Linear Gold Corp.

Linear Gold Corp.

September 29, 2009 08:56 ET

Linear Gold Reports Updated Economic Results From Goldfields Project

HALIFAX, NOVA SCOTIA--(Marketwire - Sept. 29, 2009) - Linear Gold Corp. (TSX:LRR) ("Linear") is pleased to announce updated economic results from its 100% owned Goldfields Project, located near Uranium City, Saskatchewan, Canada. The Goldfields Project is host to the Box Mine and Athona Gold Deposit.

These results include an update of the Box Mine Feasibility Study and the initial Pre-Feasibility Study for the Athona Gold Deposit. Highlights of the studies for the Goldfields Project are as follows:

- Net Present Value (NPV) of US$ 137.6 million and an Internal Rate of Return of 42.7% using US$850 per ounce gold revenues and a 5% discount rate;

- The Box Mine and Athona Gold Deposit will be developed as open pit operations with combined Proven and Probable gold reserves of 1,030,400 ounces of gold including:

-- 685,900 ounces of gold for the Box Mine representing a 14% increase over the 2008 study; and

-- 344,500 ounces of gold for the Athona Gold Deposit , as calculated in the Pre-Feasibility study;

- The Goldfields Project is expected to have a 15.3 year mine life based on an average annual life-of-mine production rate of 1.8 million tonnes with an initial 9.4 years of production from the Box Mine followed by 5.9 years of production from the Athona Gold Deposit; and

- The estimated operating cost from the Box Mine is US$375.00 per ounce of gold and the combined life-of-mine operating cost from the Goldfields Project (Box Mine and Athona Gold Deposit) is projected at US$419.00 per ounce.

Wade Dawe, President and Chief Executive Officer of Linear, stated "The results of the updated Box Mine feasibility study and Athona Gold Deposit pre-feasibility study confirm the robust economics of the Goldfields Project. With operating costs estimated at US$375 per ounce, the Box Mine will provide Linear with significant cash flow over its planned 9.4 year mine life and represents a stable platform from which Linear plans to pursue additional growth opportunities. The results of the Athona Gold Deposit pre-feasibility study increase the combined Goldfields gold reserves to over 1.0 million ounces and support an extended 15.3 year mine life for the Goldfields Project, providing a tremendous long-term source of cash flow for the benefit of Linear. Based on these impressive results, with the Environmental Impact Study already approved, Linear is progressing with final mine engineering design and completing construction permit applications."


Bikerman Engineering & Technology Associates, Inc. (BETA) was retained by Linear to update a National Instrument 43-101 compliant Technical Report by BETA dated June 2007, Revision 1-May 12, 2008 on the Box Mine. The updated Feasibility Study used a US$750/oz base case gold price to calculate the cut-off grade (CoG) of the revised mine plan while the 2008 Box Mine Feasibility Study utilized a US$525/oz CoG. In addition, BETA was retained to complete a Pre-Feasibility study on the Athona Deposit. Both technical reports were completed under the direction of David Bikerman, Engineer of Mines and President of BETA, an independent Qualified Person as defined by National Instrument NI 43-101. David Bikerman has reviewed and approved the technical content of this release.

The results of the revised Box Mine and new Athona Deposit in-pit reserves, as stated in the BETA technical reports, estimated in accordance with CIM Standards and National Instrument 43-101, in comparison to the 2008 Feasibility Study are summarized in Table 1.

Table 1. Goldfields Project Comparison of In-pit Revised Reserves Estimate
since 2008
May 2008
Feasibility September 2009
Study Studies
Feasibility Pre-Feasibility Goldfields
Box Mine Study Study (Box + Athona)
Box Mine Athona Deposit
Proven & Probable
(Gold Ounces) 601,007 685,900 344,500 1,030,400
Tonnes 10,997,000 14,908,000 10,483,000 25,391,000
Grade (grams per
tonne) 1.70 1.43 1.02 1.26
Stripping Ratio 3.16:1 3.42:1 2.47:1 3.03:1
Base Case Gold Price $525 $750 $750 $750
Estimated Mine Life 7.1 years 9.4 years 5.9 years 15.3 years

The estimated Proven and Probable reserves at the Goldfields Project are as follows in Table 2.

Table 2. Proven and Probable Reserves at the Goldfields Project
Deposit Category Tonnes Grade Ounces Strip Ratio
(Au g/t)
Box(1) Proven 2,317,700 1.70 126,900
Probable 12,590,300 1.38 559,000
---------- ---- -------
Total 14,908,000 1.43 685,900 3.42:1
Athona(2) Proven - - -
Probable 10,483,000 1.02 344,500
---------- ---- -------
Total 10,483,000 1.02 344,500 2.47:1
Goldfields Project Proven 2,317,700 1.70 126,900
(Box + Athona) Probable 23,073,300 1.22 903,500
---------- ---- -------
Total 25,391,000 1.26 1,030,400 3.03:1
(1) Feasibility level study
(2) Pre-Feasibility level study

The reserves are based on the following assumptions:

- A $750.00 gold price;

- An internal cut-off grade (CoG) of 0.25g/t Au based on recoveries of 93% at Box and 89% at Athona;

- Gold Reserve ounces do not include metallurgical losses

Financial Summary

The studies included a financial analysis of the Box Mine and Athona Gold Deposit based on nominal mill throughput of a 5000 tonnes per day operation (1.8 million tonnes per year), estimated pre-production capital cost of US$65.7 million, estimated open-pit Box Mine and Athona Gold Deposit operating cost per tonne of ore of US$16.01 (strip ratio 3.42:1) and US$15.00 (strip ratio 2.47:1), respectively, estimated gold recovery at Box of 93% and Athona of 89% and production subject to a 2% net smelter royalty.

Table 3 summarizes the results of the financial analysis with the Net Present Value (NPV) calculated at a 5% discount rate and the Internal Rate of Return (IRR), each at a range of different gold prices.

Table 3. Summary Financial Analysis of the Goldfields Project
Goldfields Project
Box Mine & Athona
Box Mine Gold Deposit
Gold Price NPV (US$) @ 5% IRR NPV (US$) @ 5% IRR
Base Case $750 $73.0 million 31.3% $93.2 million 31.8%
$850 $105.6 million 42.2% $137.6 million 42.7%
$900 $121.9 million 47.6% $159.4 million 47.9%
$950 $138.1 million 52.7% $181.2 million 53.0%
$1000 $154.3 million 57.8% $203.0 million 58.1%

The project area is serviced by excellent local infrastructure which includes airport, hydro-electric power, telecommunications, good road system and employee accommodations.

The NI 43-101 Technical Reports for the Box Mine Feasibility Study and the Athona Deposit Pre-Feasibility Study will be filed on SEDAR within 30 days of the date of this news release.

Additional gold ounce potential exists from both of the Box and Athona deposits where the down-dip extensions remain open. Exploration upside at the Goldfields Project is considered excellent. Future exploration programs will also include testing of the Golden Pond and Frontier Adit target areas. Previous drill results at Golden Pond were reported as 16.57grams per tonne of gold over 13.6 metres and 5.07grams per tonne of gold over 15 metres. A regional exploration and drill program is planned to identify, test and define new areas of mineralization.

Mr. Mike Sylvestre, P.Eng., a qualified person under National Instrument 43-101, has reviewed and approved the scientific and technical information in this press release based on the 43-101 compliant technical reports by Bikerman Engineering & Technology Associates, Inc., June 2007, Revision 1-May 12, 2008, Revision 2-September 24, 2009 on the Box Mine - Goldfields Project, Uranium City, Saskatchewan, Canada, and the Athona Pit Pre-Feasibility, Box Mine Goldfields Project, Uranium City, Saskatchewan, Canada, September 25, 2009.

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 Linear and the Goldfields Project, statements regarding exploration prospects, statements regarding synergies and financial impact of the proposed transaction, the terms and conditions of the transaction, the benefits of the proposed transaction, the identification of mineral reserves and resources, costs of and capital for exploration and development projects, exploration and development expenditures, timing of future exploration and development activities, expected production, 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 based on various assumptions and on the best estimates of Linear, as the case may be, as of the date hereof, and 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, and as well as those risks identified under "Risk Factors" disclosure sections in the documents filed under the profile of SEDAR by Linear from time to time. 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.

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