Kria Resources

Kria Resources

July 29, 2009 12:30 ET

Kria Resources' Preliminary Economic Assessment Results for Halfmile Lake Demonstrate Pre-Tax NPV of C$587 Million and IRR of Over 16%

TORONTO, ONTARIO--(Marketwire - July 29, 2009) - Kria Resources (TSX VENTURE:KIA) today announced results from its recently completed Preliminary Economic Assessment (PEA) on its Halfmile Lake Property.

The Halfmile Lake Property is located in northeast New Brunswick, Canada, approximately 60 kilometers southwest of Bathurst, and only 40 kilometers from the world class Brunswick 12 deposit. Kria believes that the Halfmile Lake and Stratmat properties represent the largest and highest grade undeveloped deposits in the Bathurst Mining Camp and have been explored by Xstrata Zinc and its predecessor companies at intervals since the 1960s and extensively during the 1980s and 1990s when the Heath Steele and Stratmat Mines were in production.

The estimates from the PEA are outlined in the table below:

Summary of PEA Estimates
Rate of Return (IRR) 16.24%
Net Present Value (NPV) CAD$587 million (at a 0% discount rate)
CAD $139 million (at an 8% discount rate)
Mineable Recovery Rate 90%
Dilution Rate 10%
Operating Costs $62.49 per tonne milled (includes mining
$43.89, processing $14.90 and general &
administration $3.70)
Total Cash Flow (life-of-mine) $587 million, before taxes from metal

The estimated diluted mineral resources used in the PEA are outlined below:

Tonnes ZnEQ Zn% Cu% Pb% Ag gm/t
Upper Zone
Indicated 1,180,773 7.24 6.1 0.4 2.1 15.4
Inferred 153,931 7.37 6.6 0.2 2.4 5.6
Lower Zone
Indicated 4,427,478 8.77 7.9 0.1 2.6 34.5
Inferred 1,055,732 8.23 7.4 0.1 2.5 35.2
Deep Zone
Inferred 4,779,941 6.24 5.8 0.1 1.5 15.5
Calculated using a 5% zinc equivalent cut-off. Please refer to the Beartooth
Platinum and Kria Resources Information Circular of February 26, 2009 filed
on SEDAR for the NI 43-101 compliant resource estimate on Halfmile Lake.
This resource was the basis for the PEA, however mining dilution and mining
recovery rates were factored into the resource estimate used in
the PEA.

The PEA estimates pre-production capital expenditure requirements of CAD$123 million and capital expenditures of CAD$215 million to achieve full production. Total projected capital expenditure required over the life of mine is CAD$324 million. A provision of 25% contingency is included in the capital cost estimate. The PEA estimates that a 2,000 tonnes per day underground mining operation utilizing 75% mechanized cut and fill along with 25% longhole methods would be employed. The PEA also utilized a mill capacity of 2,000 tonnes per day for estimation purposes.

Mine life is currently estimated at over 20 years with payback being achieved in the eighth year of operation from commencement of mine startup.

Life-of-mine average metal prices and metal recoveries used in the PEA are outlined in the table below:

Average metal prices Metal recoveries
Zinc US$ 0.80/lb 89.72%
Copper US$ 1.91/lb 60.00%
Lead US$ 0.56/lb 72.07%
Silver US$ 10.59/oz 48.56%

A US:CDN dollar exchange rate of 0.846 was used.

In addition to the results from the Halfmile PEA, there is potential to create a Halfmile Lake/Stratmat project with a potential rate of return of 22% if the inferred mineral resource from the nearby Stratmat property, also owned by Kria, is combined with the resource estimate from Halfmile Lake. This potential reflects utilizing Stratmat tonnage to maximize mill productivity during the initial three years and last five years of the mine life. An NI 43-101 technical resource report estimates that the Stratmat Deposit has an inferred resource of 5.52 million tonnes grading 6.11% Zn, 2.59% Pb, 0.40% Cu and 54.21 g/tonne Ag (8.16% Zn equivalent). Further studies are required to determine the economics of combining production from the two deposits, Halfmile Lake and Stratmat.

Management also anticipates initiating a preliminary economic assessment on the Stratmat property to improve overall Halfmile/Stratmat economics this fall. Drilling will be completed in order to obtain additional core for metallurgical testwork on Halfmile and geotechnical work will be conducted on the Halfmile Upper and Lower zones for stope geometry and resource updating.

The PEA also highlighted the potential to improve Halfmile project financials, including reducing the bulk concentrate production to only ship lead, zinc and copper concentrates and lower smelter charges. Average world smelter terms were used in the PEA and results of the PEA indicate that there is potential to lower smelter charges, particularly with Xstrata as a local smelter to minimize shipping costs.

Kria's President and CEO, Mike Hoffman, commented, "The PEA results confirm the potential we believe exists at Halfmile. The study team identified a number of areas that can add further value and further improve economics of the project. Our goal is to continue to advance the Halfmile/Stratmat project towards production, which should coincide with the expected recovery in commodity prices as the overall economy recovers."

Studies on the feasibility of bringing these properties into production were carried out by Noranda in the early 1990s. Kria acquired the property from Xstrata Canada Corporation-Xstrata Zinc Canada Division in July 2008 and is under agreement to meet conditions to gain full ownership of the property (see Press Release of July 29, 2008 for further details).

The PEA was conducted on behalf of Kria by Wardrop Engineering Inc., a Tetra Tech Company (Wardrop). The author and Qualified Persons as defined under NI 43-101 guidelines of the PEA report was Mike McLaughlin, P.Eng of Wardrop, with co-authors Daniel Sweeney, P.Eng., Georgi Doundarov, P.Eng., Timothy Maunula, P.Geo., and Douglas Ramsey, R.P.Bio.

This economic assessment is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability. There is no certainty that the projections from the preliminary assessment will be realized as further work is to be completed on the project.

Quality Control

The technical contents of this press release have been supervised and reviewed by Steve Davies, P. Eng., Vice President Operations of Kria and Dayle Rusk, P. Geo., Vice President Exploration of Kria, both of whom are Qualified Persons as defined under NI 43-101.

About Kria Resources

Kria Resources is a base metal exploration and development company focused on high-quality, advanced-stage base metal assets. Kria's primary asset is the Halfmile Lake and Stratmat properties near Bathurst, New Brunswick. The Halfmile Lake property has a NI 43-101 compliant Indicated mineral resource estimate of 6.26 million tonnes grading 8.13% zinc, 2.58% lead, 0.22% copper and 30.78 g/t silver using a 5.0% capped zinc equivalent cut-off grade and an Inferred resource estimate of 6.08 million tonnes grading 6.69% zinc, 1.83% lead, 0.14% copper and 20.51 g/t silver using a 5.0% capped zinc equivalent cut-off grade. The Stratmat property has an Inferred Mineral Resource estimate of 5.52 million tonnes grading 6.11% zinc, 2.59% lead, 0.40% copper and 54.21 g/t silver using a 5.0% zinc equivalent cut-off grade (Please refer to the Beartooth Platinum and Kria Resources Information Circular of February 26, 2009 filed on SEDAR for the NI 43-101 compliant resource estimate on Stratmat).

Kria also has the Ruttan copper-zinc sulphide project near Leaf Rapids, Manitoba that has an NI 43-101 compliant mineral Inferred resource estimate of 19.75 million tonnes grading 1.17% copper and 1.47% zinc using a 1.0% capped copper equivalent cut-off grade.

Through its recent combination with Beartooth Platinum, in Montana, USA, Kria controls 1,054 unpatented lode mineral claims over the exposed 50-km strike length of the Stillwater Intrusive Complex. As disclosed in a press release dated June 15, 2009, Kria has entered into a Letter of Intent with Nevoro Inc. regarding the proposed sale of the Stillwater Complex. The sale remains subject to, among other things, satisfactory due diligence and any required regulatory approvals.

Please visit our website at for additional information.

Regulatory Footnotes

Cautionary Note Regarding 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 Kria and its projects, conclusions of the PEA; estimated capital and operating expenditures; statements regarding exploration and development prospects, 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". Estimates regarding the projected economics of the projects are based on research, experience and analysis of the management of the Company and external advisors.
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 (and the company resulting from the successful completion of the proposed transaction) to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, political and social uncertainties; the actual results of current exploration activities; delay or failure to receive board or regulatory approvals; timing and availability of external financing on acceptable terms; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of mineral prices; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; and, delays in obtaining governmental approvals or required financing or in the completion of activities. 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.

To view Figure 1. Location Map of Halfmile Lake Property, please visit the following link:

To view Figure 2. Location of Halfmile Lake and Stratmat Properties in Relation to Nearby Mines, please visit the following link:


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