Fuwan Property
Feasibility Study
View the Minco Silver Feasibility Technical Report
Minco Silver released the results of its International Bankable Feasibility Study (IBFS) on September 28, 2009. The report was completed by Wardrop, with portions of the study completed by NERIN, and concluded that the Fuwan Silver Project, based on available information, is technically and economically viable as an underground mining operation.
The Study defines an operation based on underground mining and milling of the ore producing a silver/lead concentrate and a zinc concentrate on site in township of Fuwan, approximately 45 km southwest of the provincial capital of Guangzhou, China.
PROJECT OVERVIEW
Deposit
The Fuwan silver deposit (the "Deposit") falls into the broad category of sediment-hosted epithermal deposits and is characterized by 8 zones of vein and veinlet mineralization within zones of silicification. Zones 7 and 8 are not included in the reserve estimate. The predominant sulphide minerals are sphalerite and galena with lesser pyrite, as well as rare arsenopyrite, chalcopyrite, and bornite. The deposit is poor in gold (typically <0.2 ppm).
Highlights of Feasibility Study:
| Feasibility Study Highlights (Pre-Tax) |
Feasibility Results |
| Probable Mineral Reserve |
9.118 Mt averaging 189 g/t Ag |
| Mine Life |
9.2 Years |
| Daily Mine Throughput |
3,000 tpd |
| Mill Recovery (Ag Recovered in both concentrates) |
91% |
| Average Annual Recovered Ag in both concentrates |
5.5 M oz |
| Total Recovered Ag in both concentrates |
50.4 M oz |
| Total Operating Cost/t Ore Milled |
$34.42/t |
| Total Cash Cost per Payable oz Ag |
$5.65/oz |
| Pre-Production Capital Costs |
$73.1 M |
| Silver Price Used for Feasibility Study Economics |
13.57/oz Ag |
| Total Revenue |
$648.2 M |
| Total Operating Cost |
$313.8 M |
| Total Royalty Payment |
$24.3 M |
| Total Operating Cash Flow |
$310.0 M |
| Net Present Value Before Tax @ 6% Discount Rate |
$111.5 M |
| Net Present Value Before Tax @ 8% Discount Rate |
$95.3 M |
| Internal Rate of Return Before Tax |
33.2 % |
| Payback Period of Pre-Production Capital Costs |
2.3 years |
| Construction Period |
20 - 24 months |
Resource Estimation
P&E completed five resource estimates for the Fuwan silver deposit in November 2005, November 2006, June 2007, December 2007 and May 2008. The May 2008 estimate, which is an update of the December 2007 estimate on the basis of infill drilling, formed the basis of the Study. All resource estimation technical reports were done in compliance with NI 43-101 and CIM standards, most of which were filed on SEDAR. There has been no additional drilling on the deposit area since that time.
Contained Mineral Resources (at a 40g/t Silver cut-off)
Resource Area & Classification
(does not include Changkeng mineralization) |
tonnes
(Mt) |
Ag
(g/t) |
Ag
(M oz) |
Au
(g/t) |
Pb
(%) |
Zn
(%) |
| Fuwan Permit Indicated |
13.95 |
188 |
84.3 |
0.17 |
0.20 |
0.56 |
| Fuwan Permit Inferred |
10.24 |
171 |
56.1 |
0.26 |
0.26 |
0.72 |
Reserve Estimation
The resource estimate provided by P&E classified the resources for the Fuwan Zones 1 to 4 as indicated and inferred. The reserve does not include any resources from the Changkeng property. Only indicated mineral resources as defined in NI 43-101 were used to establish the probable mineral reserves. No reserves were categorized as proven.
Wardrop used a stope recovery factor of 95%, an average mining extraction rate of 97%, and an average 7% internal dilution, 8% external dilution, and 3% fill dilution to estimate the total amount of diluted probable mineral reserves. Ore reserve calculations conservatively assumed dilution to contain no metal.
Operating Costs
The operating cost estimates are based on a process rate of 990,000 t of ore annually or 3,000 tpd of ore.
| Mining |
$ 18.01/t |
| Processing |
$ 9.90/t |
| Tailings |
$ 1.13/t |
| G&A |
$ 4.78/t |
| Surface Services |
$ 0.60/t |
| Total |
$ 34.42/t |
Capital Costs
This estimate has been completed partially by NERIN and partially by Wardrop. The majority of the information used in the estimate is based on the quantities and pricing provided by NERIN to Wardrop
Area Cost
Direct Works |
(US$ x 1,000) |
A - Mining (Wardrop)
B - Primary Crushing
C - Crushed Ore Stockpile and Reclaim
D - Secondary and Tertiary Crushing
E - Grinding, Flotation, Dewatering, Reagents & Service
F - Tailings Disposal Facilities
G - Plant Site, Infrastructure & Ancillary Facilities
H - Temporary Services
L - Site/Plant Mobile Equipment
N - Power Lines (Included in G1 - Power Supply) |
21,637
660
305
52
9,140
4,250
8,627
35
1,190
Included in G1 |
| Direct Works Subtotal |
$45,896 |
| Indirect |
|
X - Project Indirect
Y1 - Land Acquisition
Y1 - Owner’s Costs
Z - Contingency |
13,330
2,120
5,663
6,051 |
| Indirect Subtotal |
$27,164 |
| TOTAL PRE-PRODUCTION CAPITAL COSTS (US$) |
$73,060 |
| Working Capital |
$8,300 |
| Sustaining Capital |
$59,900 |
Sensitivity Analysis
The project economics are sensitive to silver price, Operating costs and Capital expenditures. The sensitivity analysis results are in the table below:
| Parameter |
Economic Indicator |
Change |
| -20% |
-10% |
Base Case |
10% |
20% |
| Silver Price |
NPV ($M) |
33 |
72 |
112 |
151 |
190 |
| IRR (%) |
15 |
25 |
33 |
41 |
48 |
| Opex |
NPV ($M) |
157 |
134 |
112 |
89 |
66 |
| IRR (%) |
41 |
37 |
33 |
29 |
24 |
| Capex |
NPV ($M) |
126 |
119 |
112 |
105 |
97 |
| IRR (%) |
42 |
37 |
33 |
30 |
27 |
View The Complete News Release in PDF Format:
/i/pdf/2009-09-28_NR.pdf
For further information, please see our 43-101 Technical Reports page and then follow the link to our NI 43-101 Technical Report dated October 23, 2009 and January 24th 2008.
