La Verde / Overview

Key Facts

Located in West Central Mexico
320 Kilometres west of Mexico City
Existing Infrastructure: 150km to coast with water, power and rail all nearby.

Details

NewCastle Gold Ltd. has earned a 60% interest in the La Verde Project by advancing $6 million to Teck Resources Limited’s Mexican subsidiary, Minera Torre de Oro, S.A. de C.V., and incurring aggregate exploration expenditures of $10 million on the Property.

The La Verde property is connected by major roads and railroad to the port city of Lázaro Cardenas, approximately 155kms away.

The La Verde Project consists of a concession totalling approximately 2,547 hectares. Within the concession, mineralization is hosted within a mid-Tertiary granodiorite/quartz monzonite intrusive complex roughly 5.5 kilometres long and 1 kilometre wide; which is up to 750 metres above mean sea level (msl), known as the Sierra del Marqués intrusive complex. Historic exploration work included geological, geochemical and geophysical surveys as well as 80,000 metres of drilling.

The exposed porphyry copper system is amenable to open pit mining within the two known zones of porphyry style copper – gold – silver mineralization and with significant upside exploration potential.

An updated NI-43-101 compliant report entitled “Technical Report on the La Verde Property, Michoacán, Mexico”, dated September 19, 2012 (the “Technical Report”) was prepared for the Company by Margaret Harder, M.Sc, P.Geo. and Michael F. O’Brien, M.Sc., Pr.Sci.Nat., FGSSA, FAusIMM, FSAIMM of Tetratech Wardrop, who are independent qualified persons as defined by NI 43-101.

The report presented the estimated Measured, Indicated and Inferred resources at La Verde as follows:

 

Total East Hill plus West Hill

Cut-Off (Cu %) Tonnes Cu Ag Au Contained Cu lbs
(000s) (%) (g/t) (g/t) (000s)
Measured Mineral Resource
0.1% 79,958 0.37 2.54 0.04 637,105
0.2% 57,527 0.45 2.94 0.05 570,713
0.3% 41,090 0.53 3.26 0.05 481,021
Indicated Mineral Resource
0.1% 585,605 0.30 1.91 0.03 3,808,558
0.2% 350,442 0.40 2.33 0.03 3,098,092
0.3% 225,289 0.49 2.65 0.04 2,428,749
Measured Mineral Resource
0.1% 664,563 0.30 1.98 0.03 4,445,663
0.2% 407,969 0.41 2.42 0.03 3,668,805
0.3% 266,379 0.50 2.74 0.04 2,909,770
Cut-Off (Cu %) Tonnes Cu Ag Au Contained Cu lbs
(000s) (%) (g/t) (g/t) (000s)
Inferred Mineral Resource
0.1% 765,040 0.24 1.36 0.02 3,997,295
0.2% 337,838 0.37 1.94 0.02 2,748,328
0.3% 187,983 0.47 2.36 0.03 1,956,115

 

Base case cut-off grade of 0.2% based on similar projects and a mining conceptual study using a $2.50 per pound copper price and 92% copper metal recovery.

On January 18, 2013 the Company announced delivery of a NI 43-101 Technical Report; including a Preliminary Economic Assessment Study (“PEA”) completed by AMC Mining Consultants (Canada) Ltd. (effective date September 2012). This Technical Report was based in part on the Tetratech Technical Report. Both technical reports are available under Catalyst’s profile at www.sedar.com.

Summary highlights of the PEA and 20 year Life of Mine (LOM) plan include:

Physicals

Processing rate: 30 Mtpa (80,000 tpd, nominal)

LOM tonnes processed(1): 587Mt @ 0.37%Cu, 0.03g/t Au, and 2.3g/t Ag

LOM Concentrate production: 7.17Mt@ 26.7% Cu

LOM Contained Cu in Concentrate: 4.22 Billion lbs

Average Annual Production in Concentrate: 211Mlbs Cu, 23.8 Koz Au, and 1.63_ Moz Ag

Mine Life: 20 Years

Economics (all figures in US$)

Mining costs: Year 1-7 $1.17-1.20, LOM avg. cost. $1.70 per tonne mined (avg. LOM)

Processing Costs: $5.84 per tonne milled

Roasting Cost: $30.00 per tonne concentrate milled (approx. $1.00 per tonne of ore milled)

G&A: $0.35 per tonne milled

Pre Production Capital: $1,160 M

Undiscounted cash flow **: $1,625 M pre-tax, $1,050 M post-tax

NPV@8% **: $617 M pre-tax, $300 M post-tax

IRR **: 21.2% pre-tax, 13.5% post-tax

* M – Millions Mt- millions of tonnes Mlbs-Millions of pounds Mtpa- millions of tonnes per year

** all calculations are to a 100% interest in the La Verde Project (and after deducting a 0.5% NSR royalty). The La Verde Project PEA includes analysis at various metal prices. Base case metal prices utilized for preparation of the Mine Plan, and in the above table, were Cu-$2.70; Au $1200/ounce (“oz”); Ag – $25/oz. Financial estimates are earnings before income tax, depreciation and amortization allowances (“EBITDA”) and all dollars are US$.

(1) Includes 191 Mt tonnes of Inferred material @ 0.33% Cu, 0.03g/t Au and 1.94g/t Ag

The PEA assessed the Project economics, based on the production profile set out above, based on various metal price assumptions as set out below:

Project NPV ($ Million) Case A Case B Case C Case D
(Base Case)
0% Discount Rate 1,625 5,579 2,842 447
6% Discount Rate 796 2,874 1,436 183
8% Discount Rate 617 2,342 1,148 109
Project IRR (%) 21.2 41.9 28.6 11.5

 

1. Case A. Cu $2.70/lb; Au $1,200/oz; Ag $25/oz Base Case

2. Case B. Cu $3.64/lb; Au $1,455/oz; Ag $28.06/oz SEC Guidelines

3. Case C. Cu $3.00/lb; Au $1,200/oz; Ag $25/oz

4. Case D. Cu $2.40/lb; Au $1,200/oz; Ag $25/oz

 

The PEA is preliminary in nature and includes the scheduling of Inferred Mineral Resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as Reserves. There is no certainty that the results of the PEA will be realized. Investors are cautioned that the La Verde Project is at an early stage of development and no feasibility study has yet been undertaken. Further studies are required and include, but not limited to, drilling, metallurgical testing, geotechnical investigations and the ability of the Company to acquire surface rights, adequate waste and tailings storage areas, environmental permitting and the “Social licence” from the affected local communities to explore, develop and operate the Project.

Qualified Persons

The following independent Qualified Persons under the standards set forth by NI 43-101, were responsible for preparing the information in relation to the PEA: Mr. Pat Stevenson, P.Geo., BSc (Hons), FAusIMM (CP), MAIG, MCIM, a General Manager and Principal Geologist with AMC with over 40 years of experience in the mining industry; Mr. Mo Molavi, P.Eng., M Eng, B Eng, a Principal Mining Engineer with AMC with over 34 years of experience in the mining industry; Ms. Margaret Harder, MSc, P.Geo., a Geologist with Tetra Tech WEI Inc. with over 8 years of experience in the mining industry; and Mr. Alan Riles, MAIG, BMet (Hons), Grad Dipl Business Management, Associate Principal Consultant Metallurgist with AMC with over 40 years of experience in the mining industry.