i-minerals inc.

i-minerals inc.

August 22, 2011 08:30 ET

i-minerals inc.: Incorporation of Optimization Strategies to Reduce Capital and Operating Costs Expected to Delay Release of Feasibility Study Results About 90 Days

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 22, 2011) - i-minerals inc. (TSX VENTURE:IMA)(PINK SHEETS:IMAHF) ("the Company") i-minerals announces that it has elected to postpone the completion of the feasibility study on the Kelly's Basin feldspar-quartz deposit to incorporate a number of recently identified optimization strategies that are expected to materially reduce capital costs from the currently estimated levels. These strategies include:

  • relocation and redesign of the transload facility wherein mineral products are loaded for rail transport,
  • redesign of the quartz flotation circuit from a three float process to a two float process,
  • utilization of a high-density pneumatic pumping systems technology for materials handling, and
  • incorporation of the results from the recently completed drill program will allow for an upgrade of the reserve to proven reserve from probable reserve.

Incorporation of these strategies into the milling process is expected to reduce operating costs below levels estimated in the prefeasibility study primarily through lower electricity and reagent consumption as well as a small reduction in required manpower. The Company's engineering consultants Roberts & Schaeffer are actively working on the design improvements. Several alternate transload facility sites have been located with a preferred site identified. The net impact of these changes as more fully described below is expected to delay the completion of the feasibility study up to 90 days or possibly more, but result in lower operating costs and significant capital cost savings as compared with current estimates.

Relocation of Transload Facilities

The prefeasibility study contemplated locating the transload facility on the banks of the Snake River just across the Idaho State border at the Port of Wilma in Washington. Geotechnical work completed on this site in June 2011 indicated the site was underlain by unconsolidated fill material. Results of this work indicated the combination of building rail access, and constructing the process facility to grind and store hundreds of tons of mineral products required significant volumes of gravel, steel and concrete not contemplated in the prefeasibility study. As a result, the cost of these construction materials significantly increased the capital costs associated with the transload facility when compared with the prefeasibility estimates.

The Company has identified a number of alternate sites for the transload facility. One site has an existing rail siding, which reduces costs as no construction of a rail bed is necessary and this site is very well situated making it the preferred location. This preferred site is currently vacant and initial discussions with the owner are scheduled for the week of August 22. In an effort to further reduce costs, the Company plans to shift the custom grinding and primary storage to the mine operations at Bovill and as a result only tertiary storage together with rail loading capabilities is required at the new transload site. Servicing the rapidly growing Pacific Rim markets can still be easily accomplished by filling sea containers with mineral products at Bovill and loading containers onto barges at existing Lewiston area facilities.

Improvement of Quartz Flotation Process

Based upon recent analytical work completed at Dorfner Anzaplan ("Dorfner") a specialty quartz testing laboratory in Germany and noted in the Company's press release of July 28, 2011, the Company can make a high purity quartz through a standard flotation process. When the chemistry of the two-float quartz product (303.92 parts per million ("ppm") of impurities or 99.953% pure SiO2) is compared with the chemistry of the three-float quartz product (279.57 ppm of impurities or 99.956% pure SiO2) there is no material increase in the purity generated through the third float. Reducing the quartz production process down to two floats from three reduces the capital requirements including the footprint of the operation, which reduces the associated building costs such as steel and concrete. Recoveries will also increase somewhat given there would be no loss associated with the third float.

Materials Handling

The initial materials handling process contemplated in the feasibility study was bucket elevators with one located at the Bovill operations and the second at the transload facility. The amended plan for the transload facility does not include a bucket elevator and Roberts & Schaeffer has recommended the Company pursue high-density pneumatic pumping systems. The cost savings associated with such system are twofold: the pneumatic pumping systems have a materially lower initial capital cost and the associated building costs such as cement and steel are lower given there is no need to support the elevator structure.

Upgrade of Reserves

The November 2010 Prefeasibility Study defined the mineral reserve at Kelly's Basin as being a probable reserve of 9.946 million tons of ore containing 4.774 million tons of sodium feldspar and 1.79 million tons of quartz. As noted in the Company's press release of July 14, 2011 the completion of an additional 33 drill holes yields drill spacing supportive of the calculation of a proven reserve. Optimization of the feasibility study creates sufficient time for Company to receive the analytic results from the recent drill program and present the recalculated reserve as a proven reserve rather than a probable reserve as it is currently defined.

Operating Costs

Reducing the quartz flotation circuit from three banks of cells to two banks of flotation cells is expected to reduce power and reagent consumption. Further operating cost reductions in the flotation process may be achievable through reducing the number of electric motors by using one larger motor to power two flotation cells rather than two motors. The redesigned transload facility requires less labor to operate and there is a less than corresponding increase in Bovill area labor. The expected impact of the changes is operating costs that are forecast to be lower than those estimated in the prefeasibility study.

"Like most other companies actively completing feasibility studies on resource projects we have encountered cost escalation as compared with the costs forecast in the prefeasibility study completed just a year or so ago," commented Thomas Conway, president and CEO of i-minerals inc. "Given there were solutions identified for a number of the areas that experienced cost escalation, we have elected to postpone the completion of the feasibility study in an effort to optimize its results. The savings we have identified so far are not immaterial and could total many millions of dollars. These capital cost savings, taken together with opportunities to improve operating costs warrants the relatively short delay to facilitate the optimization of the production process."

A. Lamar Long, CPG, is the Qualified Person ("QP") for the Helmer-Bovill project under NI 43-101. He oversees the quality control and quality assurance program and the construction of all samples for metallurgical analysis and reviews all analytical results prior to public release.

About i-minerals inc.

i-minerals holds ten minerals leases in northwestern Idaho that hosts Kelly's Basin feldspar-quartz deposit that is the subject of an ongoing feasibility study. High purity quartz (>99.95% SiO2) can be produced through a standard flotation process. A pre-feasibility study completed by SRK Consulting (USA) Inc. of Denver Co ("SRK"), calculated a NPV of $61 million and an IRR of 19%. Preliminary exploration work on occurrences of primary clay deposits has identified variable concentrations of kaolinite, halloysite, quartz and feldspar. The Company commissioned SRK to complete and initial assessment of the primary clay deposits through a Preliminary Economic Assessment (the "PEA") which is based upon limited, widely spaced drilling over large areas. While additional assessment work is required to fully assess the economic viability of the deposits, the PEA yielded a NPV of $95 million and an IRR of 48% and indicated these primary clay deposits may represent the largest deposit of halloysite in North America. Halloysite is a unique tubular shaped alumina-silicate mineral often referred to as a halloysite nanotube which is being increasingly used in nanotechnology applications.

i-minerals inc.

Thomas M. Conway, President & CEO

This News Release may contain forward-looking statements based on assumptions and judgments of management regarding future events or results that may prove to be inaccurate as a result of risk factors beyond its control, and actual results may differ materially from the expected results.

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