Sure Thing. Love the Mill Terms!
Really, this is already known if the SEDAR reports were read, aside from the hiring of the M&A Firm.
Majestic's Songjiagou PA suggests $4.5-million project
2011-03-14 01:32 ET - News Release
Mr. Rod Husband reports
MAJESTIC GOLD - CORPORATE UPDATE NEWS RELEASE
Further to its news release in Stockwatch of Jan. 20, 2011, MajesticGold Corp.'s preliminary assessment (PA) report prepared by Wardrop, aTetra Tech company, for the Songjiagou gold project located in Shandongprovince, People's Republic of China is now posted on SEDAR.
Key elements of the report are as follows:
Economic parameters
Net present value of $525-million (U.S.) using a 10-per-cent discount rate;
Internal rate of return of 78.6 per cent;
Payback in 1.4 years;
Total gold production of 2,324,000 ounces (average 105,645 ounces per year) for life of mine;
Life-of-mine strip ratio 1.87 to 1 (waste to mineral inventory);
Mine-life of 22 years $973 (U.S.) per ounce for the base case gold price for this study.
Recommendations
Exploration
Wardrop recommends two phases of exploration designed to upgrade and expand the existing resource.
Phase I will focus on increasing the level of confidence in theshallower portion of the existing resource. The all-inclusive cost ofthis phase is estimated to be $1-million.Phase II is the extension of the phase I program. The objectives of thisprogram are to increase confidence in the deeper mineralization and toidentify additional resources both at depth and along strike. Theall-inclusive cost of the second program is estimated to be$3.5-million.
Engineering
Wardrop recommends further engineering studies, including:
Mining
Studies to formulate concrete decisions on village relocations studies to obtain higher-resolution topographic data;
A trade-off study to optimize the production rate;
Detailed geotechnical study to determine overall pit slopes, interramp slope angles, bench face angles, bench heights and catch bench widths;
Detailed hydrology and hydrological studies to determine design of dewatering systems;
Evaluation of proposed waste dump based on geochemical characterization of waste rock, geotechnical, hydrological and hydrogeological information;
Detailed drilling and blasting studies to determine penetration rates, effective drill patterns, powder factors and explosive mix for the different rock types;
Further engineering study to optimize the size of backhoes and haul truck fleets;
Mining loss and ore dilution studies.
Metallurgy and process
Conduct a detailed testing program to study metallurgical performance, including:
Flotation tests for optimization of primary grind size and reagents, the effect of various regrinding arrangements on gold recovery and concentrate grade;
Gravity concentration tests to recover nugget gold;
Mineralization hardness determination;
Gold extraction by cyanidation to confirm the smelting terms;
Product plan optimization to maximize smelting return;
Install on-line automatic control systems for optimizing the floatation plant efficiency;
Upgrade current assay laboratory instrumentations and establish a metallurgical lab;
Tailings storage facility;
The under-construction TSF will service approximately four to five years at the rate of 7,400 tonnes per day;
Further studies for the tailings disposal for the remaining life of mine should be conducted;
Conduct a comprehensive environmental impact assessment for the project based on the proposed process rate;
Further studies on the fresh water supply, particularly during the dry seasons, as the project is located in a relatively dry area.
Majestic is planning to commence phase I of the recommended explorationprogram as soon as practical. Wardrop's recommendations for theengineering programs will be included in the Chinese geology andengineering studies currently under way while concurrently pursuing themining licenses required for the process rate of 7,400 tonnes per day.
"We are pleased with Wardrop's findings and recommendations and areexcited to be moving our company toward becoming a significant goldproducer," stated Rod Husband, president of Majestic Gold.
The complete report is available at SEDAR and on Majestic's website.
Mike Hibbitts, PGeo, vice-president, development and exploration, and adirector of Majestic, has read and approved the information in this newsrelease.
The company is pleased to provide the following update on operations:
Financial information
For the first quarter ending Dec. 31, 2010, the company had currentassets of $6,148,255 ($4,920,964 cash) and a working capital position of$3,764,085 compared with current assets of $3,512,728 ($1,791,845 cash)and working capital deficiency of $975,436 as at year ended Sept. 30,2010.
Gold revenue from the Songjiagou mine for the three months ended Dec. 31, 2010, was $1,899,832 on the sale of 1,403.48 ounces.
Expenses for the three months ended Dec. 31, 2010, were $2,803,782,resulting in a net loss of $1,451,165 for the period. The increase inexpenses was primarily due to operation costs of $1,302,714 for thethree months ended Dec. 31, 2010, related to contract mining costs atthe Songjiagou mine.
General and administrative expenses were $1,493,909 for the three monthsended Dec. 31, 2010, which included $762,995 (MMK Financial $419,795and Russlan Fajsiev $343,200) in fees paid in association with thewarrant exercise of share purchase warrants totalling 95,540,140 forproceeds of $9,554,014. The fees were paid for services which includedthe introduction to original warrant holders of persons prepared toacquire and exercise outstanding warrants, negotiating the financialterms of the purchase of such warrants by such persons from the originalwarrant holders, and co-ordinating those sales and the subsequentexercise of the warrants.
On April 8, 2008, the company issued an unsecured note payable of$2-million to RAB as part of obtaining financing for the purpose ofmaking the company's final capital contribution to Yantai ZhongjiaMining Inc., the Chinese joint venture company that holds the rights tothe Songjiagou mineral property. During the three months ended Dec. 31,2010, the loan was fully repaid from the proceeds from the exercise ofwarrants.
Addendum to Dahedong joint venture agreement
The company has secured an addendum to the Feb. 11, 2010, agreementbetween its Chinese subsidiary (JVCo) and Dahedong smelter mill for theacquisition of an additional interest in the Songjiagou mine fromDahedong smelter mill and related matters. The addendum, which wassigned with effect from Feb. 11, 2010, outlines specific changes to theoriginal agreement as follows:
Pursuant to the profit sharing agreement made as of Sept. 1, 2010, it was agreed the company would advance further funds to JVCo by way of capital contributions to finance the expansion of operations including construction of the new mill;
Dahedong agreed that:
Dahedong will construct one new mill and related facilities with an output of approximately 6,000 tonnes per day at a budgeted cost of $50-million;
Dahedong shall complete the procedures for the acquisition and lease of land to be occupied by the new mill, obtain necessary approvals, complete filing procedures, and co-ordinate the supply of utilities such as water and electric power for the new mill;
Dahedong shall be responsible for 25 per cent of the costs incurred in the construction of the new mill including permitting, leasing and licensing costs, and JVCo shall be responsible for 75 per cent of construction costs;
Ownership of the new mill shall be vested in JVCo;
Dahedong will be responsible to pay all construction costs in the first instance;
JVCo will reimburse Dahedong for 100 per cent of JVCo's share of construction costs out of JVCo's share of net profits before any net profits are paid or distributed by JVCo to the company;
JVCo's share of construction costs will be paid only from JVCo's share of net profits so that no cost, expense or other liability will accrue to or be payable by JVCo otherwise than out of net profits;
JVCo will pay to Dahedong a financing fee equal to 10 per cent of JVCo's share of construction costs out of JVCo's share of net profits after JVCo's share of construction costs have been paid in full and before any net profits are paid or distributed by JVCo to the company;
Title to the new mill shall not be transferred to JVCo until JVCo has reimbursed Dahedong for JVCo's share of construction costs out of JVCo's share of net profits;
JVCO shall have the right, but not the obligation, to pay or reimburse Dahedong for all or any portion of JVCo's share of construction costs from other sources of funding which may be available to JVCo from time to time. This amendment will allow the project development to continue uninterrupted while Majestic seeks the required financing.
"This amendment demonstrates our partners commitment to both the projectand to Majestic," stated Mr. Husband, president of Majestic. "We lookforward to rapidly developing our project and increasing productionlevels."
The company is also pleased to announce that it has retained theservices of Vicarage Capital Ltd. of London, England, to advise it onM&A (mergers and acquisitions) issues with the objective ofnegotiating a merger with a larger company with greater financialresources or entering into a joint venture or other form of strategicalliance to advance its Songjiagou project, and to assist it innegotiations in those regards. The company has agreed to pay Vicarage atotal of $150,000 over the one-year term of the contract.
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