Creston Moly Corp. ("Creston" or the "Company") (TSX VENTURE: CMS)
announced today that it has received a Preliminary Economic
Assessment ("PEA") on its wholly-owned El Creston Molybdenum
Deposit ("Creston Project") located in Sonora, Mexico. The
independent PEA, prepared by JDS Energy & Mining Inc. ("JDS")
of Vancouver, BC, estimates production, capital and operating cost
parameters along with project economics.
Highlights of the PEA and Base Case Mine Plan include:
(All amounts are in US$ unless otherwise stated and based on $15/lb Mo and
$2.60/lb Cu.)
-- An after tax Net Present Value ("NPV") at an 8% discount rate of $561.9
million;
-- An Internal Rate of Return ("IRR") of 22.3%;
-- Annual processing rate of 50,000 tonnes per day;
-- Annual production of 23.9 million pounds of molybdenum in concentrate
for the life of mine;
-- Annual production of 29.5 million pounds of copper in concentrate for
the 7 years of copper production;
-- Direct costs, (exclusive of copper byproduct credits) of $5.58 per pound
of Mo;
-- An estimated initial capital expenditure of $655.9 million.
Key improvements of the 2010 PEA over previous studies include:
-- Identification of a copper enriched zone below the oxide cap;
-- Additional resources as a result of the 2010 drilling program;
-- A plant throughput increase from 40,000 to 50,000 tpd based in part on
favourable metallurgical testing supporting a coarser grind;
-- A coarser grind reducing processed unit costs due to lower power and
grinding cost;
-- Design and cost estimates for the previously identified preferred
Tailings Storage Facility ("TSF") (unavailable for the PFS due to land
ownership that has now been secured).
Financial Evaluation
The metal prices for the base case are $15.00 per pound for
molybdenum and $2.60 per pound for copper. As of December 2010 the
historic 3-year trailing average prices for molybdenum and copper
were $19.54 per pound and $2.95 per pound respectively. Current
prices for molybdenum and copper are $16.15 per pound and $4.11 per
pound respectively (December 15, 2010).
Table 1 - Net Present Values
(Based on 100% equity, $15/lb Mo, $2.60/lb Cu)
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2010 PEA
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NPV @ 8% After Tax $M $561.9
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NPV @ 10% After Tax $M $429.1
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IRR After Tax % 22.3%
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Payback Period (tax in) Years 4.0
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Only one price scenario was evaluated in the PEA with prices
designed to approximate long term consensus forecasts with no
escalation or de-escalation going forward. All other "cases" are
examined by use of sensitivity analysis.
Table 2 - Economic Analysis Results
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2010 PEA
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Average Moly Price US$/lb $15.00
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Average Copper Price US$/lb $2.60
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Unit Mining Costs $/t mined $1.23
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Unit Mining Costs $/t milled $2.20
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Unit Milling Costs $/t milled $4.80
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Unit G&A $/t milled $0.46
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Unit Total OPEX $/t milled $7.45
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Total Initial Capital (excluding sustaining
capital, and closure, & working capital) $M $655.9
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2010 PEA
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Capital Cost Payback Period 4.0 Years
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Mine Life 13 years
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Total Ore Processed (000's) 232,430 tonnes
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Mill Throughput 50,000 tonnes/day
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Molybdenum Price (US$15/lb)
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Copper Price (US$2.60/lb)
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"We are extremely pleased with the results of the PEA on the El
Creston Project," said Bruce McLeod, President and CEO of Creston.
"The effects of the larger resource, increased plant throughput and
the use of the preferred tailing site have shown to add significant
value to the project. We intend to continue to advance the project
as we remain confident that it is one of the most viable primary
molybdenum projects in the Americas and that it can be profitable
in a conservative price environment as demonstrated by both the PFS
and the PEA."
Development Plan
The mine has been planned as a conventional open-pit mining
operation reaching 50,000 tonnes per day of ore at full production.
The plan anticipates mining 18.25 million tonnes of ore tonnes
annually based on a 365 day operating year. The stripping ratio for
the pre-stripping and the first 4 years of operation is 2.1 and
reduces to an average of 0.5 for the remaining 9 years of
operations.
Mining operations will commence in a relatively high grade
copper zone with the copper head grade declining after the initial
years. The grade of ore processed from the mine in the first five
years will average approximately 0.063% Mo and 0.102% Cu.
The average molybdenum grade processed for the life of mine is
expected to be 0.069% Mo and for the first seven years the average
copper grade is expected to be 0.090% Cu. The project is expected
to produce 310.4 million pounds of molybdenum and 206.7 million
pounds of copper over a 13 year mine life.
Additionally there is an opportunity to extend the life of the
project by increasing the overall resources in the Main and Red
Hill Zones and through continuing evaluation, exploration and
assessment of the A 37 and Alejandra Zones. The Company obviously
plans to continue this work.
Mineral Resources
In accordance with National Instrument 43-101 - Standards of
Disclosure for Mineral Projects of the Canadian Securities
Administrators, the Company has delineated proven and probable
reserves and measured, indicated and inferred mineral resources.
The El Creston Molybdenum Deposit's resources, as determined in
accordance with National Instrument 43-101, are illustrated in the
Table below.
Table 3 - Mineral Resources 2010 PEA
Measured and Indicated and In-Pit Inferred Resources
The Creston Molybdenum Deposit contains the following mineral resources at
a 0.036% Mo equivalent(i) cut-off grade:
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Tonnes lbs Mo lbs Cu
Category (000's) Mo (%) (000's) Cu (%) (000's)
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Measured 56,300 0.074 91,300 0.06 72,000
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Indicated 159,100 0.070 244,200 0.06 209,000
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Total (M + I) 215,400 0.071 335,500 0.06 281,000
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Inferred 7,600 0.057 9,500 0.06 9,000
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(i) Note: Mo equivalent = Mo% + (Cu%/7.5)
The conceptual pit, based on an optimized pit shell, containing
the Measured, Indicated, and Inferred resources reported in Table
3, was used to design an ultimate pit with designed pit slopes and
ramps. This pit design and all 3 resource classes formed the basis
of a mine schedule used to perform the economic cash flow analysis
in the 2010 PEA.
Table 4 - Mineable Mineral Resources 2010 PEA - Compare Optimized Shell
versus Pit Design Measured and Indicated and In-Pit Inferred
Resources
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Parameter Unit Optimized Shell Pit Design
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Ore M Tonnes 223.01 232.43
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Moly Grade % 0.070 0.069
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Copper Grade % 0.059 0.060
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Contained Moly M Pounds 345.02 351.05
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Contained Copper M Pounds 290.40 304.95
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Waste M Tonnes 186.84 224.19
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Waste: Ore Ratio - 0.84 0.96
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1. Mineral Resources that are not mineral reserves do not have demonstrated
economic viability. Mineral resource estimates do not account for
mineability, selectivity, mining loss and dilution. These mineral
resource estimates include inferred mineral resources that are normally
considered too speculative geologically to have economic considerations
applied to them that would enable them to be categorized as mineral
reserves. There is also no certainty that these inferred mineral
resources will be converted to measured and indicated categories through
further drilling, or into mineral reserves, once economic considerations
are applied.
2. The mineral resources referred to herein have been estimated in a NI 43-
101 technical report (the "SRK Report") prepared for the Company in
December 2010 by SRK Consulting (Canada) Inc .("SRK"). The person
responsible for the resource estimate on behalf of SRK is Gilles
Arseneau, P. Geo. a Qualified Person for the purposes of National
Instrument 43-101.
Opportunities
A number of activities are currently underway to support the
Feasibility Report as the results of both the PFS and the PEA
warrant progressing to a Feasibility Study stage as recommended by
JDS. The Feasibility Study is expected to be completed by the mid
2011.
The PEA highlights that the following should occur in parallel with a
Feasibility stage:
-- Completion of detailed lock-cycle metallurgical testing;
-- Complete pit slope and waste dump geotechnical design;
-- Continue waste rock (ARD) characterization and Humidity Cell Test (HCT)
studies;
-- Conduct condemnation and geotechnical drilling in the proposed TSF; and
-- Complete the socio-economic study.
JDS notes that the economics in the PEA do not take into account
opportunities for improvement based on the potential for:
-- Increasing the overall resource;
-- Refined engineering during the Feasibility study;
-- Potential for silver (Ag) credits to be evaluated;
-- Capital cost savings generated by purchasing used equipment.
Going Forward
While the Company will continue with the work to complete the
Feasibility work will also continue exploration of the Red Hill,
A37 and Alejandra Zones with the objective of increasing the
overall molybdenum resource of the project. Efforts will also be
focused on the opportunities that exist in other areas such as the
potential for silver (Ag) credits.
A NI 43-101 compliant report titled "Technical Report,
Preliminary Economic Assessment, El Creston Project, Opodepe,
Mexico" will be filed on SEDAR at www.sedar.com and be made
available on Creston's website at www.crestonmoly.com.
Qualified Persons
JDS, a full service Engineering, Procurement, Construction &
Management (EPCM) firm, is recognized for its experience and
capabilities in the development and construction of mines and
mineral processing plants. The executive summary of the JDS PEA
will be posted on the Company's website (www.crestonmoly.com ) as
well as on Sedar in the near future.
The Qualified Persons ("QPs"), as defined in NI 43-101, responsible for the
preparation of this technical report include:
-- Michael Makarenko, P.Eng., JDS Energy & Mining Inc.;
-- Ali Sheykholeslami, P.Eng., JDS Energy & Mining Inc.;
-- Kenneth Meikle, P.Eng., JDS Energy & Mining Inc.;
-- Gilles Arseneau, P. Geo., SRK Consulting (Canada) Inc.;
-- David Kidd, P.E., Golder Associates Inc;
-- Hoe Teh, P. Eng, Hoe Teh Consulting Inc.
On Behalf of the Board of Directors
CRESTON MOLY CORP.
D. Bruce McLeod, President & CEO
Forward-Looking Statements
This document may contain "forward-looking statements" within
the meaning of Canadian securities legislation and the United
States Private Securities Litigation Reform Act of 1995. These
forward-looking statements are made as of the date of this document
and Creston does not intend, and does not assume any obligation, to
update these forward-looking statements.
Forward-looking statements relate to future events or future
performance and reflect Creston management's expectations or
beliefs regarding future events and include, but are not limited
to, statements with respect to the estimation of mineral reserves
and resources, the realization of mineral reserve estimates, the
timing and amount of estimated future production, costs of
production, capital expenditures, success of mining operations,
environmental risks, unanticipated reclamation expenses, title
disputes or claims and limitations on insurance coverage. In
certain cases, forward-looking statements can be identified by the
use of words such as "plans", "expects" or "does not expect", "is
expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates" or "does not anticipate", or "believes",
or variations of such words and phrases or statements that certain
actions, events or results "may", "could", "would", "might" or
"will be taken", "occur" or "be achieved" or the negative of these
terms or comparable terminology. By their very nature
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Creston to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking statements. Such factors include,
among others, risks related to actual results of current
exploration activities; changes in project parameters as plans
continue to be refined; future prices of resources; possible
variations in ore reserves, grade or recovery rates; accidents,
labour disputes and other risks of the mining industry; delays in
obtaining governmental approvals or financing or in the completion
of development or construction activities; as well as those factors
detailed from time to time in Creston's interim and annual
financial statements and management's discussion and analysis of
those statements, all of which are filed and available for review
on SEDAR at www.sedar.com. Although Creston has attempted to
identify important factors that could cause actual actions, events
or results to differ materially from those described in
forward-looking statements, there may be other factors that cause
actions, events or results not to be as anticipated, estimated or
intended. There can be no assurance that forward-looking statements
will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such
statements.
Accordingly, readers should not place undue reliance on
forward-looking statements.
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: Creston Moly Corp. Mr. Bruce McLeod President &
CEO 604-687-7545 or Toll Free: 1-888-338-2200 Creston Moly Corp.
Chris Curran Investor Relations 604-687-7545 or Toll Free:
1-888-338-2200 Creston Moly Corp. Ken MacDonald 604-694-0005
www.crestonmoly.com
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