Vancouver, British Columbia (May 4, 2011) - Sutter Gold Mining Inc. (SGM:TSX-V) ("Sutter" or the "Company") is pleased to announce the results of a National Instrument 43-101 compliant Updated Resource Estimate and Preliminary Economic Assessment ("PEA") for its Lincoln Mine gold project in Sutter Creek, California, USA. The PEA, completed by the independent engineering firm, Mine Development Associates ("MDA") of Reno, NV, USA, indicates positive economic potential for the Lincoln-Comet portion of Sutter's Lincoln Mine Project ("Project") resources. All amounts are in US$ unless otherwise indicated.
Preliminary Economic Assessment Highlights
|Cash Flow Sensitivity||Base Case||10% Above Base Case||20% Above Base Case|
|Pretax Cash Flow($000's)1||12,217||17,135||26,243|
|Internal Rate of Return, (% p.a.)||20.5%||38.9%||50.2%|
|Gold Selling Price ($/oz)||1,100||1,210||1,320|
|1Mineral resources that are not mineral reserves do not have demonstrated economic viability|
"The results of the independent report are very encouraging and support what Sutter Gold Mining has believed and worked towards for many years - that the Lincoln Mine Project has the potential to be a profitable gold mining venture, while maintaining a low-impact environmental footprint. The completion of this report represents a significant milestone for the project and the Company. We are looking forward to developing a new gold mine in the historic California Mother Lode that will provide the cornerstone to further development of the Company's already significant resource base outside the current study resources," stated Matt Collins, Sutter's Chief Operating Officer.
MDA completed a resource estimate for the Lincoln-Comet portion of Sutter's resources. The total resource used for the Lincoln Mine PEA appears in the following table:
|Lincoln-Comet Reported Resource|
|Classification||Au Cutoff||Tons||Grade||oz Au|
Using an economic cut-off of 0.22 opt, the targeted resource is 210,300 tons of resource grading 0.573 opt (19.6 g/t).
Details of the total Company resource estimate can be found in the National Instrument 43-101 report "Mineral Resource Estimate, Sutter Gold Project, Amador County, California", authored by Mark Payne, P Geo and filed on SEDAR on February 11, 2008.
Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Preliminary Economic Assessment
The PEA evaluated an initial high-grade extraction scenario utilizing the targeted Lincoln-Comet resource. A mine plan was developed on the basis of delivering 150 tons per day, 360 days per year resulting in a five-year mine life. The mine plan delivers a head grade to the mill of 0.46opt (15.8 g/t) accounting for mining dilution and losses. The mill produces an average of 22,300 ounces per year from conventional gravity and flotation processing achieving a 96% total recovery. The estimated capital requirement of the project is $19.9M excluding working capital. The operating cost to produce an ounce of gold is estimated at $704. The potential cash flow model outputs from the study are provided above. Sensitivity analysis on the cash flows indicate the project is most sensitive to gold price and then operating costs.
The estimated capital requirements for the project are shown in the following table:
|Capital Requirement - Lincoln Mine Project|
|Item||Estimated Cost 000's|
|Mine Equipment||$ 4,213|
|Mine Development||$ 2,680|
|Process Plant||$ 4,120|
|Waste Management||$ 2,052|
|Owners Cost||$ 4,716|
Contingencies are internal to the items, ranging from 10% to 25%. The mine equipment capital estimate is for an owner operated fleet which is assumed in the PEA. SGM will investigate contract mining, which if used, would reduce capital requirements but would increase operating costs.
Mining and Mineral Processing
Sutter staff and its consultants completed a comprehensive mine design for the Lincoln-Comet deposit utilizing Gemcom Surpac software and the block model resource created by MDA. The narrow-vein nature of the resource dictates the higher cost, but historically proven mining method of cut and fill stoping utilizing jackleg and stoper drills, electric and/or pneumatic slushers supplemented by modern rubber tire load-haul-dump machines and underground haul trucks. Mine levels are designed at 100 foot vertical spacing. Primary access exists through the modern 15 foot wide x 12 foot high Stringbean Alley decline. Secondary access is designed as an 8 foot wide x 8 foot high decline to the 1200 foot level (1200 feet above mean sea level) and an 8 foot wide x 8 foot high decline to the 1300 level. Stope panels are nominally 100 feet long x 100 feet high. All in-vein development is designed at a 3 foot minimum width. Material blasted and slushed in the stopes can be delivered, via muck passes to levels where the rubber tire equipment can transfer it to chutes accessed by the Stringbean Alley decline. Underground haul trucks deliver the material to a new mill facility located at the surface. Mining and haulage costs are estimated at $207 per ton of processed material. Mining dilution was estimated at 20% of zero grade waste with an additional dilution of 9.3% of material grading 0.20 opt. Ore loss was estimated at 10%.
Utilizing the extensive metallurgical data that exists for the deposit, with emphasis on the lock-cycle test work completed by McClelland Labs in 2009, Paul E. Danio and Associates, LLC completed a metallurgical process flowsheet and mill design. The process flowsheet for the Lincoln-Comet vein system material begins with crushing run-of-mine material stored in bins at the new mill facility to minus 1.5 inches. Crushed material would be conveyed to a fine-ore bin which feeds a rod mill operated in closed circuit. A centrifugal bowl gravity unit would produce a concentrate to be tabled and fused into doré. Conventional flotation utilizing non-toxic reagents would produce a flotation concentrate to be shipped offsite for final processing. Tailings would be dewatered and returned to the stopes as backfill or emplaced at the permitted Surface Fill Unit. Processing costs are estimated at $42 per ton of material. Recovery is estimated at 96% total, with 70% reporting to gravity concentrate and 26% reporting to flotation concentrate.
Operating costs of mining, processing and administrations are estimated to total $704/ounce of gold sold as summarized in the following table:
|Operating Cost Summary|
|Item||$/Year (000's)||$/Ton Ore||$/oz Au Sold|
|G & A||2,416||46||111|
The Project is estimated to require 108 persons in a range of skilled and unskilled positions. Staffing requirements appear in the following table:
|Lincoln Mine Project Staffing|
|Department / Position||Persons|
|Sand Plant Operator||4|
|ENGINEERING & GEOLOGY|
|Subtotal Engineering & Geology||8|
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Revenue and Royalties
Sales of doré produced from gravity concentrates will be to a U.S. refinery, yet to be determined. Payment for doré is estimated at 99.75% per ounce of gold, less $1 treatment charge and $0.72 for transportation. Flotation concentrates would likely be shipped to a pyrometallurgical refinery or pressure oxidation facility. Payment for flotation concentrate is estimated at 85% of contained gold, less $75.00 per ton of concentrate for transportation.
Several royalties exist on properties within Sutter's Lincoln Mine Project holdings. A blended rate of 4% gross royalty was applied for the PEA.
Environmental & Social Issues, Closure and Reclamation
Sutter's Lincoln Project has a demonstrated history of environmental stewardship and regulatory compliance. All five major environmental permits required to develop the Project are in place, with minor permitting being completed as necessary. The Lincoln Mine Project enjoys excellent community support and is encouraged by the forward thinking attitude and resourcefulness of Amador County's people and local government.
Closure costs in the PEA are estimated at $4 million based on design work from Golder Associates of Roseville, CA, USA. Currently, the project mine life is estimated at 5 years, with closure occurring in the year after final mining. The Company strongly believes the potential for extending the mine life beyond 5 years exists within the Lincoln-Comet resource itself excluding, additional and meaningful adjacent resources identified by Payne (2008).
The completed National Instrument 43-101 compliant technical report, including the Preliminary Economic Assessment from Mine Development Associates of Reno, Nevada, USA will be filed on SEDAR within 45 days of this news release and will be available on the Company's website.
Approval of the Board of Directors will be requested to implement the recommendations provided by the technical report and to source funding for the development of the Lincoln Mine Project. Sutter will continue to progress the Lincoln Mine Project permitting and engineering as planned.
The PEA and resource estimates have been prepared in accordance with the Standards of Disclosure for Mineral Projects as defined by National Instrument 43-101 of the Canadian Securities Administrators. Neil Prenn, P.E., of Mine Development Associates, is the independent qualified person responsible for the preparation of the PEA and has verified that the data from that report is fairly and accurately disclosed in this news release.
Sutter is a growth-oriented exploration and development company preparing to become a North American gold producer. The Company has two projects: the Lincoln Project located in the Mother Lode Gold Belt of California and the Santa Theresa Project located in the Northern Baja region of Mexico. Currently, the Company's primary focus is the evaluation and development of the Lincoln Project located on the California Mother Lode Gold Belt in Amador County. Sutter currently controls approximately 3.6 miles of the Mother Lode of Amador County hosting a total NI43-101 resource of 682,000 ounces, and with 90% of the property still unexplored, potential exists both at depth and along strike of the known mineralized zones. The 120-mile long Mother Lode Gold Belt produced over 13 million ounces of gold historically with 7.9 million ounces originating from the 10-mile long segment between Jackson and Plymouth where the Lincoln Project is strategically located. Properties under the Company's control include eight historic mines with significant historic gold production totaling about 3.4 million ounces or about 25% of the historic gold production from the Mother Lode. Historic mines located north and south of the Lincoln Project in the Jackson to Plymouth segment of the Mother Lode successfully mined gold to depths of 4,500 and 6,300 feet, respectively.
In Mexico, Sutter holds the rights to the geologically similar, high-grade El Alamo district of northern Baja, where historic mining to the water table produced mined grades of 30 to 60 g/t gold. Initial exploration with its joint-venture partner, Premier Gold, has demonstrated the extension of high-grade veins.
ON BEHALF OF THE BOARD OF DIRECTORS:
James Crombie, President, CEO & Director
Sutter Gold Mining Inc.
For further information please contact:
Robert Hutmacher, Chief Financial Officer at 303 238 1438 ext. 22
Website at www.suttergoldmining.com
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Note Concerning Forward-Looking Statements
This news release contains "forward-looking information" under Canadian securities law. Any information that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words such as "expect", "anticipate", "believe", "plans", "estimate", "scheduling", "projected" or variations thereof or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking information. Forward-looking information relates to, among other things: the price of silver and gold; the accuracy of mineral resource and mineral reserve estimates; the ability of the Company to finance its operations and capital expenditures; future financial and operating performance including estimates of the Company's revenues and capital expenditures and estimated production.
Forward-looking information is subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those reflected in the forward-looking information, including, without limitation, risks relating to: fluctuating commodity prices; calculation of resources, reserves and mineralization and precious and base metal recovery; interpretations and assumptions of mineral resource and mineral reserve estimates; exploration and development programs; feasibility and engineering reports; permits and licenses; title to properties; recent market events and conditions; economic factors affecting the Company; timing, estimated amount, capital and operating expenditures and economic returns of future production; operations and political conditions; environmental risks; and risks and hazards of mining operations. This list is not exhaustive of the factors that may affect any of the Company's forward-looking information. Forward-looking information about the future is inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking information due to a variety of risks, uncertainties and other factors. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated, described or intended. Accordingly, readers should not place undue reliance on forward-looking statements or information. The Company's forward-looking information is based on the assumptions, beliefs, expectations and opinions of management as of the date of this press release, and other than as required by applicable securities laws, the Company does not assume any obligation to update forward-looking statements and information if circumstances or management's assumptions, beliefs, expectations or opinions should change, or changes in any other events affecting such statements or information. For the reasons set forth above, investors should not place undue reliance on forward-looking information.
Cautionary Note Concerning Resource Estimates
The mineral resource figures referred to in this press release are estimates and no assurances can be given that the indicated levels of gold will be produced. Such estimates are expressions of judgment based on knowledge, mining experience, analysis of drilling results and industry practices. Valid estimates made at any given time may significantly change when new information becomes available. While the Company believes that the resource estimates included in this press release are well established, by their nature resource estimates are imprecise and depend, to a certain extent, upon statistical inferences which may ultimately prove unreliable. If such estimates are inaccurate or are reduced in the future, this could have a material adverse impact on the Company.
Due to the uncertainty that may be attached to inferred mineral resources, it cannot be assumed that all or any part of an inferred mineral resource will be upgraded to an indicated or measured mineral resource as a result of continued exploration. Confidence in the estimate is insufficient to allow meaningful application of the technical and economic parameters to enable an evaluation of economic viability worthy of public disclosure, except in the case of the PEA.
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