Playfair Mining Ltd.

Playfair Mining Ltd.

February 28, 2008 11:27 ET

Playfair Mining Ltd.: Grey River Preliminary Economic Assessment and Additional Drilling

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 28, 2008) - Playfair Mining (TSX VENTURE:PLY) is pleased to announce the results of the independent Preliminary Economic Assessment for its 100% owned Grey River Tungsten project. The study was performed by Golder Associates Ltd and was based on the July 2007 Inferred Mineral Resource calculation for the currently defined portion of the Grey River #10 Vein deposit.

The relatively low capital cost estimate described within the study of $US 30 Million provides a low capital barrier for Playfair to become the world's next tungsten producer. In addition to this low capital cost estimate, the study describes Net Present Value (NPV) that is currently positive with the potential to dramatically increase based on enlarging the mineral resource size through drilling.

The study, which is based solely on the partially defined #10 Vein mineralization, indicates that the NPV of the project is positive, with a possible total pre-tax cash flow of $US11 Million and NPV of $US 314,000 (or "break-even"), using a 7% discount rate. The study found no fatal technical flaws in the plan for Grey River, which is an important first step in determining production viability. Value per tonne also covers all operating costs and with a 35% increase in the tungsten price the Internal Rate of Return (IRR) increases to 30%. Additionally, the Golder preliminary assessment provides Playfair with useful information on improving the economics of the project.

A sensitivity analysis was performed for Grey River to determine how changes in price, grade, recovery or size of the resource would affect the NPV and IRR for the project. Profitability is sensitive to both metal prices and the size of the resource; increases in either have the potential to improve the project value substantially. For example, an increase in either grade, recovery or the price of tungsten by 20% raises the NPV of Grey River to an estimated $US17 Million, (based on the current size of the resource). Similarly, an increase of the resource by 100% could move the deposit's NPV to $US 36 Million, based on the current price of tungsten.

Three important aspects not fully considered in the preliminary economic assessment are as follows: (A) the potential to mine higher grade zones in advance of lower grade zones early in the mine life to improve the project's net present value, (B) the potential upside to the metallurgical results that have been completed to date, especially in terms of improving tungsten recovery (this will be fully assessed in Playfair's next phase of metallurgical test work) and (C) the potential upside to increase mining grades (or conversely decrease mining dilution) via more aggressive and selective mining methods, rather then the more conventional method suggested. Future economic assessments will work towards addressing these vital mining details.

While Playfair is very bullish on the future price of tungsten, the company is targeting to improve the economics at Grey River by expanding the size of the resource along strike and at depth. This will enable increased working areas, potentially higher production rates and longer mine life to provide an increased return on capital expenditures.

In conjunction with this view, Playfair announces plans to commence a 3,500 metre drill program at Grey River this spring. Playfair is confident that additional drill holes will add to the existing mineral resource and will thereby improve the economics of the Grey River deposit.

Donald Moore, Playfair's Chairman and CEO, states, "We are excited about the prospect of increasing the resource at Grey River and combined with what we believe will be a positive year for Tungsten prices, we see Grey River increasing in value quite rapidly. With a relatively low capital cost estimate of $US 30 Million, the idea is to increase the mine life by expanding the resource with anticipated price increases decreasing the payback period. While we are confident in the potential to dramatically increase the size of this high grade deposit once underground, we are being proactive by drilling now to increase the size of the deposit, before the potential underground development work begins."

Golder Associates BASE CASE Details

The preliminary economic assessment made use of the July 2007 Wardrop Engineering Inferred Mineral Resource estimate for the Grey River Number 10 Vein, as reported in an earlier news release and calculated by Chris Moreton, P.Geo., which is 852,000 tonnes at 0.858% WO3, with a 0.2% WO3 cut-off (16.1 million pounds of WO3). Using this July 2007 resource, Golder generated a "Base Case" which indicated a potentially mineable subset of the resource of 901,911 tonnes at 0.66% WO3, with an overall mining metal recovery of 81%. Potentially mineable zones are based on a cut-off-grade of 0.4% WO3 and a minimum mining thickness of 2 meters using a blasthole open stoping mining method. The Base Case estimates, for the currently defined portion of the Grey River Number 10 Vein deposit, indicates a possible total pre-tax cash flow of $US11 Million and NPV of $US 314,000. Golder concludes that the current size of the potentially mineable subset at Grey River limits the potential production rate and annual cash flow, indicating that it needs to be increased in order to make the project viable. Currently, the value per tonne of mined mineralized material is sufficient to pay for operating costs, however, in order to provide an acceptable return on initial capital expenditures a higher production rate over a similar, or longer, mine life is required. Alternatively, a 35% increase in the price of tungsten would be needed to improve the viability of the current resource (i.e. an IRR greater than 30%).

Golder Associates: Grey River #10 Vein Deposits Base Case Parameters

Parameter Value
Potentially Mineable Subset 901,991 tonnes
Grade 0.66% WO3
Mining Rate 105,000 tonnes/year (300 tpd)
Mill Recovery 85%
Operating Costs $US 89/tonne
Total Capital Cost $US 30.65 million
Metal Price (Ammonium Paratungstate "APT")
Concentrate Price $US 261 / MTU $US11 / pound
Discount Rate 7%

This preliminary economic assessment is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic parameters applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary assessment will be realized.

A digital copy of the Golder preliminary economic assessment will soon be available on Playfair's website and on SEDAR.COM.

Qualified Persons

Mr. Christopher Moreton, P.Geo., Mr. David Sprott, P.Eng and Mr. Andrew Bamber, P.Eng are the Qualified Persons and co-authors who have compiled and completed the January 2008 Preliminary Economic Assessment Study of the Grey River #10 Vein Deposit. Christopher Moreton is Senior Geologist with Wardrop Engineering Inc, which is a multidisciplinary and international consulting engineering firm who's North American Operations have achieved ISO 9001:2000 Certification. David Sprott, is a Senior Mining Engineer with Golder Associates Ltd., a global consulting group specializing in ground engineering and environmental services. Andrew Bamber is a partner and Principal Engineer with BC Mining and Research Ltd of Vancouver British Columbia. Michael Moore P.Geo is the Qualified Person who has reviewed the technical information contained in this News Release on behalf of Playfair. As required by NI 43-101 regulations, the preliminary economic assessment report will be filed on SEDAR.COM.

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D. Neil Briggs, President and Director

No Stock Exchange has Approved or Disapproved the Information Contained Herein. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Playfair Mining Ltd.
    D. Neil Briggs
    President and Director
    (604) 687-7178 or Toll Free: 1-888-244-6644
    (604) 687-7179 (FAX)