VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 18, 2009) - Creston Moly Corp. ("Creston" or the "Company") (TSX VENTURE:CMS) announces that it has received a Pre-feasibility Study ("PFS") on its wholly-owned Creston Molybdenum Deposit (Creston Project) located in Sonora, Mexico. The independent PFS, prepared by M3 Engineering & Technology Corporation of Tucson, Arizona ("M3"), estimates production, capital and operating cost parameters along with project economics, and considers both owner and contract mining scenarios. The Company will continue to evaluate which scenario is most advantageous.
Highlights of the Pre-Feasibility Study and Base Case Mine Plan include:
(All amounts are in US$ unless otherwise stated.)
- A pre-tax Net Present Value ("NPV") at an 8% discount rate of $465.3 million with contract mining and $502.9 million with owner mining;
- A pre-tax Internal Rate of Return ("IRR") of 28.2% with contract mining and 27.2% with owner mining;
- Annual molybdenum and copper production of approximately 20 million pounds and 12 million pounds respectively from processing of 40k tonnes per day (ktpd) of ore;
- Direct costs, inclusive of copper byproduct credits, of $6.57 per lb of Mo equivalent with contract mining and $5.74 per lb with owner mining ($15/lb Mo and $1.75/lb Cu);
- An estimated initial capital expenditure of $511.6 million utilizing contract mining and $576.2 million with owner mining.
Financial Evaluation
Financial evaluations of the project have been made for both owner mining and contract mining scenarios. In addition the study has examined the sensitivity of the project value to changes in metal prices. The metals prices for the base case are established as $15.00 per pound for molybdenum and $1.75 per pound for copper. As of January 2009 the historic 3-year rolling average prices for molybdenum and copper were $28.67 per pound and $3.12 per pound respectively. Current prices for molybdenum and copper are $9.10 per pound and $1.45 per pound respectively (Feb. 17, 2009). Therefore, a lower forecast seems to be more appropriate in the current market environment.
Creston performed a survey of banks and financial institutions during the 4th quarter 2008 and the 1st quarter 2009, to obtain their short and long term projections for molybdenum and copper prices. Fourteen provided molybdenum forecasts and twenty-one provided copper forecasts. A few banks submitted projections for one or two years, but most projected out to 10 years. The forecast average for molybdenum for 2009 to 2018 was $14.37 per pound, including those given by companies that only forecasted one or two years. The average of all surveyed companies for the next three years (2009, 2010 and 2011) is $17.42. The projected average for copper for 2009 to 2018 was $2.18 per pound, including those companies that only forecasted one or two years. The average of all forecasts for the next three years (2009, 2010 and 2011) is $2.19.
Table 1 - Financial Highlights - Table 1a - Financial Highlights -
Contract Mining Owner Mining
----------------------------------- -------------------------------------
Capital Cost Capital Cost
Payback Period 3.6 Years Payback Period 3.6 Years
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Initial Capital Initial Capital
Investment Investment
(000's) $511,601 (000's) $576,241
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----------------------------------- -------------------------------------
Mine Life 11 years Mine Life 11 years
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Total Ore Total Ore
Processed Processed
(000's) 146,705 tonnes (000's) 146,705 tonnes
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Mill Throughput 40,000 tonnes/day Mill Throughput 40,000 tonnes/day
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----------------------------------- -------------------------------------
Molybdenum Price (US$15/lb) Molybdenum Price (US$15/lb)
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Copper Price (US$1.75/lb) Copper Price (US$1.75/lb)
----------------------------------- -------------------------------------
Table 2- Net Present Values - Contract Mining
(based on 100% equity, $15/lb Mo, $1.75/lb Cu)
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NPV 0% NPV 8% NPV 10%
IRR (%) ($ Million) ($ Million) ($ Million)
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Pre-tax 28.2 1,004 465.3 379.7
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After-tax 21.0 707.3 285.2 218.8
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Table 2a - Net Present Values - Owner Mining
(based on 100% equity, $15/lb Mo, $1.75/lb Cu)
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NPV 0% NPV 8% NPV 10%
IRR (%) ($ Million) ($ Million) ($ Million)
-------------------------------------------------------
Pre-tax 27.2 1,104 502.9 407.8
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After-tax 20.2 780.0 306.0 231.9
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The Pre-Feasibility Study also stated after-tax NPV values under flat price scenarios. Flat price sensitivities on an after-tax discounted basis are presented in Tables 3 & 3a below.
Table 3 -Flat Price Sensitivities Table 3 -Flat Price Sensitivities
Contract Mining Owner Mining
(After-tax discounted basis) (After-tax discounted basis)
----------------------------------- -----------------------------------
Mo $ NPV 8% NPV 10% IRR Mo $ NPV 8% NPV 10% IRR
per lb ($ Million) ($ Million) (%) per lb ($ Million) ($ Million) (%)
----------------------------------- -----------------------------------
$12.50 62.7 22.0 11.2 $12.50 83.6 35.1 11.7
----------------------------------- -----------------------------------
$15.00 285.2 218.8 21.0 $15.00 306.0 231.9 20.2
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$20.00 730.2 612.4 36.5 $20.00 751.0 625.4 34.0
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Capital and Operating Costs
Total initial capital investment in the project is estimated to be $511.6 million utilizing contract mining and $576.2 million under the owner mining scenario, which represents the total direct and indirect cost for the complete development of the project. The life-of-mine sustaining capital for the processing plant is estimated to be $22.7 million with contract mining and $56.2 million with owner mining.
Table 4 - Operating Costs - Contract Mining
(based on $15/lb Mo, $1.75/lb Cu)
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$/Mo
Includes equivalent lb
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Mining Contractor services and mine general
services $2.19
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Milling Processing, site power, maintenance,
environmental $3.91
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General and Management, employee transportation,
Administration camp costs $0.47
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Total Operating
Costs $6.57
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Table 4a - Operating Costs - Owner Mining
(based on $15/lb Mo, $1.75/lb Cu)
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$/Mo
Includes equivalent lb
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Mining Drilling, blasting, haul, mine support
& general services $1.36
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Milling Processing, site power, maintenance,
environmental $3.91
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General and Management, employee transportation,
Administration camp costs $0.47
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Total Operating
Costs $5.74
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"We are extremely pleased with the results of M3's pre-feasibility study on the Creston Molybdenum Deposit and believe the project will contribute greatly to the socio-economic growth of the communities of San Miguel Valley, the State of Sonora, and Mexico," said J. George, President and CEO of Creston.
C.K. Benner, Chairman of the Company added, "Management intends to continue to advance the project in order to position the Company for a resurgent market. While in the short term it remains a challenge to acquire adequate financing for good mining projects, this will change. We remain confident that the Creston Project is one of the most viable primary molybdenum projects in the Americas and we want the project poised to take full advantage of the healthier base metals markets when they arrive."
Development Plan
The Creston Molybdenum Deposit has been planned as a conventional open-pit mining operation. The average stripping ratio is estimated at 1.23 to 1 (waste to ore) over the life of mine.
The grade of ore processed from the mine in the first five years will average 0.088% Mo and the average grade processed for the life of mine is expected to be 0.077% Mo. The project will produce 219 million pounds of molybdenum and 129 million pounds of copper over a 11 year mine life. As well there is an opportunity to extend the life of the project by increasing the overall resources in the Main Zone and through continuing evaluation, exploration and assessment of the Red Hill and Alejandra Zones.
Mineral Reserves and Resources
In accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators, the Company has delineated proven and probable reserves and measured, indicated and inferred mineral resources.
The Creston Molybdenum Deposit's reserves and resources, as determined in accordance with National Instrument 43-101, are illustrated in Tables 5 and 6 below.
Table 5 - Proven and Probable Reserves and In-Pit Inferred Resources
The Creston Molybdenum Deposit contains the following mineral reserves and inferred resources at a 0.035% Mo equivalent(i) cut-off grade:
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Tonnes Mo lbs Mo Cu lbs Cu
Category (000's) (%) (000's) (%) (000's)
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Proven Reserves 44,736 0.079 78,024 0.053 52,217
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Probable Reserves 101,968 0.076 171,924 0.047 106,614
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Proven and probable
reserves 146,705 0.077 249,948 0.049 158,831
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In-pit Inferred
Resources 8,718 0.065 12,464 0.063 12,158
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(i) Mo equivalent: Mo% + (Cu%/7.5)
Table 6 - Mineral Resources
The Creston Molybdenum Deposit contains the following mineral resources at a 0.03% Mo equivalent(i) cut-off grade:
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Tonnes Mo lbs Mo Cu lbs Cu
Category (000's) (%) (000's) (%) (000's)
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Measured 52,240 0.074 85,490 0.050 58,080
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Indicated 124,650 0.070 192,720 0.044 121,060
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Total (M + I) 176,890 0.071 278,210 0.046 179,140
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Inferred 16,300 0.051 18,320 0.061 21,860
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(i) Mo equivalent: Mo% + (Cu%/7.5)
1 The mineral resources referred to herein have been estimated
in a NI 43-101 technical report (the "MDA Report") prepared
for the Company in December 2008 by Mine Development
Associates ("MDA"). The person responsible for the resource
estimate on behalf of MDA is Michael Gustin, P.Geo, and a
Qualified Person for the purposes of National Instrument
43-101. The MDA Report is available at www.sedar.com.
2 Proven and probable reserves are included in the statement
of resources.
Opportunities
1) M3 notes that the economics in the PFS do not take into account opportunities for improvement based on the potential for:
- Increasing the overall resource
- Refined engineering during the bankable feasibility study
- Silver (Ag) credits to be evaluated
- Capital cost savings generated by purchasing used equipment
2) The economic downturn has provided a number of unforeseen opportunities, such as improved availability and lower pricing of new equipment, construction materials and fuel.
Going Forward
The Company will continue to prudently advance the Creston Molybdenum Deposit. In view of the state of the present financial markets, work on the Bankable Feasibility Study will continue, but will be done in a measured and cash conservative manner.
The Company will continue exploration of the Red Hill and Alejandra Zones with the objective of increasing the overall molybdenum resource of the project. Efforts will also be focused on the opportunities that exist in other areas such as the potential for silver (Ag) credits.
A 43-101 compliant report titled "Technical Report, Creston Moly Project, Pre-Feasibility Study, Sonora, Mexico" will be filed on SEDAR at www.sedar.com within 45 days of this news release and will also be made available on Creston's website at www.crestonmoly.com.
Conference Call
Creston Moly Corp. will hold a conference call on February 20, 2009 at 8 am Pacific Time (11 am Eastern Time) to discuss the Creston Molybdenum Deposit Pre-Feasibility Study Report. To access the conference call, please dial:
Toronto: 416-644-3434
Canada & USA Toll Free: 1-800-587-1893
Outside of Canada & USA: Please dial the Toronto number: 416-644-3434
Replay
The replay will be available from Friday February 20th at 2:00pm ET until Saturday February 28th @ 11:59pm ET.
Replay numbers: The replay of the conference call will be accessible by dialing 416-640-1917 (Toronto) or 1-877-289-8525 (Toll Free) and entering passcode 21297559#
An archived recording of the conference call will be available on the Company's website at www.crestonmoly.com.
Qualified Persons
M3, a full service Engineering, Procurement, Construction & Management (EPCM) firm, is recognized for its experience and capabilities in the development and construction of mines and mineral processing plants. The executive summary of the M3 pre-feasibility study will be posted on the Company's website (www.crestonmoly.com ) as well as on Sedar in the near future.
Lee A. Becker, P.E. of M3 is the qualified person responsible for the scientific and technical overview in this news release in accordance with NI 43-101. Michael Gustin, P.Geo of Mine Development Associates is the qualified person responsible for the preparation of the mineral resource estimate summarized in this news release in accordance with NI 43-101. Thomas Dyer, P.E. of Mine Development Associates is the qualified person responsible for the preparation of the mineral reserve estimate.
The following companies also contributed to the pre-feasibility study:
- Mine Development Associates ("MDA") - Reserves & Resources and Mine plan
- SRK Consulting (US) Inc. - Environmental Geochemistry
- Golder Associates Inc. - Pit Slope & Tailings Management
- Metcon Research - Metallurgical Study
- SGS Lakefield Research Limited - Comminution Testing
- Phillips Enterprises, LLC - Comminution Testing
- G&T Metallurgical Services Ltd. - Modal Analysis
- Pocock Industrial Inc. - Solid-Liquid Separation Study
- IDEAS (Dr. Miguel Rangel) - Hydrogeological Evaluation
- Lizarraga and Leal - Bat Study |
