International Enexco Announces Positive Pre-Feasibility Study for Contact Copper Project

International Enexco Announces Positive Pre-Feasibility Study for Contact 
Copper Project 
- 25.9% IRR at $3.20 per Pound Copper Price 
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 10/01/13 --
International Enexco Ltd. (TSX
VENTURE:IEC)(OTCQX:IEXCF)(FRANKFURT:I6E) (the "Company" or "Enexco")
is pleased to announce positive results of its independent National
Instrument 43-101-compliant updated Pre-Feasibility Study (PFS) of
the 100% owned Contact Copper Project, Nevada. The PFS was prepared
by Hard Rock Consultants, LLC (HRC) of Golden, Colorado. The full
technical report will be filed on SEDAR within 45 days of this news
release. The PFS describes the technical and economic viability of an
open-pit mine with recovery of copper by heap leaching with solvent
extraction and electrowinning (SX-EW). All amounts are stated in U.S.
dollars. 
Highlights of the PFS study are as follows: 


 
--  95% increase in copper contained in Proven and Probable Reserve 
--  Average annual production of 49.2 million pounds per year of copper
    cathode over 9.4 years 
--  Estimated cash cost of $1.73 per pound (includes mining, processing,
    property taxes and royalties) 
--  Before-tax NPV-8% of $136 million and IRR of 30.4% 
--  After-tax NPV-8% of $107 million and IRR of 25.9% 
--  Payback period of 3.0 years before-tax and 3.4 years after-tax 
--  Economic results support advancing the project to a feasibility study

 
"Completion of this PFS is a critical milestone for Enexco," stated
Arnold Armstrong, President and CEO of International Enexco Ltd.
"Last year we did a significant amount of drilling which followed a
property acquisition we made in 2011. That work culminated in a new
resource estimate last fall. Along with changes in economic
conditions and scope of the project, an update of the pre-feasibility
study we completed in 2010 was required before advancing the project
further. We are pleased with the results which demonstrate the
viability of the Contact Copper Project. While the results are
positive, we believe we still can enhance the project further,
including the potential to define additional resources and extend the
mine life. We will continue to focus on these aspects as we work
towards a feasibility study and permitting." 
The Contact Copper Project 
Enexco has held an interest at Contact since the Company was founded
in 1987. Enexco now holds a 100% interest in about 7,000 acres in
patented and unpatented mining claims, of which a portion was
acquired in a 2011 land deal with Allied Nevada Gold Corp(1).  
Copper mineralization has been defined by drilling for 7,500 feet in
length and 3,000 feet in width along an east-west trend. The
mineralization occurs in and around quartz veins within granodiorite,
forming zones of vein and disseminated copper oxides tens to hundreds
of feet in width and extending to depths greater than 1,000 feet. An
updated resource estimate(2) was completed in 2012 using the results
of drilling since the land deal with Allied Nevada Gold Corp (2012 NI
43-101 Technical Report on the Contact Copper Project, Nevada, USA by
3L Resources, Ltd (2012 RE)). Drilling on the property now totals
254,998 feet in 329 core and reverse circulation holes.  
Pre-Feasibility Study Update 
The PFS updates the resource estimate in the 2012 RE, and a previous
reserve estimate and economic analysis in the 2010 NI 43-101
Technical Report Pre-feasibility Study Update for the Contact Copper
Project by Gustavson Associates(3). The current estimates utilize the
same database and parameters as the 2012 RE with minor adjustments to
geologic boundaries. Mineral resources in the 2012 RE were global
estimates, and were unconstrained by pit limits. In the PFS, the
updated NI 43-101 compliant Mineral Resource estimate is constrained
by a pit based on a copper price of $4.00 per pound(4) with costs and
recoveries in the PFS at a calculated cut-off of 0.07% copper (Cu).
The Measured and Indicated Mineral Resources is inclusive of those
mineral resources modified to produce the Mineral Reserves.  
The updated NI 43-101 compliant Mineral Resource estimate in the PFS
contains 75 million tons at 0.21% Cu (314 million pounds of copper)
in the measured category, and 138 million tons at 0.19% Cu (518
million pounds of copper) in the indicated category, for a total
Measured and Indicated Resource of 213 million tons at 0.20% Cu (832
million pounds of copper) at a 0.07% Cu cut-off. The resource
estimate also has 13 million tons of 0.20% Cu (52 million pounds of
copper) in the inferred category. Inferred mineral resources are
resources that are normally too speculative to be considered as
mineral reserves. There is also no certainty that inferred resources
will be converted to measured and indicated resources through
drilling, or into mineral reserves once economic considerations are
applied. 


 
----------------------------------------------------------------------------
                Mineral Resource Estimate at 0.07% Cu Cut-off               
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Category                                                  Tons     Pounds Cu
                                            Cu %         (000)         (000)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Measured                                    0.21        75,473       313,968
----------------------------------------------------------------------------
Indicated                                   0.19       137,640       517,526
----------------------------------------------------------------------------
Total Measured + Indicated                  0.20       213,113       831,494
----------------------------------------------------------------------------
Inferred                                    0.20        12,982        52,188
----------------------------------------------------------------------------

 
The Mineral Reserve in the PFS was determined from an optimized pit
using operating cost and recovery values from the PFS. Overall pit
slopes were varied according to the results of geotechnical study,
and ranged from 40 to 52 degrees. Only measured or indicated blocks
were used in the optimization, and inferred blocks were treated as
waste. The ultimate pit is divided into three phases for the
production schedule.  
The NI 43-101 compliant Mineral Reserve estimate in the PFS contains
58 million tons of 0.23% Cu (263 million pounds of copper) in the
proven category and 83 million tons of 0.21 % Cu in the probable
category (348 million pounds of copper) for a total Proven and
Probable Reserve of 141 million tons of 0.22% Cu (612 million pounds
of copper) at a 0.07% Cu cut-off grade. The reserves are extractable
by surface mining methods at an overall waste-to-ore ratio of 2.3:1.
No inferred resources were included in the Proven and Probable
Reserve or in the economic analysis. 


 
----------------------------------------------------------------------------
                Mineral Reserve Estimate at 0.07% Cu Cut-off                
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Category                                                  Tons     Pounds Cu
                                            Cu %         (000)         (000)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Proven                                      0.23        57,678       263,249
----------------------------------------------------------------------------
Probable                                    0.21        83,416       348,499
----------------------------------------------------------------------------
Total Proven + Probable                     0.22       141,094       611,748
----------------------------------------------------------------------------

 
Metallurgical data, including previously reported column leach
tests(5), were reviewed by Dr. Deepak Malhotra of Resource
Development, Inc. Copper extractions were included in the block model
by material type and resulted in a projected overall copper
extraction of approximately 76% for the production schedule. From the
data, it was determined the ore requires crushing to minus-1-inch
size and requires no pre-curing with strong acid. From column tests
and neutralization potential data, acid consumption was calculated at
17 pounds per ton of ore. Further test work is needed to confirm
copper recovery, acid consumption and leaching characteristics for a
feasibility study. 
Capital costs were developed by HRC for the major project areas. The
mining capital is developed from a major equipment list with quotes
from manufacturers, which includes lease-purchase of the initial
mining fleet. The heap leach pad capital is developed from estimates
by MWH Global, Inc. who designed the heap leach pad and related
facilities. The plant capital is developed from equipment quotes,
factored estimates, and comparisons with other recently constructed
projects. The initial capital costs are estimated at $188.9 million,
including indirect costs and contingency. With working capital,
sustaining costs and reclamation, the total life-of-mine capital
costs are estimated at $331 million. Operating costs were estimated
from schedules of labor, materials and supplies over the project
life, with ore production ranging up to 57,000 tons per day.
Including property taxes and royalties, operating costs are estimated
at $5.68 per ton of ore, or $1.73 per pound of copper produced. The
required labor force is estimated to range from 235 to 309 employees. 


 
----------------------------------------------------------------------------
Initial Capital Cost                                              Cost (000)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Site Preparation                                                 $     2,688
----------------------------------------------------------------------------
Mining Equipment                                                      50,332
----------------------------------------------------------------------------
Crushing & Conveying                                                  18,371
----------------------------------------------------------------------------
Pad & Ponds                                                           26,146
----------------------------------------------------------------------------
SX-EW Plant, Infrastructure & First Fills                             49,921
----------------------------------------------------------------------------
Direct Costs Total                                               $   147,459
----------------------------------------------------------------------------
Indirect Costs Total                                             $    41,486
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total Initial Capital                                            $   188,945
----------------------------------------------------------------------------
Indirect costs include EPCM, freight and mobilization, owner's costs and    
 contingencies of 10% on mine equipment and 20% on all other costs.         
                                                                            
----------------------------------------------------------------------------
Operating Cost                                            $/lb Cu  $/ton Ore
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Mining                                                       0.92       3.01
----------------------------------------------------------------------------
Processing                                                   0.70       2.31
----------------------------------------------------------------------------
G&A                                                          0.06       0.21
----------------------------------------------------------------------------
Property Tax                                                 0.04       0.12
----------------------------------------------------------------------------
Cash Operating Costs                                         1.72       5.65
----------------------------------------------------------------------------
Royalties                                                    0.01       0.03
----------------------------------------------------------------------------
Total                                                  $     1.73 $     5.68
----------------------------------------------------------------------------
Cost basis includes sulfuric acid, at an estimated delivered cost of $120   
 per ton, fuel, at $3.00 per gallon, and electrical power, at $0.05/kWh.    

 
The economic analysis by HRC is developed from the production
schedule using a copper price of $3.20 per pound. Ore production to
the heap leach pad is projected at an initial rate of 30,000 tons per
day, increasing to 57,000 tons per day by Year 6 of operation. Copper
production from the SX-EW plant is projected to average 49.2 million
pounds per year over a 9.4 year mine life, for total production of
462 million pounds of copper cathode. U.S. corporate, state and local
taxes are applied to the after-tax analysis. Sensitivity of the
project to varying copper prices is shown in the accompanying table. 


 
----------------------------------------------------------------------------
Project Valuation                                  Before-tax     After-tax 
                                                     Analysis      Analysis 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total Cash flow (millions)                       $      303.9  $      255.6 
----------------------------------------------------------------------------
NPV @ 5.0%; (millions)                           $      183.8  $      149.1 
----------------------------------------------------------------------------
NPV @ 8.0%; (millions)                           $      135.5  $      106.7 
----------------------------------------------------------------------------
NPV @ 10.0%; (millions)                          $      110.1  $       84.5 
----------------------------------------------------------------------------
Internal Rate of Return                                  30.4%         25.9%
----------------------------------------------------------------------------
Payback Period                                            3.0           3.4 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
                         Sensitivity to Copper Price                        
----------------------------------------------------------------------------
Cu Price                                After-tax     After-tax      Payback
                                       NPV @ 8.0%           IRR        Years
----------------------------------------------------------------------------
$2.75                             $          14.5          10.6%         5.1
----------------------------------------------------------------------------
$2.90                             $          45.3          15.9%         4.1
----------------------------------------------------------------------------
$3.05                             $          76.0          21.0%         3.7
----------------------------------------------------------------------------
$3.20                             $         106.6          25.9%         3.4
----------------------------------------------------------------------------
$3.35                             $         137.2          30.6%         3.1
----------------------------------------------------------------------------
$3.50                             $         167.5          35.2%         2.7
----------------------------------------------------------------------------

 
HRC concludes the economic analysis supports advancing the project to
a feasibility study. A number of areas are noted to enhance the
project further, including extending the mine life by defining
additional copper oxide resources on the property. The two most
significant targets identified thus far by Enexco are the Copper
Ridge and the New York prospects, both are untested by drilling.  
William Willoughby, PhD, P.E. is the Qualified Person with Enexco
responsible for the content of this news release. The Qualified
Persons for the PFS for the Contact Copper Project are Jeff
Choquette, P.E., Principal Mining Engineer, MMSA-QP, Terre Lane,
Consulting Mining Engineer and QP, MMSA-QP, Zachary J. Black,
Principal Resource Geologist and QP SME-RM No. 4156858RM, and Deepak
Malhotra, PhD, Resource Development, Inc., MMSA-QP. 
About International Enexco Ltd. 
International Enexco Ltd. is a North American exploration and
development company focused on the Contact Copper Project in Nevada
and the Mann Lake and Bachman Lake Uranium Projects in Saskatchewan's
prolific Athabasca basin. The Mann Lake project is a joint venture
with Cameco (52.5%) as operator, Enexco (30%) and AREVA (17.5%), two
of the world's largest uranium companies. The Bachman Lake project is
a joint venture between Denison Mines Corp. (80%) as operator, and
Enexco (20%). 
On behalf of the Board of Directors 
G. Arnold Armstrong, President & CEO 
Certain information regarding the Company including management's
assessment of future plans and operations, may constitute
forward-looking statements under applicable securities laws and
necessarily involve risks associated with mining exploration and
development, volatility of prices, currency fluctuations, imprecision
of resource estimates, environmental and permitting risks, access to
labour and services, competition from other companies and ability to
access sufficient capital. As a consequence, actual results may
differ materially from those anticipated in the forward-looking
statements. A feasibility study has not been completed and there is
no certainty the disclosed targets will be reached nor that the
proposed operations will be economically viable. The TSX Venture
Exchange or its Regulation Services Provider have not reviewed and do
not accept responsibility for the adequacy or accuracy of the
contents of this news release, which has been prepared by management.
We seek safe harbour. 
(1) See Enexco News Release
http://www.enexco.ca/s/news_releases.asp?ReportID=483973.  
(2) See Enexco News Release
http://www.enexco.ca/s/news_releases.asp?ReportID=558578. 
(3) See Enexco News Release
http://www.enexco.ca/s/news_releases.asp?ReportID=483999. 
(4) The copper price of $4.00 per pound was selected for definition
of mineral resources as the copper price under which the deposit has
reasonable prospects for economic extraction. The copper price of
$3.20 was selected for definition of mineral reserves as the copper
price over the duration of the project life, representing 98% of the
5-year trailing price for copper.  
(5) See Enexco News Release
http://www.enexco.ca/s/news_releases.asp?ReportID=548364.
Contacts:
International Enexco Ltd.
Spiros Cacos
+1 604 669 8368
+1 604 642-3691 (FAX)
info@enexco.ca
www.enexco.ca
 
 
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