TIDMUGY
SYMBOLS: UME (TSXV), UGY (AIM)
Uruguay Mineral Exploration Inc. Announces Positive Prefeasibility Study Results for Arenal Deeps underground mining
Uruguay Mineral Exploration Inc. ("UME" or the "Company"), the South America focused gold production and exploration company, announces today results from the prefeasibility study ("PFS") of underground mining at the Arenal Deeps deposit at its San Gregorio operation. The independent PFS was undertaken by Golder Associates S.A. ("Golder") of Santiago, Chile and was based only on drill results up to April 7, 2009. The base case financial results of the PFS are:
Gold Price $US 740 per ounce
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Total capital $US 5.8 million
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NPV at 10% $US 7.7 million
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IRR 41%
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David Fowler, CEO of UME, commented, "The Arenal Deeps prefeasibility study was based on data available as at April 7, 2009, and it excludes the holes drilled since then as well as taking a cautious view of some potential benefits that should be realized. Even so the technical and financial results of the prefeasibility study are very positive. They provide confidence that the mine life at San Gregorio will be extended andreinforce thepotential for further underground discovery in the rest of the San Gregorio district. The infill drilling programme will continue through to January 2010, and UME believes that when all the drilling and the final feasibility study have been completed the grade of the Arenal Deeps resource will improve and the NPV of the project will show benefits considerably better than have been calculated to date. Results of the last four drill holes have been separately announced today."
The PFS is assumed to have a level of confidence of +/- 25% and includes the following assumptions:
-- Gold price US$ 740 /oz per ounce
-- Underground mine operating costs of $US 18 per tonne have been
developed from existing consumable and personnel costs. The mining
method selected for this study was sublevel open stoping.
-- Existing site costs have been used for Processing, G&A, Transport and
Refining, Royalties and Taxes for the PFS averages.
-- Average cost per ounce for the life of mine was $US 570.
The results of the PFS do not take account of:
-- Any drill results obtained since April 7, 2009. The PFS was based upon
the geological resource for Arenal Deeps as estimated by Golder and
disclosed by UME on April 7, 2009. The resource model used to
calculate this reserve has NOT been updated for drill holes ALDD103 to
ALDD111 disclosed in press releases dated July 8, 2009 and August 4,
2009;
-- Mining from resources outside of the floating stope envelope, by Cut
and Fill methods. A mine plan that incorporates a mixture of sublevel
open stoping mining and Cut and Fill methods would maximize reserves;
-- Mining a number of small isolated mineralized bodies, for example the
mineralization directly below the open pit. Mining of these bodies
will be reviewed as part of the feasibility study, with potential to
increase reserves;
-- The benefits of any silver that will be recovered during the process;
and
-- Carry forward tax losses that are expected to be available.
Reserves used for the PFS estimated using open stope design, diluted and mine recovered are as follows:
Reserve Category Tonnes Au Grade (g/t) Contained Au Oz
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Proven 140,278 1.86 8,389
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Probable 1,576,184 1.95 98,817
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Proven + Probable 1,716,462 1.94 107,206
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Preliminary geomechanical and hydrogeological test work was used to determine appropriate underground mining methods and dewatering requirements. No additional requirement for the existing processing facilities was investigated and the metallurgical response was assumed to be identical to that of the Arenal ore body processed from the exhausted open pit.
The table below outlines the sensitivity of PFS economics to various price scenarios:
Gold Price (US$) NPV at 10% (US$M) IRR (%)
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592 -0.3 8.8
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666 3.9 26.9
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740 7.7 41.3
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814 11.8 57.4
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888 15.7 71.7
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Application of the PFS development schedule to the current status of the project results in the following timeline:
Activity Timing
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Definition drilling July 2009 to January 2010
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Resource modeling February 2010
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Bankable Feasibility Study June 2010
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Commence Development July 2010
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Open Stope production starts February 2011
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Open Stope in full production May 2012
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Opportunities to accelerate the development timetable are being considered as part of feasibility work.
Qualified Person's Statement
The technical information presented in this press release has been reviewed and verified by Mr. John Sadek, Vice President Operations and a Mining Engineer, Dr. Marcelo Godoy, PhD,MSc,BSc, Principal Mining Engineer of Golder Associates S.A and Juan Pablo Gonzalez, MBA, BSc, Senior Mining Engineer and Associate of Golder Associates S.A
Mr. Sadek has a Bachelor of Engineering (Mining) from the University of Sydney and is a member of the AusIMM and SME. He has over 20 years of international experience in mining. Mr Sadek was the qualified Person for the purposes of the AIM Guidance Note on Mining, Oil and Gas Companies dated March 2006.
Dr. Marcelo Godoy, PhD,MSc,BSc, Principal Mining Engineer of Golder Associates S.A., member of the AusIMM and SME with 14 years international experience in the mining industry. Dr. Godoy was the qualified person that has supervised the preparation of this Pre-feasibility Study.
Juan Pablo Gonzalez, MBA, BSc, Senior Mining Engineer and Associate of Golder Associates S.A. member of the AusIMM and IIMCH with 17 years international experience in the mining industry. Mr. Juan Pablo was the qualified person responsible for the underground reserve estimate.
Forward Looking Statements
All statements, other than statements of historical fact, contained or incorporated by reference in this news release, including any information as to the future financial or operating performance of the Company, constitute "forward-looking statements" within the meaning of certain securities laws, including the "safe harbour" provisions of the Securities Act (Ontario) and the United States Private Securities Litigation Reform Act of 1995 and are based on expectations estimates and projections as of the date of this news release. There can be no assurance that such statements will prove to be accurate, such statements are subject to significant risks and uncertainties, and actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements include, without limitation success of exploration activities; permitting time lines; the failure of plant; equipment or processes to operate as anticipated; accidents; labour disputes; requirements for additional capital title disputes or claims and limitations on insurance coverage. The Company disclaims any intention or obligation to update or revise any forward looking statements whether as a result of new information, future events and such forward-looking statements, except to the extent required by applicable law.
ENDS
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Editors' note: Uruguay Mineral Exploration Inc. is a gold producer and exploration company focused on identifying and developing mineral opportunities in Latin America. UME is a fully integrated mining company, possessing the skills necessary to explore and develop its discoveries. The Company operates the only producing gold mine in Uruguay (San Gregorio), and is also the leading mineral exploration company in Uruguay having assembled an exploration portfolio based on gold, base metals and diamond prospects.
Uruguay Mineral Exploration Inc. is quoted in Canada (TSXV) and London (AIM) and Matrix Corporate Capital LLP is its Nominated Adviser and Broker.
For further information, please contact:
Uruguay Mineral Exploration IncTony Shearer, Chairman: +44 20 7602-1570; tonyshearer@btinternet.comDavid Fowler, CEO: 598 2 6016354; urumin@ume.com.uy
Matrix Corporate Capital LLPLouis Castro, +44 (0) 203 206 7209Tim Graham, +44 (0) 203 206 7206
Investor Relations in North AmericaSusan Borinelli, Breakstone Group: +1 646-330-5907; sborinelli@breakstone-group.com
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