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Date: Fri Mar 17, 2006 at 3:25:33 PM Pacific Time From: Rio Narcea Gold Mines ([EMAIL PROTECTED]) To: (no recipient name) ([email protected]) Re: Gold: Tasiast Project Title: Overview The Tasiast gold project is Rio Nacea's first development stage project outside of Spain. The project provides an excellent opportunity for Rio Narcea to employ its development and operating expertise to add value to the project. A bankable feasibility study was completed in April 2004 and the project is fully permitted. The management of Rio Narcea announced its decision to proceed with development of Tasiast in August 2005. Capital costs for the project are estimated to be US$63.5 million and production is forecasted for mid-2007. The Tasiast project is easily accessible from Spain with the Canary Islands (part of Spain) situated to the northwest of Mauritania. The project is located in northern Mauritania approximately 300 kilometers north of the capital city Nouakchott and 162 kilometers east-southeast of the port city of Nouâdhibou. An exploration camp is in place with telephone and radio links to the Nouakchott office, and a gravel airstrip for light aircraft. The decision to proceed with the development of Tasiast follows a detailed review by the Company of the basic engineering work by SENET Engineering (South Africa). The primary objective of this review was to optimize the project's economics in light of the significant increases in commodity input prices and general construction costs since the completion of the April 2004 feasibility study. Emphasis has been placed on limiting increases in operating costs, while recognizing the inevitable increase in capital costs. In the result, the total capital expenditure to develop the project is now estimated to be $63.5 million. The increase in capital expenditures, as compared with the feasibility study, is the result of a number of factors. The most significant are: a $5.8 million increase in the costs for the power plant, which will now operate on heavy fuel oil rather than more costly diesel oil; increases related to the general rise in construction and related input costs, particularly for steel and for ocean shipping; increased costs related to the decision to use a Lump Sum Turn Key contract; and obtaining political risk insurance. Increased freight charges are significant to the Tasiast project as most of the materials necessary for mine development and construction must be sourced and shipped from outside of Mauritania. The use of heavy fuel oil will minimize the impact of higher fuel prices on operating costs. Financing Rio Narcea plans to use a combination of its own cash and project debt to finance development of the mine and discussions with banks are well advanced in this regard. Finalization of the project debt arrangements will commence now that this development decision has been made. Reserves and Planned Production The Tasiast gold project has measured and indicated resources of approximately 12.07 million tonnes averaging 3.06 g/t gold, or 1.19 million ounces, which includes proven and probable reserves within four open pits of 9.01 million tonnes averaging 3.06 g/t gold, or approximately 886,000 ounces at a gold price of US$370 per ounce. In addition, inferred resources total 12.4 million tonnes averaging 2.25 g/t gold or approximately 899,000 ounces. The mine plan only considers existing proven and probable ore reserves. Mineralization also remains open at depth. As a result there is good potential for extension of the mine life beyond the eight years of current open pit reserves. Tasiast is forecast to produce an average of 105,000 ounces of gold annually over the current 8-year mine life at a cash operating cost of approximately $240 per ounce. This includes an initial stage of approximately three years during which Tasiast will produce approximately 120,000 ounces annually at a cash cost of approximately $220 per ounce. Project Economics With the current proven and probable reserve base (calculated at a $370 gold price) and optimized mine plan, the Tasiast gold project exhibits robust economics with an anticipated internal rate of return at a $400 gold price and assuming no debt, of 18.1%. The net present value ("NPV") of the project at varying discount rates and gold prices, is given below:
Acquisition Rio Narcea Gold Mines, Ltd. acquired the Tasiast project through an amalgamation with Defiance Mining Corporation, which was finalized on September 3, 2004 (refer to press releases dated June 30, September 1, and September 3, 2004). The Company holds a 100% interest in the Tasiast exploitation permit covering 312 km2 and nine exploration permits and 90% of three exploration permits which, in total, cover approximately 16,000 km2 in Mauritania. The following payments remain to be paid to Newmont LaSource from whom the properties were originally purchased:
Previous work The area was initially explored by the Office Mauritanien de Recherches Geologiques (OMRG) from 1993 to 1996 as part of the European Development Fund Project (EDF). The exploration properties, including Tasiast, were acquired in 1996 by Normandy LaSource, predecessor to Newmont LaSource, who by 2001 had drilled over 35,000 meters to define two main areas of gold mineralization at Tasiast. They reported a gold resource of 31 million tonnes at a grade of 2.1 g/t for a total of 2 million ounces, using a cut off grade of 1 g/t. In early 2003, the exploration permits, including Tasiast, were acquired by Tasiast Mauritanie Limited, which is now a subsidiary of Rio Narcea. The drilling data was re-interpreted and an indicated resource of 8.3 million tonnes at a grade of 2.3 g/t (611,000 ounces) and an inferred resource of 21 million tonnes at a grade of 1.8 g/t (1,176,000 ounces) (JORC code) were reported. From March to June 2003, a drill program consisting of 303 reverse circulation holes totaling 25,859 meters and 29 core holes totaling 1,976.5 meters was completed. In October 2003, Defiance released a resource estimate for the project that is summarized below: Resource Estimate Tasiast Gold Project (@ 1.0 g/t Au cut off)
The resource estimate was prepared by independent consultants A.C.A. Howe International Ltd. in accordance with the guidelines set out in National Instrument 43-101. More details are available by downloading the complete technical report (click on the link below for pdf file).
In August of 2003, Defiance engaged the services of SNC Lavalin Inc. to complete a full feasibility study. The study, completed in May 2004, contemplated an open pit operation with a conventional milling process. The project is planned to produce an average of 105,000 ounces of gold annually at average direct cash costs of US$226/oz over a period of less than 8 years. Some project parameters have recently been updated as noted above. According to the feasibility study, diluted proven and probable reserves from four pits are estimated at 9.0 million tonnes at a grade of 3.06 g/t containing 886,000 ounces of gold. Not included in the feasibility study are approximately 1.0 million tonnes of inferred resources that are located within the pits that, for the purposes of the feasibility study, are considered as waste. The mineral reserves are summarized as follows: Proven and Probable Mineral Reserves1
Gold will be recovered by a conventional process consisting of single-stage crushing, SAG and ball mill wet grinding, thickening, carbon-in-leach, gold recovery and cyanide destruction. Overall gold recovery is expected to be 95%. The project does not have access to an electrical utility grid and electricity at the site will be supplied by a group of five diesel-driven generator sets rated 1 820 kW/2 500 kVA. Water will be brought by pipeline from eight wells some 60 kilometers from the site. The wells, a primary pumping station and a booster station mid-way along the pipeline will have diesel generator sets to provide required electricity. The environmental impact study concluded that no major negative environmental impact is anticipated at Tasiast. The project location in an isolated desert area largely contributes to minimizing the environmental impacts. More details of the feasibility study are available by downloading the complete technical report (click on the link below for pdf file).
Plan map and sample cross-sections of the deposit are available below: Geology and Mineralization Mineralization at Tasiast is predominantly hosted in a banded iron formation (BIF) that was altered and mineralized late during deformation and metamorphism. The rocks and mineralization are of Archean age and similar in style to deposits in comparable Archean terrains; for example Musselwhite in Canada. Gold mineralization occurs in two parallel trends: the East Branch, which is continuous over a 4.5 kilometer strike length, and the West Branch, which is continuous over a 2 kilometer strike length. The East Branch contains one major shoot, referred to as the "Piment Central" zone and three smaller shoots, the Piment Central Extension (also called Piment Sud Nord), Piment Nord and Piment Sud zones. Mineralization dips to the east between 45° and 70° and the shoots plunge at about 30° in a southerly direction. Mineralization widths vary between 5 and 30 meters with a 20 to 25 meter width common in the strongly mineralized areas. The rocks are oxidized to a depth of about 40 meters. The West Branch contains low grade mineralization only. Gold occurs both in intensely altered BIF and in and around quartz carbonate veins and veinlets associated with pyrrhotite. Gold is typically located in around the sulfide grains or in the veins but only rarely within the grains. In late 2004, Rio Narcea completed 3,000 meters of drilling to test the depth extension of the high-grade zone beneath the main pit (Piment Central deposit) that was identified by drilling earlier in 2004. The drilling results suggest the potential of adding mineral resources amenable to underground mining which would further enhance project economics. The high-grade zone was traced to a vertical depth of 300 meters and remains open at depth.
Copyright © 2006 RIO NARCEA GOLD MINES LTD. (RNG) All rights reserved. For more information visit our website at http://www.rionarcea.com/ or send email to [EMAIL PROTECTED] . Message sent on Fri Mar 17, 2006 at 3:25:33 PM Pacific Time 'Rio Narcea Gold Mines' sent this 'Gold: Tasiast Project' item to you from the Rio Narcea Gold Mines Ltd. interactive web site. I hope that this Gold: Tasiast Project item is of use to you. [the requester was connected from the IP address of 213.186.183.216 and ISP located at Jordan / 'amman / Amman / Assigned To R13 For Adsl] --end-- --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Mauritanie-Net" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [EMAIL PROTECTED] For more options, visit this group at http://groups.google.com/group/Mauritanie-Net -~----------~----~----~----~------~----~------~--~--- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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