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Outlook
Based upon first quarter results and the 2009 mine plan, Casa Berardi remains on target to produce between 150,000 -- 155,000 ounces of gold at a total cash cost of approximately US$390 per ounce, using a Cad$/US$ exchange rate of 1.20.
Sustaining development costs and plant and equipment upgrades at Casa Berardi are estimated to total $26 million in 2009.
The Company's strong financial position at March 31, 2009, together with the net proceeds of $47.4 million from equity financing in April 2009, and the operating cash flows that are anticipated from Casa Berardi over the next twelve months are expected to allow Aurizon to meet its financial obligations as they become due and also fund its planned exploration and capital programs.
Operations
|
2009 |
2008 |
2007 |
|
Q1 |
|
|
Operating results |
|
|
|
Tonnes milled |
167,484 |
654,397 |
545,258 |
Grade -- grams/tonne |
7.93 |
8.16 |
9.78 |
Mill recoveries - % |
91.3% |
92.5% |
93.0% |
Gold Production -- ounces |
38,966 |
158,830 |
159,469 |
Gold sold -- ounces |
37,400 |
159,404 |
160,600 |
Per ounce data -- US$ |
|
|
|
Average realized gold price |
$888 |
$847 |
$696 |
Total cash costs 1 |
$379 |
$399 |
$331 |
Amortization 2 |
$183 |
$209 |
$172 |
Total production costs 3 |
$562 |
$608 |
$503 |
Table footnotes:
- Operating costs net of by-product silver credits, divided by ounces sold, and divided by the average Bank of Canada Cad$/US$ rate.
- Depreciation, depletion and accretion expenses divided by ounces sold, and divided by the average Bank of Canada Cad$/US$ rate.
- Total cash costs plus depreciation, depletion and accretion expenses per ounce of gold sold.
First Quarter 2009
CASA BERARDI
Casa Berardi produced 38,966 ounces of gold in the first quarter of 2009, of which 37,400 ounces were sold at an average price US$888 per ounce. Since commissioning the mill in November 2006, Casa Berardi has produced 374,996 ounces of gold.
Ore throughput in the mill during the first quarter of 2009 increased to 167,484 tonnes from 163,694 tonnes in the same period of 2008 as a stable daily production rate of 1,860 tonnes per day was achieved. An average ore grade of 7.9 grams/tonne was achieved in the first quarter of 2009, matching the ore grades planned for 2009. Mill recoveries averaged 91.3% in the first quarter of 2009. This compares to ore grades of 8.6 grams/tonne and mill recoveries of 92.6% in the first quarter of 2008.
Ore feed is now provided by three different zones including the 113 Zone, the NW Zone, and the newly developed Lower Inter Zone, thereby improving flexibility in the mining operations.
Total cash costs, on the basis of gold sold, were US$379 per ounce in the first quarter of 2009, 3% lower than the 2009 plan, and compared to US$422 per ounce in the first quarter of 2008. The weakness of the Canadian dollar in the first quarter of 2009 was the primary factor for the lower unit costs. Unit mining costs in the first quarter of 2009 were $108 per tonne, 2% lower than the same quarter of 2008 costs of $110 per tonne. Operating profit margin per ounce increased 12% to US$509 per ounce from US$455 per ounce in the same quarter of 2008.
Exploration for 2009
Aurizon intends to utilize its strong cash flow to upgrade mineral resources to mineral reserves in order to extend and optimize the current mine plan. A total of $15 million will be initially invested at Casa Berardi, including $7.0 million on underground development and infrastructure, and $8.0 million on approximately 56,000 metres of underground drilling.
Exploration will focus on the completion of the exploration drift at the 810 metre level of the West mine, and approximately 14,000 metres of drilling, to test the depth extension of Zone 113 and the continuity and extension of Zone 113 and the continuity and extension of Zones 118 and 123-South. The 810 metre level project will provide an underground access for drilling on the 118-120, 122 and the newly discovered 123 zones. Work on the one kilometer long exploration drift is progressing and two drill rigs are currently active at the western end of the drift.
In addition, a new underground and surface drill progam has recently been approved to initiate exploration along the west extension of the Lower Inter Zone, along the Principal Zone and along the dip extension of the East Mine with the objective of delineating inferred and indicated minerals resources.
Finally, approximately 21,000 metres of infill drilling will be performed on the north and upper limits of the Lower Inter Zone, the eastern part of Zone 113, and Zones 109 and 115.
In 2009, Aurizon intends to complete a feasibility study to finalize the technical parameters and related costs of mining the East mine crown pillar by open pit. In addition, Aurizon intends to initiate a preliminary assessment report investigating the relative risks and opportunities of mining the Principal zone crown pillar by open pit.
Aurizon granted Lake Shore Gold Corp. (Lake Shore) an option to earn a 50% interest in Aurizon's large land position surrounding the Casa Berardi Mine ("Casa Berardi Exploration Property") by incurring exploration expenditures of $5 million over a five-year period.
Lake Shore has announced results from the first phase of its 2008 drill program at Casa Berardi, which included the discovery of a new gold zone, with the best intercept being 13.03 g/t Au over 6.45 metres within a broader intersection of 8.58 g/t Au over 10.4 metres at a vertical depth of 247 metres. The new intercept is open both at depth and laterally and is located approximately 7.5 kilometres to the east of the Casa Berardi processing facility.
Casa Berardi Reserves and Resources - December 31, 2008
The Casa Berardi gold deposits are located along a five kilometre east-west mineralized corridor. They include the East and West mines, and the Principal Zone. The Casa Berardi gold deposits can be classified as an Archean sedimentary-hosted lode gold deposit. The gold mineralization is superimposed on a continuous graphitic mudrock unit corresponding to the Casa Berardi Fault plane. Gold occurs mainly south of the Casa Berardi Fault, and sometimes on both sides of the fault.
The mine has produced over 1.0 million recovered gold ounces since commencing production in 1986, including 375,000 recovered ounces since Aurizon re-commissioned production in December 2006.
Scott Wilson Roscoe Postle Associates Inc. (Scott Wilson RPA) were commissioned by Aurizon to prepare mineral reserve and mineral resource estimates on the different zones of the property, in accordance with the Standards of Disclosure for Mineral Projects as defined by N1 43-101.
CASA BERARDI MINE
MINERAL RESERVE ESTIMATE
As at December 31, |
|
|
2008 |
2007 |
|
|
Tonnes
|
Grade
Grams/tonne |
Gold Ounces |
Tonnes
|
Grade
Grams/tonne |
Ounces
of gold |
Northwest (NW) |
83,000 |
5.4 |
14,400 |
116,000 |
6.1 |
23,000 |
113 |
709,000 |
8.7 |
199,200 |
780,000 |
8.7 |
218,000 |
East mine -- Crown Pillar |
407,000 |
4.2 |
54,400 |
84,000 |
3.9 |
11,000 |
East mine - Underground |
88,000 |
6.3 |
17,800 |
- |
- |
- |
Total Proven Reserves |
1,287,000 |
6.9 |
285,900 |
981,000 |
8.0 |
252,000 |
|
|
|
|
|
|
|
Lower Inter (LI) |
953,000 |
8.9 |
273,000 |
857,000 |
9.5 |
262,000 |
North West (NW) |
- |
- |
- |
- |
- |
- |
South West (SW) |
72,000 |
4.6 |
10,700 |
5,000 |
5.8 |
1,000 |
109 |
68,000 |
5.4 |
11,700 |
43,000 |
6.8 |
10,000 |
111 |
37,000 |
5.4 |
6,400 |
28,000 |
5.6 |
5,000 |
113 |
993,000 |
9.4 |
298,400 |
843,000 |
12.1 |
329,000 |
115 |
30,000 |
11.8 |
11,400 |
37,000 |
12.0 |
14,000 |
117S |
19,000 |
7.0 |
4,300 |
- |
- |
- |
East Mine - Crown Pillar |
228,000 |
3.7 |
26,800 |
206,000 |
5.2 |
34,000 |
East Mine - Underground |
63,000 |
8.2 |
16,500 |
- |
- |
- |
Low-Grade Development |
87,000 |
3.9 |
10,900 |
89,000 |
3.9 |
11,000 |
Total Probable Reserves |
2,550,000 |
8.2 |
670,100 |
2,106,000 |
9.8 |
666,000 |
Total Proven and Probable Reserves |
3,836,000 |
7.8 |
956,000 |
3,087,000 |
9.3 |
918,000 |
Notes:
- CIM definitions were followed for Mineral Reserves.
- Mineral Reserves are estimated at a cut-off grade of 4.4 g/t Au for underground, and 1.2 g/t Au for open pit.
- Mineral Reserves are estimated using an average long-term gold price of US$750 per ounce and a US$/C$ exchange rate of 1:1.10.
- A minimum mining width of three metres was used.
- Totals may not represent the sum of the parts due to rounding.
Proven and Probable Mineral Reserves have been renewed as a result of:
Additional drilling at the East Mine crown pillar and re-assessment of the block model in the underground section above the 300 metre level have resulted in a gain of mineral reserves at the East Mine. The East Mine crown pillar represents 17% of the total reserves at Casa Berardi.
At the West Mine, the gain in mineral reserves from Zones 109, 117S, Lower Inter and South West, have been compensated by 2008 mine production in Zones 113 and North West, and a re-assessment of the block model in Zone 115, resulting in an overall underground reserve renewal in 2008.
A 16% decrease in grade is a result of the addition of low grade ore from the East Mine crown pillar and the re-assessment of the cut-off grade, due to higher gold prices.
Mineral reserves are estimated using an average long-term gold price of US$750 per ounce, compared to US$581 per ounce in 2007, and a US$/C$ exchange of 1:1.0. A minimum cut off grade of 4.4 grams of gold per tonne was used, based on long term operating costs and gold prices, for the underground zones; and 1.2 grams of gold per tonne for the open pit. In 2007, the minimum cut off grade was 5.1 grams of gold per tonne.
As the mining industry is currently experiencing gold prices that are higher than US$750 per ounce, the operations periodically mine ore that is not included in mineral reserves as the grades are lower than the minimum cut-off grades.
Reconciliation of Casa Berardi Mineral Reserves
Reconciliations between the mineral reserve estimates and the mill production averaged 99.5% for the tonnage and 105% for the grade.
|
Tonnes |
Gold ounces |
Mineral Reserves -- December 31, 2007 |
3,087,000 |
918,000 |
Resources conversion (1) |
754,000 |
114,000 |
Mining depletion (2) |
(655,000) |
(171,000) |
Mining Cost (3) |
650,000 |
95,000 |
Mineral Reserves -- December 31, 2008 |
3,836,000 |
956,000 |
Notes to the reconciliation of mineral reserves:
- Resource conversion resulted in the addition of 114,000 ounces to mineral reserves.
- Mining depletion represents mineral reserves mined and processed in 2008 before milling recoveries and, therefore, does not correspond to the actual 2008 gold production of 158,800 ounces.
- Mining costs represent an adjustment to the cut off grade as a result of changes in the three year moving average gold price and forecast operating costs.
Mine Plan for Mineral Reserves
- The mine plan for the current mineral reserves totals 3.8 million tonnes of ore, grading 7.8 grams of gold per tonne, to be mined over five years (2009 to 2013) from 113 Zone, Lower Inter Zone, and six smaller West Mine zones, as well as the open pit and underground production from the East Mine.
- Development was compiled by zone, measured from mine plans, and scheduled monthly for 2009, and quarterly thereafter. Development requirements average 20 metres per day for the next three years, and then decline rapidly, as most accesses and infrastructure will be completed.
- Production was compiled by stope, and scheduled quarterly by zone. The majority of the production tonnage will come from the 113 and the Lower Inter zones, together making up 85% of underground reserves.
CASA BERARDI MINE
MINERAL RESOURCE ESTIMATES
As at December 31, |
|
2008 |
2007 |
|
Tonnes |
Grade
Grams/tonne |
Gold
Ounces |
Tonnes |
Grade
Grams/tonne |
Gold
Ounces |
Measured Mineral Resources |
|
|
|
|
|
|
Zone 113 |
160,000 |
7.93 |
41,000 |
- |
- |
- |
North West |
42,000 |
6.48 |
9,000 |
- |
- |
- |
East Mine Crown Pillar |
310,000 |
3.11 |
31,000 |
- |
- |
- |
East Mine Underground |
216,000 |
6.55 |
46,000 |
299,000 |
6.84 |
66,000 |
Total Measured Resources |
728,000 |
5.39 |
126,000 |
299,000 |
6.84 |
66,000 |
Indicated Mineral Resources |
|
|
|
|
|
|
Zone Lower Inter |
122,000 |
6.04 |
24,000 |
103,000 |
19.86 |
66,000 |
Zone North West |
- |
- |
- |
24,000 |
4.19 |
3,000 |
Zone South West |
300,000 |
4.66 |
45,000 |
579,000 |
4.59 |
85,000 |
Zone Inter |
124,000 |
4.43 |
18,000 |
124,000 |
4.43 |
18,000 |
Zone 109 |
- |
- |
- |
19,000 |
11.19 |
7,000 |
Zone 111 |
52,000 |
5.24 |
9,000 |
52,000 |
5.24 |
9,000 |
Zone 113 |
182,000 |
5.24 |
31,000 |
681,000 |
3.89 |
85,000 |
Zone 115 |
112,000 |
14.68 |
53,000 |
24,000 |
15.28 |
12,000 |
Zone 117S |
- |
- |
- |
18,000 |
8.99 |
5,000 |
Zone 118 |
230,000 |
7.04 |
52,000 |
230,000 |
7.04 |
52,000 |
Principal Crown Pillar |
1,785,000 |
6.19 |
355,000 |
339,000 |
5.51 |
60,000 |
Principal Underground |
837,000 |
6.38 |
172,000 |
316,000 |
7.01 |
71,000 |
East Mine Crown Pillar |
399,000 |
2.63 |
34,000 |
667,000 |
4.03 |
86,000 |
East Mine Underground |
90,000 |
6.27 |
18,000 |
138,000 |
8.20 |
36,000 |
Total Indicated Resources |
4,234,000 |
5.95 |
810,000 |
3,314,000 |
5.60 |
596,000 |
Total Measured & Indicated Resources |
4,962,000 |
5.87 |
936,000 |
3,613,000 |
5.70 |
662,000 |
Inferred Mineral Resources |
|
|
|
|
|
|
Zone Lower Inter |
43,000 |
5.62 |
8,000 |
43,000 |
5.62 |
8,000 |
Zone 104 |
115,000 |
6.62 |
25,000 |
115,000 |
6.62 |
25,000 |
Zone 118 |
854,000 |
6.64 |
183,000 |
854,000 |
6.64 |
183,000 |
Zone 123 -- S |
714,000 |
9.42 |
216,000 |
714,000 |
9.42 |
216,000 |
Principal crown pillar |
841,000 |
5.97 |
162,000 |
1,647,000 |
6.43 |
340,000 |
Principal underground |
836,000 |
5.97 |
161,000 |
1,316,000 |
6.50 |
275,000 |
East Mine Crown Pillar |
310,000 |
3.02 |
30,000 |
170,000 |
5.74 |
31,000 |
East Mine Underground |
156,000 |
9.10 |
46,000 |
156,000 |
9.10 |
46,000 |
East Mine Cherty |
225,000 |
6.80 |
49,000 |
225,000 |
6.80 |
49,000 |
East Mine Zone 160 |
243,000 |
5.40 |
42,000 |
243,000 |
5.40 |
42,000 |
Total Inferred Resources |
4,339,000 |
6.60 |
920,000 |
5,484,000 |
6.89 |
1,215,000 |
Notes:
- CIM definitions were followed for Mineral Resources.
- Mineral Resources are estimated at cut-off grades of:
- 4 g/t Au for West Mine, Principal Mine and East Mine.
- 3 g/t Au for South West, Inter and 104 zones in the West Mine. Those zones were estimated by Aurizon in 2000 using 2D polygons on longitudinal sections and reviewed by RPA in 2005.
- 1.30 g/t Au for the East Mine -- Open Pit (Geostat, 2008).
- Mineral Resources are estimated using an average long-term gold price of US$750 per ounce, and a US$/C$ exchange rate of 1:1.10.
- Minimum mining widths of two to three metres were used.
- Mineral Resources are exclusive of Mineral Reserves.
- Totals may not represent the sum of the parts due to rounding.
- Mineral resources which are not mineral reserves do not have demonstrated economic viability
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