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By Anonymous Western Copper Holdings Ltd. ("Western") has received a bankable feasibility study from Teck Cominco for the San Nicolas massive sulfide deposit in Zacatecas, Mexico. AMEC Simons Mining & Metals was the primary consultant for the preparation of the seven volume report. Western's interest, currently 21%, will range between 18.75% and 29.75%, once a production decision has been made, depending on various options available to Teck Cominco. The study is presently under review by Western as to its completeness, accuracy and assumptions.
The project proposed under the feasibility study is designed to treat 15,000 tonnes of ore per day, and over its projected twelve-year mine life will produce 2.1 billion pounds of zinc, 1.4 billion pounds of copper, 171,000 ounces of gold and 18 million ounces of silver. Sensitivity analysis demonstrates that the project as currently designed is most sensitive to changes in metal prices and freight costs.
Because zinc will be the primary metal produced during the first years of operation, it is expected that consideration will be given to a production decision at the time of projected higher zinc prices. Work is continuing in various areas toward optimizing the economics of the project.
The San Nicolas property is 60 kilometers southeast of the city of Zacatecas on the Mexican plateau, a high desert approximately 2,150 meters above sea level. The topography is essentially flat, the climate arid, and vegetation consists mainly of cacti and low bushes.
The feasibility study is based on conventional open pit mining of a volcanogenic massive sulfide deposit covered by an average 170-meter depth of overburden. The estimated mineral reserves included in the mine plan total 65 million tonnes with an average grade of 1.32% copper, 2.04% zinc, 0.53g/t gold and 32.1 g/t silver. These reserves include 1.9 million tonnes of proven mineralization with an average grade of 0.71% copper, 3.51% zinc, 0.94 g/t gold and 44.8 g/t silver; and 63.3 million tonnes of probable mineralization averaging 1.34% copper, 2.01% zinc, 0.52 g/t gold and 31.7 g/t silver. The sulfide body contains an upper high-grade zinc zone and a lower copper-rich zone and is open at depth. A significant tonnage of copper mineralization present below the defined mineral reserves could be accessed from the bottom of the pit after open pit mining is complete, if conditions warrant.
The feasibility study projects that ore will be mined and processed at a rate of 15,000 tonnes per day (5.5 million tonnes per year). Average production is estimated at about 230,000 tonnes per annum of copper concentrates with an average grade of 23.8% copper over the 12 year mine life; and 190,000 tonnes per annum of zinc concentrates with an average grade of 50% zinc over a ten year period. Overall copper and zinc recoveries are estimated to be 76.3% and 71.0%, respectively. Based on metallurgical results to date, gold and silver recoveries are low and will only contribute about 4% to the net smelter return.
The capital cost estimate of US$245.6 million includes a contingency of $26.8 million. Life of mine operating costs total US$8.53 per tonne milled ($2.18 mining, $5.99 milling and $0.36 G&A).
The major infrastructure required to develop San Nicolas is minimal. A three-kilometer access road is needed to link the project site with an existing paved highway, and a thirty-kilometer power line is required to connect the site to the existing power grid.
The report also identifies a number of massive sulfide targets within a ten-kilometer radius of San Nicolas that will require additional work. Limited drilling at three of these prospects encountered narrow intersections of massive to semi-massive sulfides and stringers, as well as strong hydrothermal alteration.
Western is a minerals exploration company with current focus on silver and base metals in the State of Zacatecas in central Mexico. In addition to the interest in San Nicolas, Western's principal asset is its 100% interest in the Penasquito silver project. Diamond drilling has indicated the potential for a large bulk tonnage silver deposit.
For detailed information on Penasquito, San Nicolas and other Western projects, please visit our web site at www.westerncopper.com.
ON BEHALF OF THE BOARD OF DIRECTORS
"Dale Corman"
Dale Corman
Chairman and Chief Executive Officer
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