StrataGold completes economic assessment at Mar

2008-12-01 14:26 ET - News Release

Mr. Terry Tucker reports

STRATAGOLD ANNOUNCES POSITIVE PRELIMINARY ECONOMIC ASSESSMENT ON THE MAR-TUNGSTEN DEPOSIT, YUKON

StrataGold Corp. is releasing a positive National Instrument (NI) 43-101 preliminary economic assessment (PEA) on its 100-per-cent-owned Mar tungsten deposit, located within the Dublin Gulch property, Yukon Territory. The PEA was produced by SRK Consulting (U.S.) Inc.

PEA highlights:

• The PEA demonstrates a pretax internal rate of return (IRR) of 15.5 per cent and a net present value (NPV) of $24-million (U.S.) at a discount rate of 8 per cent.
• The PEA estimates total mine production of 45,725 tonnes of tungsten trioxide (WO3) concentrate with an average grade of 58 per cent WO3 during an 11-year mine life (2,651,000 metric tonne units (MTU) of WO3).
• Mining and milling on a year-round basis at a production rate of 3,000 tonnes per day and a strip ratio of 6.7:1.
• Total capital costs, including closure, are estimated at $76.1-million (U.S.), including the processing plant estimated at $41.8-million (U.S.) (including 35-per-cent contingency), and capital costs for infrastructure and support facilities estimated at $13.1-million (U.S.) (including 30-per-cent contingency). This includes the construction of a 20-kilometre-long power line connecting to the existing Yukon power grid.
• Operating costs over the life of mine are estimated to be $38.12 (U.S.) per tonne or $6.43 (U.S.) per pound WO3.
• Processing will include a combination of gravity concentration and flotation with an overall recovery of 80 to 85 per cent achievable, with 60 to 65 per cent from gravity and an additional 20 per cent from flotation.

Assumptions:

• The revenue model assumes an ammonium paratungstate (APT) price (the marketable intermediary of tungsten) of $253 (U.S.) per metric tonne unit (MTU) or $11.50 (U.S.) per pound. The projected WO3 concentrate price is 85 per cent of the APT price.
• Average tungsten recovery of 82.5 per cent was used.

Mining

Mining of the Mar tungsten zone will be a conventional open-pit truck and shovel operation, with the necessary support equipment. Mining operations are characterized by a moderate stripping ratio pit consisting of skarn-hosted tungsten mineralization located on a plateau 2.5 kilometres west of the Eagle zone gold deposit. It has been assumed that a mining contractor will execute the mining of the mineralized material and waste material. The preliminary pit design was determined to be approximately 0.5 kilometre in diameter, 250 metres deep, with a volume of 27.6 million cubic metres. The operation would originally start with three 100-tonne trucks, plus support equipment, with additional units added over the life of mine to make up fleet requirements.

PIT DESIGN RESULTS Mill total throughput 9,868,551 tonnes Mill throughput per year 1,020,000 tonnes (3,000 tonnes per day) Waste total 66,071,293 tonnes Strip ratio 6.70:1 WO3 grade 0.33% Contained WO3 70,856,775 pounds

Process and infrastructure

The indicated process flowsheet at the Mar tungsten deposit would include:

• Blending of run-of-mine ore to provide a consistent WO3 feed-grade to the processing plant;
• Primary crushing using a jaw crusher;
• SAG-ball mill grinding;
• Gravity concentration;
• Sulphide and non-sulphide flotation with regrind mill;
• WO3 final concentrate thickening, filtering and packaging;
• Tailings thickening and disposal.

Access to the property is via road 35 kilometres north of Mayo via Highway 2 and then proceeds along the South McQuesten Road for 46 kilometres, of which the last 25 kilometres is not maintained but in good repair. Mayo is located 350 kilometres north of Whitehorse. An existing 69-kilovolt-ampere power line runs within 20 kilometres of the project.

Updated Mar tungsten deposit resource statement (1)

The mineral resource has been restated from the company's news release in Stockwatch on Oct. 16, 2008, and has resulted in an overall increase of 89 per cent to the indicated resource from the resource statement reported in Stockwatch on Jan. 15, 2008. The resource statement previously announced in Stockwatch on Oct. 16, 2008, contained a company conversion error of tungsten to WO3 grades on 2008 drill results and the grade shell was reduced from 0.1 per cent to 0.05 per cent WO3.

                                                                WO3 MTUs
Resource             Total      % WO3     Contained WO3    (metric tonne
category            tonnes   grade (*)          (pounds)      units (xx))

Indicated       12,700,000       0.31        86,200,000        3,909,000
Inferred         1,300,000       0.30         8,900,000          403,000

(*) A cut-off grade of 0.10 per cent WO3 was used for this resource
statement with a categorical indicator technique to develop a grade shell
of 0.05 per cent WO3 used to limit the projection of mineralization.

(xx) An MTU is defined as one-100th of a metric tonne or 22.05 pounds.

Notes:

• Drilling has been audited and validated by SRK in accordance with CIM estimation of mineral resources and mineral reserves best practice guidelines and with National Instrument 43-101 guidelines by Dr. Bart Stryhas, PhD, an independent qualified person as defined by NI 43-101.
• The resource estimation employed a categorical indicator approach based on a cut-off of 0.05 per cent WO3. Grade estimation was made using an inverse distance squared algorithm within blocks having a probability of 50 per cent and higher.
• Drill hole WO3 assays were composited into two-metre downhole lengths and capped at 3 per cent.
• Tonnage was estimated based on a specific gravity assigned by rock type and alteration type. The specific gravities ranged between 2.7 and 2.9 grams per cubic centimetres.
• Mineral resources are not mineral reserves and do not have demonstrated economic viability.
• Mineral resources were classified according to the CIM definition standards for mineral resources and mineral reserves by Dr. Stryhas.
• SRK is not aware of any known environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant issues that could potentially affect this estimate of mineral resources. The mineral resources may be affected by subsequent assessments of mining, environmental, processing, permitting, taxation, socio-economic and other factors. There is insufficient information at this early stage of study to assess the extent to which the resources will be affected by these factors, which are more appropriately assessed in a conceptual study.
• The preliminary economic assessment is preliminary in nature and 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. There is no certainty that the preliminary economic assessment will ever be realized.
• The preliminary economic assessment and mineral resource statement are effective Dec. 1, 2008.

Recommendations

The Mar tungsten deposit has excellent opportunities for significant resource expansion. The mineralization is defined over an 800-metre strike length and remains open in several directions. Exploration drilling is warranted on the north and south extensions of the mineralization, and further downdip to the west. A program of 4,840 metres of diamond drilling is recommended to delineate the limits of mineralization, which can be recovered by open-pit mining. An additional 2,650 metres of diamond drilling (not included in budget) is recommended to define exploration potential to the west and on other targets in the area.

SRK recommends the commencement of a prefeasibility study, which would include additional metallurgical testwork, geotechnical drilling and data collection, groundwater monitoring and dewatering wells, and environmental monitoring and additional baseline work.

Program                                              Cost (in millions of U.S. dollars)

Exploration drilling 4,840 metres -- 25 holes                         3.20
Metallurgical studies                                                 0.25
Geotechnical drilling (four holes)                                    0.50
Tailings trade-off study and site geotechnical studies                0.20
Groundwater monitoring and dewatering wells (six holes)               0.60
Environmental monitoring and baseline work                            0.75
Prefeasibility study (12 to 18 months)                                1.25
Total recommended work plan                                           6.75

The company deems the equity markets all but closed with respect to financing near-term exploration and development activities. In this environment, StrataGold continues to explore strategic alternatives, and will continue to seek options that are in the best interest of its shareholders and, in particular, the advancement of the Mar-Tungsten deposit.

We seek Safe Harbor.