VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 8, 2010) - Woulfe Mining Corp. (TSX VENTURE:WOF) ("Woulfe" or, the "Company") announces that the Preliminary Economic Assessment, or Scoping Study prepared for the Company by Wardrop, a Tetra Tech Company, ("Wardrop") for the development of the Company's Sangdong Project in Korea was posted today on SEDAR and the Company's web site. The Scoping Study is a key milestone showing positive economics.
Highlights:
- 26.4 % Internal Rate of Return (IRR)
- 3.4 years payback on US$ 289 M capital
- Direct operating costs of $32.50 /t processed
- US$462 million Net Present Value (NPV) at 8% discount value.
The base case commodity prices were as follows:
- Ammonium Paratungstate (APT) – US$250 /mtu
- Molybdenum – US$15.00 /lb Mo.
Approximately 36.1 million tonnes (Mt) of the Footwall Zone resource is confined within the preliminary mine plan with values of 0.33% WO3 and 0.04% MoS2. An economic evaluation was applied to this tonnage based on a pre-tax financial model for which the above numbers were returned on a pre-tax basis.
The Scoping Study also returned positive economics on a base case plus/minus 20% metal pricing scenario. Three scenarios were considered and the highlights are shown in the table below:
| Scenario |
NPV 10 (US$M) |
NPV 8 (US$M) |
IRR (%) |
Payback (Yrs) |
| Minus 20% |
107.3 |
164 |
15.4 |
5.5 |
| Base Case |
366.7 |
461.7 |
26.4 |
3.4 |
| Plus 20% |
626.1 |
759.4 |
35.8 |
2.5 |
The Scoping Study considered the Footwall zone to avoid issues regarding the condition of the existing mine infrastructure or workings, as the condition of the existing infrastructure is unknown. The Scoping Study considers 55% of the published resource, disclosed by the Company in its news release of March 8th 2010. In order to derive the resource confined within the mine plan an extraction factor of 65% was applied to account for the benched room-and-pillar mining method. The ore body was diluted by 15% at zero grades and then a 95% recovery factor was applied. This may be considered overly cautious but as the study is based on inferred resources it is necessary to be conservative in the estimates.
The capital estimates consider 100% new mine development, giving no value to the existing vertical shafts, ventilation shafts or the 25km of underground development as the condition of the access is yet to be evaluated. The capital costs consider prices in Canada and Australia; as for the project in Asia, there is scope to improve on capital costs as we move to a Feasibility Study in early 2011.
The study delineated the current Inferred Resource of 103.2 Mt at 0.35% WO3 and 0.04% MoS2.
Sangdong, Skarn mineralisation Resource Estimate; reporting cut-off 0.1% WO3
| Zone |
Tonnes (Mt) |
WO3 |
MoS2 |
| Hangingwall |
45.8 |
0.32 |
0.05 |
| Footwall |
57.4 |
0.37 |
0.04 |
Note: MoS2 is reported in terms of WO3 cut-off
The scoping study was carried out by Wardrop engineers UK and the Qualified person is Mr. Paul Gribble, C. Eng, FIMMM (Resource Estimate). It should be noted that "Mineral resources that are not mineral reserves do not have demonstrated economic viability"
Project Viability
The Scoping Study is based on a 2.5 Mt per annum processing plant, an Ammonium Paratungstate ("APT") price of US$250 per mtu, and a 15 year mine life. Using a discount of 8% this generates an NPV of US$462 million. Setting the NPV to zero with an 8% discount rate, the break even APT price is US$171 per mtu giving a 46% pre-tax profit margin. The South Korean tax rate for companies is 30% and no royalties are payable in South Korea.
The discount rate used is 8% as South Korea is a low risk jurisdiction. The project is considered to have a reduced technical risk, as the project was mined successfully for 40 years and APT, molybdenum, bismuth and gold were all produced historically. The recoveries in the model assume similar recoveries to the historic averages even though technology has improved.
Tungsten Pricing
Wardrop considered an APT price for the scoping study of US$250 per mtu to be consistent with the historical development of the project. There are factors influencing the market dynamics with China declaring tungsten a strategic metal and moving from tax breaks for export to taxing exports. In mid-March, China announced that no new mine permits will be issued for tungsten until mid 2011. In the meantime, China is actively buying concentrates on the world market and, as the input costs to Chinese production is rising the APT price is also increasing in price. Another factor that is playing out on the world market is the expansion of global manufacturing to cater to development in China, India and Africa. To manufacture any piece of equipment a tungsten insert is required in machining. This accounts for 60% of tungsten usage with the remaining uses linked to steel and technology. Tungsten has a melting point over 3000°C and is a high performance wear material.
When the historical tungsten price in 2010 dollars is considered (see a historical price chart at http://www.woulfemining.com/images/W-Price-Chart.gif), it becomes clear why some forecasters suggest an APT price of US$300 per mtu may be achieved by 2013. Further it can be seen why the majority of tungsten mines outside China closed in the eighties.
Plan Going Forward
The Company plans to move the project vigorously to bankable feasibility in early 2011 and seek development capital mid 2011 as this would allow production to begin in 2013 to coincide with the tightening market.
Woulfe Mining Corp "WOF"
Woulfe is a TSX-V listed company with a diversified portfolio of mining licences for tungsten, molybdenum, gold, base metals, uranium and vanadium in South Korea. The company is focused on unlocking the value of these assets to increase company value and move the company onto the main board of the TSX.
In South Korea the flagship tungsten/molybdenum Sangdong Project, situated 187 Km south east of Seoul, is rapidly moving ahead with a scoping study released to market in March 2010, which clarified that the project is viable and should be moved to feasibility. The Company will carry out an intense drilling program to upgrade the resources and to improve the grade with an objective of bringing the project to bankable feasibility by 2011 and into production in 2013.
While the Sangdong tungsten Project is a core project, the company is carrying out work on its Muguk gold Project, which was Korea's largest gold mine, as well as nine vanadium/ uranium leases and base metal projects to evaluate their possible contribution to the Company.
The persons listed below from Wardrop are independent Qualified Persons as defined by NI 43-101 and have reviewed and approved the contents of this news release.
Eur. Ing. Andrew J. Carter C. Eng., MIMMM, MSAIMM, SME (Processing)
Mr. Scott Cowie, BE (Mining), LLB, MAusIMM (Mining and Financial Analysis)
Mr. Greg Mosher, P. Geo (Geology and site visit)
Mr. Paul Gribble, C. Eng., FIMMM (Resource Estimate)
This information is available on our website at www.woulfemining.com.
Forward-looking statements and forward-looking information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. We have made certain assumptions about the forward-looking statements and information and even though our management believes that the assumptions made and the expectations represented by such statements or information are reasonable, there can be no assurance that the forward-looking statement or information will prove to be accurate. Furthermore, should one or more of the risks, uncertainties or other factors materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements or information. These risks, uncertainties and other factors include, among others, the following: commodity price volatility; discrepancies between actual and estimated production, mineral reserves and resources and metallurgical recoveries; mining operational and development risk; litigation risks; regulatory restrictions, including environmental regulatory restrictions and liability; risks of sovereign investment; currency fluctuations; speculative nature of mineral exploration; global economic climate; dilution; share price volatility; competition; loss of key employees; additional funding requirements.
There can be no assurance that forward-looking statements or information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, you should not place undue reliance on the forward-looking statements or information contained herein. Except as required by law, we do not expect to update forward-looking statements and information continually as conditions change and you are referred to the full discussion of the Company's business contained in the Company's reports filed with the appropriate regulatory authorities.