Published by: World Tibet Network News, Wednesday January 31, 1996
VANCOUVER, Jan. 29 /CNW-PRN/ - Breckenridge Resources Ltd. is pleased to report the very favorable conclusions of a just-completed Prefeasibility Study on the Xiacun silver-base metals deposit in Sichuan Province, China. This detailed study was carried out by Rescan Engineering Ltd., a highly qualified, independent Canadian engineering firm specializing in mining projects. The study concludes that the project can be developed as an economically robust 1,500 tonne per day mine/mill complex.
The fully diluted mineable reserves, allowing for a 10% ore loss underground, have been calculated as follows:
Tonnes Zinc Silver Lead Copper Gold
% g/tonne % % g/tonne
8,173,000 9.15 224.94 5.65 1.04 0.61
Mining has been scheduled to enhance the economies of the project with higher grade ore to be mined in the early years of the initial 15 year mine life. The ore will be mined underground by simple shrinkage stope methods.
A conventional flotation plant will produce separate copper, lead and zinc concentrates with the copper concentrate to be further treated on-site to produce a copper matte. Average annual production of metals will be as follows:
Zinc Silver Lead Copper Gold
42,650 tonnes 118 tonnes 26,075 tonnes 4,650 tonnes 5,895 ounces
The total capital cost for the mine, mill, hydroelectric plant and associated infrastructure is calculated to be US$86 million.
Assuming current payment schedules from existing Chinese smelters, the Net Smelter Return to the property, after provision for all smelting, refining and concentrate hauling costs, is US$117 per tonne of ore in the early years of operation and averages US$91 per tonne over the life of the mine.
Total operating costs are calculated at US$33 per tonne which reflects low labour and power costs for this project.
The pre-tax annual operating profit will be US$46 million in the early years of operation and average US$31 million over the life of the mine. This corresponds to a pre-tax discounted cash flow rate of return (DCFROR) of 37% and a very rapid 1.9 year payback of capital. The tax regime that will be applicable to this project is now under negotiation. It is the expectation of Breckenridge that the joint venture will be exempt from income tax for the first two years of operation and will be granted a 50% tax reduction for at least the following three years. This should result in a very favorable after-tax DCFROR and a short payback period.
As reported in News Release dated January 10, 1996, Breckenridge has concluded an Agreement in Principle with respect to the joint venture development of the Xiacun Project. In view of the positive results of the Prefeasibility Study, it is the intention of Breckenridge and our Chinese partners to aggressively continue discussions towards concluding a final joint venture agreement based on the existing Agreement in Principle. Under the terms of the Agreement in Principle, Breckenridge can vest a 67% project interest by completing a bankable final feasibility study and matching, pro-rata, prior Chinese project expenditures in an amount to be finalized by further agreement. Thereafter, both parties will share all project costs and proceeds in proportion to their respective project interests. Our Chinese partner has agreed to lead negotiations, on behalf of the joint venture, with all relevant government agencies with respect to royalties, tax regime, permitting and other such matters. Preliminary indicatio
ns are that very significant incentives will be available to this project.
A major program towards a final bankable feasibility study on this project will now proceed. Initial work will include mining a large underground bulk sample and transporting the sample to Canada for a definitive testwork program to optimize the prefeasibility metallurgical results, revising the process plant capital and operating cost estimates based on the results of this metallurgical test program, and preliminary hydroelectric plant design.
[For further information: James S. Kermeen, M.Sc., P.Eng., President, Breckenridge Resources Ltd. +1-604-684-4691]
