VANCOUVER, BRITISH COLUMBIA--(Marketwired - June 19, 2013) - Oracle Mining Corp. ("Oracle Mining" or the "Corporation") (TSX:OMN)(OTCQX:OMCCF)(FRANKFURT:OMC) is pleased to provide an update to its shareholders for our Oracle Ridge copper project (" Oracle Ridge " or " Oracle Ridge Project "), located 24 km northeast of Tucson, AZ.
Dear Oracle Mining shareholder,
We wish to thank you as a loyal shareholder of Oracle Mining for your support during the year. These are challenging times in the mining sector in both the financial markets and with mining project cost escalations. While we have no control on the markets and the price of commodities, general cost escalation in the mining sector is something management has actively been battling since the Oracle Ridge Project was acquired two-and-a-half years ago. To put it simply: as experienced mine builders and operators, we will not accept inflated capex estimates.
Our belief in the strength of Oracle Ridge is reinforced by the disclosure of a resource estimate along with a technical report we filed in April. The scale of Oracle Ridge and established infrastructure have always set Oracle Ridge apart favourably when compared to larger greenfield projects and the resource estimate confirms our belief that we can continue to work towards a feasibility study. While we have experienced delays, our commitment to Oracle Ridge being developed responsibly has meant that we have never strayed from our targets. It is for this reason that we have significant support from our largest shareholders RK Mine Finance (19.9%), RichStone Mining Investment (15.9%) and our directors and officers (16.6%).
We are also very pleased to be writing to you following our recent announcement of our partnership with JDS Energy & Mining Inc. ("JDS") to provide engineering services and produce a feasibility study in accordance with NI 43-101 (the "Feasibility Study"). JDS and the Oracle Ridge team have initiated the ground work and are working on the drilling plan and feasibility study timeline. JDS is well-respected for their innovative and cost-effective approach to mine development of projects on the scale of Oracle Ridge and we are confident they can produce a feasibility study for Oracle Ridge on-budget and on-schedule. Unlike most engineering firms, JDS has operated projects on the ground as well as provided technical expertise; we think this entrepreneurial approach is the right fit for Oracle Ridge. If you are looking for evidence, I would encourage you to look at the success stories on their website, from running drilling programs to feasibility studies to mine construction in harsh environments.
A short anecdote about our first meeting after we advised JDS we were interested in receiving a proposal: We called their CEO on a Wednesday afternoon; by Thursday, they had flown a five-man team to meet with us on the ground at the mine site in Arizona and started work on a new outline for a scoping proposal. We had the completed outline a week later and soon after that, a final services agreement. That is a process that would take most large engineering firms weeks, if not months, to conclude.
We look at a number of ways to measure the performance of our team and the level of success over the past year, specifically in the areas of permitting and finance, and how we've overcome any barriers to achieving our goals in either area.
In late 2012, our internal timeline for the production of a technical report and Feasibility Study encountered what we believe would be an unreasonable delay. Within days of learning of further delays, we took a fresh approach and the result was that we announced a mineral resource estimate (see March 18, 2013 news release) and filed on SEDAR a technical report entitled Review of the Oracle Ridge Project was filed within 90 days (on April 1, 2013). The report states that for a 1.0% copper cut-off grade, the mineral resource estimate at Oracle Ridge is
- 9.9 million tons grading 1.64% copper and 0.43 silver ounces/ton in the indicated mineral resource category containing 323 million pounds of copper and 4.2 million ounces of silver.
- 6.9 million tons grading 1.58% copper and 0.41 silver ounces/ton in the inferred mineral resource category containing 217 million pounds of copper and 2.8 million ounces of silver.
The current indicated mineral resource estimate at the time of the Feasibility Study will be included in the Feasibility Study for the Project and inferred mineral resource estimates will not be included. Following the disclosure of the resource, we've had questions from shareholders about the delay in producing a feasibility study. We have had our frustrations with this delay as well. This frustration resulted in our hiring JDS to provide engineering services and produce a feasibility study, with strict timelines and deliverables.
Another matter that shareholders ask us about regularly is permitting for Oracle Ridge. As you are aware, permitting is not entirely under any mining company's control as there are multiple stakeholders who have input during the process and success is reliant upon favourable relations with the community as well as working cooperatively with the permit-granting agencies. We have engaged in a pro-active manner with State and Federal regulatory agencies, State and County Officials and local communities to ensure stakeholders are kept informed and appraised of the project. We place a high priority on being a good corporate citizen and a responsible member of the community. We are pleased to report that thanks to the help of our excellent team in Tucson, permitting remains on schedule. A brief review of what has been accomplished since acquiring Oracle Ridge in 2010:
- The project Preliminary Jurisdictional Delineation ("PJD") was approved by the US Army Corp. of Engineers ("USACE") on February 6, 2013. An approved PJD is a step toward securing a Clean Water Act Section 404 permit. If the project moves toward a construction decision, final construction drawings will be compared to the PJD by USACE to determine the amount of disturbance and the permitting path forward.
- In July 2012, we announced that we had signed a Memorandum of Understanding (the "MOU") with Pima County for the development of the Mine. On July 10, 2012, the county Board of Supervisors unanimously approved a resolution in support of our proposal to re-open the Mine, and also approved and ratified the MOU.
- In December 2012, pursuant to the MOU, we exchanged with Pima County approximately 133 acres of private land for certain Pima County land that lies between the Mine site and the historical tailings facility, and is considered critical by the Corporation in ensuring access to the Mine site. In addition, the Corporation provided at least an additional 300 acres of land to Pima County as mitigation for potential disturbances related to the operation of the Oracle Ridge project.
- Oracle Mining has continued to secure access rights to the Mine site, and in the fourth quarter of 2012 received a Right of Way from the Arizona State Land Department that provides the Corporation access along the Black Hills Road to the mining operation from San Manuel.
- In July 5, 2012, we received the Class II Air Quality Operating Permit (the "Air Permit") from the Pima County Department of Environmental Quality. The application had been submitted in October 2011.
- In January 2012, we submitted the Aquifer Protection Permit ("APP") amendment application under expedited review process of the Arizona Department of Environmental Quality ("ADEQ") and in March 2013, the amended APP was granted to the Corporation.
- A preliminary draft Environmental Assessment was submitted to the U.S. Forest Service ("USFS") during the fourth quarter of 2012 in support of the Application for Transportation and Utility Systems and Facilities on Federal Lands (SF-299) permit. This permit is necessary to allow us the use of a portion of Forest Service lands.
Like all small mining companies, Oracle Mining has no cash flow until it has a producing asset, and must finance itself to get to that stage. We have previously reported that Credit Suisse has provided us with a $70 million indicative term sheet detailing the standards necessary for the provision of funds. We have maintained an ongoing relationship with Credit Suisse since signing the term sheet and they have advised us that they are prepared to negotiate final terms of a debt arrangement and prepare for credit committee review if a feasibility study confirming positive economic and technical viability is completed.
While the Oracle Ridge Project has a current mineral resource established, the Corporation expects that additional drilling will be undertaken this year with the goal of expanding and upgrading, if possible, the mineral resource estimate. The Corporation has not made any production decision with respect to Oracle Ridge and a decision to proceed with production at the Oracle Ridge Project can only be based upon the results of the feasibility study demonstrating economic and technical viability.
Management has effectively countered and overcome obstacles to development of Oracle Ridge since work began more than two-an-a-half years ago. We feel it is management's role to ensure a project is built economically and efficiently and while delays have been frustrating, we are ultimately responsible for ensuring shareholders see the value of this great Oracle Ridge reflected in our share price.
Please contact any of our team anytime at 604-689-9282 to answer any questions you may have about the Oracle Ridge Project or Oracle Mining.
Sincerely,
Paul Eagland, Chairman
Rod Campbell, President
Qualified Person
The scientific and technical information included in this letter to shareholders has been reviewed and approved by Kevin Francis, SME RM, Vice President Technical Services of Oracle Mining, a non-independent qualified person within the meaning of NI 43-101.
Regulatory footnotes:
Information and statements contained in this news release that are not historical facts are "forward-looking information" within the meaning of Canadian securities legislation that involves risks and uncertainties. Forward-looking information included herein is made as of the date of this news release and Oracle Mining does not intend, and does not assume any obligation, to update forward-looking information unless required by applicable securities laws. Forward-looking information relates to future events or future performance and reflects management of the Corporation's expectations or beliefs regarding future events. In certain cases, forward-looking information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "scheduled", "estimates", "intends", "anticipates" or "does not anticipate", "goal" or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" or the negative of these terms or comparable terminology. Examples of forward-looking information in this letter to shareholders include, but are not limited to, statements with respect to: our plans to work towards commencing and completing the Feasibility Study; our Mineral Resource estimate for the Oracle Ridge Project; our plans and expectations for the Oracle Ridge Project including our plans relating to completion of a further drilling program and further exploration and development of the Oracle Ridge Project; the timing or completion of any work on the Oracle Ridge Project, including timing of commencement and completion of our proposed drilling program and the Feasibility Study; and our goal to expand the Mineral Resource estimate and upgrade Mineral Resources, if possible, to a higher Mineral Resource category. This forward-looking information is based, in part, on assumptions and factors that may change or prove to be incorrect, thus causing actual results, performance or achievements to be materially different from those expressed or implied by forward-looking information. Such factors and assumptions include, but are not limited to: our assumptions regarding copper, base metal and precious metal prices; accuracy of Mineral Resource estimate and Mineral Resource modelling; accuracy of cut-off grade and assumptions underlying thereto, including projected copper prices and estimates of total operating costs; dilution allowance assumptions; success of future drilling programs; reliability of drilling, sampling and assay data; representativeness of mineralization; accuracy of metallurgical testwork; our ability to comply with current and future environmental, safety and other regulatory requirements and to obtain and maintain timely receipt of regulatory approvals.
By its very nature, forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Corporation to be materially different from any future results, performance or achievements expressed or implied by forward-looking information. Such factors include, but are not limited to: dilution to shareholders from any equity financings; the availability of capital on acceptable terms, or at all; risks relating to our estimates of Mineral Resources and cut-off grade and factors underlying, proving to be inaccurate; our dependence on the Oracle Ridge Project; risk that we are unable to enforce our legal rights under existing agreements, permits or licences or are subject to litigation or arbitration that has an adverse outcome; risk there are changes in project parameters as plans continue to be refined; risks related to the actual results of exploration and development activities; our historical experience with development-stage mining operations; changes in commodity prices, and particularly copper prices; receipt of necessary permits and licences; regulatory changes; risks related to the uncertainty of timing of events including delays in obtaining governmental approvals or financing or in the completion of project development studies; we are affected by environmental, safety and regulatory risks, including increased regulatory burdens or delays, accidents, labour disputes and other risks inherent in the mining industry; availability of materials and equipment; lack of revenue and commercial production; increased indebtedness and events of default thereunder; competition for properties, capital, skilled personnel and resources; uninsured risks; defects in title; influence of significant shareholders; foreign operations; adequate infrastructure in the jurisdictions in which we operate; opposition to mining activities; fluctuations in currency exchange rate, as well as those factors discussed in the Corporation's annual information form dated April 1, 2013, for the year ended December 31, 2012, filed and available for review on SEDAR at www.sedar.com . Although the Corporation has attempted to identify important factors that could cause actual actions, events or results to differ materially from forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated by such forward-looking information. Accordingly, readers should not place undue reliance on forward-looking information.
