Cash Minerals Ltd.

Cash Minerals Ltd.

November 17, 2008 07:00 ET

Cash Minerals Releases Positive Coal Pre-Feasibility Study (NI 43-101) on Division Mountain Property, Yukon Territory

Study Demonstrates Economic Viability of 26.4 Mt of 'Proven' Coal Reserves

TORONTO, ONTARIO--(Marketwire - Nov. 17, 2008) - Cash Minerals Ltd. (TSX VENTURE:CHX) today announced results from a recently completed NI 43-101 pre-feasibility study on the Division Mountain coal property, located in the Yukon Territory, which contains estimated measured mineral resources of 52.5 million tonnes of high volatile bituminous "B" coal, including 26.4 million tonnes of proven mineral reserves. The study was commissioned in July 2008 to re-evaluate previous economic studies conducted on Division Mountain given improvements in the export coal markets. The study was performed by Norwest Corporation ("Norwest"), a leading North American energy and mining engineering consultancy.

The updated study proposes that the reserves be developed to provide approximately 2.6 million metric tonnes per year (Mtpy). Over 2 Mtpy of raw coal is projected to be mined and washed to produce a 14% ash product for the thermal export coal markets on the Pacific Rim. This results in a yield of 58.3% resulting in an average of approximately 1.24 million tonnes of thermal coal per year over 10 years to be sold. In addition, it is proposed that approximately 240 thousand metric tonnes of run-of-mine coal per year would fuel a 50 megawatt "mine-mouth" generating station. Alternative 1 presented in the table below uses current assumptions of mine planning, taking into account long-term price forecasts from a recent market study by McCloskey Group, and assuming wash yields as predicted from the currently available washability test data, confirms economic reserves and overall project viability.

The updated study also revealed that with only a moderate increase in yields, the project economics can be significantly enhanced as illustrated in the table below presented as Alternative 2. By assuming a relatively small improvement in washability yields of 6.1%, an IRR of over 20% may be realized, with an NPV of $50.4 million using a discount rate of 5%.

Alternatives 1 2
------------ - -

PRODUCTION, per year (000)

Thermal tonnes 1,243 1,374

Power plant tonnes 240 240

REVENUES, per year ($000)

Thermal coal sales 98,309 108,654

Power plant coal sales 8,138 8,138

TOTAL REVENUES ($000) 106,447 116,792

Yukon royalties 1,633 1,779

Coal transportation 21,661 23,946

Port charges 6,227 6,883

Labour 10,374 10,374

Materials and supplies 46,485 46,653

Other 987 952

TOTAL PRODUCTION COSTS ($000) 85,734 88,808

EBITDA ($ 000) 19,080 26,205

EBITDA ($/sales tonne) 13 16

NPV (5%) 11 million 50.4 million
IRR 9.20% 22.40%

The results in this table represent an average year of the 10 year mine-life

The financial results demonstrate an economically robust project generating an average pre-tax cash flow of $19.1 million per annum and approximately $26.2 million with moderate improvements in the net yield.

A payback period of less than six years is estimated for the initial capital expenditures of $110 million under Alternative 1 and a payback period of less than four years for Alternative 2 with a similar capital expenditure requirement. Of the $110 million required, $48.5 million is required for mine development, infrastructure and facilities and $61.3 million for mobile equipment.

"The pre-feasibility study on the Division Mountain coal project clearly demonstrates potential for the development of a mine to serve the export coal market, specifically the thermal coal export market, along with the domestic market. This is an exciting prospect as the economics of this project are significantly enhanced while not dependent solely on the domestic market," stated Greg Duras, President and CEO of Cash Minerals Ltd.

The economic analysis presented in the study as the basis for demonstrating economic reserves is based on the following assumptions:

- The use of long term price forecasts for thermal coal, as projected in a current market study by the McCloskey Group, Ltd.

- Exporting thermal coal into Pacific Rim markets.

- The use of an owner-operated coal transportation fleet to truck coal from the mine to port.

- Out-of-seam dilution (OSD) of 5cm from the roof and from the floor of each coal strata.

- Minimum minable coal seam thickness of 0.5m.

- Includes provisions for mining.

The coal resource and reserve mineral estimates are dated as of October 10, 2008 and are summarized in the tables below.

Resource Area ASTM Coal Rank In-Place Resources
(Tonnes in Millions)
Measured Indicated
Division Mt. High Volatile Bituminous B 52.493 0
Total 52.493

Area ASTM Coal Rank In-Place Reserves
(Tonnes in Millions)
Proven Probable
Division Mt. High Volatile Bituminous B 26.372 0
Total 26.372
(1) T. C. Becker, (B.Sc., P.Geo) and G. M. Stubblefield (P.E), both of
Norwest Corporation, are qualified persons under National
Instrument 43-101 and prepared the above resource and reserve
mineral estimates.
(2) These estimates were prepared in accordance with National
Instrument 43-101 and CIM Definition Standards on Mineral Resources
and Mineral Reserves adopted by CIM Council.
(3) Mineral resources that are not mineral reserves do not have
demonstrated economic viability.

The study is based on the coal being open pit - mined using conventional truck/shovel practices. It is projected that a raw coal product is produced, including: a ROM product that will be sold as fuel for a local 50MW (net) generating station, and coal to be washed in order to produce an export grade coal. Mineral reserve estimates may be materially affected by certain factors that have been detailed in the technical report to be filed under the profile of the Company on SEDAR at

While the updated study notes that the current market conditions support the development of a mine to serve the export coal market and the regional thermal coal market, additional recommendations were presented that may result in significantly increased project value. These recommendations included:

- More cost effective operations as a result of further detailed information and detailed mine planning;

- Additional study on coal washability, which may lead to significant improvements in project economics;

- Increase in production to meet increased industrial demand in the region; and

- Further exploration with the goal of defining additional resources of PCI and/or metallurgical grade coal, which could lead to further export potential.

Division Mountain Outlook

Based on the pre-feasibility study, and previous work conducted on Division Mountain, Cash Minerals intends to plan a drill program to perform additional hydro-geological and geotechnical testing and analysis. This program will also be used to better delineate the existing deposit.

A clean-coal ash content of 14% is recommended for the export thermal coal markets, which will result in more efficient coal washing and improved yields than the PCI coal, thereby increasing revenues. Project economics have been found to be extremely sensitive to coal washing yield. The historic washability testing will be reviewed and a washability testing program will be designed in order to provide a more detailed coal washing model.

New development will place additional demand on the Yukon's energy infrastructure. Coal energy supply options offer substantial opportunities to produce power over the long term at a lower cost than diesel generation in the Yukon. Division Mountain is suitably located and is well positioned with a large coal resource in close proximity to the existing electricity grid to be part of the future prosperity and growth of the Yukon through the generation of affordable, clean and reliable electricity from coal.

Division Mountain Coal Property

The Division Mountain coal deposit is located 90 km north-northwest of Whitehorse in Canada's Yukon Territory and 290 km from a year-round tidewater port at Skagway, Alaska. The coal deposit is held 100% by Cash Minerals and covers 776.4 hectares. Most of the area of detailed exploration at Division Mountain lies within five coal leases, which grants mining rights for a renewable 21-year term. The remaining area lies within an area covered by an additional 22 Territorial Coal Exploration Licences held by Cash Minerals Ltd., which covers approximately 360,000 hectares of coal-bearing stratigraphy in the Division Mountain area. These licences are held under renewable three-year terms.

Exploration was last conducted on the Division Mountain property in 2005 and consisted of four diamond drill holes, which were designed to confirm geological data and to explore target areas outside the defined deposit. The exploration program successfully confirmed the results of earlier drilling and outlined new coal seams on the Corduroy Mountain property, which is located five kilometres east of the Division Mountain coal deposit. The Division Mountain resource estimate was updated based on this drilling in a separate study conducted by Norwest.

T. C. Becker, (B.Sc., P.Geo) and G. M. Stubblefield (P.E), both of Norwest Corporation, are qualified persons under National Instrument 43-101, and have reviewed the scientific and technical information concerning the pre-feasibility study and reserve estimate cited in this news release. Messrs. Becker and Stubblefield authored the pre-feasibility study.

About Cash Minerals

Cash Minerals is a Canadian-based energy company focused on uranium and coal exploration. Under an agreement with joint venture partner Mega Uranium Ltd., Cash Minerals can maintain a 75% working interest in the highly prospective Igor property, located in the Wernecke Uranium District, Yukon, by completing a bankable feasibility study on the Igor property by December 31, 2012. Wernecke Uranium properties include numerous iron-oxide copper-gold-uranium (IOCG-U) and structurally-controlled hydrothermal uranium targets. The Company also holds a measured resource of 52.5 million tonnes of high volatile "B" bituminous coal (refer to NI 43-101 report dated December 21, 2005). This resource is located on a portion of the Division Mountain property, which occupies less than five percent of Cash Minerals' total coal leases in the Yukon.

Forward-Looking Statement

Except for statements of historical fact relating to the Company, certain information contained herein constitutes "forward-looking information" under Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the conclusions, parameters and assumptions underlying the Pre-Feasibility Study, the development potential of the Division Mountain project; mineral reserve and resource estimates and the ability to realize such estimates; capital and operating expenditures; coal prices; permitting time lines and permitting; government regulation of mining operations; and environmental risks. 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 statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. Estimates regarding the anticipated timing, amount and cost of mining at the Division Mountain Project are based on assumptions underlying mineral reserve and mineral resource estimates and the realization of such estimates as are set out in the Pre-Feasibility Study. Capital and operating cost estimates are based on research of the Corporation and its technical consultants and other factors that are set out in the Pre-Feasibilty Study. Production estimates are based on mine plans and production schedules, which have been proposed by the Corporation's personnel and independent consultants. 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 risks described in the public disclosure of the Company posted under the profile of the Company on SEDAR at Although management of 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 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 information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.


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