 | November 12, 2009 Brett's Hammond Reef Delivers Robust Economic Results | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NR-0916 Brett Resources Inc. (TSX Venture Exchange -- BBR) ("Brett" or the "Company") is pleased to announce the results of the Preliminary Assessment Study (the "Study") of its 100% owned Hammond Reef Gold Project (the "Project") located near Atikokan, Ontario. The Study was compiled by Scott Wilson Roscoe Postle Associates, Inc. (Scott Wilson RPA) and uses the new Base Case Inferred Mineral Resource of 6.70 million ounces of gold (259.4 million tonnes grading 0.8 grams per tonne (g/t) gold (Au) at a cut-off grade of 0.30 g/t, which relates to the economic cut-off in the Study). Using a base case gold price of $825 per ounce, the Study shows that the Project has a net pre-tax cashflow (undiscounted) of $1,186 million with an after tax Net Present Value (NPV) of $413 million using a 5% discount rate. The mine would recover 5.13 million ounces of gold at a strip ratio of 1.43 to 1 over a 14-year mine life. Over the first six years, on average, Hammond Reef will produce 463,000 ounces of gold per year at a head grade of 0.91 g/t Au, with direct cash costs of $360 per ounce (net of silver credits). Over a projected 14-year mine life the current deposit would produce an average of 369,000 ounces of gold per year at an average direct cash cost of $414 per ounce (net of silver credits), generating earnings before interest, taxes and capital recovery (EBITDA) of $1,958 million and earnings before interest and taxes (EBIT) of $1,186 million. For the first six years of production, the pre-tax operating cash flow is $1,229 million (EBITDA) and $656 million (EBIT). The Study shows a pre-tax Internal Rate of Return of 18.5% (15.2% after tax) and a Payback Period of 4.2 years (4.6 years after tax). Results of the Study are highly encouraging and Brett is continuing infill and exploration drilling as well as metallurgical, environmental and engineering studies to advance the Hammond Reef Gold Project to feasibility and production. Patrick Soares, President and CEO of Brett, commented: "These robust economic results, the recent signing of the MOU with eight First Nations, very strong community support and promising nearby exploration targets encourage Brett to press on with exploration and engineering activities and advance the Hammond Reef Project to and through feasibility as quickly as possible." Study Summary
Economic results for the Base case and Base Case +20% are as follows:
All dollar amounts presented in this press release are expressed in US dollars. An exchange rate of 1.11 Canadian to US dollars was used with respect to Canadian expenditures. Life of mine capital expenditures are estimated at $772 M (which includes an initial capital expenditure of $614 M), giving the Project an overall capital expenditure per recoverable ounce of $151. This Study will be the foundation for further growth as Brett continues with infill drilling to raise the resource classification and explores for new resources on nearby targets. Brett's current 70,000 metre drill program includes exploration drilling of new gold zones identified by this summer's exploration. The Study is preliminary in nature, it includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves, and there is no certainty that the Preliminary Assessment will be realized. Location The Hammond Reef Project is located in the Sawbill Bay-Marmion Reservoir area of the Thunder Bay Mining District, approximately 170 kilometres west of Thunder Bay, Ontario, Canada, and roughly 23 kilometres northeast of the town of Atikokan, Ontario. The property can be accessed both by water and by gravel road and there is a power line approximately 10 kilometres to the west, and a 230MW power generating station 14 kilometres to the southwest of the property. Atikokan has a population of about 3,000 people and is serviced by provincial highway and rail. The local economy is based on forestry, a thermal generating station, government services, retail services, tourism and light manufacturing, and has a history of mining. The region benefits from a strong contractor and supplier base to the mining industry and an experienced mining workforce. Other resources are available from Thunder Bay, which has a population of over 100,000 and is home to an international airport with daily scheduled jet service, rail service and port facilities. Mineral Resources Based on the results of the Study, the economic cut-off at a gold price of $825 per ounce is 0.27 g/t gold. Therefore, the Study was based on a new base case NI 43-101 compliant Inferred Mineral Resource of 259.8 million tonnes at 0.80 g/t gold totaling 6.7 million ounces of gold at a 0.30 g/t Au cut-off. The mineral resource at various cut-offs is as follows:
Capital Investment Program The initial capital investment program amounts to $614 M and is summarized below:
The investment program is scheduled over a three year period. Sustaining capital is estimated at $158 M and is primarily for additional mining equipment, infrastructure and a dike to extend the pit into Marmion Reservoir. Closure cost provisions amount to $35 M. Mining The preliminary mining plan was developed using the Inferred Mineral Resources audited by Scott Wilson RPA. An open pit optimization was performed using Whittle software, which is based on the Lerchs-Grossmann algorithm. The pit optimization resulted in an estimated mining resource conversion rate of 82 percent relative to the Inferred Mineral Resource at a cut-off of 0.3 g/t gold. The annual mining excavation plan shown below was based on stockpiling lower grade material during the initial 6 years for processing in the later years of the mine life.
*Includes 56.034 million tonnes re-handled from the stockpile to the mill The deposit will be mined by conventional open pit mining methods using an initial fleet of thirteen 218-tonne haul trucks, two hydraulic shovels, one loader, three drills and various ancillary equipment.The mine production daily rate, including waste, is estimated at 158,000 tonnes per day for the first nine years, decreasing thereafter. The waste-to-ore ratio is estimated at 1.43 to 1. The pit design includes a maximum inter-ramp pit slope of 49 degrees and a maximum highwall height of 345 m. The initial pit design is limited by a 20 m standoff from Marmion Reservoir to the southwest. In year 5, a 1,200 m long dike may be constructed to allow the open pit to extend into the reservoir area for maximum extraction of the resource, extending the life of the mine from 12 to 14 years and optimizing the Project economics. The A-zone mineralized system remains open to the southwest as no drilling has taken place within the reservoir or on the land mass beyond where positive surface exploration results have been realized. Mining costs have been estimated at an average of $1.40 per tonne moved. Fuel price assumption is based on $70 per barrel. The average annual fuel consumption is estimated at 31.2 million litres. Mineral Processing The plant design is based on tests recently completed at SGS Lakefield, Ontario which confirmed the viability of a flotation-cyanidation process. Coarse primary grind (180 micron) feeds bulk sulphide flotation to pre-concentrate the gold to a stream of less than 10% by weight of the plant feed. The concentrate is subjected to fine regrinding to nominal 80% passing 10 micron and cyanidation to achieve an overall gold recovery of 93%. Confirmatory, variability and optimization metallurgical testwork continues. In order to minimize the environmental impact of the Project, the use of thickened tailings disposal technology has been selected. In addition, placement of the tailings in the former Steep Rock iron ore open pits is being investigated. All Acid Base Accounting (ABA) and Net Acid Generation (NAG) analyses indicated that the process tailings are likely to be non-acid generating. The sulphide sulphur content of the deposit is low, and there appears to be adequate carbonate to neutralize any potential acid generation. The mineral processing costs, including tailings operations and power, are estimated at $4.45 /tonne milled using a power cost of $0.054 (CDN$0.06) per kilowatt hour. Operating Costs Total direct operating costs, including $0.73/tonne for general and administration costs, are estimated at $8.90 per tonne milled or an average of $414 per ounce before royalties. At a base case gold price of $825 per ounce this operating cost is equivalent to an average cut-off of 0.27 g/t gold. The summary per year is outlined below, based on an average gold recovery of 93%:
Economic Results Under the Base Case scenario at a gold price at $825 per ounce, the unleveraged pre-tax Internal Rate of Return (IRR) is estimated at 18.5%, the Net Present Value (NPV) at a 5% discount rate is $588.4 million and the undiscounted cashflow is $1,186 million. The Base Case after tax IRR is 15.2%, the NPV at 5% is $413.2 million and the net cashflow (undiscounted) is $900.1 million. The table below outlines sensitivities under various pre-tax price scenarios:
The table below outlines sensitivities under various after-tax price scenarios:
*Gold prices are varied by increments of ± 10% from the Base Case of $825. Path ForwardThe Company has begun a significant infill and exploration drill program as described in Brett's news release dated October 5, 2009. The required Federal and Provincial Environmental Assessment processes will be initiated shortly and are expected to take approximately 24 months to complete. These will be executed in parallel to other engineering studies to advance the Hammond Reef Gold Project toward production. Detailed Report The NI43-101 Preliminary Assessment Technical Report will be available mid December at www.sedar.com and on the Company's corporate website . Qualified Person The Preliminary Assessment Study was prepared by Scott Wilson RPA under the supervision of Mr. Richard J. Lambert, P.E., a registered professional engineer and an independent Qualified Person under the standards set forth by National Instrument 43-101. Mr. Joseph P. Ringwald, P. Eng., Vice-President Operations for Brett and a registered professional engineer, is the Company's designated Qualified Person for the purposes of the Study. Mr. Lambert and Mr. Ringwald have reviewed and approved the contents of this press release. Conference Call Brett will host a conference call on Thursday, November 12th at 10:00 AM Pacific Time / 1:00 PM Eastern Time where senior management and Brett's Technical team will discuss the Study and will be available to respond to questions from analysts and investors. Those interested in participating in the conference call should dial in at 416-340-8410 (Toronto local and international), or 866-225-2055 (North American toll free). An operator will direct participants to the call. About Brett Resources Inc. Brett Resources Inc. is a Canadian minerals exploration company whose primary mandate is the discovery, acquisition, and development of precious metals systems, with particular expertise in Canada and Latin America. Since 2006 Brett's primary focus has been the 100 percent owned Hammond Reef Gold Deposit in Ontario where a C.I.M. Inferred Resource of 6.70 million ounces of gold, 259.4 million tonnes at a grade of 0.8 grams per tonne utilizing a 0.3 gram per tonne gold cut-off has been outlined. The Company will continue to advance this flagship Project. Patrick Soares, President & CEO Neither TSX Venture Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release. This news release contains forward-looking statements that are not based on historical fact, including those identified by the use of forward-looking terminology such as statements containing the words "believes", "may", "will", "estimates", "continue", "anticipates", "intends", "expects", "should" or the negatives thereof and words of similar import. Management of the Company cautions that these forward-looking statements are subject to risks and uncertainties that could cause actual events or results to differ materially from those expressed or implied by the statements. Management believes that the estimates are reasonable, but should not unduly be relied upon. The Company makes no representation, warranty (express or implied), or assurance as to the completeness or accuracy of these projections and, accordingly, expresses no opinion or any other form of assurance regarding them. Management does not intend to publish updates or revisions of any forward-looking statements included in this document to reflect the Company's circumstances after the date hereof or to reflect subsequent market analysis. Contact: Tony Perri, Manager, Investor Relations or Raju Wani at 403-240-0555 Brett Resources Inc. Suite 611 - 675 West Hastings Street Vancouver, BC V6B 1N2 Tel: (604) 488-0008 tperri@brettresources.com www.brettresources.com | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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