Medinah Minerals, Inc., Announces Mining Developments at Compania LDM Chile
LAS VEGAS--(BUSINESS WIRE)--
Medinah Minerals (OTC/PINK: MDMN) today issued the following shareholder update concerning mining developments at the LDM Chile mining project.
Following is the report received from LDM Chile as to mine operations at the Las dos Marias site, dated July 15, 2013.
LDM is in the process of developing formal reserve estimates. This update is based upon preliminary and unproven assumptions at this early stage of the mining project. Now that LDM is moving into an operational stage from development, more information will become available over time by which to better provide forecasts on mineral resources, cash flows and operations. Mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced and extracted at the time the reserve determination is made. Investors are cautioned not to assume that all or any part of the indicated resources will ever be converted into reserves. Information concerning a description of mineralization and resources contained in this update may not be comparable to information made public by US companies subject to the reporting and disclosure requirement of the Securities and Exchange Commission of the United States Government.
Investors should be aware that LDM is a privately owned company and that Medinah Minerals, Inc.'s involvement is not through direct ownership but rather through a profit-sharing position whereby Medinah Minerals, Inc. will receive a 30% portion of LDM’s net production earnings from the Los Amigos #1 claim. It should also be noted that Medinah Minerals, Inc. owns a 51% shareholding interest in Medinah Mining Chile, which in turn owns 20% of LDM Chile. Therefore, Medinah Minerals, Inc. is not responsible or liable for any statements, projections, releases, acts or decisions of LDM nor does Medinah Minerals, Inc. warrant or guarantee, in any manner, the performance or obligations of LDM in any respect.
About Medinah Minerals, Inc.
Medinah Minerals, Inc. (ticker symbol: MDMN) is headquartered corporately in Las Vegas, Nevada, and is a Junior Mining Exploration Company with several acquired property interests, all located in the Country of Chile.
Señor Juan José Quijano Fernández
President – Medinah Minerals, Inc.
Cautionary statements regarding forward-looking statements : This update contains forward-looking statements that are statements other than statements of historical facts such as those statements regarding the outlook for company resources, operations and prospects. Investors are cautioned that forward-looking statements are not a guarantee of future performance. Actual results may differ materially from those anticipated, projected or assumed in forward-looking statements. Many factors can cause actual results to differ materially from those anticipated in the forward-looking statements. Many of the assumptions on which these forward-looking statements are based are certain to change after these forward-looking statements are made including, for example, commodity prices, resource estimates and production volumes and costs, some aspects of which we may or may not be able to control.
COMPAÑIA MINERA LDM CHILE
Project Update Submitted by LDM Chile
Santiago, Chile
July 15, 2013
Updated summary of Las Dos Marias ore possibilities and the production outlook.
Caution: All calculation of grades and tonnage are estimates only and not proven. Earnings and valuations are based on these estimates.
Note: The calculations in this report are ultra -conservative using volumes and values in the order of 33% of estimated non-proven resources.
The LDM mining operation has grown significantly to the point whereby the Company is now looking to hire a highly competent mining Manager/Engineer to address the day-to-day operations including:
- Baseline measurements of copper ore inventory and sorting of copper grades for shipment.
- Management of general mining operations, staffing of crews, shipping schedules, mine safety and security concerns.
- Establishment of a mining development plan devised for ongoing production, building to an intended 400 tonnes per day to the Til Til processing plant.
- Full assessment of future gold production and expansion for Adit 1/gold tunnel.
- Coordinate mine operations with processing plants, audit processing results and reconcile payments with output.
LDM has identified valuable resources that can provide continual cash flows for all parties. This must now be recognized and treated as an assumed long-term producing mine operation.
Sr. Quijano has been very busy gathering facts, and organizing shipping schedules to the mills that have the capacity to accept our ore. Bringing in outside professional assistance to analyze our ore deposits, check our mining work and access roads, has brought LDM to the point where we can now expect consistent and ongoing production schedules.
We can now get a preliminary analysis of the project for cash flows, ore reserves and projected annual earnings from production, as well as potential in-ground asset values.
Copper ores
From the data and discussions with various geologists, Sr. Quijano has received estimates through their visual observations that the approximate size of the skarn structure is 400 meters by 500 meters by 200 meters but further depth and width ore resource deposit determinations are required.
Using a very conservative estimate of only 10% of these resources being ore grade, a simple calculation shows ore tonnage in the copper skarn to be approximately 9 million tonnes. For discussion purposes only, we will use 3 million tonnes or 1/3 the volume to be even more conservative.
Reserves: 3 million tonnes grading potentially 3% copper (target 4%)
Production rate: initial target 250 tonnes/day (projected 400 tonnes/day)
Gross revenues: approximately $205/tonne
Net operating/milling/trucking costs: $100/tonne
Projected Net revenues: $105/tonne
Targeted Daily production net revenues: 250 x $105 net or $6.9 million per annum.
Note:
| (1) | No values attributed to gold or silver at this point. | ||||
| (2) |
Recent assays by Juan José Quijano Fernández returned 16.81% cu and 250 g/t ag with some gold values. (Certificado de Analisis – see www.medinah-minerals.com/Projects ). |
||||
| (3) | Medinah Minerals, Inc. is entitled to 30% of projected net revenue. |
The next process is the calculation of potential mine life.
Using the figures provided above by the LDM geologist and using a shipping tonnage of 250 tonnes per day and 22 working days per month, we can calculate an annual production tonnage of 66,000 tonnes throughput per year from only the copper skarn zone.
This calculation shows a mine life at this minimal production rate could be 45 years from the skarn zone alone.
As you can see, this is a small mining operation and production that can easily be tripled or quadrupled as enhancements in production and shipping improvements are attained. Production will be doubled as Sr. Quijano has contracted an additional mill to process the copper/gold ore not included in the skarn deposit. If ore production were increased, there would still exist at least a 15+ year copper ore supply.
As cash flows begin, LDM company owners plan a series of short drill holes to further test the extent and grade of the known copper skarn currently being mined.
This could generate a proven reserves category for LDM for many years.
The proven reserves category will include the high-grade, gold-bearing quartz veins that are planned for production and will be included in the second milling process. Additional to the gold-bearing quartz veins at DDH-01 and DDH-02, more copper-bearing structures have been uncovered during exploratory mining operations. These new structures differ significantly from the high-grade copper skarn. These very large veins contain both gold and copper mineralization and one has been blasted 8 meters wide, not yet reaching the other side.
Gold Ores
We can utilize similar production and cash flow calculations as we have done with the production estimates from the copper skarn, except in the case of the newly located copper/gold veins, and later, the inclusion of gold values will be assessed as well.
5 grams of gold/tonne could produce an additional $14 million per annum. 3% copper could produce an additional $7 million in copper production.
This gold ore will be shipped to the second processing mill that is better equipped for gold extraction along with the copper.
Sr. Quijano is negotiating an arrangement with this second processing mill that will take in the copper/gold ore that should exceed the revenues of the copper skarn due to increased gold recovery.
Potential Net Earnings per annum
Mill 2: $21 million
Mill 1: $7 million
Total Potential Net income from both mills: $28 million per year.
These projections are based on 250 tonnes/day shipped. The mill projects full utilization at 400 tonnes/day.
This is a very basic valuation exercise and it must be taken into account that there is much more to the LDM deposit that just the skarn. The LDM/Altos Plateau deposit was created by an enormous underlying heat source creating a mineralized ore body known as a porphyry. Through the results thus far, it is believed that the copper and copper/gold/silver associated with this discovery, is much more extensive than just the skarn. Indeed the miners have discovered several extremely large copper/gold-bearing vein structures (potential tonnages) that have not been included in this preliminary evaluation. Further, and not associated with the porphyry, are the high-grade gold-bearing quartz veins in DDH-02 that have not yet been reached by the miners.
Asset valuation
Until now, we have only used a calculation of 3% of the reported size of the skarn zone in our ore calculations. We have also disclosed that additional mineralized structures have been discovered during the mining process and that we are soon to be mining the DDH-01 and DDH-02 gold-bearing quartz veins.
With these additional factors in mind, it would be more accurate to extend the in-ground asset assessment to 10% of the volumetric ore reserve calculations. Also, as there is only one section of the copper-bearing structure that contains only minimal gold values, an overall inclusion of 3 grams/tonne of gold is justified from assay results of stockpiles and sampling. Again, this assessment assumes that all ore zones end within the boundaries of the volumetric skarn zone calculation. These zones are likely to extend added distances, but for now this will give a base line from which to begin to evaluate the minimum basic potential of the LDM discovery.
We begin at 9 million tonnes of ore grading 3% copper. This produces a gross value of $205/tonne or net $105/tonne.
Gold valuations estimates are 3 grams of gold/tonne. This lower valuation ignores all of the known high-grade gold ore, both stockpiled and assayed, and yet to be determined.
This produces a gross value of $116/tonne and a net of $116/tonne as the copper has paid all costs of production.
Copper asset in ground net reserves potential: $947,340,000
Gold asset in ground net reserves potential: $1,044,000,000
This indicates a potential net asset value of nearly $2 billion in the volumetric skarn analysis area at the LDM discovery.
The LDM project, to date, indicates a potential large in-ground asset. This analysis is restrictive to the Los Amigos #1 LDM discovery only and no other values are included from adjacent claims or from the Gordon breccia.
When all the factors are taken into account, fully confirmed and published in an analytical accounting, many analysts will likely conclude a much larger valuation for the LDM Company. This will likely be based on the ability to create future production expansion and increases in cash flow and reserve tonnages. For the purposes of this analysis, we have presented a conservative based scenario.
Compañia LDM Chile inventory ore, creating cash flow from all mill receipts and establishment of a viable ongoing copper and gold mining operation, should further enhance the valuations of the LDM.
Señor Juan José Quijano Fernández
President/Compañia Minera LDM Chile
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