Treasury Metals Inc.

Treasury Metals Inc.

September 08, 2010 10:39 ET

Treasury Metals Samples 49.06 g/t Au From Main Zone Trench and Files Preliminary Economic Assessment for Goliath Gold Project on SEDAR

TORONTO, ONTARIO--(Marketwire - Sept. 8, 2010) - Treasury Metals Inc. ("Treasury" or the "Company") (TSX:TML) is pleased to announce the results from recent trenching and sampling on its wholly-owned Goliath Gold Project located about 20 kilometres east of the City of Dryden, Ontario. In addition, the Company has filed on SEDAR, the National Instrument 43-101 ("NI 43-101") compliant Preliminary Economic Assessment ("PEA") completed by independent consultant A.C.A. Howe International Limited ("Howe") and originally announced July 13th, 2010. The full report can be downloaded from SEDAR ( and will be posted on the Company's website (

Trenching and Sampling

This Summer's work program included channel sampling on the Main Zone of the Thunder Lake gold deposit, which was exposed by a 40 metre long trench. Sampling returned gold concentrations as high as 49.06 g/t Au over 0.55 metres. A total of 47 channel samples were collected from 6 areas in the trench exposure and channel cuts were made perpendicular to the strike of the Main Zone, at intervals of approximately 5-10 metres along strike. Structural and geological mapping was also completed over the exposed Main Zone.

Scott Jobin-Bevans, Treasury's President and CEO, commented, "The main purpose of this trenching program was to expose the Main Zone and enable our geological team to characterize the structural aspects of the deposit as they relate to gold grade distribution. By correctly interpreting the structures that host gold mineralization at Goliath we can establish a pattern and better target future drilling. With these results we can now confidently project high-grade gold mineralization intersected at depth to the surface, supporting our approach of open pit and underground mining scenarios."

Preliminary Economic Assessment


  • Project has potential economic viability under base case assumptions (US$850/oz gold).

  • Surface and underground mining operations with stand-alone gravity/flotation milling complex.

  • Initial scenario contemplates 390,000 ounces Au recovered over 8 ½ years at a production rate of 1,500 tonnes per day; average annual recovery of 48,000 ounces Au.

  • At US$850 per oz (base case gold spot price): after-tax NPV@5% of $23 million and IRR of 15%.

  • At US$1,200 per oz (current gold spot price): after-tax NPV@5% of $91 million and IRR of 43%.

  • Estimated initial capital expenditure of $38 million; Life of Mine capital expenditure of $59 million; and, payback period of 4 years at US$850 per ounce gold, or 2½ years at US$1,200 per ounce gold.

Howe concluded that:

  • Treasury should continue to advance the Project toward Pre-Feasibility.

  • Infill drilling to upgrade Inferred Resources to Indicated Resources, aimed at increasing total gold ounces to be considered in future economic/production models.

  • Collect material for further metallurgical test work to include gravity, flotation and cyanidation mineral processing, optimised to confirm recoveries used in the economic model.

  • Collect geotechnical information to be used for surface and underground mine planning.

  • Optimization of economic model by investigating purchase of a used mill instead of construction of new mill.

  • Initiation of Environmental Baseline studies as soon as possible.

Dr. Jobin-Bevans commented further, "The PEA has demonstrated that our Goliath Gold Project has potential economic viability at $850 gold and, as it contemplates only 35% of the contained ounces in the current resource, shows tremendous upside. With a targeted drilling program, we are planning to upgrade resources from inferred to indicated through in-fill drilling, initiate environmental baseline studies and complete further metallurgical testing as recommended in the PEA. In addition, we plan to continue building ounces along strike and to target other promising areas on the greater than 45square kilometre Property. This Project is located in an area with excellent infrastructure including access to power, roads, services and labour and with this PEA we now have a clear path toward pre-feasibility and permitting."

Economic Sensitivity

The base case considers the development of surface and underground mining operations on the Thunder Lake gold deposit and a stand-alone gravity/flotation milling complex at the Goliath Gold Project. Howe concludes that under base case assumptions of 1,500 tonnes per day production and US$850 per ounce gold, and assuming 100% equity financing and an even exchange rate against the US$, the Project has potential economic viability with an after-tax Internal Rate of Return ("IRR") of 15%, a 5% discounted Net Present Value ("NPV") of $23 million and an estimated payback period of four years.

The following table summarizes the results of the PEA, assuming a production rate of 1,500 tonnes per day:
Gold Price (US$/oz)   NPV (0%)* (CDN$M)   NPV (5%) (CDN$M)   NPV (10%) (CDN$M)   IRR
$850   $43   $23   $10   15%
$1,000   $81   $52   $33   28%
$1,200   $132   $91   $63   43%
$1,400   $182   $129   $93   57%
* Equivalent to cumulative after-tax profit.
The Preliminary Assessment 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 Assessment will be realized.

The PEA is an estimate of the economic viability of the Project and does not contemplate the full spectrum of engineering and regulatory factors, which would be required prior to making a production decision. All amounts are in Canadian Dollars except the gold price, which is quoted in US Dollars.

Proposed Mining Operations

As proposed, mining will initially be by surface methods with a target production rate of 1,500 tonnes per day using standard methods of drilling, blasting, and excavating using excavators and truck haulage. Equipment for surface operations would be leased.

Proposed development for underground mining will commence in Year 1 with production commencing in Year 3. Access will be via a decline with the portal located near the bottom of the first small pit to be mined – currently the easternmost pit. In Year 3, the surface production rate would drop to 750 tonnes per day, equal to the underground production rate, for a combined production rate of 1,500 tonnes per day. Sublevel, long-hole stoping with delayed backfill is recommended as the primary underground mining method.

Proposed Mineral Processing

Previous work on the Property included an underground bulk sample that was extracted in 1998. Howe notes that the head grade of this historic composite sample was not representative of the head grade currently being contemplated. It's Howe's opinion that further metallurgical test work be completed. A conceptual mill flowsheet is proposed that would involve gravity separation, followed by flotation. This process has been initially selected as the recovery method over gravity/cyanidation because of lower capital costs and similar, if not lower, operating costs.

Mineral Resource Estimate – Updated

The PEA also includes an updated Mineral Resource Estimate ("Resource Estimate") for the Thunder Lake gold deposit, based on diamond drilling completed as at December 2009. This Resource Estimate does not take into account the results from the more than 10,300 metres completed in 2010 and does not incorporate potential metal credits from silver and by-product metals of lead, zinc and copper; these metals are also not included in the current PEA.

Resources were defined using a block cut-off grade of 0.5 g/t Au for surface resources (<100 metres deep) and 2.0 g/t Au for underground resources (>100 metres deep). Surface plus underground Indicated Resources total 3.4 million tonnes with an average grade of 2.5 g/t Au, for 270,000 ounces. Surface plus underground Inferred Resources total 10.6 million tonnes with an average grade of 2.7 g/t Au, for 930,000 ounces. The Main Zone contains the majority of resources from both categories and is the primary target for underground mining. A summary of mineral resources by resource category is as follows:

Category   Block Cut-off Grade (g/tonne)   Tonnes Above Cut-off   Average Au Grade (g/tonne)   Contained Au (ounces)
Surface   0.5   2,900,000   1.9   180,000
Underground   2.0   490,000   5.7   90,000
Subtotal, Indicated       3,400,000   2.5   270,000
Surface   0.5   5,400,000   1.1   190,000
Underground   2.0   5,200,000   4.4   740,000
Subtotal, Inferred       10,600,000   2.7   930,000


  1. Cut-off grade for mineralised zone interpretation was 0.5 g/tonne.
  2. Block cut-off grade for surface resources (less than 100 metres deep) was 0.5 g/tonne gold.
  3. Block cut-off grade for underground resources (more than 100 metres deep) was 2 g/tonne gold.
  4. Gold price was US$850 per troy ounce.
  5. Zones extended up to 150 metres down-dip from last intercept. Along strike, zones extended halfway to the next cross-section.
  6. Minimum width was 2 metres.
  7. Non-diluted resources.
  8. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
  9. A specific gravity (bulk density) value of 2.78 was applied to all blocks (based on 30 samples).
  10. Un-cut. Top-cut analysis of sample data suggested no top cut was needed and removal of high grade outliers would not materially affect the global block model grade.

The Resource Estimate, which uses a combination of historical and current drilling results, includes 41 additional holes up to drill hole TL09-86, drilled in late 2009 with results reported in early 2010. The Resource Estimate was prepared by Doug Roy, M.A.Sc., P.Eng., Associate Mining Engineer with Howe.

Qualified Person

Technical information related to the PEA contained in this news release has been reviewed and approved by Doug Roy, an independent Qualified Person as defined by NI 43-101, with the ability and authority to verify the authenticity and validity of this data. The report titled "Technical Report and Preliminary Economic Assessment on the Goliath Gold Project", with an effective date of July 9th, 2010 has been prepared by Doug Roy, Patrick Hannon, Ed Thornton and Ian D. Trinder of A.C.A. Howe International Limited.

About Treasury Metals

Treasury Metals Inc. is a Canadian mining company that is focussed on expanding the Company's gold resources and developing its 100% owned flagship Goliath Gold Project located in the Kenora Gold District of northwestern Ontario. Treasury Metals obtains significant royalty revenue from an NSR on Goldgroup Mining Inc.'s Cerro Colorado Mine located in Mexico.

For additional information on Treasury Metals and its projects, including updated technical information as it pertains to this news release, please visit the Company's website at

Forward-looking Statements

Securities regulators encourage companies to disclose forward-looking information to help investors understand a company's future prospects. This press release contains statements about our future financial condition, results of operations and business. These are "forward-looking" because we have used what we know and expect today to make a statement about the future. Forward-looking statements usually include words such as may, expect, anticipate, believe or other similar words. We believe the expectations reflected in these forward-looking statements are reasonable. However, actual events and results could be substantially different because of the risks and uncertainties associated with our business or events that happen after the date of this press release. You should not place undue reliance on forward-looking statements. As a general policy, we do not update forward-looking statements except as required by securities laws and regulations.

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