Revenue forecasts are based on sales of 2,785,000 tonnes of aggregate at an average price of $34/00/tonne FOB Prince Rupert, and 285,000 tonnes of coarse material at an average of $21.45/tonne. The cash flow forecast is based on in-pit measured and indicated resources with 1% of the total being an inferred resource within that pit. The mining production schedule assumes Highbank’s application to increase its existing permit will succeed.
Overall, with total cash operating cost of $16.71/tonne and royalties of $2.35/tonne, the production forecast provides an operating margin of around 44%. At an annual discount rate of 8%, the base case cash flow for the three operating years evaluates to an NPV of $24.3 million. The project is least sensitive to capital costs, mainly due to most of the required capital investment having taken place prior to start of the cash flow period.
This preliminary economic assessment is preliminary in nature and there is no certainty that the assessment will be realized. Inferred mineral resources are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves.
The Company advises that while it has made the decision to put the Project into production, the Company is not basing its production decision on a feasibility study of mineral reserves demonstrating economic and technical viability. There exists an increased economic and technical risk of failure associated with such a production decision.
The Company is continuing its efforts to secure long-term contracts for its aggregate products from Swamp Point North.
The Technical Report summarizing the PEA will be available on the Company’s website (www.highbankresources.com) and through SEDAR (www.sedar.com). Qualified persons under NI 43-101 who contributed to the PEA and will be responsible for sections of the Technical Report are: David K. Makepeace, M.Eng., P.Eng., Senior Geologist-Environmental Engineer; & Tania Ilieva, Ph.D., P.Geo., Senior Geologist; of Micon International Limited. In addition, Keith McCandlish, P.Geo., and Peter Cain, Ph.D., P.Eng. of DMT Geosciences Ltd authored the mineral resource and mining sections of the Technical Report, respectively.
The disclosure of the technical information contained above in this news release has been reviewed and approved by David K. Makepeace, M.Eng., P.Eng., who is a Qualified Person as defined under NI 43-101.
On behalf of the Board of Directors of
HIGHBANK RESOURCES LTD.
“Victor N. Bryant”
Victor N. Bryant,