Soho Resources Corp.

Soho Resources Corp.

October 04, 2010 09:30 ET

Soho Resources Corp. Announces Positive Preliminary Economic Assessment for Current Resource Identified on Its Tahuehueto Project

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 4, 2010) - Soho Resources Corp. (TSX VENTURE:SOH) ("Soho" or the "Company") is pleased to announce results of a Preliminary Economic Assessment ("PEA") for its 100% controlled Tahuehueto Project in Durango, Mexico. Results demonstrate robust economic returns using three-year rolling average gold, silver and base metal prices. Highlights are as follows:

Summary of PEA Estimates
Net cashflow $US 184.2 million
Net Present Value (NPV) 5% Discount Rate $US 109.6 million
Internal Rate of Return (IRR) 31%
Payback period (months) 27
Mine life (years) 11
Max processing rate (tonnes per annum) 1,000,000
Capital & startup costs $US 89.1 million


Metal Selling Prices    
Metal Sell Price - $US Source
Gold 965.81/oz London PM fix price (Centennial Precious Metals, Inc. 2010)
Silver 15.38/oz London fix price (Silver Institute, 2010)
Copper 2.92/lb LME grade A cathode spot price, CIF European ports (IMF, 2010)
Lead 0.95/lb LME 99.97% pure spot price, CIF European ports (IMF, 2010)
Zinc 0.88/lb LME high grade 98% pure spot price, CIF UK ports (IMF, 2010)

Mr. Ralph Shearing, President and CEO of the Company states, "The delivery of these robust Preliminary Economic Assessment numbers is one of the most significant milestones in the history of the Company and clearly demonstrates the potential economic viability of the Tahuehueto Project. It is important to note that this economic assessment was calculated from the resource as outlined in the most recent 2009, NI 43-101 compliant mineral resource. Very significant upside exploration potential exists within the unexplored portions of the current resource structures, both along strike and down dip, as well as in the many other separate mineralized structures known to occur, but yet unexplored, within the project concessions. Additional upside potential is also contained within the difference between the three-year rolling average metal prices used in the PEA and the current strong precious metal prices for gold and silver. There is very little doubt in my mind that with additional exploration and development the projected 11 year mine life outlined in the PEA could be dramatically extended."

The PEA was prepared by Snowden Mining Industry Consultants Inc. ("Snowden") in accordance with the requirements of Canadian National Instrument 43-101 "Standards of Disclosure for Mineral Projects" ("NI 43-101"). It contemplates a combination of an open pit operation at the El Creston Zone along with underground operations at Cinco de Mayo, El Creston and El Rey, utilizing mechanized low-cost Long Hole Open Stope ("LHOS") mining methods. Metallurgical test work, as previously disclosed, indicates that sulfide flotation methodology will produce separate copper, lead and zinc concentrates. 

As part of their report Snowden completed a preliminary Life of Mine (LOM) schedule for the combined open pit and underground operations. Key findings from this schedule include:

  • Potential mine life of greater than ten years, with the mill operating at full capacity from Year 2 to 8

  • Potential mill feed over the Life of Mine of 9.0 Mt with average grades of 1.64 g/t Au, 28 g/t Ag, 0.18%Cu, 0.87%Pb and 1.64%Zn

  • Cinco de Mayo underground operates over the whole mine life with a steady production rate at or near 300 Kt per annum

  • Creston open pit is mined from Years 1 to 8

  • El Rey and Creston underground operations commence in Year 6

  • A substantial spike in the gold grade during Year 2 of 3.5 g/t

For detailed LOM information on a year by year basis please visit the company's website at the following link;

Capital cost estimates are based on a new plant and equipment, published costs for similar projects and information contained in Snowden's database, and including scoping level quotes from contractors and suppliers, or scaling from other projects in similar locations. 

Note that:

  • Mining costs are based on the use of contractors, therefore the mobile equipment fleet is not included as a capital cost

  • All underground development has been treated as an operating cost

  • Sustaining capital is provided for at 2.5% of startup costs per annum

An itemized account of the capital costs included in the PEA is shown in the table below.

Capital and Startup Costs  
Item Value ($USM)
Pre-project capital  
  Additional drilling & data gathering 3.5
  Pre-feasibility study 1.5
  Feasibility study 2.0
  Detailed design 2.0
  Permits 0.5
  Process plant 49.4
  Tailings dam construction 4.6
  Open pit roads 2.0
  Portals and UG access roads 0.5
  Equipment (non-contract) 0.5
  Workshops 0.9
  Contractor mobilization 0.3
  Site access road 7.7
  Power connection to grid 9.4
  Water supply and treatment 1.4
  Fuel storage and distribution 0.2
  Offices and equipment 0.4
  Camp/canteen 0.8
  Construction camp 1.5
Total 89.1

In undertaking the economic analysis of the project, Snowden made the following assumptions:

  • No provision was made for exploration expenditure attributable to the operation

  • No provision was made for environmental bonds, rehabilitation costs or salvage revenues

  • No provision was made for project financing arrangements or sales arrangements other than spot price contracts

  • No provision was made for depreciation of capital expenditure

  • No provision was made for government royalties or taxes

  • No provision was made for inflation of costs with time

The PEA developed a number of conclusions and recommendations for future work. It can be concluded from the current study that there is potential for a profitable project to be established at Tahuehueto. An open pit operation is potentially viable at El Creston, whilst resources with potential for economic underground mining exist at Cinco de Mayo, El Creston and El Rey. Snowden also concludes that there is the possibility for open pit mining at Cinco de Mayo, however, until an assessment of the geotechnical stability of the cliff face above the Cinco de Mayo zone has been completed, the resource contained there has been excluded for open pit mining and all material remains in the underground mine plan. Metallurgical test work indicates that it will be possible to use flotation to produce separate copper, lead, and zinc concentrates.

The financial modelling assumptions deliver a significant mine life of 11 years at a maximum processing rate of 1 Mtpa (2750 tpd). An IRR of 31% is achieved on cash flow of $US184.2 Million. 

It is recommended that Soho continues with its evaluation of the Tahuehueto Project and progresses towards undertaking a Prefeasibility Study to address the remaining material project uncertainties.

Resource estimation recommendations:

  • Undertake a study based on the existing data to determine appropriate drill hole spacing and orientation with an aim to increase the confidence in the resource classification to ensure sufficient Measured and Indicated Resource so that upon completion of a Prefeasibility Study these can be converted to Reserves.

  • Undertake a drilling program at a spacing and orientation recommended by the drill hole spacing study so that more of the resource can be classified as Measured or Indicated which may then be converted into Reserves after completion of a Prefeasibility Study.

  • Review the resource confidence classification criteria for future resource estimates and ensure that all aspects affecting confidence in the resource estimation are considered, including geological understanding, complexity, and continuity, the sample data density and orientation (including sample grades and bulk density data), the data accuracy and precision as established through the QAQC programs, grade continuity including the spatial continuity of mineralization, the quality of the estimates, and the results of the estimation validation. 


  • Assess the use of alternative depressants and alternative addition rates in the bulk rougher circuit

  • Assess alternative depressants in the copper-lead separation stage

  • Determine the role of finer primary grinding on zinc selectivity in the bulk rougher flotation stage. That may lead to the use of zinc depressants in the bulk cleaner circuit in an attempt to divert more of the zinc to the zinc concentrate

  • Assess the role of regrinding

  • Conduct Work Index testing

  • Undertake tests to determine the processing variability between the "fresh" and the "supergene" zones and the effect of randomly comingling of ore types


  • Undertake a program of geotechnical logging, testing and analysis so that the potential of an open pit at Cinco de Mayo can be established (which would substantially increase the value of the project), and that better definition of underground and open pit geotechnical design criteria can be achieved.

  • After completion of the recommended program of data collection, embark on a Prefeasibility Study where construction and operating costs can be defined more accurately so that reserves can be calculated and some trade-off studies undertaken.

With the release of the Preliminary Economic Assessment Soho plans to advance the project through Pre-feasibility and Feasibility toward production. In order to do so, the Company is seeking to add experienced mining engineering and construction personnel to its management team and Board of Directors. Given the favorable results of this current economic assessment and the upside potential contained within the future exploration and development potential of the project, the Company is very confident in its ability to locate and secure additional expertise, dedicated to developing a profitable mining operation at Tahuehueto.

The final report for this Preliminary Economic Assessment will be filed on SEDAR within 45 days of this news release.

Qualified Persons

This press release was prepared under the supervision and review of Ralph Shearing, President and CEO of Soho Resources, a Licensed Geologist, and Qualified Person as defined by NI 43-101. The PEA disclosed in this press release was prepared by Snowden Mining Industry Consultants Inc. of Vancouver, British Columbia, under the direction of Mr. Anthony Finch BEng, BEcon, MAusIMM, an independent Qualified Person as defined by NI 43-101.

Definitions used in this release are consistent with those adopted by the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") Council in December 2005, as amended, and prescribed by the Canadian Securities Administrator's National Instrument 43-101 and Form 43-101F1, Standards of Disclosure for Mineral Projects. Mineral resources are not mineral reserves and do not have demonstrated economic viability.


Ralph Shearing, Chief Executive Officer

WARNING: The Company relies upon litigation protection for "forward-looking" statements. This News Release may contain forward-looking statements including but not limited to comments regarding the timing and content of up-coming work programs, geological interpretations, receipt of property titles, potential mineral recovery processes, etc. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. Soho Resources Corp. relies upon litigation protection for forward-looking statements.

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Last Close 2010/10/01 - $0.145

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