Seafield Resources Ltd.

Seafield Resources Ltd.

April 23, 2012 06:30 ET

Seafield Announces Preliminary Economic Assessment for Its Miraflores Deposit, Indicating an IRR of 50% and 709,349 Ounces of Recovered Gold

TORONTO, ONTARIO--(Marketwire - April 23, 2012) - Seafield Resources Ltd. ("Seafield" or "the Company") (TSX VENTURE:SFF) is pleased to announce the results of an independent Preliminary Economic Assessment ("PEA") for its 100%-owned Miraflores Deposit (the "Project"), located in the Quinchía District of the Department of Risaralda, Colombia. The PEA was completed by SRK Consulting ("SRK") of Denver, Colorado.


  • Open pit mine life of 8 years, underground mine life of 10 years and full process production life of 14 years.

  • Average annual gold production of 71,007 oz ("Au") in the first 8 years produced from open pit and underground mining; 114,173 oz total from processing of low grade stockpile after year 8 until end of mine life

  • Average mill throughput rate of 4,000 tonnes per day ("tpd");

  • Mineable resource of 11.97 million tons ("Mt") of gold:

  • 6.97 Mt at 1.38 g/t Au (open pit mining)

  • 5.0 Mt at 2.27 g/t Au (underground mining)

  • Strip Ratio of 2.04:1 (waste : mill feed including low grade stockpile)

  • Average cash operating cost of US$ 524/oz during the first 8 years of production when 82% of the gold is produced (excluding royalties of 6.4% and refining charges);

  • Initial capital expenditures of US$ 93.7 M;

  • IRR of 50% and pre-tax NPV (8%) of US$249 M (based on a gold price of US$ 1,500/oz).

"We are very pleased with SRK's recommendation to move Miraflores forward," commented Cesar Lopez, Seafield's President and CEO. "The PEA presents a production scenario with robust economics achieved through manageable capital expenditures and below-average industry cash costs. Our team will continue to develop our project and secure Seafield's position as an emerging gold producer in Colombia."


The PEA models the mining of the Miraflores breccia pipe deposit using a combination of open pit and underground mining methods. Seafield plans to develop a lower tonnage operation with a focus on processing the higher grade materials of the deposit in the first eight years of the mine life. Below are the details of the results from the PEA on the Company's Miraflores Deposit:

Project Description:


Seafield's Miraflores Deposit is located within the Company's 100%-owned, 6,757-hectare Quinchía Gold Project in the Department of Risaralda, Colombia. The mineral contract of Miraflores consists of a 124-hectare claim located some 55 km north of Pereira, the capital of the Department of Risaralda and approximately 100 km south of Medellín. The elevation of the deposit area ranges from 1,000 to 1,500 masl.


Miraflores is located in a sparsely populated district approximately 2.5 hours' drive on paved road from Pereira. The main trunk line for power in the region runs 5 to 10 km from the deposit, running parallel to the Cauca River. Water sources for the project include the Cauca River, located 3 km east of the Miraflores Deposit, as well as tributaries that flow through the property.


Miraflores is a magmatic-hydrothermal breccia pipe, located within a fertile hypabyssal porphyry cluster. The low sulphidation epithermal deposit contains free gold associated with cement materials and high-grade structures where gold is associated with zinc, lead, copper and iron. The Miraflores breccia pipe has a drill tested diameter of 280 metres by 250 metres and a vertical extent of 600 metres. The deposit widens and remains open at depth.

Open Pit Mining

The open pit is defined by two discrete mine phases with the first phase focusing on processing the higher grade materials of the deposit in the first 8 years of production. The open pit model contains measured, indicated and inferred resources. The higher grade component contains only materials above 0.6 g/t Au and is estimated to contain 6.97 Mt of rock with a grade of 1.38 g/t Au and 310,184 oz of contained Au in-situ before recovery. The open pit contribution to mill throughput is approximately 2,400 tpd. Lower grade materials between 0.3 g/t to 0.6 g/t Au will be stockpiled and fed into the mill after year 8 of full production. The lower grade materials are estimated to contain 8.32 Mt of rock with a grade of 0.43 g/t and 115,000 oz of contained Au in-situ before recovery.

The ultimate pit will be 550 metres from east to west, 500 metres north to south with a maximum high-wall height of 440 m and volume of 17.02 Mm3. At a cut-off grade of 0.3 g/t Au, the overall strip ratio (waste: mill feed) is estimated at 2.04.

Underground Mining

Within the Miraflores breccia pipe are a series of north-south trending veins that contain higher grade gold than the background breccia system. To date, Seafield has identified eight higher grade structures within the deposit (See Company's press release dated January 31, 2012). The underground mining component of production will target the higher grade features below the open pit.

The mineable resource in the underground mine is estimated to contain 5.0 Mt (diluted) at an average gold grade of 2.27 g/t. Before process recovery, the underground portion of the deposit is estimated to contain 363,808 ozs gold. The underground contribution to mill throughput is approximately 1,600 tpd during the time open pit operations are in full production (first 8 years).

Available geotechnical data to date indicates that a sublevel longhole stoping method with 15 m sublevel spacing and backfill would be successful in obtaining a high extraction ratio in the economic portion of the deposit. The Company is currently conducting further geotechnical studies to gather more information for the next level of study.

The main ramp access development is situated on the east side of the deposit close to the process plant site. The main ramp is currently designed with a cross section of 4 metres wide by 5 metres high and a total length of 5,260 metres at a grade of 15%. Development on the sublevels will have a minimum cross section of 3 metres wide by 4 metres high. The first section of the ramp will run west then spiral down to access the stope areas.

Total production summary for the Miraflores Deposit is outlined in the Table 1 below:

Table 1 - Miraflores Production Summary
Description Units Open Pit Underground Stockpile
Tonnes Processed Mt 6.97 4.99 8.32
Gold Grade g/t 1.38 2.27 0.43
Cut-Off Grade g/t 0.60 0.88 0.30 - 0.60
Average Contribution to Mill feed Tpd 2,400* 1,600* 4,000
Throughput Tpd 4,000
Gold Recovery % 90
Total Gold Production Ozs 709,349
Full Production Period Yrs 8
(years 1-8)
(years 1-10)
(years 8-14)
* Average for first 8 years, actual rates vary on an annual basis and underground production.

The Company cautions that the PEA is preliminary in nature, and is based on technical and economic assumptions which will be evaluated in more advanced studies. The PEA is based on a resource model that contains Measured, Indicated and Inferred mineral resources. Inferred mineral resources are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized.


An extensive metallurgical study was recently completed by Inspectorate under the design and supervision of SRK (See Company press release dated March 26, 2012). Table 2 provides estimates of overall gold recoveries for the process option based on the relative contribution of each rock type in the resource and includes an adjustment for miscellaneous plant losses (2%).

Processing by a flowsheet that includes gravity concentration followed by flotation and cyanidation of the flotation concentrate is estimated to recover 90% of the gold. This process offers the optimal advantage of higher overall gold recovery and a smaller cyanidation circuit, which could significantly improve options for tailings disposal.

Table 2 - Estimated Miraflores Gold Recoveries (2% plant losses)
Rock Type Contribution (%) Gravity + Flotation + Cyanidation (%)
White Breccia 56 93
Green Breccia 22 90
Basalt 12 89
Argillized* 10 93
Overall 100 92
Gold Recovery % (Plant Loss Adjusted) 90
*Note: Assume argillized materials are blended with other rock types

Tailings Facility

Waste material will be used for the progressive construction of the tailings dam embankment. A tailings storage facility has been located and designed capable of storing up to 19.1 Mt of mill tailings. The impoundment site will be west of the mill location in the valley below the deposit. The impoundment volume has been divided into two storage cells to accommodate 2.60 Mm3 of fine residual concentrator tailings and 11.97 Mm3 of slime mill tailings.

A starter dam will be constructed 2 years before mill production and will have sufficient capacity for 1.5 years of tailings. The dam embankment construction is anticipated to be a continuous operation to keep ahead of tailings deposition. Tailings deposition will be by multi-point discharge along the dam face with the decant pool and pump barge located on the north beach of the impoundment.

Equipment & Development

Mine equipment has been sized to accommodate the relatively low production rate as defined by the production schedule, but also handle the heavy rainfall events common in the region. For the open pit mine component, 40t articulated dump trucks combined with suitable loading equipment have been estimated for both capital and operating costs.

Two twin-boom drill jumbos, with a third machine onsite to act as a backup, have been estimated to undertake all of the underground development work. Development mucking will be undertaken by 3 cu yd LHD's dumping into 22t trucks. Drilling for ground support will be undertaken by the jumbos or hand held drills from a scissor lift. The majority of the development will occur in the first two years and development will reduce significantly for the remainder of the mine life.

During the first year of operation, most of the development waste will be stockpiled on surface. Once stoping operations commence, the waste stockpile will be reclaimed as backfill.

Capital and Operating Costs

The initial capital expenditures are estimated at US$ 93.7 million. Sustaining capital of US$ 43 million will cover underground equipment and development, and the tailings dam expansion throughout the mine life. The total life of mine ("LoM") capital cost estimate totals US$ 137 million. A contingency of 20% was applied to all stages of capital expenditures to account for optimizing capital usage and operations efficiency throughout the mine life. A summary of the total capital cost estimates are outlined in Table 3 below.

Table 3 - Miraflores Capital Cost Estimates (US$000s)
Description Initial Sustaining LoM
Open Pit Mining
Underground Mining
Tailings Facility
Owner Cost
Subtotal 78,120 35,816 113,935
Contingency (20%) 15,624 7,163 22,787
Total Capital 93,744 42,979 136,723

Operating costs were estimated based on assumptions and productivities that are consistent with conditions encountered in the project area. The LoM operating cost will be approximately US$20.79/t-RoM. Miraflores' operating cost estimates are summarized in Table 4 below:

Table 4 - Miraflores Operating Cost Estimates
Description Value (US$/t.milled)
Mining - Open Pit + Underground $ 8.29
Processing $ 11.03
Tailings $ 0.47
G&A $ 1.00
Total $ 20.79

Project Economics

A sensitivity analysis highlighting Miraflores' Net Present Value ("NPV") using various gold prices and discount rates are outlined in Table 5.

SRK's cash flow model in the PEA was based on the production schedule associated with the gold grades, recovery rates, and capital and operating costs presented in this press release. Project value (NPV 8%) at US$1,500/oz gold on a pre-tax basis is US$ 249 million with an IRR of 50%. The post-tax (NPV 8%) on a post-tax basis is US$ 188 million with an IRR of 45%. Full payback, given the base case price of gold, will occur after 1.8 years of operations.

Over the first 8 years of the mine life, the project cash cost is estimated to be US$ 524.01/oz-Au (excluding royalties of 6.4% and refinery charges). The LoM project cash cost is estimated to be US$ 594.50/oz-Au (excluding royalties of 6.4% and refinery charges).

Table 5 - Base-Case Gold Price Sensitivity Analysis
Gold Price NPV (5%) NPV (8%) IRR Payback (years)
$ 1,300 $ 207 M $ 166 M 38 % 2.10
$ 1,400 $ 256 M $ 207 M 44 % 1.95
$ 1,500 $ 306 M $ 249 M 50 % 1.80
$ 1,600 $ 355 M $ 291 M 55 % 1.40

Note: All prices are in $US and are reported at pre-tax values.

Next steps

Based on the results of this PEA, SRK has recommended advancing the Miraflores project forward. In preparation for a more detailed study on the deposit, the Company has begun implementing the following programs:

Geotechnical Studies

Open pit and underground mine design in the PEA were based on limited rock characterization data. The Company is currently conducting a thorough geotechnical investigation to evaluate rock strength, seismic hazards, stability of the ultimate pit slope and underground stress measurement in the project area. The studies will provide further information for defining the ultimate mine design parameters.

Metallurgical Test Work and Process Design

Seafield plans to perform further test-work to provide a more detailed analysis on the recovery rates and methods. Detailed studies need to thoroughly evaluate the optimum process flowsheet and required process parameters.

Improve Resource Confidence

A tunnelling and 5,000-metres infill diamond drill program is currently underway at the Miraflores Deposit to further define the high grade mineralization within the breccia pipe. Further drilling data will be used to update the current NI 43-101 compliant resource estimate at Miraflores.

Tailings Storage

The Company is planning to conduct geochemical and characterization studies to facilitate eventual tailings dam foundations and design. Further studies are being planned to characterize the waste and tailings that will be produced from Miraflores.

Environmental Baseline Studies

Environmental baseline studies are underway to establish the development boundaries of Miraflores. The studies will cover investigations of hydrology, hydrogeology, social characterization, climatic and meteorology data collection, water and air characterization and monitoring, soil characterization, archaeology and ecosystems characterization.

Corporate Social Responsibility Programs

As a signing member of the United Nations Global Compact, the Company is dedicated to adhering to the 10 universally accepted principles in the areas of human rights, labour, environment and anti-corruption. Seafield is heavily engaged in corporate social responsibility initiatives in the Quinchía District. 71% of the Company's employees in Colombia are from the local town of Quinchía.

The Company has partnered with the Technical University of Pereira for the implementation of social responsibility strategies designed to address the needs of local stakeholders. Past initiatives have included landslide relief, community events for youths, cultural events, infrastructure upgrades and educational programs. As Miraflores advances to the next stage towards production, Seafield will continue to place social responsibility as a top priority to ensure it operates to not only the general long-term value for its shareholders, but also to benefit the members of the district.

Assessment Authors and Qualified Persons

SRK Consulting, Denver, was responsible for the compilation of information and preparation of the overall study.

  1. Bret Swanson B.E (Mining). MAusIMM, MMSAQP is a Principal Mining Engineer with 17 years of global mining experience. His recent work has involved contributions to numerous feasibility, pre-feasibility, preliminary assessment, due diligence and competent person reports while employed with SRK, Denver. Mr. Swanson was the lead person responsible for completing the PEA for Miraflores. He has reviewed the information in this release as it relates to the Miraflores Deposit.
  2. Eric Olin, MSc, MBA, RM-SME, Principal Process Metallurgist of SRK in Denver, Colorado. Mr. Olin has over 30 years' experience in the minerals industry with extensive consulting, plant operations, process development, project management and research & development experience with base metals, precious metals, ferrous metals and industrial minerals. Mr. Olin was responsible for the information provided under metallurgy.
  3. Scott E. Wilson, C.P.G., of Scott E. Wilson Consulting, Inc. in Englewood, Colorado prepared the Miraflores Deposit resource estimates. Mr. Wilson is an independent qualified person as defined by National Instrument 43-101 and has prepared or reviewed the preparation of the information which forms the basis of the NI 43-101 resource estimate at Miraflores. He is a Certified Professional Geologist, a member of the American Institute of Professional Geologists (CPG #10965) and a Registered Member (#4025107) of the Society of Mining and Metallurgy and Exploration, Inc., a professional association and designation recognized by the Canadian regulatory authorities.

Tom Henricksen, VP, Exploration of Seafield Resources Ltd., is a qualified person as defined by National Instrument 43-101 and reviewed the preparation of the scientific and technical information in this press release. Dr. Henricksen is a Registered Professional Geologist in the State of Wyoming, USA (Membership # PG-3069) a professional association and designation recognized by the Canadian regulatory authorities.

About Seafield Resources Ltd.

Seafield Resources Ltd. is a mineral exploration company currently focused on advancing its Miraflores Deposit in Colombia towards feasibility level. Seafield's 100%-owned 6,757-hectare Quinchia Gold Project is located in Department of Risaralda, Colombia. Seafield's Miraflores Deposit currently has a NI 43-101 compliant Measured and Indicated resource of 1,925,542 ounces gold at 0.8 g/t and an Inferred resource estimate of 103,043 ounces gold at 0.6 g/t. Additionally, the Company has a NI 43-101 compliant resource estimate for its Dosquebradas Deposit, also part of the Quinchia Gold Project, with Inferred resource estimate totalling 920,772 ounces gold at 0.5 g/t. Seafield Resources Ltd. trades its shares on the Toronto Venture Exchange (TSX-V) under the symbol SFF and in the United States using CUSIP 81173R101. For more details on the Company, please visit

Forward-Looking Statement

This news release includes certain "forward-looking statements" within the meaning of that phrase under Canadian securities laws. Without limitation, statements regarding potential mineralization and resources, exploration results, and future plans and objectives of the Company are forward looking statements that involve various degrees of risk. Forward-looking statements reflect management's current views with respect to possible future events and conditions and, by their nature, are based on management's beliefs and assumptions and subject to known and unknown risks and uncertainties, both general and specific to the Company. Although the Company believes the expectations expressed in such forward-looking statements are reasonable, such statements are not guarantees of future performance and actual results or developments may differ materially from those in our forward-looking statements. The Company cautions that the PEA is preliminary in nature, and is based on technical and economic assumptions which will be evaluated in more advanced studies. The PEA is based on a resource model that contains Measured, Indicated and Inferred mineral resources. Inferred mineral resources are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. The following are important factors that could cause the Company's actual results to differ materially from those expressed or implied by such forward looking statements: changes in the world wide price of commodities, general market conditions, risks inherent in exploration, risks associated with development, construction and mining operations, the uncertainty of future profitability and the uncertainty of access to additional capital. Additional information regarding the material factors and assumptions that were applied in making these forward looking statements as well as the various risks and uncertainties we face are described in greater detail in the "Risk Factors" section of our annual and interim Management's Discussion and Analysis of our financial results and other continuous disclosure documents and financial statements we file with the Canadian securities regulatory authorities which are available at The Company undertakes no obligation to update this forward-looking information except as required by applicable law. The Company relies on litigation protection for forward-looking statements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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