Thursday, 20 June 2013

Sacre Coeur Minerals unveils encouraging metallurgical test hole results, grading higher than current resource

Sacre-Coeur Minerals (CVE:SCM) has reported metallurgical test hole results from the company's Million Mountain Zone 1 resource body in Guyana, saying the results are encouraging in terms of grades. 
The holes were drilled to collect samples for metallurgical testing, as part of the feasibility study that is currently underway for the project. 
The company said Thursday that while the average of the metallurgical test holes cannot be considered representative of the resource body, the results are encouraging as the length weighted average of 3.08 grams per tonne (g/t) gold is significantly greater than the saprolite hosted portion of the NI 43-101 compliant resource at 1.026 g/t gold. 
In particular, the 42.8 metres grading 10.56 g/t gold is considerably higher than predicted by the resource model for this area, said Sacre-Coeur. 
The metallurgical test holes were positioned to target a representative range of grades expected from the measured saprolite resource at the property - or the resource from chemically weathered rock - based on the model developed for the latest report. Six core holes were drilled vertically from surface through the saprolite portion.
The junior gold miner said the effects of the new drilling data will be determined when the resource model is updated, which will happen in conjunction with the feasibility study release. 
The company is also working to lower the volume of the down-line processing stream for the property by "de-sliming" before further processing, without significant loss of contained gold. This therefore reduces the size and capital and operating cost for the actual gold recovery system. 
"The company is very pleased with the early results from the studies in support of the feasibility study for development of its Million Mountain Zone 1 resource," Sacre-Coeur said in the statement. "To date, all results have been as good as or better than projected based on the company's internal analysis."
Owing to the positive results of Sacre Coeur's own internal analysis, the company decided to move directly to a formal feasibility study, now being done by Tetra Tech, and expected in the third quarter. The report will be followed immediately by a final development decision, as well as by the completion of development financing and the start of construction - should the study lead to a positive result. 
Commissioning of the mine and plant for production is targeted for the third quarter of next year. 
The Million Mountain Zone 1 deposit hosts roughly 500,000 troy ounces of gold as currently tested, including NI 43-101 compliant measured resources of 12.12 million tonnes grading 1.0 g/t gold, and indicated resources of 2.18 million tonnes grading 0.9 g/t gold. Since this report, the company has drilled an additional 40 holes on the outside of the resource body, with the estimate to be updated as part of the feasibility study in process. 
The mining plan for the deposit is to be completed in two phases, with the first phase to be limited to the portion that is saprolitized. Drilling and blasting is not required to excavate saprolite, and therefore crushing and grinding requirements are less intensive. The un-weathered portion of the deposit will be mined separately, and will be commissioned at a later date, according to Sacre Coeur's statement. 
The company is already in production in Guyana, boasting all-in cash production costs of less than $500 an ounce at its alluvial/elluvial operations. In a recent interview with Proactiveinvestors, president and CEO Gregory Sparks attributed the reason behind the company's low-cost success mainly to the planned retrofitting of its first production unit, and the addition of a second unit, equipped with a fine gold recovery circuit. 
The net effect from these changes led the miner to boost its production forecast for the year, to between 6,000 to 8,000 ounces of gold, up from its prior estimate in the range of 5,000 to 7,000 ounces. 
The Canadian junior company, which is looking to build out its cash position over the next year from net cash flow as a means to initiate the distribution of dividends by 2015, owns about 860 square kilometres of both producing and development-stage properties in Guyana, including another eight targets at Million Mountain. 
Based on its internal analysis at Million Mountain Zone 1, using a base case gold price of $1,500 an ounce, Sacre-Coeur is looking at a net present value of $145.5 million from the project at a discount rate of 5 per cent, and an IRR of 123 per cent. "The economics are quite robust all the way down to $1,000 an ounce of gold," said Sparks.

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