VANCOUVER, July 7 /PRNewswire-FirstCall/ - Luna Gold Corp. (TSXV-LGC)
("Luna" or the "Company") is pleased to release the results of its
Feasibility Study ("FS") for its wholly owned, fully permitted Aurizona
gold project, in Maranhao State, Brazil. The study was completed by Luna's
Brazilian subsidiary and its Brazilian consultants. SRK Consulting ("SRK")
of Lakewood, Colorado has reviewed and contributed to the work of Luna and
its consultants and drafted the NI 43-101 Technical Report. The report has
been filed and is available on SEDAR. All gold reserves come from the Piaba
deposit.
Highlights of the Report
- 0.5 million ounces of Proven and Probable gold reserves
- Life Of Mine ("LOM") is 7.5 years
- LOM production is 469,000 ounces gold (average production of
approximately 60,000 oz/year)
- 1.7 million tonnes of Inferred material at a grade of 1.12 g/t Au
occurs within the pit and is reported as waste.
- Initial Capex of USD 47.5 million (including a USD 4 million
contingency and USD 7 million owners costs)
- LOM cash operating costs of USD 422/ounce (USD 371/ounce over the
first three years)
- NPV(5%) USD 75 million, IRR 46% (pre-tax basis, Base Case scenario
with LOM average gold price of USD 780/oz and BRL of 1.8)
- NPV(5%) USD 155 million, IRR 69% (pre-tax basis, at LOM average
gold price of USD 1,000/oz and BRL of 1.8 - this scenario is not
part of the SRK report and SRK is not forecasting a USD 1000/oz
gold price)
Table 1. - Aurizona 43-101 Reserve Estimate (3 June 2008)
Proven Probable P&P
----------------------------------------------------------------
tonnes Au tonnes Au
(kt) (g/t) oz (kt) (g/t) oz oz
----------------------------------------------------------------
Piaba 1,156 1.48 55,000 10,177 1.36 445,000 500,000
Reserve Estimate Assumptions
1) Full miming recovery is assumed
2) Internal cut of grades of 0.45 g/t, 0.49g/t, and 0.60 g/t were used
for Saprolite, Transition, and Fresh Rock respectively
3) Internal cut of grades include metallurgical recoveries of 95%, 93%,
and 91% in Saprolite, Transition, and Fresh Rock respectively
4) Insitu ounces do not include metallurgical recovery losses
5) Saprolite is defined as highly weathered rock, Transition is defined
as moderately weathered rock, and Fresh Rock is unweathered
6) the estimate is based off of a gold price of USD 650/oz
7) The ounces have been rounded to the nearest thousand
8) for further details on the resource estimate assumptions, please see
the press release dated 20 May 2008
Luna's CEO, Tim Searcy, comments, "The Company is very pleased with
these results. The FS provides an excellent view on the economic viability
of mining saprolite and fresh rock at Aurizona, but it does not reveal
Aurizona's full potential. Luna began work on this FS well before
initiating its infill and exploration drill program. As a result, the
economic evaluation has focused largely on the weathered resources defined
by historic drilling. The success Luna's exploration program is having in
expanding the resource, especially in the fresh rock, has not significantly
impacted this economic analysis because most of the added ounces are still
Inferred, and Inferred material is treated as waste under NI 43-101. Luna
continues its fresh rock drilling at Piaba and Tatajuba and intends to
drill test other satellite deposits at Aurizona later in the year. The
Company is confident that these efforts will continue to expand the
resource at Aurizona and extend the LOM (please see
http://www.lunagold.com/i/pdf/piaba-long-section-07-07-08.pdf)."
Capex and Opex
LOM operating estimates are: a strip ratio of 2.64, mining costs of USD
7.72/ore tonne, processing costs of USD 6.84/ore tonne, G&A of USD 1.89/ore
tonne, and an average recovery of 94% for a cash operating cost of USD
422/oz.
The recovery process is a standard grind, gravity, and CIL. The
processing rate was modeled at 1.5 mtpa; however, the nameplate capacity on
the mills is 1.8 mtpa. This provides the opportunity for a 20% increase in
production. Luna has already secured its grinding mills (please see the
press release dated 21 February 2008), and expects to have them on site by
Q4, this year.
Initial Capex, including contingency and owners cost, is estimated at
USD 47.5 million with USD 2.4 million for mining, USD 28.4 million for
plant and construction costs, USD 3.4 million for infrastructure, and USD
6.3 million for the first three years of tailings containment. (A mining
contractor will be engaged to perform mining operations.) In addition,
owners cost during the construction and start-up period are estimated at
USD 7.0 million. More than 99% of the surface rights over the Piaba pit,
process plant, waste dump, and tailings storage facility have been
acquired; the process for securing the outstanding interests has been
initiated.
Luna's COO, Jim Bahan, states "The FS is a useful snapshot of the
potential at Piaba based on current operating cost estimates, plant
throughputs, and gold reserves. We will continue drilling to better define
and increase the overall reserves and resources at Piaba, and its satellite
deposits. Our strategic objective is to treat the higher grade ores in the
CIL plant and the lower grade ores by heap leaching, in order to
substantially boost overall gold output. In the meanwhile, Luna will focus
on the surface oxide resources that should provide a solid cash base for
the company's growth plans."
Of the USD 3.4 million infrastructure component of capex, USD 2.2
million is for the 41 km installation of a 69 kV powerline, which will be
dedicated to the Aurizona project. The overall capex also includes cost
estimates for diesel generator back-ups.
Economic Model
The economic analysis, at an average LOM gold price of USD 780/oz, BRL
of 1.8, and a discount rate of 5%, returns an NPV of USD 75.3 million and
an IRR of 46%. This economic analysis includes only proven and probable
reserves; it treats inferred mineralization as waste. The FS pit includes
1.7 million tonnes of Inferred resources with a grade of 1.12 g/t, for
approximately 60,000 oz. Inferred Mineral Resources are considered too
speculative geologically to have the economic considerations applied to
them that would enable them to be categorized as Mineral Reserves. However,
this Inferred material represents an opportunity to improve the economics
of the mine, if it can be converted into reserves it could extend the mine
life by one year and reduce cash costs.
Fiscal Incentives
The Aurizona project area is located in a Federal development area
known as the SUDENE (Superintendencia de Desenvolvimento do Nordeste). Gold
mining activities are listed as a priority industry for regional
development by SUDENE, as such the Project can reasonably expect to benefit
from a number of Federal and State fiscal incentives, including a reduction
of 75% of the Corporate Income Tax rate for a period of 10 years. This
would bring down the Corporate Income Tax rate to 6.25% from 25%. The
Project remains subject to the Social Contribution Tax of 9%.
Exploration
Luna's Exploration Manager, Titus Haggan states "Geologic
reinterpretation of the deposit and limited drilling have provided very
positive results to date. Drilling at Aurizona is ongoing, focusing on
depth expansion at Piaba and strike and depth expansion at Tatajuba. In
addition, Luna has yet to test a number of the other satellite deposits
that occur in the immediate vicinity of Piaba and Tatajuba within the area
defined as Aurizona Main. In the coming months, a second drill rig will be
added to the project to begin the testing of these targets." (please see
http://www.lunagold.com/i/maps/Aurizona_Targets.jpg)
Permitting
The Aurizona project received its operating license on 11 July 2007
(please see the Luna press release dated 16 July 2007). The license permits
Luna's wholly owned subsidiary, Mineracao Aurizona SA (Aurizona) to
initiate the mining and processing of gold. The permit is valid until 11
December 2009, and is renewable every two years.
Social Issues
The village of Aurizona has approximately 1,500 inhabitants and 400
homes. The common means of survival has been gold mining, initially in
pits, but now, more commonly, in the shallow subsurface using metal
detectors. There has always been subsistence farming, combined with hunting
of small game and fishing.
The community will benefit from improved infrastructure: better roads,
new water wells, and use of the 69 kV powerline after the mine closure or
after the project upgrades to a higher voltage line. Beyond infrastructure,
the community will benefit primarily from the creation of local jobs and a
much greater purchasing power within the community, which should have a
positive impact on local businesses.
Luna has already provided the community with access to the project's
medical clinic which is staffed with a doctor and nurse. The mine will
commence an apprentice program whereby interested parties can obtain work
experience and skills training. Evening classes will be held to improve
basic education, particularly in the areas of domestic economics, health,
and hygiene.
About Luna Gold Corp
Luna is a mining exploration company focused on the acquisition,
exploration, and development of gold resources and advanced stage gold
exploration projects in northeastern Brazil.
On behalf of the Board of Directors
LUNA GOLD CORP.
Tim Searcy, P. Geo. - President and CEO
Website: http://www.lunagold.com
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this press release.
Regulatory Footnotes
Exploration on the Aurizona Project was initiated in 1978 by Brascan
Recursos Naturais S.A. (Brascan) and continued through the 1990's with work
by Brascan, Unamgen Mineracao e Metalurgia S.A. (Unamgen) an exploration
subsidiary of Gencor Ltd. and Eldorado Gold Corp. (Eldorado). Luna acquired
the property in 2007 and commenced exploration soon after. Historic drill
core (HQ (63.5mm) diameter) analyses by previous operators Unamgen and
Eldorado were conducted at Nomos Laboratory in Rio de Janeiro and Bondar
Clegg Laboratory in Luziania, Goias respectively. Unamgen and Eldorado
conducted laboratory QA/QC programs and retained all original assay
certificates. Luna used Acme Laboratories Ltda in Maraba, Brazil and
Vancouver, Canada. Luna's QA/QC program consists of blanks, Certified
Reference Materials (CRM), pulp check assays at ALS Chemex in Belo
Horizonte, Minas Gerais and coarse reject check assays at Acme and at ALS
Chemex. The Piaba reserve estimate contains drill data produced up to
01/12/2007.
The Feasibility Study was compiled by SRK Consulting of Lakewood, CO,
an internationally recognized independent consulting engineering company.
Peter Clarke, Registered Professional Engineer (British Columbia, #
13,473), is SRK's Qualified Person for the National Instrument 43-101
technical report (Reserve Statement and scientific and technical work on
which this release is based), and has reviewed the technical information
disclosed in this press release. Mr. Clarke and SRK are independent of the
company as defined under NI 43-101.
This news release does not constitute an offer to sell or a
solicitation of an offer to sell any of the securities in the United
States. The securities have not been and will not be registered under the
United States Securities Act of 1933, as amended or any state securities
laws and may not be offered or sold within the United States or to U.S.
persons unless registered under the United States Securities Act of 1933
and applicable state securities laws or an exemption from such registration
is available.
Forward-Looking Statements
Statements in this release that are forward-looking statements are
subject to various risks and uncertainties concerning the specific factors
identified in Luna Gold Corp.'s periodic filings with Canadian Securities
Regulators. Such forward-looking information represents management's best
judgment based on information currently available. No forward-looking
statement can be guaranteed and actual future results may vary materially.
Luna Gold does not assume the obligation to update any forward-looking
statement unless otherwise required by law.
CONTACT: Investor Relations at (604) 689-7317 or toll free at
1-866-689-7317
SOURCE Luna Gold Corp.
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