All positive for Mt. Milligan

Vancouver — A preliminary economic assessment of Terrane Metals’ (TRX-V, TRXOF-O) Mt. Milligan copper-gold project, in central B.C., paints a rosy picture of the large deposit’s potential.

Completed as part of Terrane’s ongoing $20-million feasibility program, the study projects annual production of 97 million lbs. (44,000 tonnes) copper and 273,300 oz. gold annually over the first six years of a 14.5-year mine life. Average annual metal production over the mine’s life is 90 million lbs. (40,800 tonnes) copper and 221,530 oz. gold.

With projected revenue coming mostly from the copper, life-of-mine average annual cost of production is estimated at US65 per lb. copper (net of gold credits) or minus US$190 per oz. gold (net of copper credits).

Initial capital costs are estimated at $827 million with payback (pretax) projected in 3.9 years. A 20.6% pretax internal rate of return (IRR) is calculated with an 8% discounted pretax net present value (NPV) of $580 million.

Three-year backward-rolling average metal prices of US$550 per oz. gold and US$2.50 per lb. copper are used in the “base case” engineering study. Payback, IRR and NPV all improve significantly using 2-year average and current metal prices.

The preliminary economic assessment looked at mining a measured and indicated resource of 317.3 million tonnes grading 0.22% copper and 0.43 gram gold per tonne. The modelled open pit has a relatively low 0.74:1 strip ratio, based on an NSR cutoff of US$4 per tonne.

A 60,000-tonne-per-day milling circuit would see annual throughput of 21.9 million tonnes of ore. Metal recoveries are estimated at 84.9% for copper and 73.8% for gold to produce a concentrate grading 27.3% copper.

Wardrop Engineering, which completed the study, recommends Terrane go ahead with a feasibility level report. If the feasibility is positive, Wardrop recommends the company proceed with detailed engineering, procurement, construction and commissioning. With a feasibility completed by early 2008 and necessary permits in hand by mid-2009, commercial operations could begin by mid-2011.

Terrane purchased Mt. Milligan, located northwest of Prince George, from Goldcorp (G-T, GG-N) in 2006. Goldcorp, in turn, acquired the project through a strategic agreement with Barrick Gold (ABX-T, ABX-N) in its takeover of Placer Dome.

Terrane issued 240 million series A preferred shares (at a deemed value of 50 apiece) to Goldcorp for the project portfolio, consisting of the Mt. Milligan, Berg, Maze Lake and Howards Pass properties.

Porphyry copper and gold mineralization at Mt. Milligan is principally hosted in volcanic and volcaniclastic rocks.