
Gold Recovery 89.1%
Mine Life 9.9 Years
NI 43-101 Mineral Resources
The PEA was based on the May 27, 2011 NI 43-101 Mineral Resource
estimate. (See following table for details).
Corcoesto Gold Deposit
----------------------------------------------------------------------
Resource Class Cutoff Tonnes Contained Gold
(g/t Au) (x1000) g/t Au (x1000 oz)
----------------------------------------------------------------------
Measured 0.65 3,899 1.77 222
----------------------------------------------------------------------
Indicated 0.65 1,823 1.69 103
----------------------------------------------------------------------
Measured +
Indicated 0.65 5,783 1.74 325
----------------------------------------------------------------------
Inferred 0.65/2.0 20,265 1.76 1,149
----------------------------------------------------------------------
1. CIM definition standards were followed for the resource estimate
2. The 2010 and 2011 resource models used an inverse-distance-power (IDP)
grade estimation within a three-dimensional block model with mineralized
zones defined by wireframed solids.
3. A total of 19,075.7 m of surface trenching in 225 trenches, 443.1 m of
adit sampling in 4 adits and 42,111.18 metres of diamond and RC drilling
in 342 drill holes were used in the resource with sample spacing's that
were less than 30 m for Measured resources, less than 40 metres for
Indicated resources and less than 195 m for Inferred resources except
for Inferred resources below 200 m from surface and for the northern two
vein systems that used drill spacing's of 196 m
4. A base cutoff grade of 0.65 g/t Au was used for reporting resources
above a depth of 200 m from surface and a cutoff grade of 2.0 g/t Au was
used for reporting resources below 200 m from surface
5. Dilution is included for a minimum mining width of 2.0 m on a 4.0 m high
mining bench
6. Mineral Resources that are not mineral reserves do not have economic
viability
Initial Capital Cost using Contract Mining
An initial capital expenditure of $135 million is required to
construct the project and is detailed in the following table.
Initial Capital Cost
--------------------------------------------------------------------------
Description $ Million
--------------------------------------------------------------------------
Engineering and Preproduction Development 28.5
--------------------------------------------------------------------------
Power 4.0
--------------------------------------------------------------------------
Process Plant 92.0
--------------------------------------------------------------------------
Tailings & Reclamation 10.9
--------------------------------------------------------------------------
Total Initial Cost 135
--------------------------------------------------------------------------
Resource Drilling 9.0
--------------------------------------------------------------------------
Royalty Purchase 1.5
--------------------------------------------------------------------------
Contingency - 17.5% 25.3
--------------------------------------------------------------------------
This capital estimate utilized an exchange rate of 1.38 Euro/$US
and is based on industry standard estimates and 2011 pricing
supplied by vendors where applicable.
Site Operation Cost
The Corcoesto Project is modelled as a combined open pit and
underground mining operation. Life-of-mine operating costs are
$32.52/tonne ore milled for open pit and $56.78/tonne ore milled
for underground, as detailed in the following table.
Site Operating Cost
--------------------------------------------------------------------------
Description Open Pit Underground
($/tonne milled) ($/tonne milled)
--------------------------------------------------------------------------
Mining (including waste
and staff) 15.74 40.00
--------------------------------------------------------------------------
Milling 14.63 14.63
--------------------------------------------------------------------------
Tailings 1.00 1.00
--------------------------------------------------------------------------
G & A 1.15 1.15
--------------------------------------------------------------------------
Total 32.52 56.78
--------------------------------------------------------------------------
Infrastructure
The Corcoesto gold project is located in northwest Spain
approximately 35 km west-southwest of the port city of La Coruna in
the Autonomous Community of Galicia. The project has excellent
infrastructure, which is connected to existing roads at the nearby
community of Corcoesto. Delivery of electrical power will be
completed connecting a new substation to the existing 22kV power
line which currently bisects the project. Mine employees will
commute daily from local communities.
Metallurgy and Processing
Metallurgical recovery is estimated at 89.1% based on a series
of test completed at McClelland Laboratories in Sparks Nevada
during 2011. Work included diagnostic tests completed on a series
of composite samples from drill holes across the three main gold
mineralized zones at Corcoesto. The 6,000 tpd process facility will
utilize conventional crushing, grinding, gravity, flotation and
cyanidation to produce gold dore.
Major equipment for the processing facility includes a primary
crusher sized for 6,000 tpd (34" x 44"), a semi-autogenous (SAG)
mill, two ball mills (14' x 18') and a vertical regrind mill for
the flotation concentrate. The average ball mill work index is 14.3
kW/t and the mill feed will be ground to 53 microns.
The processing facility includes: centrifugal gravity units,
leach and carbon adsorption tanks (13.8m x 13.8m), rougher,
scavenger, and cleaner flotation cells (100 m3), concentrate
thickener, elution circuit, electrowinning and smelting.
Additionally the facility will include a reagent handling system
which includes a cyanide detoxification unit.
Recommendations and Development Plan
The PEA demonstrates that the Corcoesto Gold Project has a NI
43-101 compliant mineral resource estimate that has the potential
to be economically viable under a Base Case development scenario.
As a result, Ore Reserves Engineering Inc. has recommended that the
Company upgrade the PEA to feasibility-level status. Additional
recommended work includes resource conversion utilizing surface
drilling for in-pit resources as well as underground access and
drilling targeted at the deeper resource areas.
Conference Call Details
Edgewater will hold a conference call on Friday November 18,
2011 at 11 am Eastern Standard Time, 8 am Pacific Time. During the
call, senior management will be available to discuss the study and
respond to questions from analysts and investors. To join the call,
please dial:
Canada & USA Toll Free: 1 888 754 4430
International Toll Dial In: 1 212 231 2927
Qualified Persons
The Corcoesto Gold Project PEA Technical Report data in this
news release was read and approved by Alan Noble, P.E., of Ore
Reserves Engineering Inc., a professional mining engineer
registered in the State of Colorado, USA and a Qualified Person
("QP") as defined by National Instrument 43-101. A technical report
is being prepared and will be filed in the next 45 days.
Mr. Gregory Smith, P.Geo., Vice-President of Exploration of the
Company, is the Qualified Person as defined by NI 43-101, and is
responsible for the accuracy of the technical data and information
contained in this news release.
The preliminary assessment includes 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
the preliminary assessment will be realized.
About Edgewater Exploration Ltd.
Edgewater is a mineral exploration company focused principally
on acquisitions, advancement and development of precious metal
properties. Edgewater is currently developing the Enchi Gold
Project in Ghana, West Africa and the Corcoesto Gold Project in
Northwest Spain.
On behalf of the board of EDGEWATER EXPLORATION LTD.
George Salamis, President and CEO
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Contacts: Edgewater Exploration Ltd. Ryan King Vice President
(604) 628-1012rking@edgewaterx.comwww.edgewaterx.com
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