Dec 10, 2007 09:31 ET
Largo Reports Robust Economics From New Scoping Study for Maracas Vanadium-PGM Project (Brazil)
- Pre-tax IRR of 40.7% and pre-tax NPV of $212 million at a discount rate of 10% per year
- Estimated payback of 3 years, after tax cashflows of $683 million over an estimated production life of 26 years based on long term price of US$5 per lb for V2O5
- Measured and Indicated Resource at $5.00 per lb. V2O5 estimated to be 22.5 million tonnes grading 1.26%, including a very high-grade zone of 8.7 million tonnes grading 1.96% vanadium pentoxide.
- Expanded resource allows 10 years of milling of higher grade material (1.95% Vanadium Pentoxide; V2O5)
TORONTO, ONTARIO--(Marketwire - Dec. 10, 2007) - Largo Resources Ltd. (TSX VENTURE:LGO) is pleased to report that a new NI 43-101 compliant Preliminary Assessment (the "Revised Preliminary Assessment") has been completed on the Gulcari A deposit at its Maracas Vanadium-PGM property in Bahia, Brazil by Micon International Limited ("Micon") of Toronto, Ontario.
Micon has revised the Preliminary Assessment previously announced in a press release dated June 7, 2007 based on an updated block model that includes increased vanadium tonnages compared to the resource utilised in the original Preliminary Assessment and the inclusion of platinum group metals (PGMs) (see press release dated November 7, 2007).
The Revised Preliminary Assessment addresses the recovery of vanadium plus the production of feedstock for iron and steel production, as well as the potential to recover PGMs.
Projected Cash Flows
Based on an estimated initial capital investment of US$126.2 and the milling of 14,633,000 tonnes of open pit material at a diluted grade of 1.29 % vanadium pentoxide the project has a discounted payback of 3 years and generates cashflows of US$683 million over an estimated production life of 26 years. This results in a pre-tax IRR of 40.7% and an pre-tax NPV of US$212 at a discount rate of 10% per year. This scenario results in the production of approximately 5,000 tonnes per year (tpa) of 80% ferrovanadium alloy ("ferrovanadium") over the first 10 years of mine life after which production decreases to 2,000 tpa.(i)
Price forecasts for vanadium pentoxide have been provided by CRU of London, England. The base case view of the forecast is that the long-term price of vanadium pentoxide will stabilise at approximately $5.00 per lb.
Micon's analysis of the historical long-term relationship between the price of ferrovanadium and vanadium pentoxide has been used to establish a long-term average price for ferrovanadium on which the Revised Preliminary Assessment is based. The sensitivities of these outcomes to changes in vanadium price are summarised in the table below:
-------------------------------------------------------------------------Ferrovanadium Base Case at Sensitivity at Sensitivity at price US$23.08/kg US$28.85/kg US$34.62/kg-------------------------------------------------------------------------Vanadium pentoxide US$5.00/lb US$6.25/lb US$7.50/lb historical equivalent price-------------------------------------------------------------------------IRR (%) (pre tax) 40.7 52.0 65.5-------------------------------------------------------------------------NPV @10% (pretax) US$212 million US$331 million US$459 million-------------------------------------------------------------------------Undiscounted US$747 million US$1,112 million US$1,487 million cumulative cashflow (pre tax)-------------------------------------------------------------------------IRR (%) (after tax) 38.8 49.6 62.2-------------------------------------------------------------------------NPV @ 10% (after tax) US$192 million US$301 million US$417 million-------------------------------------------------------------------------Undiscounted US$683 million US$1,017 US$1,361 million cumulative cashflow (after tax)-------------------------------------------------------------------------
The current prices for ferrovanadium and vanadium pentoxide are approximately US$ 36/kg and US$ 7.50/lb respectively.
Projected revenues are expected to be comprised of the sale of ferrovanadium alloy as the primary product and by-product revenue from the sale of leached concentrate pellets as feedstock for iron and steel production.
Micon also identified an Upside Scenario where, markets permitting, the production rate of ferrovanadium was increased to 7,500 tpa. Based on the same resource base under this scenario, the IRR increased to 44.7% with an NPV of US$245 million at a discount rate of 10% per year after tax.
ESTIMATED MINERAL RESOURCES
As previously reported in Largo's press release dated November 7, 2007, the Measured and Indicated Mineral Resource at $5.00 per lb vanadium pentoxide consistent with a cut-off grade of 0.46 g/t has been estimated using sensitivity analysis predicated on Micon's revised resource, to be 22.5 million tonnes grading 1.27% vanadium pentoxide and 0.28 g/t combined platinum and palladium, including a high-grade zone of 8.4 million tonnes grading 2.0% vanadium pentoxide and 0.40 g/t platinum and palladium. The open pit mine design was based on a pit shell reflecting a vanadium pentoxide price of US$5.00 per lb. This pit would be mined in two phases. Results from mining only the first phase pit have been included in this assessment leaving potential to add further value to the project that is intended to be investigated at a more detailed phase of engineering. The portion of these mineral resources within the preliminary open pit mine design were estimated to be 14,696,000 tonnes at a diluted grade of 1.29% vanadium pentoxide(i).
Mining and Processing
The deposit outcrops on surface and is amenable to open pit mining. The waste rock scheduled for mining was estimated to be 49,077,000 tonnes, resulting in a strip ratio of 3.33:1. Open pit mining proceeds at a faster rate than milling in order to supply the mill with higher-than-average-grade feed for the first 10 years of the mine life. Excluding one year of pre-stripping, the open pit is mined out over 13 years. However, milling of the lower grade material continues for a further 13 years after completion of the milling of higher grade material. Largo believes there is an opportunity to further optimise the mine plan, through the addition of a second phase of mining to exploit the deeper parts of the resource. This strategy would require an increase in mining capital to allow adequate waste stripping and, although it is anticipated that this would add value to the base case presented here, further optimization of the mining plan at a more detailed phase of engineering is required before incorporating this second phase of mining into the project plan.
The process flowsheet has been based on work carried out by previous investigators in the late 1980s and early 1990s. The flowsheet comprises the following steps: comminution, concentration by magnetic separation, roasting, leaching, precipitation and production of ferrovanadium. Mill throughput is 581,000 tpa. Overall vanadium recovery is estimated to be 63.4%.
PGM Recovery
The recent drill program at the Gulcari "A" deposit focused on confirming the vanadium mineralization, not optimizing for platinum group elements. During the course of the drill program it became evident to the Company that there is a significant nugget effect leading to underestimation of the PGM grades in the core. This also became apparent when significantly higher PGM grades were evidenced in two bulk composite samples (1100 kilograms) that were prepared for metallurgical testwork and which on average assayed 0.64 g/t platinum and 0.21 g/t palladium, which is significantly higher than the PGM grades reported above. The PGMs are a work in progress and Largo continues to investigate their potential.
Micon has assessed the economics of the recovery of PGMs using a process flowsheet consisting of the production of a flotation concentrate followed by the PlatsolTM process, which had been demonstrated to be effective by SGS Lakefield (see Largo News Release of September 10, 2007). The overall platinum recovery for flotation and the PlatsolTM process combined prior to smelter deductions was estimated to be about 60%. This work was done on another bulk sample that assayed 0.74 g/t platinum and 0.19% palladium.
Based on the November 7, 2007 mineral resource, Micon determined the recovery of PGMs not to be economic under the scenario envisaged in the Revised Preliminary Assessment. However, Largo intends to continue investigations into the recovery of PGMs as it believes that potential exists for a positive economic contribution to be made by PGMs through better definition and understanding of their distribution.
Capital Costs
Capital costs associated with infrastructure, mining equipment and construction of the process plant are estimated to be US$126.6 million, including a 20% contingency of US$20.8 million. The estimate has an intended level of accuracy of +/-30%.
Conclusions and Recommendations
Micon's report notes that the average grade at Maracas "is high when compared to other known vanadium mines of similar geology currently in production." Micon concludes that the Maracas vanadium deposit could form the basis on which to build a viable ferrovanadium production operation. In its view, the potential for incremental value to be added through sales of leached concentrate pellets to the iron and steel industry warrants further investigation. Sales of by-product sodium sulphate, and the recovery of titanium in slags from iron-making, could also be investigated. These investigations have already been initiated by Largo.
Micon further recommends that feasibility and environmental studies be undertaken to advance the project.
Largo President and CEO Mark Brennan commented: "we are delighted with the results of the Revised Preliminary Assessment by Micon. I believe it rightly sets Maracas apart as a highly robust, world-class vanadium deposit. Key milestones that will be pursued in the weeks ahead include formal commencement of a bankable feasibility study and the conclusion of product marketing discussions with global partners, which I would characterize as advanced, leading to the potential conclusion of an off-take agreement (or agreements) for vanadium."
This press release was reviewed by Tim Mann, P.Eng., Largo's VP of Engineering and a Qualified Person as per National Instrument 43-101 who has the ability and authority to verify the authenticity and validity of information provided herein.
Mr. Christopher Jacobs, C.Eng., Mr. B. Terrence Hennessey, P. Geo., Mr. Richard Gowans, P. Eng., and Ms. Jane Spooner, P. Geo. of Micon are independent Qualified Persons responsible for the Preliminary Assessment. Mr. Christopher Jacobs has read and approved the contents of this press release.
(i)Cautionary Statement: Mineral resources that are not mineral reserves do not have demonstrated economic viability. This preliminary assessment is preliminary in nature; it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the results of the preliminary assessment will be realized.
About Largo
Largo Resources is a Canadian natural resource development and exploration company with two advanced stage projects: the Maracas Vanadium-PGM deposit in Brazil and the Northern Dancer Tungsten-Molybdenum deposit in the Yukon. Largo also has a large (60,000 hectare) land position and prospective gold exploration properties in Ecuador. The company is listed on the TSX Venture Exchange under the symbol LGO.
For more information please refer to Largo's website: www.largoresources.com.
Disclaimer
Certain statements contained in this news release may contain forward-looking information within the meaning of Canadian securities laws. Such forward-looking information is identified by words such as "estimates", "intends", "expects", "believes", "may", "will" and include, without limitation, statements regarding the company's plan of business operations, production levels and costs, estimates regarding mineral resources, projections regarding mineral prices, anticipated revenues and projected expenditures. There can be no assurance that such statements will prove to be accurate; actual results and future events could differ materially from such statements. Factors that could cause actual results to differ materially include, among others, metal prices, risks inherent in the mining industry, financing risks, labour risks, uncertainty of mineral resource estimates, equipment and supply risks, title disputes, regulatory risks and environmental concerns. Most of these factors are outside the control of the company. Investors are cautioned not to put undue reliance on forward-looking information. Except as otherwise required by applicable securities statutes or regulation, the company expressly disclaims any intent or obligation to update publicly forward-looking information, whether as a result of new information, future events or otherwise.
THE TSX VENTURE EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
For more information, please contact
Largo Resources Ltd.
Mark Brennan
President & CEO
(416) 861-5886
Email: mbrennan@largoresources.com
or
Largo Resources Ltd.
Tony LaMantia
VP, Corporate Development
(416) 861-5882
Email: tlamantia@largoresources.com
Website: www.largoresources.com
hoffe es sind keine Fehler drinnen 
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