Timmins Gold Corp. ("Timmins" or the "Company") announces the completion and filing of the technical report titled NI 43-101 F1 updated resources and reserves and mine plan for the San Francisco Gold Mine, Sonora, Mexico, dated November 30, 2010, prepared by Micon International Limited of Toronto (Micon). The Technical Report was prepared to update the previous technical report dated March 31, 2008 (as amended on January 13, 2009), and to provide a base case scenario for increased production at the San Francisco Mine as a result of rising gold prices and a 28 % increase in the estimated mineral reserves at the mine.
RESOURCE AND RESERVE ESTIMATES
The updated mineral resource estimate was initially published on November 16, 2010. Figures have been rounded to reflect that they are estimations. Mineral Resources that are not Mineral Reserves do not, however, have demonstrated economic viability.
|Resource Classification||Tonnes (x 1,000)||Gold Grade (g/t)||Contained Gold (oz)|
|Total Measured and Indicated||42,531||0.720||984,000|
For open pit resources, Timmins utilized Lerchs Grossman pit shell geometry at reasonable long term prices, costs and recovery assumptions. The resource is based on a pit shell constructed at a gold price of USD 1,100 per ounce. Pit optimization was based on Measured, Indicated and Inferred resources which includes undiluted mineral reserve material based on data available as at August 31, 2010.
Proven and Probable Reserves derived from the Measured and Indicated mineral resources including mine recovery and a dilution factor of 12% have been estimated within the ultimate pit outline commensurate with a gold price of USD 900 per ounce. Figures have been rounded to reflect that they are estimations.
|In Pit Reserves||In Pit Waste|
|Classification||Tonnes (x 1,000)||Grade (g/t)||Contained Ounces||Waste Tonnes (x 1,000)||Total Tonnes (x 1,000)||Stripping Ratio|
Metal Price Forecast
Revenue projections are based on a constant gold price of USD 1,000/oz in real terms, closely approximating the 3-year trailing average price but significantly lower than current spot prices. Accordingly, the sensitivity of the project to a gold price in a range of up to USD 1,400/oz has also been evaluated. For minor silver content, a price of USD 17/oz has been used.
The undiscounted base case cash flow evaluates to approximately USD 273.6 million before tax and USD 207.1 million after tax. The base case Net Present Value (NPV) at a discount rate of 8%/y (NPV) evaluates to approximately USD 216.8 million before tax and USD 163.1 million after tax. As pre-2011 capital costs have been treated as sunk, no internal rate of return has been calculated. The average cash cost of production equates to USD 489 per ounce of gold, or USD 7.88 per tonne treated.
The base case evaluation has been made for a nominal through put rate of 18,000 tonnes per day, which is expected to be achieved by July, 2011. A summary of the base case life-of-mine statistics and annual cash flows are summarized in the table below.
|Net Sales Revenue||93,885||103,074||102,644||103,513||85,880||48,567||537,564|
|Cash Op. Costs||Mining costs||35,528||33,279||29,418||24,260||23,722||13,572||159,779|
|Metallurgy & Lab costs||441||451||451||451||446||193||2,434|
|Total Cash Operating Costs||53,526||53,098||49,236||44,077||43,491||19,065||262,494|
|Net Cash Operating Margin (EBITDA)||40,359||49,975||53,408||59,435||42,389||29,502||275,070|
|Changes in working capital||5,915||1,013||-375||-321||-2,247||-13,090||-9,107|
|Net cash flow before tax||28,302||48,273||51,055||59,363||44,335||42,291||273,618|
|Net cash flow after tax||19,220||35,567||37,859||44,993||34,823||34,633||207,095|
|Discounted Cash Flow (8 %/y) Pre-Tax||27,234||43,010||42,119||45,345||31,357||27,696||216,760|
|Cumulative DCF (8 %/y) Pre-tax||27,234||70,243||112,362||157,707||189,064||216,760|
|Discounted Cash Flow (8 %/y) After tax||18,494||31,689||31,233||34,369||24,630||22,681||163,096|
|Cumulative DCF (8 %/y) After tax||18,494||50,183||81,416||115,785||140,415||163,096|
Sensitivity of the NPV to changes in gold price, operating and capital costs has been analyzed. Revenues are directly proportional to gold price, recovery and grade. With an adverse change of 30% (i.e., a reduction in gold price to USD 700 per ounce), NPV remains strongly positive; economic break-even occurs with a gold price of around USD 510 per ounce. At USD 1,300 per ounce, NPV before tax is estimated at approximately USD 349 million.
Sensitivity of the project NPV has also been determined for a specified range of gold prices.
| Gold Price
| NPV before tax
| NPV after tax
The following is a summary of Micon's conclusions:
"Micon has reviewed Timmins' operational plans for the San Francisco mine and believes that the mine plan and operational parameters have been well thought out. It is Micon's opinion that the San Francisco mine is a well-run operation. Micon supports the further economic studies to determine the impact of increasing the crusher throughput to 18,000 tonnes per day.
Micon has reviewed the proposed exploration program for San Francisco. It is Micon's opinion that Timmins' proposed exploration plans are properly conceived and justified for the San Francisco Mine and property.
Given the known extent of mineralization on the property, compared to the amount of mining activity, the San Francisco Mine and property has the potential to host further deposits or lenses of gold mineralization, similar in character and grade to those exploited in the past, outside the present resource base."
This press release was reviewed and prepared by Lawrence A. Dick, Ph.D., P.Geo, a director of the Company, who is recognized as a Qualified Person under the guidelines of National Instrument 43-101 and by Miguel Soto, P. Geo., a director and the COO of the Company. Pursuant to National Instrument 43-101, Mr. William Lewis, B.Sc., P.Geo., Mr. Mani Verma, M.Eng., P.Eng., Ing. Alan J. San Martin, MAusIMM., from Micon International Ltd, (Micon), of Toronto, Ontario are the independent Qualified Persons responsible for the Mineral Reserve and Mineral Resource Estimate. Mr. Christopher A. Jacobs, CEng, MIMMM and Mr. Richard M. Gowans, B.Sc., P.Eng. of Micon International Ltd, (Micon), of Toronto, Ontario are the independent Qualified Persons responsible for the economic assessment and metallurgy. Each of Mr. Lewis, Mr. Verma, Mr. San Martin, Mr. Jacobs, Mr. Gowans, Mr. Dick and Mr. Soto have read and approved the contents of this news release. For further information please contact at 604-682-4002, or go to the website at www.timminsgold.com or contact our President Arturo Bonillas at firstname.lastname@example.org or 011-52-662-252-1132.
On behalf of the Board:
Bruce Bragagnolo, LLB
Chief Executive Officer
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This News Release contains forward-looking statements. Forward-looking statements are statements which relate to future events. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans, "anticipates", believes", "estimates", "predicts", "potential", or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, level of activity, performance or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements.
While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggestions herein. Except as required by applicable law, Timmins Gold does not intend to update any forward-looking statements to conform these statements to actual results.