VANCOUVER, BRITISH COLUMBIA–(Marketwired – Jan. 29, 2016) – Discovery Ventures Inc. (“Discovery” or the “Company”) (TSX VENTURE:DVN)(FRANKFURT:0DV)(OTCQX:DTVMF) is pleased to announce that it has received a technical report entitled Amended Preliminary Economic Assessment Technical Report on the Willa Property. The report is an amendment of the Technical Report entitled “Preliminary Economic Assessment & Technical Report, Willa Max Project” dated May 26, 2014, which supported the original disclosure in a May 28, 2014 News Release entitled “WillaMAX PEA Highlights Low CAPEX and Robust Economics”.
The amended report presents an updated Mineral Resource based on surface and underground drilling data collected between 1980 and 2004. The amended report also presents the results of a Preliminary Economic Assessment based on a mine plan focused on the Measured and Indicated Mineral Resources only of the west zone at Willa and processing the material at the MAX facility.
Mineral Resource Estimates
Updated Mineral Resources to form the basis of the PEA were estimated by Mr. Michael Waldegger, P.Geo., of MFW Geoscience Inc. Key assumptions and parameters considered during the preparation of the Mineral Resource estimate are described below.
Gold, copper, and silver grades from drillhole samples collected between 1980 and 2004 formed the basis of the Mineral Resource estimate. All drillholes were completed by historic operators and holes completed prior to 1980 were not considered for this estimate. All samples were of half diamond drill core at 2 m sample lengths and some at 1 m lengths. All missing intervals or blanks were replaced with half detection limits.
The estimate was prepared with commercial mining software packages employing 3D block modelling techniques.
A recoverable metal value per tonne (“RMV”) was used to model the mineralized zones, which were used to constrain the grade estimate. The mineralized zones were modelled using geological modelling software Leapfrog Geo version 2.2.1 (Leapfrog) supplied by Aranz Geo. The RMV assumed metal prices guided by the three-year average metal prices ($US) of $1400/oz Au, $3.15/lb Cu and $20/oz Ag and milling recoveries based on metallurgical test work of 82% for Au, 90% for Cu, and 82% for Ag. The mineralized zones are represented by a RMV grade shell at a cut-off of $US 100/t.
A geology model based on lithological logs was completed using Leapfrog and was used to guide and validate the mineralized zone model.
Block model grade estimation was completed using mining software Geovia Gems version 6.7.1 supplied by Dassault Systems. Capped assays were composited to 2 m lengths and interrupted at the mineralized zone boundaries and the composites were used to estimate block grade by Ordinary Kriging within and outside of the mineralized zones. Blocks were sized to 4 m cubes and retained a percent rock type model. Assays were capped at 50 g/t for gold, 7% for copper, and at 100 g/t for silver.
Based on estimated block grades for gold copper and silver, a gold equivalent grade was computed by block based on the one-year average metal prices ($US) of $1200/oz Au, $2.75/lb Cu and $16.50/oz Ag and milling recoveries of 82% for Au, 90% for Cu, and 82% for Ag. The gold equivalent grade was used as the basis of the cut-off to report the Mineral Resources.
A trend of increasing density with increasing sample grade was observed within the mineralized zone and therefore a variable density model linked to grade was coded within the RMV shell. Outside of the mineralized zone the block model was coded with the mean density from samples grouped by the geological model rock type.
Mineral Resources were classified in accordance with CIM Definition Standards for Mineral Resources and Mineral Reserves (2014). Spacing of drillhole intersections was sufficient to reasonably assume continuity of mineralization and assign Indicated to most blocks within the RMV shell. Generally the Inferred category was assigned to the outer fringe of the RMV shell and where underground development intersected the RMV shell in the West Zone blocks were upgraded to Measured if they were within 10 m of an underground drillhole collar.
The updated Mineral Resources are estimated above a 3 g/t Au Equivalent cut-off to be:
- 198,000 t of Measured Resources at an average grade of 5.36 g/t Au, 0.83% Cu and 8.3 g/t Ag,
- 627,000 t of Indicated Resources at an average grade of 4.97 g/t Au, 0.86% Cu and 9.5 g/t Ag, and
- 151,000 t of Inferred Resources at an average grade of 4.21 g/t Au, 0.71% Cu and 9.8 g/t Ag.
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
Comparison of 2016 Mineral Resource Estimates to Previous Disclosed 2014 Estimate
The original PEA was based on Mineral Resources disclosed in a 2012 Technical Report and estimated above a 3.5 g/t Au cut off to be:
- 495,784 t of Measured Resources at an average grade of 7.18 g /t Au, 0.94% Cu and 12.16 g/t Ag,
- 262,415 t of Indicated Resources at an average grade of 5.71 g/t Au, 0.67% Cu, and 13.26 g/t Ag, and
- 73,591 t of Inferred Resources at an average grade of 3.39 g/t Au, 0.29% Cu, and 5.42 g/t Ag.
The only material technical information, pertinent to the mineral resource estimate, collected since the 2012 estimate was 96 samples of mineralized drill core tested for dry bulk density. The estimate presented in the Amended Technical Report has 21% more volume at a 3% lower density for 17% more tonnes. The reported tonnage is 23% lower in Au and Ag grades and 4% higher in Cu grade than the 2012 estimate. The updated resource contains 10% fewer ounces of gold, 21% more pounds of copper, and 8% fewer ounces of silver.
A detailed review of the previous model was not completed; however, the factors contributing to the largest changes are likely due to the following changes in methodology:
- The updated estimate used estimation constraints based on a grade shell model and applied hard boundaries during grade estimation. The previous estimate did not use estimation constraints other than the search radius extent.
- The updated estimate of grade used the Ordinary Kriging estimator. The previous estimate used Inverse Distance to the 3rd power.
- The updated estimate was reported above a 3 g/t gold equivalent cut-off grade, which considered recoverable contributions from gold, copper and silver. The previous resource was reported above a 3.5 g/t gold only cut-off grade.
- The updated estimate introduced a variable density model based on tests on samples of drill core and taking into account the observation of an increase in density with an increase in sample grade. The previous estimate applied a constant density of 2.9 t/m3.
- The current estimate applying different capping levels to raw assays.
- The current estimate was classified differently, with far less tonnage reporting to the measured category.
PEA Mine Plan
A mine plan was developed by Wayne Ash, P.Eng., based on the update Mineral Resources of the West Zone only. Eight stopes were planned and range in Measured and Indicated tonnage from 2,500 to over 180,000 tonnes. The total diluted and recoverable tonnage in the eight stopes is estimated at 617,460 tonnes grading 4.51 g Au/t, 0.81% Cu, and 8.39 g Ag/t. The above recoverable Mineral Resource assumes 5% over-break dilution and 95% stope recovery.
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. The Preliminary Economic Assessment is preliminary in nature, and although it does not include Inferred Mineral Resources, there is no certainty that the Preliminary Economic Assessment will be realized.
Capital Cost Estimate
The capital cost for the Willa mine is estimated at $C 14 million.
The capital cost for the MAX operation is estimated at $C 7.3 million.
Total capital cost of $C 21.3 million.
Operating Cost Estimate
The estimated operating costs for the project are $C 97.77/t.
The tonnage and grade used for the cash flow analysis is the average of all eight projected stopes.
Metal prices ($US) of 1200/oz for Au, 2.75/lb for Cu, and 16.60/oz for Ag and are based on one-year average prices. Milling recoveries were assumed at 83.9% for gold, 90% for copper and 82% for Ag.
The cash flow analysis assumes a daily mine and mill production rate of 400 tonnes per day (146,000 tonnes per year).
The revenue is estimated at $C 140.3 million, the operating costs at $C 62.5 million, cumulative cash flow at $C 56.1 million, the after-tax Net Present Value (based on a 10% discount rate) at $C 38.7 million, and the after-tax Internal Rate of Return at 83%. The mine has an estimated lifespan of 4.25 years. Due to the accumulated tax pools of about $C 47 million at the MAX operation there will be no tax over the life of the Willa mine.
The PEA is preliminary in nature and there is no certainty that it will be realized.
Comparison of 2016 Amended PEA to Previous Disclosed 2014 PEA
|Item||Amended PEA 2016||PEA 2014||units|
|Stope Recoverable Tonnage West Zone||617,460||748,826||tonnes|
|Stope Recoverable Gold Grade West Zone||4.51||5.70||Au g/t|
|Stope Recoverable Copper Grade West Zone||0.81||0.87||Cu %|
|Stope Recoverable Silver Grade West Zone||8.39||13.12||Ag g/t|
|World Gold Price Used in Cash Flow Analysis||1,200.0||1,200.0||$US/oz troy|
|World Copper Price Used in Cash Flow Analysis||2.75||3.00||$US /% Cu|
|World Silver Price Used in Cash Flow Analysis||16.50||20.00||$US/oz troy|
|US dollar in Canadian Funds||1.30||1.10||$C per $US|
|Gold Recovery in Mill||83.9||82.0||%|
|Copper Recovery in Mill||90.0||90.0||%|
|Silver Recovery in Mill||82.0||82.0||%|
|Total Revenue||140.3||164.8||$C million|
|Capital Cost||21.7||12.8||$C million|
|Development Unit Cost||2,000||3,000||$C / metre|
|Stope Mining, Mineral Transport, Milling Unit Cost||97.77||102.16||$C /t|
|Total Operating Expense||62.5||82.8||$C million|
|Smelting Unit Cost||200.0||220.0||$US/t conc|
|Copper Refining||0.20||0.22||$US/ lb Cu.|
|Cumulative Cash Flow at End of West Zone Resource||56.1||69.1||$C million|
|NPV after tax (10% discount rate)||38.7||55.0||$C million|
|IRR (after tax)||83||412||%|
In the amended report, the Capital Costs have increased by 70%. For the Willa projected mine life, this increase in capital cost results in a lower Net Present Value and a much lower Internal Rate of Return.
Wayne M. Ash, P. Eng., a Qualified Person under NI 43-101 who has an arm’s length relationship with the Discovery, has read and approved the scientific and technical disclosure in this news release that pertains to the Preliminary Economic Assessment, and consents to the public filing of this news release. Michael Waldegger, PGeo, a Qualified Person under NI 43-101 who has an arm’s length relationship with Discovery, has read and approved the scientific and technical disclosure in the news release that pertains to the Mineral Resource Estimate, and consents to the public filling of this news release. The amended PEA is available on the Company’s SEDAR profile, which is available at www.sedar.com.
Discovery Ventures Inc. is a gold, copper and silver mining company focused on the exploration and development of its WillaMAX project that is located in the Kootenay region of British Columbia. The company holds a 100% interest in four mineral properties in B.C., and is currently active in the development
of its Willa Property. Discovery’s newly acquired Max Mine and Milling facility is located 142 km north of the Willa Project site.
On behalf of the Board of Directors,
Dan Omeniuk, Chief Executive Officer and Director
Neither the TSX Venture Exchange Inc. nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange Inc.) accepts responsibility for the adequacy or accuracy of this press release.
This press release contains forward-looking information that involve various risks and uncertainties regarding future events. Such forward-looking information can include without limitation statements based on current expectations involving a number of risks and uncertainties and are not guarantees of future performance of the Company, such as statements regarding estimated mineral resources, estimated net present values, internal rates of return, daily and annual production, costs, metal prices, and statements regarding the Company’s development plan. The assumptions made in developing the forward-looking statements include: the accuracy of current resource estimates and the interpretation of drill, metallurgical testing and other exploration results; the timely receipt of required permits; the continuing support for mining by local governments; the availability of equipment and qualified personnel to advance the projects; execution of the Company’s existing plans and further exploration and development programs, which may change due to changes in the views of the Company or if new information arises which makes it prudent to change such plans or programs; efficiency of the markets in factoring developments at the projects into its common share price and the assumptions and estimates disclosed in the Amended PEA. There are numerous risks and uncertainties that could cause actual results and Discovery’s plans and objectives to differ materially from those expressed in the forward- looking information, including: risks of the mineral exploration industry which may affect the advancement of the Willa and MAX projects, including possible variations in mineral resources, grade, metal prices, capital and operating costs, and the application of taxes; availability of sufficient financing to fund planned or further required work in a timely manner and on acceptable terms; timely receipt of required permits, availability of equipment and qualified personnel, failure of equipment or processes to operate as anticipated, changes in project parameters as plans continue to be refined; failure of equipment or processes to operate as anticipated; regulatory, environmental and other risks inherent in the mining industry. These and all subsequent written and oral forward-looking information are based on estimates and opinions of management on the dates they are made and are expressly qualified in their entirety by this notice. Except as required by law, the Company does not intend to update these forward-looking statements.
Chief Executive Officer and Director
Discovery Ventures Inc.