Miramar Provides Comments on Doris North Feasibility Study, Hope Bay Project
VANCOUVER, British Columbia–(BUSINESS WIRE)–March 25, 2004
Miramar Mining Corporation (AMEX:MNG) (TSX:MAE):
— Increased Commodity Prices Not Expected to Materially Impact
— Work Underway to Assess Extended Production Options
Miramar Mining Corporation today announced that capital costs for the Doris North feasibility study are unlikely to deviate significantly from the $39.3 million announced in January 2003. “The Doris North project is unusual in that it comprises a very high grade gold reserve lying close to surface, allowing capital costs to be minimized,” said Tony Walsh, Miramar’s President and CEO. “These capital costs will not be materially impacted by recent increases in prices for steel, fuel and other commodities, which have negatively impacted other companies and their proposed mining developments. Further, the price of gold has increased in both US dollar and Canadian dollar terms, and we have added gold ounces to the production profile at Doris North since the feasibility study was completed. Doris North is an extremely robust project, and we believe it will become the cornerstone for the development of the Hope Bay belt.”
Doris North will be first mine on Miramar’s 100% owned Hope Bay project, located north of the Arctic Circle in the Nunavut Territory. The company has been working with its independent consultants to update the feasibility study, with completion expected toward the middle of this year – in tandem with the final stages of the permitting process. “The update is warranted given the progress in permitting, opportunities to optimise the results of the previous study, and to evaluate options to incorporate flexibility for longer term production possibilities,” said Mr. Walsh. “Our intention has always been to start Hope Bay on a modest scale, minimizing capital and targeting a short payback period and significant cash generation that we can use to build toward a higher, sustainable production rate over time. While the results of the feasibility study update will not be finalized for several more months, initial results suggest that any capital and operating cost increases should be offset by optimization opportunities as well as higher revenues from both higher forecast prices and increased gold production.”
Feasibility Validation Study
The Doris North feasibility study was announced on January 9, 2003. The study outlined plans for a 690 tonne per day operation to mine, mill and recover approximately 311,000 ounces of gold over a two year period, at estimated cash costs of US$109 per ounce. Capital costs were estimated at C$39.3 million and the project was forecast to generate a net, pre-tax cash flow, after capital payback (in 6.6 months), of C$69.3 million (a 136% rate of return) at a gold price of US$325 (C$512) per ounce. The feasibility study was undertaken by independent consultants Bateman Engineering, SRK Consulting and Nuna Logistics and the results of the study are detailed in a technical report filed on February 10, 2003 and available at http://www.sedar.com. All feasibility work completed on the Doris North project has been under the direction of Brian Labadie, Executive Vice-President and Chief Operating Officer for the Company. Mr. Labadie joined Miramar in 1996 and has extensive experience in development and operating in the Canadian north.
Additional work completed since the feasibility study suggests a number of potential opportunities to optimize the Doris North project, and to take into account potential for longer term production from other deposits such as the Boston deposit. The updated study will not be complete until mid 2004; however, preliminary results indicate that increases in the prices of fuel, steel and other commodities will not materially increase the capital and operating costs. Initial capital costs are expected to remain within the feasibility study parameters of plus or minus 15% of the C$39.3 million estimated, while operating costs are expected to remain within approximately 20% of the US$109 per ounce cash cost estimate, with fuel price increases and a stronger Canadian dollar proving to be the principal factors varying from feasibility cost estimates. These cost increases are expected to be more than offset by an increase in the price of gold, which is currently trading at approximately US$415 (C$553) per ounce. In addition, approximately 30,000 ounces of resources not previously incorporated in the feasibility study have been identified and will increase total production of the Doris North project.
The proposed Doris North development is affected less than other proposed mining developments by recent increases in commodity prices because it is a relatively small scale high grade underground mining operation, with minimal development required to access very high grade reserves (grading approximately 31 g/t gold in situ). Further, the relatively smaller scale of the proposed processing facility allows Miramar greater flexibility in designing the infrastructure to be less capital intensive, avoiding the use of steel buildings.
As announced on March 19, 2004, the Nunavut Impact Review Board (“NIRB”) has called public hearings for June 13-18, 2004 to discuss the permitting of the Doris North Project in four communities in Nunavut. NIRB has directed the Company’s subsidiary, Miramar Hope Bay Ltd. (“MHBL”), to provide supplemental information to its final Environmental Impact Statement filed in December 2003, and to hold technical meetings with interveners prior to the hearings. MHBL is preparing the required supplemental information and the Company expects that the hearings will proceed as planned in June.
“We believe that the Doris North project will continue through the permitting process this year, and anticipate that we will be able to proceed as planned and meet our targeted start date of the end of 2005 providing the permitting process goes according to schedule,” said Mr. Walsh. The 2004 work program at Hope Bay includes one drill in the Doris area, which is targeting additional high-grade ore that may lie north of the fault that currently defines the northern limit of Doris gold reserves. Once Doris North is brought into production, Miramar will work from underground to bring the Doris Central and Doris Connector zones into the measured and indicated category. Total Doris resources at December 31, 2003 consist of 586,000 ounces of gold at 23.9 grams per tonne in the measured and indicated category, and an additional 795,000 ounces of gold of 14.7 grams per tonne in the inferred category.
Extended Production Options
In parallel with on-going exploration activities at Hope Bay, Miramar plans to commence a drill program in April 2004 to upgrade portions of the inferred resource at the Boston deposit to the indicated resource category during 2004. Additional programs to increase indicated resources will continue into 2005. An updated resource estimate will provide the basis for a preliminary assessment to evaluate the economics of mining the upper portions of the Boston resource. The Boston deposit currently has measured and indicated resources of 687,000 ounces at a grade of 15.4 g/t gold plus an additional 901,000 ounces at a grade of 10.9 g/t gold. These resources are accessed by decline to a depth of approximately 220m below surface, providing rapid development options for the core of the deposit. In addition, these resources lie within the upper 500m of the Boston system, whereas drilling in 2003 extended the mineralization to depths of more than 1,000m below surface over a strike length of approximately 750m, indicating significant upside potential. Drilling is currently underway to continue evaluating this potential.
“The objective of the in fill drilling is to demonstrate the potential for a significantly extended production life at Hope Bay,” said Mr. Walsh. “We expect to have this study completed in early 2005. We are concentrating on Boston after the Doris North project, because it appears to provide the most rapid and lowest capital cost opportunity at Hope Bay given the work completed to date and the underground development already in place.” The deeper resources at Boston, the remainder of the Doris deposit and the Madrid resources may provide future longer term options to extend production at Hope Bay and possibilities for expanded levels of production, and will be evaluated as exploration and other works progress. These options would be subject to completion of additional permitting processes.
Major Gold Projects
The Hope Bay project is 100% owned by Miramar, extends over 1,000 sq.km. and encompasses one of the most prospective undeveloped greenstone belts in Canada. The belt contains a number of significant gold deposits which, combined, host a measured and indicated resource of 1.8 million oz of gold averaging 9.9 g/t plus an inferred resource of 3.6 million oz of gold averaging 6.9 g/t. All deposits remain open to expansion. As announced February 18, 2004 Miramar is currently conducting an extensive exploration program with 6 drill rigs targeting possible extensions of the high grade Doris North deposit, expansions to the Madrid resource and continued evaluation of the depth potential at Boston. A seventh drill rig will be added shortly, and a reverse circulation drill is conducting regional exploration.
Miramar also has an option to earn a 60% interest in the George and Goose Lake projects, which contain indicated resources of 4.37 million tonnes grading 9.8 g/t gold, and an additional inferred resource of 1.88 million tonnes grading 9.9g/t gold. As announced February 26, 2004, drilling at Goose Lake is expected to be underway in April with three rigs, one working to confirm the existing resource, and one each testing for extensions to the north and south of the existing resource.
All resource and reserve estimates have been prepared by the Miramar Hope Bay Limited staff in accordance with Canadian regulatory requirements set out in National Instrument 43-101 and reviewed by John Wakeford, P. Geo. Exploration Manager for Miramar Mining Corporation. The Goose Lake resources for 2002 were estimated by Watts Griffis and McOuat Limited (WGM). WGM states that the estimate complies with National Instrument 43-101. At the George Lake project, AMEC (formerly MRDI) completed a resource estimate in 1998 which was reviewed for National Instrument 43-101 compliance in 2001. A detailed audit of the MRDI 1998 resource estimate for Locale 2 and a brief review of the Locale 1 resource was undertaken by WGM in 2002.
All other information previously released on the Hope Bay Project is available on Miramar’s website at http://www.miramarmining.com/.
Forward Looking Statements
Statements relating to exploration work at the Hope Bay Project and the expected results of this work are forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expects,” “plans,” “anticipates,” “believes,” “intends,” “estimates,” ‘projects,” “potential” and similar expressions, or that events or conditions “will,” “would,” “may,” “could” or “should” occur. Information inferred from the interpretation of drilling results and information concerning mineral resource estimates may also be deemed to be forward looking statements, as it constitutes a prediction of what might be found to be present when and if a project is actually developed. These forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in the forward-looking statements, including, without limitation: risks related to fluctuations in gold prices; uncertainties related to raising sufficient financing to fund the planned work in a timely manner and on acceptable terms; changes in planned work resulting from weather, logistical, technical or other factors; the possibility that results of work will not fulfill expectations and realize the perceived potential of the Company’s properties; uncertainties involved in the interpretation of drilling results and other tests and the estimation of gold reserves and resources; the possibility that required permits may not be obtained on a timely manner or at all; the possibility that capital and operating costs may be higher than currently estimated and may preclude commercial development or render operations uneconomic; the possibility that the estimated recovery rates may not be achieved; risk of accidents, equipment breakdowns and labour disputes or other unanticipated difficulties or interruptions; the possibility of cost overruns or unanticipated expenses in the work program; the risk of environmental contamination or damage resulting from Miramar’s operators and other risks and uncertainties, including those described in the Miramar’s Annual Report on Form 40-F for the year ended December 31, 2002 and Reports on Form 6-K filed with the Securities and Exchange Commission.
Forward looking statements are based on the beliefs, estimates and opinions of Miramar’s management on the date the statements are made. Miramar undertakes no obligation to update these forward-looking statements of management’s beliefs and estimates or opinions or other factors should they change.
All resource estimates reported in this disclosure are calculated in accordance with the Canadian National Instrument 43-101 and the Canadian Institute of Mining and Metallurgy Classification system. These standards differ significantly from the requirements of the United States Securities and Exchange Commission, and resource information reported in this disclosure may not be comparable to similar information reported by United States companies. The terms “Resource(s)” does not equate to “reserves” and normally may not be included in documents filed with the Securities and Exchange Commission. “Resources” are sometimes referred to as “mineralization” or “mineral deposits”.
This news release has been authorized by the undersigned on behalf of Miramar Mining Corporation.
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