Toronto, ON - San Anton Resource Corporation (SNN:TSX) is pleased to announce a highly encouraging US$260 million net free cash flow, US$415/oz production cost ‘base case’ scoping study finding for the Cerro del Gallo gold/silver project, part of the greater San Anton project in Guanajuato, Mexico. Key scoping study outcomes: - US$260M net free cash flow before tax (unadjusted for inflation) - post capital expenditure payback
- US$82M estimated initial capital investment to be padi back in 2.25 years
- US$415 per ounce average life-of-mine operating cost after silver credits, indicated
- Updated optimised pit results for combined heap leach/carbon-in-leach processing of:
- 69.9Mt in-pit resource at 0.66g/t gold (Au) and 13.6g/t silver (Ag)
- 0.74:1 average strip ratio over 14 year mining life
- 4Mtpa initial processing rate, expanding to 5.5Mtpa
- US$900/oz gold/US$15/oz silver metal price assumptions
- Full feasibility study will now proceed for completion by last quarter 2010
- 2011 current target for mining commencement – dependent on feasibility study outcomes
This study represents a further advance on the indicative optimized pit and mine production schedule data released by the company in 2009, and incorporates independently verified capital/operating projections and assumptions. The newly completed Cerro del Gallo scoping study tested the probability of economically developing part of the deposit to recover gold and silver via open pit mining and heap leach/carbon-in-leach (“CIL”) processing. Importantly, the scoping study is a ‘base case’ guide to the possible economic feasibility for the operation, using simple mining and processing techniques to generate significant cash flow within a short time frame. Options to further optimise this ‘base case’ will be reviewed during a full feasibility study to take place over approximately the next 8 months. This will include options to further increase gold and silver recoveries. The advanced status of the in-pit geological resource – 85% measured, 15% indicated – is a key positive factor enabling the company to progress planning with a high degree of confidence. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Pit Optimization Results Mr. Tim Carew of Reserva International LLC in Reno, Nevada, USA, generated a series of open pit optimization studies using Gemcom Whittle Optimization software based on a heap leach/CIL flow sheet and representative costs for operations of a similar size and nature including mining costs of US$1.63/t for weathered and near surface material and US$1.93/t for all other rock types, processing costs of US$3.50/t heap leach, US$6.93/t CIL, US$0.68/t administration, plus transport and refining costs which are variable on a per ounce basis. Preliminary metallurgical recoveries (see Table 3) were assumed for each of three rock types based on the results of intermittent bottle roll tests. At a gold price of US$900/oz and silver price of US$15/oz, resources within the pit were estimated at 69.9 Mt comprising 0.66g/t gold and 13.6g/t silver, or 1.49 million ounces of gold and 30.5 million ounces of silver (see Table 1). The conceptual strip ratio is 0.74:1. The pit optimization resources were incorporated into a preliminary mine and metal production schedule (see Table 2). Metallurgy Metallurgical testing to support the scoping study has focused on a cyanide heap leach flow sheet utilizing the three material types from the gold/silver domain. Metallurgical testing was completed by SGS Lakefield Oretest in Perth, Australia. For the purposes of the pit optimization study, it was assumed that an optimized heap leach flow sheet would result in gold and silver recoveries as shown in Table 3. These assumed values were established from indicative results from metallurgical testing completed to date, which included 18 bottle roll tests (intermittent rolling), as well as the reported results of comparable operations. Two column leach tests have been completed on the weathered material and which achieved similar (75% at 12.5mm and 78% at 6.3mm) gold recoveries as the bottle roll tests. CIL recoveries are based on actual results from earlier leach test work conducted at laboratories in Perth, Australia. Extensive metallurgical testing will be completed as part of the full feasibility study. Engineering & Operating Costs Sedgman Metals Engineering Services (“Sedgman”) in Perth, Australia independently reviewed the initial capital cost estimate, the operating costs and the metallurgical parameters used for the scoping study. Capital costs of US$82 million for the 4Mtpa crushing/heap leach plant are the costs recommended for the scoping study following Sedgman’s review. After reviewing the operating costs and making adjustments as per Sedgman’s recommendations, the heap leach processing costs were estimated at US$3.54 per tonne plus an allowance for contingency. Sedgman listed several risks and recommendations in their review in moving forward with a full feasibility study. Sedgman also reviewed the metallurgical test work completed to date and commented on the recoveries used for the scoping study. From the limited test work completed for the scoping study, Sedgman feel that the slightly lower gold recovery of 72% for the weathered material would have been recommended but agree that the 75% used is within the degree of accuracy for this level of study. Sedgman has recommended significantly more test work be undertaken for the full feasibility study to gain more confidence in gold and silver recoveries and reagent consumptions for the different material types as well as a detailed engineering study. An estimate of an additional US$68 million (including contingencies) for the inclusion of a 2.8Mtpa CIL plant has been included in the scoping study. This estimate is based on the costs of several similar projects completed over the past 3 years. Table 4 summarizes the scoping study capital costs for the project development. These costs have been estimated from actual quotes for new equipment, estimates based on other similar operations and general unit costs plus contingencies appropriate for this level of study. There is the possibility of reducing the costs if suitable used equipment becomes available. John Cook, President and Chief Executive Officer of San Anton stated that “The next stage for the development of the Cerro del Gallo deposit will be to continue with the full feasibility study work which will mainly include more detailed metallurgical test work to increase the confidence in the data and the possible improvement in the gold and silver recoveries for the different material types within the deposit and detailed engineering study and equipment costing.” John Skeet, Chief Operating Officer of Kings Minerals, which owns 71.3% of San Anton and which oversees technical operations for the San Anton project, stated that “We are very pleased with the outcome of this scoping study for Cerro de Gallo. The study indicates the opportunity to generate a significant cash flow from a relatively simple and low cost operation located in an area with well established infrastructure. The results from the study have also indicated that including CIL processing for the ‘fresh’ rock material will significantly improve the economics of the development.” Within the next 45 days, San Anton will be releasing an updated National Instrument 43-101 compliant technical report which will include all of the details of the scoping study plus an updated independent review of the capital cost estimates. The updated report will be filed on SEDAR and available under San Anton’s profile at www.sedar.com. Mr. Tim Carew of Reserva International LLC in Reno, Nevada, USA, and Sedgman Metals Engineering Services in Perth, Australia, both of whom are independent Qualified Persons under National Instrument 43-101, have reviewed and approved the technical information in this press release. Corporate Update As announced by the company on February 3, 2010, San Anton has agreed in principle with Kings Minerals to complete a business combination whereby Kings will acquire all of the issued and outstanding shares of San Anton not presently owned by Kings Minerals in exchange for shares of Kings Minerals on the basis of two (2) ordinary shares in the capital of Kings Minerals for each San Anton common share held. Completion of the transaction is subject to a number of conditions, including the receipt of all required regulatory, stock exchange, director and shareholder approvals. The special committee of independent directors formed by the Board of Directors of San Anton has recently retained an independent valuator to provide a valuation for the proposed transaction and to consider the fairness of the proposed transaction, from a financial point of view, to the shareholders of San Anton (other than Kings Minerals). Additional details regarding the valuation and fairness opinion and the proposed transaction will be announced as the work of the valuator and the special committee progresses. Subject to these conditions, it is expected the business combination will be finalized by the end of May 2010. Go to PDF version of the press release for Table 1 of "Summary of Resources in Optimized Pit Shell Based on Au US$900/oz and Ag US$15/oz", for Table 2 of "Cerro del Gallo Deposit – Preliminary Mine Metal Production Schedule", for Table 3 of "Assumed Process Recoveries", and for Table 4 of "Estimated Capital Costs +/- 30%." About San Anton Resource Corporation San Anton Resource Corporation is an exploration and development company that is listed on the Toronto Stock Exchange and is totally focused on the mining friendly jurisdiction of Mexico. The Company’s principal asset is a 64% interest in the San Anton Property (Goldcorp 36%), which hosts the near-surface Cerro del Gallo gold-silver-copper deposit. The Property is located in a historic gold-silver mining district and has only recently been subjected to modern exploration techniques. This work quickly identified several targets and has led to the delineation of a NI 43-101 Mineral Resource of 461 million tonnes grading 0.27g/t gold (3.9Moz), 11g/t silver (163Moz) and 0.11% copper (1.09Blb) and an Inferred Mineral Resource of 166 million tonnes grading 0.11g/t gold (0.6Moz), 7 g/t silver (39Moz) and 0.10% copper (0.36Blb). Within the overall deposit, there is a ‘gold domain zone’ containing Measured & Indicated Mineral Resource of 209 million tonnes grading 0.48g/t gold (3.2Moz) and 11g/t silver (71Moz) and within this zone, there is a relatively higher grade gold resource defined at surface. The deposit remains open in several directions.
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For further information please contact: John Cook, President & CEO / Tel: (416) 987-0856 / Email: johncook@kos.net Christian Del Valle, Manager, Corporate Development / Tel: (416) 987-0856 / Email: cdelvalle@sanantonresourcecorp.com The Toronto Stock Exchange has neither approved nor disapproved the contents of this press release. This News Release includes certain "forward-looking statements". All statements other than statements of historical fact included in this release, including, without limitation, statements regarding potential mineralization and reserves, exploration results, and future plans and objectives of San Anton are forward-looking statements that involve various risks and uncertainties. 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 expectations of San Anton are detailed from time to time in the filings made by San Anton with securities regulators. |