Tintina Resources Inc.
TSX VENTURE : TAU
OTCQX : TINTF

Tintina Resources Inc.

July 17, 2012 09:00 ET

Tintina Resources Completes Preliminary Economic Assessment for the High-Grade Johnny Lee Deposit on its 100% Owned Black Butte Copper Project, Montana, USA

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 17, 2012) -

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Tintina Resources Inc. ("Tintina" or the "Company") (TSX VENTURE:TAU)(OTCQX:TINTF) is pleased to announce the positive results of a Preliminary Economic Assessment ("PEA") for the Johnny Lee deposit on its 100% owned Black Butte Copper project located in central Montana, USA. The Black Butte Copper project is comprised of 4,947.3 hectares (12,225 acres) of private ranch lands and unpatented Federal mining claims hosting a number of copper deposits. Private ranch lands contain all currently known deposits including the high-grade copper-cobalt-silver Johnny Lee deposit which is the focus of the PEA (see Images 1-3: http://media3.marketwire.com/docs/tau717_F1-3.pdf). All currency amounts are in United States (US) dollars unless stated otherwise.

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Highlights

  • Initial estimated startup capital of $210.4 million including a 21% contingency of $30 million with estimated sustaining capital of $62.1 million over 14 year mine life
  • Base case using long-term copper price of $2.97/pound (lb)*
    • Pre-tax NPV 8% of $145.8 million with an IRR of 20.4%
  • Using current copper price of $3.40/lb
    • Pre-tax NPV 8% of $278.3 million with an IRR of 30.4%.
  • Underground mining operation with 14-year mine life processing up to 3,300 tonnes (t) per day using a conventional flotation circuit producing a single concentrate
  • Average annual payable metal production estimated at 47 million pounds of copper
  • Life-of-mine payable metal production estimated at 660 million pounds of copper
  • Operating cost $68.93/t milled; cash cost $1.88/lb copper;
  • Undiluted Indicated mineral resource of 8.48 million tonnes (Johnny Lee deposit only)
    • 2.96% copper
    • 0.12% cobalt
    • 16.9 g/t silver
    • 0.008 g/t gold
  • Undiluted Inferred mineral resources of 3.72 million tonnes (Johnny Lee deposit only)
    • 4.01% copper
    • 0.07% cobalt
    • 8.9 g/t silver
    • 0.23 g/t gold

(* $2.97/lb copper price is based on the Energy and Metals Consensus Forecast's (EMCF) Mean price as of April 16, 2012 (the "EMCF Price"). The EMCF Price is a forward looking consensus of metal prices among 20 leading international financial institutions and is published by Consensus Economics, UK.)

"This preliminary study shows the economic viability of the high grade Johnny Lee copper deposit - the first deposit we expect to be developed in a district which Management feels has excellent exploration potential. This study sets the stage for feasibility level work, scheduled to begin in the coming months. The Black Butte resource is located entirely on private lands with excellent infrastructure and we have found Montana to be a mining friendly and safe jurisdiction to do business. We have developed a good working rapport with State regulators and look forward to advancing Black Butte to the permitting stage," stated Rick Van Nieuwenhuyse, Executive Chairman of Tintina.

Jerry Zieg, Vice President of exploration for Tintina, stated, "The Black Butte Project offers the opportunity to develop a high quality copper project at a time when other lower grade, high capital projects are struggling. In a short time we have turned an interesting exploration target into an important economic opportunity and with the discovery and delineation of additional resources at the Lowry deposit (see Company press release dated March 19, 2012), we have demonstrated that our exploration team can identify new targets that will define the next generation of copper deposits in the district. We expect to continue adding significant value with continued exploration success."

Johnny Lee Preliminary Economic Assessment Overview

Tintina commissioned Tetra Tech (NASDAQ:TTEK) to prepare an independent PEA of the Johnny Lee copper deposit located in central Montana, U.S.A. The PEA assumes a long-term metal price of $2.97/lb copper based on the EMCF. The PEA Technical Report will be filed within 45 days on SEDAR at www.sedar.com.

Based on the PEA, mining of the Johnny Lee copper deposit is envisioned as an underground operation processing up to 3,300 tonnes of material per day. The current resource base of 8.48 million tonnes of indicated mineral resources and 3.72 million tonnes of inferred mineral resources support a 14-year mine life. The proposed mine is forecast to produce a single copper concentrate containing an average of 47 million pounds of payable copper metal per year over a 14 year mine life. Life-of-mine ("LOM") payable metal production is estimated at 660 million pounds of copper. The production schedule is based on processing average-grade material through the life of the operation with potential upside obtained by mining higher-grade material during the early years of the project. Tetra Tech, the lead consulting group managing the study, developed a conceptual process flow sheet to produce a copper flotation concentrate using unit operations that are standard to the industry. Additional metallurgical testing will be undertaken during the next phase of study to further develop the design parameters. LOM production and recoveries are summarized below based on the current conceptual process.

Table 1 - Johnny Lee Mine Production Summary(1)

Tonnes Processed 12,156,000(1)
Copper Grade: 2.99% Cu(1)
(1) - Figures reflect assumed mine dilution and mine recovery factors.

Table 2 - Johnny Lee Mill Production Summary

Model Parameter Unit Copper Concentrate
Concentrate produced Kt(2)-dry 1,356
Copper recovery(1) % 86.4
Concentrate grade(1) % 23.2
Recovered Copper Klb(3) 692,751
(1) - For primary metal in concentrate (2) - thousand metric tonnes
(3) - thousand pounds

Table 3 - Johnny Lee Payable Metal Production

Production Copper
Average Annual 47 million lbs
Life of Mine 660 million lbs

Project Economics

Using a base case metal price of $2.97/lb copper, the pre-tax basis Net Present Value at an 8% discount rate (NPV8%) is $145.8 million with an IRR of 20.4% with full payback occurring in year 5.5. Using current metal prices of approximately $3.40/lb copper the pre-tax basis NPV8% is $278.3 million with an IRR of 30.4%. Start-up capital is estimated at $210.4 million including a 21% contingency of $30 million. Estimated sustaining capital of $62 million comprises primarily underground development, equipment and tailings dam expansion throughout the mine life. The total LOM capital cost estimate is $272 million, which is considered accurate to +35% and -15%. Project cash costs, defined as the sum of total operating, freight, marketing, smelter and royalty costs, are estimated at $1.88 per payable pound of copper. Operating costs are estimated as $48.96 per tonne for mining, $14.63 per tonne milled for process, and $5.34 per tonne milled for site services, G&A and tailings operating.

The table below highlights the IRR, NPV at 8% discount and NPV at 5% discount for a selection of copper prices.

Table 4 - Economic Sensitivity Summary

Copper Price
($)
IRR
(%)
NPV @ 8%
(in millions $)
NPV @5%
(in millions $)
2.50 8.1 1 41
2.75 14.9 78 142
3.00 21.1 155 242
3.25 27.0 232 342
3.50 32.6 309 442
4.00 43.6 463 643

Table 5 - Johnny Lee Capital Cost Estimates

Description Cost (in millions $)
Mining 53.60
Processing and tailings 68.10
Infrastructure 21.70
Capital cost 143.40
Indirect & Owners 36.60
Contingency @ 21% 30.00
Total Capital 210.40
Sustaining 62.10

Mineral Resource Estimate

The Johnny Lee deposit consists of two zones - Upper and Lower. The mineral resource was developed from a drill hole database consisting of 192 drill holes with a total of 89 drill holes containing one or more intercepts of significant mineralization used to estimate the Johnny Lee deposit resource. Of the 89 drill holes, 73 drill holes, representing 16,595.78 meters of drilling were used to estimate the Johnny Lee Upper Zone resource. In addition, 25 of the 89 drill holes, representing 11,646.99 meters of drilling were used to estimate the Johnny Lee Lower Zone resource. Nine (9) of the 89 drill holes intersected both the Johnny Lee Upper and Johnny Lee Lower zones. Mineralization occurs as lenses of high grade copper, primarily chalcopyrite which is hosted within thicker and more extensive massive pyritic sulfide lenses, all of which are contained in un-mineralized shale and carbonate country rock. Zone boundaries are either faults and/or diminishing copper grades.

Black Butte Copper Mineral Resource Statement as of June 20, 2012

Table 6 - Undiluted Indicated Resources at Black Butte Copper

UNDILUTED INDICATED RESOURCES - BLACK BUTTE COPPER, MT, USA
Cu
Cutoff
(%)
Tonnes
(000)
Estimated Metal Grades Estimated Contained Metal
Cu
(%)
Co
(%)
Au
(g/t)
Ag
(g/t)
Cu Lbs
(Millions)
Co Lbs
(Millions)
Au Ozs
(000)
Ag Ozs
(000)
Johnny Lee
Deposit
Upper Zone
1.60 8,483 2.96 0.12 0.008 16.9 553 22 2.2 4,609
TOTAL 8,483 2.96 0.12 0.008 16.9 553 22 2.2 4,609

Table 7 - Undiluted Inferred Resources at Black Butte Copper

UNDILUTED INFERRED RESOURCES - BLACK BUTTE COPPER, MT, USA
Cu
Cutoff
(%)
Tonnes
(000)
Estimated Metal Grades Estimated Contained Metal
Cu
(%)
Co
(%)
Au
(g/t)
Ag
(g/t)
Cu Lbs
(Millions)
Co Lbs
(Millions)
Au Ozs
(000)
Ag Ozs
(000)
Johnny Lee Deposit
Upper Zone
1.60 1,257 2.64 0.10 0.008 16.4 73 3 0.3 663
Johnny Lee Deposit
Lower Zone
1.50 2,462 4.71 0.06 0.350 5.1 256 3 28.0 404
Johnny Lee
Upper & Lower Deposit
SUB-TOTAL
3,719 4.01 0.07 0.23 8.9 329 6 28.3 1067
Lowry Deposit
Middle Zone
1.60 5,139 2.60 0.12 0.009 14.6 294 14 1.5 2,412
GRAND TOTAL 8,858 3.19 0.10 0.10 12.2 623 20 29.8 3,479
Notes:
1. Mineral Resources have been classified according to the "CIM Standards on Mineral Resources and Reserves: Definitions and Guidelines" (December 2005). The preliminary economic assessment contained herein is preliminary in nature and includes inferred Mineral Resources that 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 preliminary economic assessment will be realized.
2. It cannot be assumed that all or any part of an Inferred Resource will be upgraded to an Indicated Resource, or that an Indicated Mineral Resource will be upgraded to a Measured Resource, as a result of continued exploration. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the Mineral Resources will be converted into Mineral Reserves. Mineral Resources are global in situ totals.
3. For the Johnny Lee Upper Zone, cutoff grade calculation is based on assumed metal prices of $2.75/lb for copper and an 81% recovery. A mining cost of $US $59.00/tonne, processing costs of US $16.00/Tonne, and G&A costs of U.S. $5.00/tonne were assumed to form the basis for the resource cut-off determination. For the Johnny Lee Lower Zone, cutoff grade calculation is based on an assumed metal price of $2.75/lb. for copper and an 84% Cu recovery. A mining cost of US $50/tonne, processing costs of US $16/tonne, G&A costs of US $5.00/tonne, and refining costs of US $5.53/tonne, were assumed to form the basis for the resource cut-off determination. Note: these costs differ from those used for the cash flow model in the PEA.
4. Mineral resource tonnage and contained metal quantities have been rounded to reflect the accuracy of the estimate, and thus the numbers may not sum due to rounding.

Opportunities

  1. Metallurgy - the Company is planning to expand the metallurgical test work during the anticipated feasibility study with efforts to potentially increase the recovery and to possibly realize additional revenue from the addition of either cobalt or silver.
  2. Mine Plan - the Company will investigate opportunities to bring the Lower Zone into production earlier in the mine life resulting in additional payable copper earlier in the mine life.
  3. Additional Resources - in addition to the Johnny Lee Deposit, the Company has also outlined resources at the Lowry Deposit which contains a number of mineralized zones. The Lowry Middle Zone, which is not included in the PEA, has a NI 43-101 Inferred resource containing 294 million pounds of copper at an average grade of 2.60% Cu (see Company press release dated March 19, 2012). Inclusion of the Lowry Middle Zone Deposit in the anticipated feasibility study would be dependent upon additional drilling resulting in an upgrade this Inferred resource to a Measured and Indicated status.
  4. District Exploration Potential - the copper deposits at Black Butte lie in a 15 mile long mineral belt targeted by past exploration drilling, most of which was completed prior to the discovery of the Johnny Lee and Lowry deposits, and focused on only one of the several mineralized sulfide horizons now known to exist. Mineralized sulfide zones occur intermittently over 750 meters of stratigraphy, and copper deposits occur in discrete massive sulfide lenses along these stratigraphic horizons, presumably controlled by syn-sedimentary faulting. Past drilling on Tintina-controlled lands outside the area of known copper resources encountered as much as 400 meters (true thickness) of massive sulfide with variable concentrations of copper and zinc. With an excellent geochemical, geophysical, and geological database, Management believes there is a high probability for discovery of new copper deposits within several miles of the proposed mine and mill complex.

Feasibility Study

The Company has decided to commission a final Feasibility Study ("FS"). The Company has sent out a request for proposals to a select group of highly qualified engineering firms and expects to complete the Feasibility Study by mid - 2013.

2012 Development Plans

In preparation for the anticipated Feasibility Study on the Black Butte Copper project, the Company is in the process of performing additional exploration activities for the purpose of upgrading a portion of the Johnny Lee deposit resource from Indicated to Measured category, as well as upgrading Inferred resources to Indicated resources. Other planned work includes continued engineering, geotechnical, hydrological, and metallurgical studies, and continued baseline environmental studies. As previously reported, Tintina also plans to submit an application for an Exploration Decline to the Montana Department of Environmental Quality in Q3 - 2012.

About the Black Butte Copper Project

Geologists with Cominco American Inc. and joint venture partners Utah International and BHP discovered the deposits during exploration programs in the 1980s. In 1993, Cominco turned the property back over to the ranch owners and the deposits lay dormant until 2010 when members of the original discovery team now with Tintina re-established contact with the property owners. In May of 2010 Tintina completed mining leases on over 5,000 acres of private ranch lands which contain all currently identified resources at Black Butte. Present land holdings consist of 3,109.7 hectares (7,684.28 acres) of private ranch lands and 1,837.7 hectares (4,541 acres) of Federal mining claims. Tintina has completed over 45,000 meters of drilling since September of 2010, and from this work has achieved resource estimates on the Johnny Lee and Lowry deposits (described below). At least five additional copper mineralized zones have been identified in the resource area.

The Johnny Lee Deposit lies 3.2 km (2 miles) west of U.S. Highway 89, and is comprised of the Johnny Lee Deposit Upper Zone and the Johnny Lee Deposit Lower Zone. Both zones consist of tabular layers of copper-cobalt-silver mineralization as bands of massive chalcopyrite concentrated within fine-grained massive pyritic sulfide layers hosted by shale and conglomerate. The Johnny Lee Deposit Upper Zone deposit lies at depths ranging from 30 to 210 meters below the surface and is up to 29.17 meters thick. The Johnny Lee Deposit Lower Zone lies at depths ranging from 340 to 500 meters below surface and is up to 22.30 meters thick. Portions of both the Upper and Lower Zones are faulted away and have yet to be located. Additional sulfide zones lie above the Johnny Lee Upper Zone and contain variable concentrations of zinc and copper.

The Lowry Deposit (Fig. 2) lies 1.2 kilometers (0.75 miles) west of U.S. Highway 89 and consists of at least five mineralized copper zones. Of these, the Lowry Deposit Middle Zone is a tabular layer of copper-cobalt-silver mineralization reaching up to 52 meters thick with high concentrations of chalcopyrite (copper-iron sulfide) concentrated within fragmental, silicified and dolomitized shale and carbonate. The deposit dips gently to the south, lies at depths ranging from 265 to 718.5 meters below surface, and measures 600 meters by 300 meters in plan. The northeast trending Rose fault down drops the southeast portion of the zone, where two holes extend the zone by about 100 meters. These holes have not been offset further east nor south. More drilling is required to bring any of the other copper mineralized zones to the Inferred category.

These deposits are amenable to underground mining, an approach consistent with the desires of the landowners and community. Community and regional support for the project is high due to the strong desire for jobs in this economically challenged rural Montana area. Permitting activities are ongoing using highly knowledgeable Montana-based consulting groups together with the in-house team. Base-line and other key studies for permitting are carried out in close cooperation with the Montana Department of Environmental Quality to ensure high quality and complete permit applications.

Project Infrastructure

Infrastructure required for the project is minimal and includes only the upgrading or construction of up to two miles of access road and upgrading of a connection to an existing power supply. The Black Butte project is easily accessible by an all season paved U.S. Highway (Hwy 89) located within 2 miles of the proposed mining and milling complex. Rail service is also available within 50 miles (80 km) via Hwy 89. Having several municipalities located within 100 miles of the project, including White Sulphur Springs, Harlowton, Townsend, Great Falls, and Helena means quality labor and services are readily available.

Environmental Assessment and Permitting

Mining related surface disturbances will all occur on privately owned lands and as result, these activities fall under State permitting guidelines administered by the Montana Department of Environmental Quality (MDEQ). Tintina is currently operating under an Exploration License which is in the process of being amended in order to permit construction an exploration decline for underground access. Approval of this amendment requires a complete and satisfactory application. Before any additional mine construction can be undertaken, Tintina must complete an Environmental Resources Baseline Study (underway); prepare a Mine Operating Plan; prepare a Reclamation Plan; and prepare a Monitoring Plan sufficient to meet the requirements of the Montana Metal Mines Reclamation Act. These four plans are combined to form an application for a Mine Operating Permit (MOP). Should the MDEQ find the MOP application complete and sufficient, the MDEQ will initiate an evaluation of the project under guidelines of the Montana Environmental Policy Act (MEPA). In addition, Tintina must meet the requirements of the Montana Hard Rock Mining Impact Act, which requires a prepayment of taxes to mitigate anticipated local socioeconomic impacts. A number of other special permits/certificates may be required. The successful approval of an MOP is projected for late 2015, but could take longer. Tintina and its consultants are working closely with the MDEQ to ensure timely and efficient collection of data and analysis of all information required for the permitting process.

Community Engagement

Tintina has worked closely with members of the local community during the early phase of its work, and is expanding its effort to ensure engagement of all stakeholders. Tintina's long term plan involves further development of the district to promote a sustainable mining based economy for the community. The Company is committed to open and transparent communications with the communities in which it conducts business and with the introduction of this PEA, will hold frequent community meetings to discuss project development plans, answer questions and solicit feedback on the project.

PEA Contributions

The PEA and resource estimates have been prepared in accordance with the Standards of Disclosure for Mineral Projects as defined by National Instrument (NI) 43-101 of the Canadian Securities Administrators. George Darling, Art Winckers, Mike Lechner, and Jianhui Huang are the Qualified Persons responsible for preparation of the PEA and have verified that the data from their report is fairly and accurately disclosed in this news release. Readers are cautioned that the conclusions, projections and estimates set out in this news release are subject to important qualifications, assumptions and exclusions, all of which are detailed in the PEA. To fully understand the summary information set out above a technical report will be filed on SEDAR at www.sedar.com and should be read in its entirety.

Qualified Persons

The technical contents of this release and all technical information relating to the PEA have been reviewed and approved by Mr. George Darling, P.Eng., (Stantec), Art Winckers, P.Eng,. (Tetra Tech), Wayne Stoykos, P.Eng., (Tetra Tech), Mike Lechner, P.Geo. (Resource Modeling Inc.) as Qualified Persons in accordance with NI 43-101, and are all independent of Tintina Resources Inc.

Jerry Zieg, Vice President of Exploration for the Company is a Qualified Person for the purposes of National Instrument 43-101 and has also reviewed and approved the information of a scientific nature contained in this news release. Assays for this program have been completed by ALS Chemex including duplicates, standards, and blanks for QA/QC purposes.

About Tintina Resources Inc.

Tintina Resources Inc. is a growth company focused on the exploration and development of base metal properties in North America. The Company's experienced Board of Directors and Management Team is currently focused on advancing the Black Butte Copper Project (Cu-Co-Ag) located in central Montana towards a production decision. The Company is also exploring the Baird (Cu-Zn) property in Alaska where it has commenced a 2,000 meter exploration drill program.

About Mining in Montana

Montana has been a mining state for a well over 100 years. Today, more than two dozen mining operations are active making mining a cornerstone contributor to the State's GDP. Tintina has met with State regulators and looks forward to presenting the Black Butte Copper project as an underground mine with a small footprint located on private land. The project continues to benefit from broad local community support.

ON BEHALF OF THE BOARD OF DIRECTORS

Raj Chowdhry, CA, President & CEO

Cautionary Note Regarding Forward-Looking Statements: Certain disclosures in this release, including statements regarding the Company's plans for and intentions with respect to exploration of the Company's Black Butte Copper Project, resource estimates, a preliminary economic analysis, including estimates of capital and sustaining costs, anticipated internal rates of return, mine production, estimated recoveries, mine life, estimated payback period, and net present values, planned exploration activities and the results thereof, development activities, including the receipt of approvals and permits, the preparation of a feasibility study, the potential to increase recoveries and to possibly realize additional revenues, opportunities to accelerate production and other plans and objectives of the Company with respect to the Black Butte Project and surrounding area constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and Canadian securities legislation. In making the forward-looking statements in this release, the Company has applied certain factors and assumptions that the Company believes are reasonable, including that the Company is able to obtain any government or other regulatory approvals and any financing required to complete the Company's planned exploration and development activities, that the Company is able to procure equipment and supplies in sufficient quantities and on a timely basis, that the Company's exploration and development activities on the Black Butte Copper Project will not be affected by actions of environmental activists or other special interest groups, that actual results of exploration activities are consistent with management's expectations, that the proposed mine plan and recoveries will be achieved, that capital costs and sustaining costs will be as estimated, that the assumptions underlying mineral resource estimates are valid and that no unforeseen accident, fire, ground instability, flooding, labor disruption, equipment failure, metallurgical, environmental or other events that could delay or increase the cost of development will occur.

However, the forward-looking statements in this release are subject to numerous risks, uncertainties and other factors relating to Tintina Resource's operation as a mineral exploration company and the Black Butte Copper Project property that may cause future results to differ materially from those expressed or implied in such forward-looking statements. Such uncertainties and risks include, among others, actual results of the Company's exploration activities being different than those expected by management, uncertainties involved in the interpretation of drilling results and geological tests, delays in obtaining or inability to obtain required government or other regulatory approvals or financing, interference with Tintina Resource's exploration or development activities by environmental activists or other special interest groups, inability to procure equipment and supplies in sufficient quantities and on a timely basis, the risk of unexpected variations in mineral resources, grade or recovery rates, of failure of plant, equipment or processes to operate as anticipated, of accidents, labor disputes, and unanticipated delays in obtaining governmental approvals and completing other development activities, the risk that estimated costs will by higher than anticipated and the risk that the proposed mine plan and recoveries will not be achieved, equipment breakdowns and bad weather. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Readers are cautioned not to place undue reliance on forward-looking statements. Tintina Resources does not intend, and expressly disclaims any intention or obligation to, update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.

Neither the 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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