EL CONDOR RESOURCES LTD. KEMESS SOUTH -- A LOW COST CO-PRODUCT MINE
VANCOUVER, British Columbia, Aug. 30 /PRNewswire/ -- Robert G. Hunter, chairman of El Condor Resources Ltd. advises that, with the recent completion by Kilborn Engineering Pacific Ltd. of a detailed Prefeasibility Engineering Study of the Kemess South Project and the advanced status of government mine development certification, Company management will commence introduction of the Project to senior mining groups with respect to its 60 percent and operator interest in the Kemess South Joint Venture and its 100 percent interest in the Kemess North properties. The Company's goal is to have a senior mining group bring the Project to production. Engineering work completed by Kilborn and associated consultants has proven that the Kemess South gold-copper deposit is an attractive long life, low cost, co-product mine. Its unique position as a co-product mine makes it suitable for development by a wide spectrum of senior producers. Upon commercial production, Kemess South will rank among Canada's largest gold producers and at the same time will be one of Canada's largest copper producers. Canada's Top 10 Gold Mines Ranked By 1991 Production Mine Name Production (Ounces) Williams 518,703 Golden Giant 443,400 David Bell 283,128 Campbell 260,521 x Kemess South 259,000 Doyon 257,271 Lupin 216,877 Bousquet 2 175,844 Snip 153,402 Dome 144,526 Con 123,000 Source: Northern Miner, July 6, 1992. Canada's Top 10 Copper Mines Ranked by 1991 Production Mine Name Production (Million Lbs.) Highland Valley 378 Kidd Creek 256 Inco 243 Island Copper 141 Falconbridge 75 Ansil 71 x Kemess South 65 Gibraltar 63 Gaspe Copper 55 Flin Flon 44 Selbaie 38 Source: Canadian Mining Journal, April, 1993. x Shows Kemess South Deposit's ranking for average annual production for first 6 years of 15 year mine life. Forecasts are that by the year 2000, due to the depletion of their reserves, only three of British Columbia's major open pit mines will remain in production. Already, in the past two years; four major open pit mines (Afton, Brenda, Equity and Bell) have ceased operations. This situation coupled with the worldwide demand for new metal production makes the need for Kemess South production exceptionally high. Fortunately, the Kemess South deposit is among the highest grade (value per ton basis) open pit mines ever discovered in British Columbia (second only to the much smaller Afton Mine) and it should be the first of a new generation of open pit mines for the Province.
Principal Open Pit Mines in British Columbia(a) Reserves at Start-up
Deposit Reserve Grade Contained Metal Name Status Million Cu Mo Au Billion Million Million tons pct pct oz/ lbs.Cu lbs.Mo oz.Au ton Afton Closed 35 1.03 - 0.017 0.7 - 0.6 Bell Closed 128 0.48 - 0.010 1.2 - 1.3 BethlehemClosed 556 0.42 0.016 - 4.7 178 - Brenda Closed 175 0.18 0.049 - 0.6 172 - B.C. MolyClosed 116 - 0.120 - - 278 - Copper Mountain Closed 157 0.57 - 0.005 1.8 - 0.8 Endako 256 - 0.081 - - 414 - GibralterReduced 360 0.37 0.008 - 2.7 58 - Granisle Closed 94 0.43 - 0.004 0.8 - 0.3 Highmont Closed 149 0.28 0.031 - 0.8 92 - Island Depleting280 0.52 0.017 0.006 2.9 95 1.7 Lormex Depleting526 0.41 0.015 - 4.3 158 - Similco Reduced 60 0.43 - 0.005 0.5 - 0.3 Valley 872 0.48 0.007 - 8.4 122 - MEDIAN 165 0.42 0.012 0.000 1.2 92 0.0 Kemess South Project Reserves -- August 1993 Kemess South (Mineable)Ready 220 0.22 - 0.018 1.0 - 4.0 (a) Modified and updated after Sinclair, A.J.; Carter, N.C. and Dawson K.M.: A Preliminary Analysis of Gold and Silver Grades of Porphyry-Type Deposits in Western Canada; Precious metals in the Northern Cordillera; The Association of Exploration Geochemists, 1982. During the initial six yers of Kemess South operation, gold production will average 259,000 ounces per year at a cost, on a pro-rata basis, of US $181 ounce. On a normal cost basis, where production costs are attributed to gold and revenues from copper are credited against the overall cost of production, gold production costs drop to an average US $65/ounce. A direct comparison of Kemess South costs can be made with leading North American gold producers. Estimated Gold Production Cost Schedule Mine/Producer Est. 1993 Cash Cost Au $US/oz. Hemlo 139 American Barrick 161 Newmont Gold1 177 Lac Minerals 194 Placer Dome 196 Pegasus 213 Battle Mountain 216 Homestake 236 Echo Bay 247 Amax Gold 309 Kemess South (Average Years 1-6) - Pro-rata Cost US $181/oz Au - Normal Cost US $65/oz Au Kemess South, in addition to ranking among the lowest cost gold producers, will also be a low cost copper producer. For the initial six years of mining, cash cost per pound of copper has been projected at $US54cents/lb., on a pro-rata basis, which ranks Kemess South in the lowest quartile of world copper producers. Examination of North and South American copper producers highlights the low cost postion of Kemess South.
Competitive Analysis as a Producer of Copper Concentrates (a)
Ranking Mine Cash Cost Cu (cents/lb) 1 Escondida (Chile) 44 2 Chuquicamata (Chile) 51 3 La Caridad (Mexico) 51 4 KEMESS SOUTH 54 5 Bingham Canyon (USA) 57 6 Cuajone (Peru) 60 7 Ray (USA) 73 8 Highland Valley (Canada) 74 9 Morenci, Bagdad (USA) 76 10 Pinto Valley, Chino (USA) 77 11 Gibraltar (Canada) 81 12 Cananea (Mexico) 99 13 Similco (Canada) 100 14 Island Copper (Canada) 101 (a) Copper production cost values obtained from Commodities Research Unit Limited, and William Hill Consultants Ltd., April 1993. By applying the normal costing method, whereby production costs are attributed to copper and revenues from gold and silver are credited against the overall cost of production, the average cost for the initial six years at Kemess South has been calculated at minus 24 cents/lb of copper. Copper Production Cost - Normal Costing Method Kemess South Avg. Years 1 - 6 Cost/pound Cu (US$) 1.28 Gold, Silver credit (US$) less 1.52 Total Cost Per Pound of Copper (US$) (-0.24) Kilborn Engineering has calculated the Net Present Value and Internal Rate of Return of the Kemess South Project at several gold prices on a stand alone, before tax, 100 percent equity financed basis. Economic parameters held constant for the analysis were Copper Price (US $1.00/lb), Capital Cost (CDN $363 million), Working Capital (CDN $11.3 million), and Exchange Rate ($0.77CDN - US). The Net Present Value using a 10 percent discount rate and Internal Rate of Return of the Kemess South Project at different gold prices is: Kemess South Project Net Present Value Schedule Gold Price NPV at 10 percent IRR US$/oz CDN$Million percent $450 315 26.5 percent $400 225 22.1 percent $375 180 19.9 percent On a fully diluted basis El Condor Resources Ltd. has 14,403,903 shares outstanding and a working capital position of CDN $3,900,000. -0- 8/30/93 /CONTACT: Robert G. Hunter, Chairman, 604-684-6365/ (ECN.)
CO: El Condor Resources Ltd. ST: British Columbia IN: MNG SU:
MF-LM -- LA026 -- 7292 08/30/93 21:27 EDT
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|Date:||Aug 30, 1993|
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