Chronicle Journal: Finance

St. Augustine and NADECOR Announce Positive Results from King-king Preliminary Feasibility Study

Pre-tax NPV(8%) of US$2.0 Billion and pre-tax IRR of 24.8%

SPOKANE, WASHINGTON -- (Marketwired) -- 09/18/13 -- St. Augustine Gold and Copper Limited (TSX: SAU) ("St. Augustine" or the "Company") and its joint venture partner Nationwide Development Corp. ("NADECOR") are pleased to announce the results of the Preliminary Feasibility Study ("PFS") on the King-king Copper-Gold Project located in Pantukan, Compostela Valley, Philippines. The results of the PFS show that the planned operation has favorable economic potential, generating an estimated pre-tax net present value ("NPV") of $2.0 billion and an estimated pre-tax internal rate of return ("IRR") of 24.8%.

"The results of this advanced Preliminary Feasibility Study confirm that King-king is an attractive project with robust economics that will bring significant value to our shareholders, our partner and the Philippines," stated Andrew J. Russell, St. Augustine's CEO. "The strong results of the PFS pave the way for St. Augustine and our joint venture partner NADECOR to continue the development of King-king, including the remaining technical work and the advancement of project financing."

"We are pleased that the millions of dollars and years of intensive technical work that St. Augustine has invested in the PFS have paid off and confirmed that this flagship mining project has the potential to generate great value and thousands of jobs for the Philippines," added Conrado T. Calalang, NADECOR's President.

The Declaration of Mine Project Feasibility ("DMPF") was submitted to the Philippine Government in May 2012. The final feasibility study will incorporate any required amendments to the DMPF once comments are received from the Government's final review of the document.

Key Project Indicators


--  Unleveraged pre-tax net present value ("NPV") of $2.0 billion and an
    estimated pre-tax internal rate of return ("IRR") of 24.8%, using an 8%
    discount rate, $1,250/oz gold price and $3.00/lb copper price.

--  The ore delivery and processing rate will be a designed throughput of
    100,000 tonnes per day ("tpd") split between 40,000 tpd to an on-off
    heap leach and 60,000 tpd to a flotation mill with agitated tails leach.
    The mining rate will be approximately 178,000 tonnes per day for the 22
    year mine plan. Production from the heap leach process is expected to
    start one year prior to commencing mill operations.

--  Robust project economics are driven in large part by an initial five
    year higher grade operation with a low strip ratio and tidewater
    proximity. Average annual production during the first five years of full
    production (both heap leach and mill in operation) is 270 million pounds
    of copper (122,487 mt), 360,143 ounces gold (11,202 kg) and 568,958
    ounces silver (17,697 kg) with an average gold equivalent total cost of
    $454 per ounce.

--  Life of mine production of 3.16 billion pounds of copper (1.43 million
    tonnes), 5.43 million ounces of gold (168,950 kg) and 11.65 million
    ounces of silver (362,356 kg).

--  Life of mine average annual production of 138 million pounds of copper
    (62,374 mt), 236,169 ounces gold (7,346 kg) and 506,504 ounces of silver
    (15,755 kg) with an average gold equivalent total cost of $621 per
    ounce.

--  An estimated initial capital cost of $2.04 billion including the mine,
    the mill, on-off leach pad, power plant, port facility and $240 million
    in contingency costs.

--  The study assumes large scale contract mining will be used during the
    course of the 22 year mine plan, which reduced project initial capital
    and increased mine operating cash cost. After tax economic analysis
    assumes a six year income tax holiday.

The PFS was prepared by M3 Engineering & Technology Corporation of Tucson, Arizona ("M3"). The resource, reserve, and mine plan was developed by Independent Mining Consultants ("IMC") of Tucson, Arizona. AMEC provided metallurgical studies, geotechnical and tailing facility design. The Company will file the full NI 43-101 technical report on SEDAR and the Company's website within 45 days. All dollar figures in this news release are in 2012 USD.

Reserve Base

The table below presents the mineral reserve for the King-king Project based on the mine and plant production schedules developed for the study. The mineral reserve amounts to 617.9 million tonnes at 0.300% total copper and 0.395 g/t gold.


---------------------------------------------------------------------------
                                             Tot Cu  Sol Cu    Gold     NSR
Reserve Classification              Ktonnes      (%)     (%)   (g/t)   (US$)
---------------------------------------------------------------------------
Proven Mineral Reserve
  Heap Leach Ore                     17,791   0.340   0.197   0.132   16.53
  Oxide Mill Ore                     21,674   0.514   0.328   0.849   45.36
  Sulfide Mill Ore                   52,942   0.305   0.044   0.543   24.92
  Low Grade Mill Ore                  6,734   0.184   0.027   0.218   10.80
  -------------------------------------------------------------------------
  Total Proven Reserve               99,141   0.349   0.132   0.514   26.92
---------------------------------------------------------------------------
Probable Mineral Reserve
  Heap Leach Ore                     77,373   0.305   0.172   0.145   14.81
  Oxide Mill Ore                     45,440   0.393   0.259   0.745   35.30
  Sulfide Mill Ore                  345,715   0.288   0.037   0.398   20.48
  Low Grade Mill Ore                 50,247   0.191   0.023   0.211   10.93
  -------------------------------------------------------------------------
  Total Probable Reserve            518,775   0.290   0.075   0.373   20.01
---------------------------------------------------------------------------
Proven/Probable Mineral Reserve
  Heap Leach Ore                     95,164   0.311   0.177   0.143   15.13
  Oxide Mill Ore                     67,114   0.432   0.281   0.779   38.55
  Sulfide Mill Ore                  398,657   0.290   0.038   0.417   21.07
  Low Grade Mill Ore                 56,981   0.190   0.023   0.212   10.91
  -------------------------------------------------------------------------
  Total Prov/Prob Reserve           617,916   0.300   0.084   0.395   21.12
---------------------------------------------------------------------------

Mining Schedule

The PFS assumes a base case ore production rate of 100,000 tpd considering 40 ktpd to an on-off heap leach and 60 ktpd to mill. IMC prepared a 22 year mine plan followed by 3 years of processing stockpiled ore. Heap leach ore declines in year 6 and is discontinued by year 13. The mine schedule excludes inferred mineral resources, which are considered to be waste in the mine reserve analysis. The mine schedule has six development phases and is optimized for metals production at the plant while maintaining low waste to ore ratio in the early years. The availability of high quantities of copper oxide material in the early years allows for early development for copper heap leach processing, which starts approximately 1 year before the mill starts. A mill ore stockpile near the crusher will be utilized to allow 3 to 4 years of additional mill ore processing in the later years when mine activity is completed. The table below provides a summary of the plant production, and illustrates the higher metal grades and lower waste /ore ratio achieved early in the mine life:


----------------------------------------------------------------------------
                                           First 5 Years        Life of Mine
----------------------------------------------------------------------------
Processed Tonnes,    Mill                   97 million(i)        523 million
----------------------------------------------------------------------------
                     Heap Leach               69 million          95 million
----------------------------------------------------------------------------
Copper (%),          Mill                            .44                 .30
----------------------------------------------------------------------------
                     Heap Leach                      .33                 .31
----------------------------------------------------------------------------
Gold (g/tonne)       Mill                            .61                 .44
----------------------------------------------------------------------------
Waste to Ore Ratio                                   .75                1.06
----------------------------------------------------------------------------
(i) Four years of mill production. Mill plant starts one year after heap
    leach.

Development Overview

The proposed open pit mine and processing plant will produce copper/gold/silver concentrate, copper cathode, and gold dore bullion. Oxide ore containing significant gold and all sulfide ore will be treated in a concentrator at 60,000 tpd. The concentrator process will consist of crushing, grinding, gravity concentration of free gold, and flotation of sulfide copper. An agitated leach circuit will leach oxide copper from flotation tails. Oxide ore containing little or no gold will be treated in a heap leach at 40,000 tpd. The heap leach process will consist of crushing, agglomeration, and leaching utilizing on-off cells. Pregnant solutions from the agitated leach and heap leach processes will go to a common SX-EW facility for production of cathode copper. Overall gold and copper recoveries from ore through dore production, copper-gold concentrate and copper cathodes are estimated at 73.2% and 77.5%, respectively. Total life of mine metal production for the dual processing case (heap leach and mill) is 3.16 billion pounds (1.43 million tonnes) of copper, 5.43 million ounces (169 tonnes) gold and 11.65 million ounces (362 tonnes) silver. A dry stack tailing facility is proposed for handling tailings from the process plant. Tailings will be filtered to remove moisture prior to stacking. Ore will be transported from the primary crusher located near the mine to the mill and heap leach area by a single aerial conveyor. The aerial design is chosen to overcome the high relief terrain in the area. Construction of a power station is proposed at a new coastal complex where a docking facility will be constructed to serve the facility, along with ancillary operations and accommodation for construction and operating staff.

Production Rates, Capital Costs, Operating Costs, Metal Prices and Financial Valuation

Project production, capital and operating costs, metal prices, financials and sensitivities are shown in the table below. In the table below, Base Case refers to the case represented in the Key Project Indicators described above.


---------------------------------------------------------------------------
                                       15% Higher   15% Higher   15% Higher
                                     Metal Prices   OPEX Costs  CAPEX Costs
                           Base Case       Case 1       Case 2       Case 3
---------------------------------------------------------------------------
Ore Production Rate LOM
 (ktonnes/day)                    74           74           74           74
---------------------------------------------------------------------------
Projected Mine Life
 (yrs)                            23           23           23           23
---------------------------------------------------------------------------
Metal Price Assumptions
---------------------------------------------------------------------------
  Copper ($/lb)                 3.00         3.45         3.00         3.00
---------------------------------------------------------------------------
  Gold ($/oz)                   1250         1438         1250         1250
---------------------------------------------------------------------------
  Silver ($/oz)                25.00        28.75        25.00        25.00
---------------------------------------------------------------------------
Average Annual
 Production
---------------------------------------------------------------------------
  Gold (oz)                  236,169      236,169      236,169      236,169
       (kg)                    7,345        7,345        7,345        7,345
---------------------------------------------------------------------------
  Silver (oz)                506,504      506,504      506,504      506,504
         (kg)                 15,752       15,752       15,752       15,752
---------------------------------------------------------------------------
  Gold Equivalent (oz)       576,326      578,715      576,326      576,326
                  (kg)        17,924       17,998       17,924       17,924
---------------------------------------------------------------------------
  Copper (thousand lbs)      137,511      138,507      137,511      137,511
         (metric tons)        62,375       62,826       62,375       62,375
---------------------------------------------------------------------------
LOM Revenue ($000)
---------------------------------------------------------------------------
  Gold                    $6,489,150   $7,462,523   $6,489,150   $6,489,150
---------------------------------------------------------------------------
  Silver                    $184,575     $212,261     $184,575     $184,575
---------------------------------------------------------------------------
  Copper                  $9,238,453  $10,703,220   $9,238,453   $9,238,453
---------------------------------------------------------------------------
  Less Treatment and
   Refining Charges        $(548,215)   ($551,701)   $(548,215)   $(548,215)
---------------------------------------------------------------------------
  Total Revenue          $15,363,963  $17,826,303  $15,363,963  $15,363,963

---------------------------------------------------------------------------
Avg. Annual Net Cash
 Flow ($000) Pre-Tax        $248,393     $347,681     $205,498     $234,876
---------------------------------------------------------------------------
LOM Total Net Cash Flow
 ($000) Pre-Tax           $5,713,035   $7,996,668   $4,726,473   $5,402,153
---------------------------------------------------------------------------
Initial Capital ($000)    $2,041,919   $2,041,919   $2,041,919   $2,348,207
---------------------------------------------------------------------------
Sustaining Capital
 ($000)                     $248,591     $248,591     $248,591     $248,591
---------------------------------------------------------------------------
LOM Operating Costs
---------------------------------------------------------------------------
  Mining Cost ($/tonne
   mined)/($/tonne
   ore)(i)                 1.93/3.97    1.93/3.97    2.21/4.57    1.93/3.97
---------------------------------------------------------------------------
  Process Plants
   Operating Cost
   ($/tonne ore)                5.28         5.40         6.08         5.28
---------------------------------------------------------------------------
  General
   Administration
   ($/tonne ore)                1.04         1.04         1.19         1.04
---------------------------------------------------------------------------
  Other ($/tonne ore)           2.51         2.68         2.56         2.51
---------------------------------------------------------------------------
  Total Operating Cost
   ($/tonne ore)               12.80        13.09        14.40        12.80
---------------------------------------------------------------------------
Cash Cost/Gold
 Equivalent oz.                 $621          633          699          622
---------------------------------------------------------------------------
Pre-Tax Economic
 Indicators
---------------------------------------------------------------------------
  NPV @ 8% ($000)         $1,998,943   $3,026,107   $1,597,899   $1,738,111
---------------------------------------------------------------------------
  IRR (%)                      24.8%        31.8%        22.2%        21.1%
---------------------------------------------------------------------------
  Payback (yrs)                  2.4          1.9          2.6          2.8
---------------------------------------------------------------------------
After-Tax Economic
 Indicators(ii)
---------------------------------------------------------------------------
  NPV @ 8% ($000)         $1,757,074   $2,655,758   $1,418,223   $1,517,826
---------------------------------------------------------------------------
  IRR (%)                      24.0%        30.9%        21.5%        20.3%
---------------------------------------------------------------------------
  Payback (yrs)                  2.4          1.9          2.6          2.8
---------------------------------------------------------------------------
(i)  Mine operating costs reflect higher cost contract mining.
(ii) Assumes an income tax holiday for the first six years of the project.

Opportunities

Opportunities to improve project economics are being evaluated to be included for the feasibility study. These include the following:


--  Continued evaluation of electric power supply options, including
    discussions with independent power providers about long-term power
    supply costs.

--  Completion of geotechnical work. This may allow more favourable geometry
    for the tailing storage facility and reduce the volume of the compacted
    tailing in the outer shell.

--  Increased metal recoveries with additional treatment to the cleaner
    flotation scavenger tails, where most of the losses occur.

--  Substitution of secondary and tertiary crushing or secondary crushing
    and high pressure grinding rolls for the SAG/pebble crusher circuit may
    provide significant capital and operating cost savings. This change
    would reduce comminution electrical power requirements with a consequent
    reduction in size and capital cost of the power plant.

--  Drilling is planned to define more heap leach ore and perhaps more high
    grade mill ore to add to the early part of the mine schedule.

--  There is potential for expansion of the mill in the future to process
    ore at an increased rate due to potentially adding more ore to the
    resource or due to higher metal prices.

NATIONAL INSTRUMENT 43-101 COMPLIANCE

The following Qualified Persons under National Instrument 43-101 ("NI 43-101") have reviewed and approved the scientific, technical and economic information contained in this news release: Joshua Snider, P.E. of M3 Engineering and Technology, Michael G. Hester, FAusIMM of Independent Mining Consultants, Inc.

A NI 43-101 compliant technical report entitled "King-king Copper-Gold Project Mindanao, Philippines" dated October 12, 2010, and prepared by Michael G. Hester, FAusIMM of Independent Mining Consultants, Inc., Donald F. Earnest, P.G. of Resource Evaluation, Inc. and John G. Aronson of AATA International, Inc. has been previously filed by the Company on www.sedar.com.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This announcement includes certain "forward-looking statements" within the meaning of Canadian securities legislation. All statements, other than statements of historical fact included herein are forward-looking statements. Forward-looking statements involve various risks and uncertainties and are based on certain factors and assumptions. 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 Company's expectations include uncertainties related to fluctuations in gold, copper and other commodity prices and currency exchange rates; uncertainties relating to interpretation of drill results and the geology, continuity and grade of mineral deposits; uncertainties relating to the completion of a bankable feasibility study; uncertainty of estimates of capital and operating costs, recovery rates production estimates and estimated economic return; the need for cooperation of the Company's joint venture partner and government agencies in the development of the Company's mineral projects; the need to obtain additional financing to develop the Company's mineral projects; the possibility of delay in development programs or in construction projects and uncertainty of meeting anticipated program milestones for the Company's mineral projects; and other risks and uncertainties disclosed under the heading "Risk Factors" in the Annual Information Form dated March 22, 2013, and filed with Canadian securities regulatory authorities on the SEDAR website at www.sedar.com.

Contacts:
St. Augustine Gold and Copper Ltd.
Kristi Harvie
Manager Investor and Corporate Affairs
+1-509-343-3193
kharvie@sagcmining.com

TMX Equicom
Marina Proskurovsky
Account Manager
+1-416-815-0700 ext. 288
mproskurovsky@tmxequicom.com

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