LDI Underground and Open Pit Mines Models - January 20, 2009
PLEASE NOTE: On October 21, 2008 the Company announced that it was temporarily placing its Lac des Iles Mine on a care and maintenance basis effective October 29, 2008 due to depressed metal prices.
Offset High Grade Zone
The OHGZ is located on the Lac des Iles property and was discovered by the Company’s exploration team in 2001. The OHGZ is believed to be the fault‑displaced continuation of the Roby Zone mineralization and is located below and approximately 250 meters to the west of the Roby Zone. A mineral resource estimate prepared by Scott Wilson Roscoe Postle Associates in October 2007 estimated that the OHGZ has significantly more mineral resources than the current underground mine at the Roby Zone at similar grades, while still being open along strike to the north and south and at depth.
On May 7, 2008, the Company announced the results of a preliminary economic assessment prepared by Micon International Limited, which concluded that the OHGZ could extend the Company’s underground mining operation to 2018 based on a palladium price in excess of US$350 per ounce. Micon examined the economic viability of several mining scenarios for the OHGZ, including a continuation of the existing ramp system from the current underground mine, several shaft options and a conveying option. The study concluded that in order to achieve a production rate of 250,000 ounces of palladium per annum, the underground mine could be operated at 4,000 - 7,000 tonnes per day using a series of conveyors and access ramps at an initial estimated capital cost of $37 million.
The Micon study proposes continuation of the longhole stoping mining method, which was the Company’s mining method prior to the temporary mine closure, at the existing underground operations. Using the conveying system to bring ore to surface was found to be advantageous since it provides a great deal of flexibility in decision making and spreads capital expenditures over the life of the mine. Conversely, a conventional shaft – hoist system would have required significant upfront capital expenditures.
Once operating at 6,000 tonnes per day, the study estimates that the OHGZ operation could yield approximately 250,000 ounces of palladium, 16,000 ounces of platinum, 17,000 ounces of gold, 2 million pounds of nickel and 4 million pounds of copper annually. This economic assessment is preliminary in nature and includes measured, indicated and inferred mineral resources. Approximately 80% of the resources included in the preliminary economic assessment are in the inferred category. Inferred mineral resources are considered too speculative geologically to have economic considerations applied to them that would enable the resource to be categorized as mineral reserves. The study’s level of accuracy is deemed to be plus or minus 20-25%.
In light of the current commodity price environment, the Company is re-evaluating a variety of production scenarios including mining methods and mill configurations to optimize the overall economics of the project.
Drill programs will be planned for 2009 and 2010 to confirm and advance resources. Potential exists to add new resources along strike to the north and south and down-dip. Thus far the OHGZ has been traced to a depth of 1,300 meters below surface, and along a strike length of approximately 600 meters.
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