Terrane Metals Corp.
TSX VENTURE : TRX

Terrane Metals Corp.

October 16, 2007 09:15 ET

Terrane Announces Results of Preliminary Economic Assessment on Mt. Milligan Copper-Gold Project

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 16, 2007) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Robert Pease, President and CEO of Terrane Metals Corp. ("Terrane" or the "Company") (TSX VENTURE:TRX) is pleased to announce results of a Preliminary Economic Assessment ("PEA") on its 100%-owned Mt. Milligan copper-gold project in British Columbia, Canada.

The 43-101 compliant study was completed by Wardrop Engineering Inc. ("Wardrop") as part of an on-going $20 million feasibility-level work program that will be completed in Q1 2008. Wardrop has advised that for the purposes of this study, a three year backward-rolling average metal price and exchange rate scenario should be considered the Base Case. All dollars are Canadian unless otherwise stated.



Base Case Highlights Years Years
(US$550/oz Gold, US$2.50/lb Copper and FX 0.86) 1 - 6 1 - 14.5

Average Annual Metal Production
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Copper lb, million 97 90
Gold oz 273,300 221,530

Average Annual Cost (US$/lb/oz)
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1 lb Copper net of Gold credit 0.36 0.65
1 oz Gold net of Copper credit - $198 - $190

Average Annual Net Revenue (%)
------------------------------
Copper 60 63
Gold 39 36
Silver 1 1

Pre-Tax Payback (years) 3.9
----------------------

Pre-Tax Internal Rate of Return (%) 20.6
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Pre-Tax Net Present Value (8%) $580 million
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Rob Pease stated: "Our efforts over the past 16 months have been focused on value engineering and ensuring future environmental stewardship at Mt. Milligan. We have been able to design a project with a low stripping ratio, excellent metallurgy, compact mine site footprint and responsible closure plan. The PEA clearly demonstrates the opportunity for strong operating margins over a range of metals prices. Management believes that Mt. Milligan has the potential to be an environmentally sound, long life and low cost producer of copper and gold that will make a positive impact on the social and economic well-being of the region."



Key Life-of-Mine Parameters

Mineable Resources 317 million tonnes
Millfeed Grade 0.22% Cu 0.43 g/t Au
Stripping Ratio 0.74/1
Annual Throughput 21.9 million tonnes
Milling Rate 60,000 tonnes/day
Copper Recovery 84.9%
Gold Recovery 73.8%
Copper Concentrate Grade 27.3%
Initial Capital Cost $827 million
Operating Cost $7.12/tonne milled
Mine Life 14.5 years


Pre-Tax Financial Models

Pre-tax financial models presented in Table I are based on three metal price and exchange rate scenarios: a Base Case three year backward-rolling average, a two year backward-rolling average and current prices based on the London Metal Exchange and calculated as of October 2, 2007.

The Base Case economic evaluation has determined an Internal Rate of Return (IRR) of 20.6%, payback of capital in 3.9 years and a Net Present Value (NPV) of $580 million at a discount rate of 8%.



Table I PRE-TAX FINANCIAL MODELS SUMMARY

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Metal Price Scenarios
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Current 2 Year 3 Year Avg
Units Price Avg (Base Case)
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Copper US$/lb 3.65 2.95 2.50
Gold US$/oz 740 610 550
FX(i) USD/CAD 0.99 0.89 0.86
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NPV 0% $ millions 2,990 2,310 1,650
5% 1,740 1,290 870
8% 1,270 910 580
Payback Years 2.6 3.1 3.9
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IRR % 33.0 26.8 20.6
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(i)Initial Capex at FX equals 0.85


Working capital in the amount of $37 million, sustaining capital $120 million and reclamation and closure costs of $31 million have been included in the above financial models. Financial metrics over a wider range of metal prices can be viewed in a sensitivity matrix at the Company's website http://www.terranemetals.com.

Resources and Contained Metal

Resources in Table II are based on a Measured and Indicated classification within a smoothed and optimized open pit at an NSR cut-off of US$4.00/tonne. The NSR cut-off was calculated using metal prices of US$1.50/lb copper and US$550/oz gold, and takes into consideration metallurgical recoveries, concentrate grades and transportation costs and smelter treatment charges. These resources can be mined at a waste/ore ratio of 0.92/1 for Years 1-6 and 0.74/1 for Years 1-14.5. To ensure optimal metallurgical performance the mine plan has been designed to deliver feed to the process plant at an average grade of not less than 0.20% Cu.



Table II RESOURCES AND CONTAINED METAL

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Tonne Cu Au Copper lbs Gold oz
(Million) (%) (g/t) (Billion) (Million)
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Measured 205.3 0.23 0.47 1.04 3.08
Indicated 112.0 0.20 0.35 0.49 1.26
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Total 317.3 0.22 0.43 1.53 4.34
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Note: Mineral resources that are not mineral reserves do not have
demonstrated economic viability


Metallurgy

The 60,000 tpd process facility will utilize conventional crushing, grinding, rougher and cleaner flotation to produce a marketable gold-rich copper concentrate. Metallurgical performance is summarized in Table III. Metal recoveries and concentrate grades have been determined from an extensive locked-cycle test work program on representative composite samples obtained from a 60 hole (18,507 total metres) core drilling program completed in 2007.



Table III METALLURGY

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Years Years
1-6 1-14.5
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Millfeed Grade
Cu (%) 0.23 0.22
Au (g/t) 0.52 0.43

Recovery (%)
Cu 87.6 84.9
Au 75.2 73.8

Concentrate Grade
Cu (%) 27.6 27.3
Au (g/t) 54 46

Annual Concentrate (dry tonnes) 159,000 149,000
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Systematic optimization of the process flow sheet and fine regrinding of the rougher flotation concentrate resulted in an improved copper concentrate grade of 27.3% while maintaining excellent copper and gold recoveries.

Tailing Containment Facility and Waste Rock Dumps

The U-shaped tailings containment facility is immediately adjacent to the open pit and plant site. It will be constructed in stages using overburden and waste rock removed from the open pit. The facility has been carefully designed to minimize land disturbance and waste rock dumps and to simplify operation and allow for effective closure.

Infrastructure

The project is connected to existing roads and railheads at the nearby communities of Ft. St. James and Mackenzie. Mine employees will commute daily from local communities. Delivery of electrical power will require the construction of a 92km - 230kV power line from a substation located south of Mackenzie. Concentrate will be transported from the railhead at Ft. St. James to the port of Vancouver and then transferred to ocean vessels for shipment to smelters.

Initial Capital Cost

An initial capital expenditure of $827 million is required to construct the project (Table IV). This estimate utilized an exchange rate of 0.85 and is based on 2007 dollars with pricing supplied by vendors where applicable.



Table IV INITIAL CAPITAL COST

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Description $ Million
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Mining & Preproduction Development 168
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Plant Site Infrastructure 18
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Process Plant 246
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Ancillaries 23
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Power Supply & Distribution 51
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Tailings & Water Reclaim 42
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Owner's Costs 31
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Indirects 142
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Contingency - 15% 106
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Total $827 million
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Site Operating Cost

Life-of-mine site operating costs are $7.12/tonne ore milled (Table V).



Table V SITE OPERATING COST

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Description $/Tonne Milled
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Mining (including waste) 2.52
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Milling 3.79
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G & A 0.56
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Plant Services 0.25
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Total $7.12/t
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Recommendations and Development Plan

The PEA demonstrates that Mt. Milligan has a NI 43-101 compliant resource that has the potential to be economically viable under a Base Case development scenario. As a result, Wardrop has recommended that the Company upgrade the PEA to feasibility-level status. Should the resulting feasibility study confirm the economic viability of the project Wardrop further recommends that detailed engineering, procurement, construction and commissioning proceed for Mt. Milligan. The anticipated development plan would call for completion of the feasibility study in Q1 2008 followed by receipt of required permits in Q2 2009 and commencement of commercial operations in Q2 2011.

Conference Call

Terrane will host a conference call on Wednesday October 17, 2007 at 8:00am PDT to discuss results from PEA. A recording of the call will be available on the Company website. Call-in information is as follows:

Toll Free Dial-in Numbers (within the US and Canada): 1 800 926 9853

International Dial-in Number: +1 212 231 2912

Qualified Persons

Ms. Karla Mills, P.Eng., of Wardrop Engineering Inc. is a Qualified Person as defined by National Instrument 43-101. Ms. Mills has reviewed and approved the contents of this news release.

Mr. Herb Welhener, P.Eng., of Independent Mining Consultants, Inc. is a Qualified Person as defined by National Instrument 43-101. Mr. Welhener has reviewed and approved the contents of this news release.

Mr. Bruno Borntraeger, P.Eng., of Knight Piesold Ltd. is a Qualified Person as defined by National Instrument 43-101. Mr. Borntraeger has reviewed and approved the contents of this news release.

Mr. Joe Rokosh, P.Eng., of Merit Consultants International Inc. is a Qualified Person as defined by National Instrument 43-101. Mr. Rokosh has reviewed and approved the contents of this news release.

The NI 43-101 Technical Report for the Mt. Milligan Preliminary Economic Assessment estimate will be filed on SEDAR within 14 days of the date of this news release.

About the Company

Terrane Metals Corp. is an exploration and mine development company focused on the development of the Mt. Milligan copper-gold and Berg copper-molybdenum-silver projects in British Columbia, Canada. Goldcorp Inc. (TSX:G)(NYSE:GG) owns a 58% equity interest in Terrane on a fully diluted basis.

TERRANE METALS CORP.

Robert Pease, P.Geo, FGAC, President and CEO

Cautionary Note Regarding Forward Looking Statements

Except for the statements of historical fact contained herein, the information presented in this News Release constitutes "forward-looking statements" as such term is used in applicable Canadian laws. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. In particular, statements concerning Mineral Resource estimates should be viewed as forward-looking statements to the extent that they involve estimates of the mineralization that will be encountered if the property is developed. Any statements 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 or phrases such as "expects" or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "estimates" or "intends", or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact and should be viewed as "forward-looking statements". Such forward looking statements, including but not limited to, those with respect to the price of metals, the amount of estimated mineralization and of contained metals and the timing of and possible outcome of pending economic evaluations and other factors and events described in this News Release, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks and other factors include, among others, the actual results of exploration activities; variations in the underlying assumptions associated with the estimation or realization of Mineral Resources, the conclusions of economic evaluations and possible variations in ore grade or recovery rates; costs and timing of the development of new deposits; availability of capital to fund programs and the resulting dilution caused by the raising of capital through the sale of shares; accidents, labour disputes and other risks of the mining industry including without limitation those associated with the environment, delays in obtaining governmental approvals, permits or financing or in the completion of development or construction activities, title disputes or claims limitations on insurance coverage. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended.
There can be no assurance that such statements 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 statements contained in this News Release and in any document referred to in this News Release.

Forward looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made and the Company undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, except as required by applicable law.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Terrane Metals Corp.
    Rob Pease
    President and CEO
    (604) 681-9930 or Toll Free: 1-866-681-9930
    or
    Terrane Metals Corp.
    Ryan King
    Investor Relations
    (604) 681-9930 or Toll Free: 1-866-681-9930
    Website: www.terranemetals.com