Alexis Minerals Corporation
TSX : AMC

Alexis Minerals Corporation
Garson Gold Corp.
TSX VENTURE : GG

Garson Gold Corp.

March 08, 2010 08:45 ET

Alexis Projects Robust Economics at Snow Lake Mine With IRR of 191%

TORONTO, ONTARIO--(Marketwire - March 8, 2010) - ALEXIS MINERALS CORPORATION (TSX:AMC) (the "Company" or "Alexis") and Garson Gold Corp. (TSX VENTURE:GG) ("Garson") are pleased to report positive results from a preliminary assessment (PA) by Alexis of its newly acquired Snow Lake Mine (formerly New Britannia Mine), at Snow Lake, Manitoba. The independent study, to be completed by Golder Associates in March 2010, using current resources in the Main Mine and No. 3 Zone, estimates that the Snow Lake Mine would produce a total of approximately 423,000 ounces of gold over an estimated 6 year project life, at a Life of Mine (LOM) total cash cost of approximately US$ 544/ oz. The initial capital cost is estimated at CDN $33.7 M, including working capital. The Snow Lake Mine is projected to generate a 191% internal rate of return (IRR) and approximately CDN $163.8 million accumulated cash flow on a before tax basis based on March 2010 Bloomberg Consensus gold price estimates.(1) The payback period is estimated at less than 2 years. Alexis Minerals owns 95% of the outstanding shares of Garson Gold Corp.

If the Snow Lake Mine was put back into production at the rates estimated, the Company would expect its total gold production to increase to approximately 150,000 ounces gold per year, positioning Alexis as a mid-tier gold mining company and place Alexis in the top 10 gold mining companies in Canada, by production volume from assets in Canada. The Company estimates that its total annual operating cash flow from its three operations, Lac Herbin and Lac Pelletier in Quebec and Snow Lake Mine in Manitoba, would be CDN $ 65 – 75 million in 2012.

Alexis has completed a re-estimation of the mineral resources at the Snow Lake Mine as at January 31, 2010 using a cutoff of 2.74 g/t. The estimated Measured and Indicated Resources on the Snow Lake Mine property total approximately 3,032,000 tonnes at 5.2 g/t Au for 506,100 ounces gold with an additional Inferred Mineral Resource of 2,149,000 tonnes at 5.2 g/t for 357,100 ounces gold. Including the Quebec properties, Alexis now has total Measured and Indicated Resources of 4,751,000 tonnes at 6.0 g/t Au for 922,595 ounces of gold and Inferred Mineral Resources of 520,627 ounces of gold (see Table 1).

The PA is preliminary in nature, and includes inferred mineral resources that are considered too speculative geologically to have economic consideration applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the PA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Resources from only the Main Mine and the No.3 Zone have been considered in the Preliminary Assessment. Highlights of the Preliminary Assessment include:

  • Total undiluted resources of 3.03 Mt @ 5.19 g/t measured and indicated and 1.14 Mt @ 5.48 g/t inferred were calculated at a cut-off grade of 2.74 g/t
  • A mine plan of 5.20 Mt @ 3.96 g/t inclusive of mining dilution (40% at 0.62 g/t Au) and losses for a total of approximately 423,000 ounces of gold mined
  • An annual production rate of 691,000 tonnes for over 90,000 oz Au per year, which is consistent with historical production rates at the New Britannia Mine
  • The net present value (NPV) of production at a 7% discount rate is CDN $125 million with an IRR of 191% (pre-tax).
  • The study estimates total pre-production capital expenditures of CDN $33.8 million and total mine capital of CDN $61.7 million
  • Total cash cost for the mine is projected at US$540/oz Au or CDN $ 74/tonne.
  • Gold Price and Foreign exchange used were from Bloomberg consensus estimates with an average price of US $1063/oz Au and exchange of 1.05 CDN/USD. 
  • Sensitivity Analysis indicates a robust project at the three year trailing average gold price of US $861/oz Au yielding a NPV, at a 7% discount rate, of $51 million and IRR of 54.9%.
  • The PA recommends completing a full feasibility study. Work continues with a target date of the feasibility at the end of June, 2010.

Alexis believes that the Snow Lake Mine property offers excellent exploration upside and potential for the expansion of resources. The Company recently announced the discovery of significant gold mineralization in a potential on-strike extension to the mine (refer news release, February 17, 2010). The Snow Lake Mine is most sensitive to gold price, head grade, mine grade, foreign exchange and recovery. Management is encouraged by the projected continuation of the bullish trend of gold in the current economic climate.

Background

The Snow Lake Mine was recently acquired with the acquisition of Garson Gold Corp. (refer news release, October 20, 2009). The mine, formerly named the New Britannia Mine, had historic production of 1.44 million ounces of gold. It was most recently mined by Kinross/ High River Gold from 1995-2005, producing a total of 822,550 ounces of gold.

Alexis plans to advance this preliminary economic assessment to an independent NI 43-101 level Feasibility Study. Resource review and mine planning are currently well advanced and the project remains on schedule. One diamond drill is currently active on the property and one additional drill is being mobilized. The property hosts several additional zones of mineralization including the Birch, Boundary, Kim, Bounter and Squall Zones. Delineation drilling will focus in areas of estimated Inferred Mineral Resources with the objective of increasing these to the Indicated Mineral Resources category for feasibility study; and, on exploration to evaluate the potential for new resource discovery.

Qualified Persons

Estimation and compilation of the Snow Lake Mine resources was completed by Alexis personnel under the supervision of Jamie Lavigne, P.Geol., VP Exploration for Alexis Minerals and Patrick Sevigny , Eng., Manager, Business Development for Alexis Minerals both Qualified Persons as defined by NI 43-101. The preliminary assessment and economic analysis has been completed by Golder Associates under the direction and supervision of Eric Hinton, P. Eng. A NI 43-101 compliant report, completed by Golder Associates, will be filed on SEDAR by March 31, 2010.

The technical and scientific content of this press release has been reviewed and approved by Jamie Lavigne, P.Geol., VP Exploration for Alexis Minerals and Qualified Person as defined under NI 43-101 Guidelines and Eric Hinton (P. Eng.), Independent QP, Golder Associates Ltd.

Table 1. – Reserves and Resources

Table of Proven and Probable Reserves:
       
Category / Deposit Tonnes Grade (g/t) Resource (oz Au)
       
Proven      
  Lac Herbin (1) 97,900 9.0 28,400
  Lac Pelletier (2) 9,258 8.0 2,381
Probable      
  Lac Herbin (1) 519,500 7.0 117,600
  Lac Pelletier (2) 474,104 7.6 115,747
       
Total Proven & Probable 1,100,762 7.5 264,128
 
Table of Measured and Indicated Resources:
       
Category / Deposit Tonnes Grade (g/t) Resource (oz Au)
       
Measured      
  Lac Herbin (1) 124,800 9.2 37,100
  Lac Pelletier (2) 61,000 6.2 12,140
  Snow Lake Main Mine (3) 7,000 4.8 1,000
Indicated      
  Lac Herbin (1) 731,500 7.2 169,500
  Lac Pelletier (2) 856,883 7.2 197,755
  Snow Lake Main Mine (3) 2,631,000 5.0 420,000
  No. 3 Zone Main (4) 394,000 6.7 85,100
       
Total Measured & Indicated 4,751,283 6.0 922,595
 
Table of Inferred Resources:
       
Category / Deposit Tonnes Grade (g/t) Resource (oz Au)
       
Inferred      
Lac Herbin (1) 420,500 6.0 80,500
Lac Pelletier (2) 391,770 6.5 82,127
Snow Lake Main Mine (3) 568,000 4.7 85,200
No. 3 Zone Main (4) 261,000 7.9 65,900
No. 3 Zone Footwall (4) 314,000 5.0 50,900
Birch Zone (3) 569,000 4.4 81,000
Squall Margaret Upper (5) 100,000 4.9 16,000
Squall Margaret Lower (5) 337,000 5.4 59,000
       
Total Inferred Resources 2,961,270 5.5 520,627
 
Mineral Resources are reported inclusive of Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability 
1.   NI 43-101 Technical Report Reserves Calculation on Lac Herbin Mine, Val d'Or, Quebec. Completed for Alexis Minerals Corporation by François Chabot, M.Sc., Golder Associates Ltd., September 2009.
2.   NI 43-101 Technical Report Pre-Feasibility Study on Lac Pelletier Project, Rouyn-Noranda, Quebec. Completed for Alexis Minerals Corporation by François Chabot, M.Sc., Golder Associates Ltd., August 2009.
3.   NI 43-101 Technical Report on the Preliminary Assessment of the Snow Lake Mine Property and update of the Mineral Resource Estimate, Snow Lake, Manitoba. The PA is being completed for Alexis Minerals Corporation and Garson Gold by Golder Associates Ltd., Eric Hinton, P.Eng, March 2010 based on the Mineral Resource Estimate completed under the supervision of Jamie Lavigne, P. Geol and Patrick Sevigny, Eng, both of Alexis Minerals Corporation, January 31, 2010.
4.   NI 43-101 Technical Report Audit of the No. 3 Zone Mineral Resource Estimate on the New Britannia Mine Property, Snow Lake, Manitoba. Completed for Garson Gold Corp. by William J. Lewis, P. Geo and Charley Murahwi, M.Sc., Micon International Ltd., July 20, 2008.
5.   NI 43-101 Technical Report on the Squall Lake Property, The Pas Mining Division Snow Lake Manitoba. Completed for Garson Resources Ltd. By D Beilhartz, P. Geo., April 2006.

About Alexis Minerals
Alexis Minerals Corporation is a Canadian mining company listed on the Toronto Stock Exchange (symbol "AMC") and trades in the US on the Over the Counter QX International platform ("OTCQX: AXSMF") The Company owns one producing gold mine in Val-d'Or and the right to earn a 100% interest in the Lac Pelletier gold property in Rouyn-Noranda. Recently Alexis has acquired over 90% of all shares of Garson Gold Corp and is proceeding with the forced conversion of the remaining outstanding shares. Alexis undertakes exploration in the mineral rich Val-d'Or (100% ownership of 212 sq. km.) and Rouyn-Noranda Mining Camps (50% ownership of 785 sq.km and in joint venture with Xstrata Copper). For more information about Alexis Minerals visit www.alexisminerals.com.

About Garson Gold

Garson Gold holds a 100% interest in The New Britannia Gold Mine (NBM) Project in Snow Lake Manitoba and the Copper Prince and the McMillan Gold Mine properties located in Ontario. Garson's flagship project is the NBM, which covers approximately 4,840 hectares and hosts the historic New Britannia Gold Mine which operated from 1949 to 1958 and again from 1995 to 2005 and produced approximately 1.44 million ounces of gold. Infrastructure at the New Britannia Gold Mine includes a fully-permitted 2,150 tonne per day modern mill and tailings facility, and associated plant, and equipment.

Forward looking information.

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the future financial or operating performance of Alexis and its projects, the identification of mineral reserves and resources, costs of and capital for exploration projects, exploration expenditures, timing of future exploration, requirements for additional capital, government regulation of mining operations, environmental risks, reclamation expenses, title disputes or claims, limitations of insurance coverage and the timing and possible outcome of pending litigation and regulatory matters. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to those risks described in the annual information form of the Company. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.


(1) Bloomberg Consensus US$ Gold Prices: 2010 – 1127, 2011 – 1158; 2012 – 1128; 2013 – 1125; 2014 – 850; 2015 – 850; 2016 – 850. Foreign Exchange: C$1.05 = US$1.00

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