SECURITIES AND EXCHANGE COMMISSION
British Columbia, Canada | 1040 | 91-0742812 | ||
(Province or other jurisdiction of | (Primary Standard Industrial | (I.R.S. Employer Identification No.) | ||
incorporation or organization) | Classification Code Number) |
Vancouver, British Columbia, Canada V6C 1S4
(604) 633-4888
Suite I-102
88 Inverness Circle East
Englewood, Colorado 80112
(303) 862-3929
Kenneth G. Sam | Corey Dean | Bob Wooder | Riccardo Leofanti | |||
Jason K. Brenkert | DuMoulin Black LLP | Blake, Cassels & Graydon | Skadden, Arps, Slate, | |||
Dorsey & Whitney LLP | 10th Floor — 595 Howe Street | 595 Burrard Street, Suite | Meagher & Flom LLP | |||
Republic Plaza Building, | Vancouver, BC V6C 2T5 | 2600 | 222 Bay Street, Suite 1750 | |||
Suite 4700 | Canada | Three Bentall Centre | Toronto, ON M5K 1J5 | |||
370 Seventeenth Street | Vancouver, BC V7X 1L3 | Canada | ||||
Denver, Colorado 80202 | Canada |
A. | o | Upon filing with the Commission, pursuant to Rule 467(a) (if in connection with an offering being made contemporaneously in the United States and Canada). | ||
B. | þ | At some future date (check the appropriate box below): |
1. | o | pursuant to Rule 467(b) on ___(date) at___(time) (designate a time not sooner than 7 calendar days after filing). | ||||||
2. | o | pursuant to Rule 467(b) on ___(date) at ___(time) (designate a time 7 calendar days or sooner after filing) because the securities regulatory authority in the review jurisdiction has issued a receipt or notification of clearance on ___(date). | ||||||
3. | o | pursuant to Rule 467(b) as soon as practicable after notification of the Commission by the Registrant or the Canadian securities regulatory authority of the review jurisdiction that a receipt or notification of clearance has been issued with respect hereto. | ||||||
4. | þ | after the filing of the next amendment to this Form (if preliminary material is being filed). |
Title of each class of | Proposed maximum | Amount of | ||||||
securities to be registered | aggregate offering price (1) | registration fee | ||||||
Common Shares | $28,045,625 | $1,999.65 | ||||||
TOTAL | $28,045,625 | $1,999.65 | ||||||
(1) | Rule 457(o) permits the registration fee to be calculated on the basis of the maximum offering price of all of the common shares to be registered. The proposed maximum initial offering price per common share will be determined at a future date. In no event will the aggregate initial offering price of all common shares issued pursuant to this Registration Statement exceed U.S.$28,045,625. Based on the maximum initial offering price of Cdn$28,750,000 converted into U.S. dollars based on the noon rate of exchange on January 18, 2010, as reported by the Bank of Canada, for the conversion of Canadian dollars into U.S. dollars of Cdn$1.00 equals US$0.9755. |
Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the United States Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State.
•COMMON SHARES
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C$• per Common Share
Proceeds to | ||||||||||||
Price to the Public(1) | Underwriters’ Fee(2) | the Company(3) | ||||||||||
Per Common Share | $ | • | $ | • | $ | • | ||||||
Total(4) | $ | • | $ | • | $ | • |
Notes: | ||
(1) | See “Plan of Distribution”. | |
(2) | A fee (the “Underwriters’ Fee”) equal to $• per Common Share from the sale of the Common Shares will be paid to the Underwriters upon completion of the Offering. See “Plan of Distribution”. | |
(3) | Before deducting expenses of this Offering, estimated to be approximately $•, which together with the Underwriters Fee, will be paid from the proceeds to the Company of the Offering. | |
(4) | If the Over-Allotment Option (as hereinafter defined) is exercised in full, the total number of Common Shares sold under the Offering will be•, the total Price to the Public will be $•, the total Underwriter’s Fee will be $• and total net proceeds to the Company will be•, before deducting costs of the Offering. |
Maximum size | Percentage of Offering | Exercise period | Exercise price | |||
• Common Shares | 15% of the Offering | up to 30 days following the Closing Date | $• per Common Share |
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Year Ended | ||||||||
June 30 | High | Low | Average | Close | ||||
2009 | 1.30 | 1.00 | 1.17 | 1.16 | ||||
2008 | 1.08 | 0.92 | 1.01 | 1.02 | ||||
2007 | 1.19 | 1.06 | 1.13 | 1.06 |
Six Months Ended | ||||||||
December 31 | High | Low | Average | Close | ||||
2009 | 1.17 | 1.03 | 1.08 | 1.05 | ||||
2008 | 1.30 | 1.00 | 1.13 | 1.22 |
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Au | Gold. | |
Deposit | A mineralized body which has been physically delineated by sufficient drilling, trenching, and/or underground work, and found to contain a sufficient average grade of metal or metals to warrant further exploration and/or development expenditures; such a deposit does not qualify as a commercially mineable ore body or as containing ore reserves, until final legal, technical, and economic factors have been resolved. | |
Dip | The angle at which a stratum is inclined from the horizontal. | |
g/t | Grams per tonne. | |
Grade | The amount of valuable metal in each tonne of ore, expressed as grams per tonne (g/t) for precious metals such as silver and gold, and as percent (%) for base metals such as lead and zinc. | |
km | Kilometers. | |
m | Meters. | |
Mineral Reserve, Proven Mineral Reserve, Probable Mineral Reserve | Under CIM standards, a Mineral Reserve is the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by a preliminary feasibility study or feasibility study. This study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and allowances for losses that may occur when the material is mined. | |
The terms “Mineral Reserve”, “Proven Mineral Reserve” and “Probable Mineral Reserve” used in this Prospectus are mining terms defined under CIM standards and used in accordance with NI 43-101. Mineral Reserves, Proven Mineral Reserves and Probable Mineral Reserves presented under CIM standards may not conform with the definitions of “reserves” or “proven reserves” or “probable reserves” under United States standards. See “ Cautionary Note to United States Investors”. | ||
Mineral Reserves under CIM standards are those parts of Mineral Resources which, after the application of all mining factors, result in an estimated tonnage and grade which, in the opinion of the qualified person(s) making the estimates, is the basis of an economically viable project after taking account of all relevant processing, metallurgical, economic, marketing, legal, environment, socio-economic and government factors. Mineral Reserves are inclusive of diluting material that will be mined in conjunction with the Mineral Reserves and delivered to the treatment plant or equivalent facility. The term “Mineral Reserve” need not necessarily signify that extraction facilities are in place or operative or that all governmental approvals have been received. It does signify that there are reasonable expectations of such approvals. |
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Under CIM standards, Mineral Reserves are sub-divided in order of increasing confidence into Probable Mineral Reserves and Proven Mineral Reserves. A Probable Mineral Reserve has a lower level of confidence than a Proven Mineral Reserve. | ||
Proven Mineral Reserve:A Proven Mineral Reserve is the economically mineable part of a Measured Mineral Resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that the economic extraction can be justified. | ||
Probable Mineral Reserve:A Probable Mineral Reserve is the economically mineable part of an Indicated and, in some circumstances, a Measured Mineral Resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that the economic extraction can be justified. | ||
Mineral Resource, Measured Mineral Resource, Indicated Mineral Resource, Inferred Mineral Resource | Under CIM standards, Mineral Resource is a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge. | |
The terms “mineral resource”, “measured mineral resource”, “indicated mineral resource”, and “inferred mineral resource” used in this Prospectus are mining terms defined under CIM standards and used in accordance with NI 43-101. They are not defined terms under United States standards and generally may not be used in documents filed with the SEC by U.S. companies. See “Cautionary Note to United States Investors”. | ||
A mineral resource estimate is based on information on the geology of the deposit and the continuity of mineralization. Assumptions concerning economic and operating parameters,including cut-off grades and economic mining widths, based on factors typical for the type of deposit, may be used if these factors have not been specifically established for the deposit at the time of the mineral resource estimate. A mineral resource is categorized on the basis of the degree of confidence in the estimate of quantity and grade or quality of the deposit, as follows: | ||
Inferred Mineral Resource:Under CIM standards, an Inferred Mineral Resource is that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. | ||
Indicated Mineral Resource:Under CIM standards, an Indicated Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and |
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economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed. | ||
Measured Mineral Resource:Under CIM standards, a Measured Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity. | ||
Mineralization | The concentration of metals and their chemical compounds within a body of rock. | |
Ore | A metal or mineral or a combination of these of sufficient value as to quality and quantity to enable it to be mined at a profit. | |
Ounceoroz | A troy ounce or twenty penny weights or 480 grains or 31.103 grams. | |
Quartz | A mineral composed of silicon dioxide. | |
Strike | Direction or trend of a geologic structure. | |
Tonne | Metric unit of weight equivalent to volume multiplied by specific gravity; equivalent to 1.102 tons or 1,000 kilograms (2,204.6 pounds). | |
Vein | Thin sheet-like intrusion into a fissure or crack, commonly bearing quartz. |
To Convert From | To | Multiply By | ||
Feet | Meters | 0.305 | ||
Meters | Feet | 3.281 | ||
Miles | Kilometers (“km”) | 1.609 | ||
Kilometers | Miles | 0.6214 | ||
Grams | Ounces (Troy) | 0.03215 | ||
Grams/Tonnes | Ounces (Troy)/Short Ton | 0.02917 | ||
Tonnes (metric) | Pounds | 2,205 | ||
Tonnes (metric) | Short Tons | 1.1023 |
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Grade | Recovery | |||||||||||||||||||||||||||||||||||||||
Mass | Au | Ag | Pb | Zn | Au | Ag | Pb | Zn | ||||||||||||||||||||||||||||||||
Year | Product | (%) | (g/t) | (g/t) | (%) | (%) | (%) | (%) | (%) | (%) | ||||||||||||||||||||||||||||||
2010 | Head | 100.0 | 0.44 | 1,010 | 11.73 | 5.26 | 100.0 | 100.0 | 100.0 | 100.0 | ||||||||||||||||||||||||||||||
Pb-Ag Conc | 16.1 | 1.3 | 5,924 | 71.0 | 2.2 | 47.8 | 94.6 | 97.6 | 6.7 | |||||||||||||||||||||||||||||||
Zn Conc | 8.5 | 1.1 | 305 | 0.64 | 54.3 | 21.2 | 2.6 | 0.5 | 87.4 | |||||||||||||||||||||||||||||||
2011 | Head | 100.0 | 0.45 | 994 | 11.54 | 5.43 | 100.0 | 100.0 | 100.0 | 100.0 | ||||||||||||||||||||||||||||||
Pb-Ag Conc | 15.9 | 1.3 | 5,921 | 71.0 | 2.2 | 47.8 | 94.5 | 97.5 | 6.4 | |||||||||||||||||||||||||||||||
Zn Conc | 8.8 | 1.1 | 302 | 0.63 | 54.4 | 21.6 | 2.7 | 0.5 | 87.7 | |||||||||||||||||||||||||||||||
2012 | Head | 100.0 | 0.43 | 820 | 8.50 | 5.49 | 100.0 | 100.0 | 100.0 | 100.0 | ||||||||||||||||||||||||||||||
Pb-Ag Conc | 11.8 | 1.72 | 6,392 | 70.1 | 2.3 | 47.7 | 91.7 | 97.1 | 4.9 | |||||||||||||||||||||||||||||||
Zn Conc | 8.9 | 1.10 | 298 | 0.47 | 54.4 | 23.1 | 3.2 | 0.5 | 88.5 | |||||||||||||||||||||||||||||||
2013 | Head | 100.0 | 0.37 | 717 | 7.04 | 6.09 | 100.0 | 100.0 | 100.0 | 100.0 | ||||||||||||||||||||||||||||||
Pb-Ag Conc | 9.7 | 1.8 | 6,616 | 68.6 | 2.8 | 47.4 | 90.0 | 95.0 | 4.5 | |||||||||||||||||||||||||||||||
Zn Conc | 10.0 | 1.1 | 297 | 0.40 | 54.6 | 29.5 | 4.1 | 0.6 | 89.4 | |||||||||||||||||||||||||||||||
Average | Head | 100.0 | 0.42 | 871 | 9.47 | 5.6 | 100.0 | 100.0 | 100.0 | 100.0 | ||||||||||||||||||||||||||||||
Pb-Ag Conc | 13.1 | 1.5 | 6,185 | 70.3 | 2.3 | 47.7 | 92.7 | 96.9 | 5.4 | |||||||||||||||||||||||||||||||
Zn Conc | 9.1 | 1.1 | 300 | 0.52 | 54.4 | 23.9 | 3.1 | 0.5 | 88.4 |
Tonnes | Ag (g/t) | Pb (%) | Zn (%) | |||||||||||||
Indicated | ||||||||||||||||
SW All | 215,800 | 997 | 12.6 | 7.2 | ||||||||||||
East 48 Upper | 16,900 | 1,001 | 3.7 | 10.0 | ||||||||||||
East 48 Mid | 59,600 | 571 | 3.9 | 7.4 | ||||||||||||
East 49 All | 17,000 | 699 | 4.2 | 2.4 | ||||||||||||
99 All | 91,700 | 995 | 7.5 | 4.2 | ||||||||||||
Total Indicated | 401,000 | 921 | 9.4 | 6.5 | ||||||||||||
Inferred | ||||||||||||||||
Total (East) | 111,100 | 320 | 3.1 | 17.9 |
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US$:Cdn$ | Ag | Pb | Zn | |||||||||||||
Zone | Exchange | US$/oz | US$/lb | US$/lb | ||||||||||||
SW | 0.90 | 15.25 | 0.675 | 0.80 | ||||||||||||
99 | 0.90 | 15.25 | 0.675 | 0.80 | ||||||||||||
East | 0.90 | 14.50 | 0.600 | 0.90 |
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Cut off $230
Mineable | NSR | 2010 | 2011 | 2012 | 2013 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SW Zone | Tonnes | diluted | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | TOTAL | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 29,454 | $ | 560 | 1600 | 4446 | 5000 | 3002 | 3000 | 3000 | 2000 | 3000 | 3000 | 1406 | 29454 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 71,223 | $ | 560 | 1900 | 5700 | 5330 | 5700 | 5700 | 5700 | 5700 | 5000 | 5000 | 5178 | 5700 | 4247 | 3844 | 3516 | 3008 | 71223 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
C_Upper | 44,139 | $ | 618 | 1900 | 6700 | 6700 | 6700 | 6000 | 6700 | 6700 | 2739 | 44139 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
C_Lower | 32,475 | $ | 396 | 4000 | 4000 | 4000 | 4100 | 4100 | 4100 | 4100 | 4075 | 32475 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
D | 32,226 | $ | 388 | 1400 | 2800 | 2800 | 2800 | 2826 | 2800 | 2800 | 2800 | 2800 | 2800 | 2800 | 2800 | 32226 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
E | 7,996 | $ | 475 | 1999 | 1999 | 1999 | 1999 | 7996 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sub-total SW | 217,512 | $ | 519 | 0 | 5400 | 16846 | 17030 | 16802 | 17500 | 18200 | 17200 | 17564 | 14800 | 13384 | 12600 | 13146 | 12743 | 12415 | 11882 | 217,512 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
99 Zone | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 5,683 | $ | 377 | 1300 | 1300 | 1300 | 800 | 983 | 5683 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 4,627 | $ | 508 | 2776 | 1851 | 4627 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
D | 1,364 | $ | 578 | 1364 | 1364 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
E | 2,971 | $ | 466 | 1486 | 1486 | 2971 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
F | 5,396 | $ | 854 | 2698 | 2698 | 5396 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
G | 27,247 | $ | 675 | 2100 | 2878 | 3619 | 3000 | 2302 | 2815 | 2616 | 2373 | 2137 | 1200 | 2207 | 27247 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
H | 6,128 | $ | 364 | 3064 | 3064 | 6128 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
J | 4,795 | $ | 295 | 1199 | 1199 | 1199 | 1199 | 4795 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sub-total 99 | 58,211 | $ | 572 | 0 | 2100 | 5654 | 5470 | 5698 | 5000 | 4300 | 5300 | 4936 | 7700 | 6763 | 3507 | 800 | 983 | 0 | 0 | 58,211 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
East Zone | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Upper 48 | 14,121 | $ | 454 | 2354 | 2354 | 2354 | 2354 | 2354 | 2354 | 14121 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
East_Mid_U | 20,086 | $ | 345 | 4039 | 3,500 | 3,586 | 4,500 | 4,461 | 20086 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
East Mid_L | 12,010 | $ | 271 | 2700 | 2834 | 3232 | 3245 | 12010 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sub-total East | 46,218 | $ | 359 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 2354 | 6393 | 8554 | 8774 | 10085 | 10059 | 46,218 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
TOTAL PRODUCTION | tonnes | 0 | 7,500 | 22,500 | 22,500 | 22,500 | 22,500 | 22,500 | 22,500 | 22,500 | 22,500 | 22,500 | 22,500 | 22,500 | 22,500 | 22,500 | 21,941 | 321,941 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Plant Feed: | TPD | 250 | 250 | 250 | 250 | 250 | 250 | 250 | 250 | 250 | 250 | 250 | 250 | 250 | 250 | 244 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Au | gpt | 0 | 0.44 | 0.44 | 0.44 | 0.46 | 0.45 | 0.44 | 0.43 | 0.44 | 0.41 | 0.42 | 0.43 | 0.38 | 0.38 | 0.36 | 0.36 | 0.42 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ag | gpt | 0 | 1037 | 1002 | 1009 | 1060 | 1029 | 955 | 931 | 873 | 805 | 789 | 814 | 728 | 722 | 712 | 706 | 871 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pb | % | 0 | 11.97 | 11.57 | 11.81 | 11.90 | 11.65 | 11.53 | 11.09 | 10.10 | 8.63 | 7.74 | 7.51 | 7.15 | 7.04 | 7.02 | 6.95 | 9.47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Zn | % | 0 | 5.54 | 5.14 | 5.29 | 5.52 | 5.57 | 5.38 | 5.27 | 5.62 | 5.08 | 5.39 | 5.85 | 5.99 | 5.96 | 6.18 | 6.19 | 5.60 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NSR | $/t | $ | 607 | $ | 586 | $ | 592 | $ | 617 | $ | 601 | $ | 564 | $ | 549 | $ | 516 | $ | 469 | $ | 453 | $ | 460 | $ | 416 | $ | 412 | $ | 406 | $ | 402 | $ | 506 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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Financial Analysis | ||
Mill, G&A, and mine operating costs are presented in Table 1.5, Table 1.6, and Table 1.7. The project operating costs were estimated from a number of sources including cost estimating guides, contractor and vendor quotes, previous studies, and experience. | ||
Table 1.5 Process Operating Cost Summary |
Annual Cost | Unit Cost | |||||||||||
Description | Labour | (Cdn$/a) | (Cdn$/t ore) | |||||||||
Process Personnel | ||||||||||||
Supervision | 4 | 528,247 | 5.87 | |||||||||
Operation | 16 | 1,177,045 | 13.08 | |||||||||
Maintenance | 6 | 516,458 | 5.74 | |||||||||
Sub-total | 26 | 2,221,750 | 24.69 | |||||||||
Supplies | ||||||||||||
Operating Supplies | 631,171 | 7.01 | ||||||||||
Maintenance Supplies | 29,063 | 0.32 | ||||||||||
Power Supply | 540,143 | 6.00 | ||||||||||
Mobile Equipment | 204,451 | 2.27 | ||||||||||
Sub-total | 1,404,827 | 15.61 | ||||||||||
Total | 28 | $ | 3,626,577 | $ | 40.30 | |||||||
Table 1.6 G&A Operating Cost Summary |
Annual Cost | Unit Cost | |||||||||||
Description | Labour | (Cdn$/a) | (Cdn$/t ore) | |||||||||
Labour | 19 | 1,820,542 | 20.23 | |||||||||
Head Office | 100,000 | 1.11 | ||||||||||
Insurance | 100,000 | 1.11 | ||||||||||
Operating Supplies | 742,000 | 8.24 | ||||||||||
Contracts | 1,531,363 | 17.02 | ||||||||||
Total | 19 | $ | 4,293,905 | $ | 47.71 | |||||||
Table 1.7 Mine Operating Cost Estimate by Function |
LOM | Average | |||||||
Cost | Unit Cost | |||||||
Mine Function | (Cdn$000) | (Cdn$/t) | ||||||
Alexco Mine Supervision | 1,192 | 3.79 | ||||||
Contractor Overhead — Monthly | 18,425 | 58.60 | ||||||
Contractor Lateral Development | 8,138 | 25.88 | ||||||
Contractor Raising | 856 | 2.72 | ||||||
Contractor Cut & Fill Stoping | 13,395 | 42.60 | ||||||
Contractor Load Underground Trucks | 0 | 0.00 | ||||||
Alexco Surface Truck Haulage | 1,562 | 4.97 | ||||||
Contractor Backfilling | 5,880 | 18.70 | ||||||
Contractor Mine Services | 5,035 | 16.01 | ||||||
Alexco Surface Waste Pile Maintenance | 163 | 0.52 | ||||||
Alexco Technical Services | 3,548 | 11.28 | ||||||
Alexco Energy | 4,917 | 15.64 | ||||||
Mine Operating Cost | 63,110 | 200.70 |
15
Capital cost estimates for the project are shown in Table 1.8. | ||
Table 1.8 Capital Cost Summary |
Total Cost | ||||
Area Description | (Cdn$000) | |||
Direct Costs | ||||
Site Development | 3,282 | |||
Underground Mining | 6,310 | |||
Crushing | 901 | |||
Fine Ore Storage | 1,267 | |||
Mill Building | 7,128 | |||
Tailings | 1,681 | |||
Site Services | 1,489 | |||
Ancillary Facilities | 1,754 | |||
Plant Mobile Fleet | 797 | |||
Temporary Services | 754 | |||
Indirect Costs | ||||
Project Indirects | 4,574 | |||
Owner Costs | 5,928 | |||
Contingency* | 5,779 | |||
Total Project Costs | 41,644 |
* | refer to Table 19.36 for contingency allowances. |
The pre-tax base case financial model was calculated using the following parameters: |
• | assumed current net smelter terms | ||
• | 3.8-year mine life | ||
• | royalties are 1.5% NSR after all initial capital plus $6.2 M in exploration costs paid back through earnings before income taxes, depreciation, and amortization (EBITDA) and accumulated cash flow turns positive and capped at Cdn$4 M, as per Alexco | ||
• | production schedule as outlined in this study | ||
• | operating costs as outlined in this study | ||
• | capital costs as outlined in this study | ||
• | the model was prepared on a pre-tax basis | ||
• | working capital distribution as per Alexco and is credit back end of mine life | ||
• | depreciation costs not calculated | ||
• | Silver Wheaton Corp. (Silver Wheaton) capital contribution and capital distribution as per Alexco. |
The economic evaluation indicates a base case pre-tax net present value (NPV) of US$29.4 M at a discount rate of 8.0% for the Bellekeno deposit. The summary of pricing scenarios and project economics is presented in Table 1.9 and Table 1.10. |
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Table 1.9 Economic Evaluation at Various Cases of Metal Prices |
NPV at 8% | ||||
Discount Rate | ||||
Scenario | (US$ M) | |||
3-year Average | 38.8 | |||
Alexco Base Case | 29.4 | |||
Wardrop | 28.7 | |||
Current | 53.8 |
Table 1.10 Metal Prices used for LOM Base Case |
2010 | 2011 | 2012 | 2013 | |||||||||||||
Silver (US$/oz) | 16.42 | 16.38 | 14.38 | 13.46 | ||||||||||||
Lead (US$/lb) | 0.80 | 0.78 | 0.69 | 0.61 | ||||||||||||
Zinc (US$/lb) | 0.82 | 0.91 | 0.86 | 0.82 | ||||||||||||
Gold (US$/oz) | 1,067.00 | 1,092.00 | 942.00 | 883.00 | ||||||||||||
Cdn$/US$ | 0.92 | 0.92 | 0.92 | 0.92 |
The payback period is defined as the time required after revenue is first received in Year 1 to achieve break-even cumulative cash flow. For this project, the payback period for the base case is approximately 0.5 years. The payback period is based on the annual un-discounted cash flows. There is no consideration for inflation, interest, or depreciation in this calculation. | ||
Conclusions | ||
The following conclusions have been made regarding the Bellekeno Project: |
• | The testwork results indicate that the tested mineralization responds well to conventional lead/zinc differential flotation process with a cyanide-free zinc mineral suppression regime. | ||
• | Silver and lead minerals associate intimately and will be recovered together to produce a silver-lead bulk concentrate, and zinc minerals will be concentrated into a separate zinc concentrate. | ||
• | The historic underground workings at the Bellekeno mine have been extensively examined and in general remain in very good condition. | ||
• | Based on the mining context of the deposit, a suitable mining method is mechanized overhand cut-and-fill in 3.5 m lifts. | ||
• | An efficient means of backfilling will be the use of a cemented blend of development waste rock and dry (filtered) tailings back hauled from the process plant. Both materials are available in abundant quantities to meet the mine backfill requirements. | ||
• | The deposit contains multi-metals and two metal concentrates will be produced on site. For this reason mine planning must be based on NSR values. | ||
• | Alexco will operate the mine on the basis of contractor mining. The planned mine operating schedule is two 11-h shifts per day, 7 d/wk. |
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• | SRK concludes that the planned mine will achieve a production rate of 250 t/d over a 3.6-year mine life. | ||
• | Scheduling indicates the mine will be ready to start production at 250 t/d by late June 2010. | ||
• | The most significant mine related risks are geotechnical, related to weak and challenging conditions that may be locally encountered in stoping. | ||
• | The most significant mine opportunity is the potential to increase the mine life as a result of exploration and/or higher metal prices. | ||
• | Providing that the set out design criteria and assumptions are satisfied, there is a strong indication that the project is commercially viable. | ||
• | Structural and stratigraphic studies, as well as extensive drilling of the Bellekeno deposit has resulted in a number of resource expansion and exploration targets in areas within and immediately adjacent to the existing minable resource. It is recommended that these targets be ranked in order of priority and drilling of initial targets adjacent to existing or planned underground infrastructure in the SW, 99, and Upper East be coordinated with pre-production mine development work. |
• | the price of silver and other metals; | ||
• | the Company’s operating performance and the performance of competitors and other similar companies; | ||
• | the public’s reaction to the Company’s press releases, other public announcements and the Company’s filings with the various securities regulatory authorities; | ||
• | changes in earnings estimates or recommendations by research analysts who track the Common Shares or the shares of other companies in the resource sector; |
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• | changes in general economic conditions; | ||
• | the number of Common Shares to be publicly traded after the Offering; | ||
• | the arrival or departure of key personnel; and | ||
• | acquisitions, strategic alliances or joint ventures involving the Company or its competitors. |
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• | reserve, resource or other mineralization estimates will be accurate; or | ||
• | mineralization can be mined or processed profitably. |
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• | the global credit/liquidity crisis could impact the cost and availability of financing and Alexco’s overall liquidity; | ||
• | the volatility of silver prices would impact Alexco’s revenues, profits, losses and cash flow; | ||
• | volatile energy prices, commodity and consumables prices and currency exchange rates would impact Alexco’s production costs; and | ||
• | the devaluation and volatility of global stock markets could impact the valuation of Alexco’s equity and other securities. |
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Use of Proceeds | Estimated Expenditure | |
Bellekeno mine construction capital | $5,930,000 | |
Additional contingency for Bellekeno mine capital cost overruns | $l | |
Initial working capital for Bellekeno mine | $6,100,000 | |
General working capital and corporate purposes | $l | |
Estimated net proceeds | $l |
25
Type of | No. of | Issue or Exercise | ||||||||||
Securities | Common | Price per | ||||||||||
Date of Issue | Issued | Shares | Security | Reason for Issue | ||||||||
February 2, 2009 | Stock Options | 635,000 | $ | 1.65 | Grant of stock options | |||||||
February 6, 2009 | Common Shares | 110,000 | $ | 0.80 | Exercise of stock options | |||||||
March 17, 2009 | Common Shares | 3,428,572 | $ | 1.75 | Private placement of flow-through common shares | |||||||
July 21, 2009 | Stock Options | 50,000 | $ | 2.18 | Grant of stock options | |||||||
November 16, 2009 | Stock Options | 200,000 | $ | 2.90 | Grant of stock options | |||||||
November 23, 2009 | Common Shares | 25,000 | $ | 1.50 | Exercise of stock options | |||||||
November 25, 2009 | Common Shares | 4,000 | $ | 1.50 | Exercise of stock options | |||||||
December 23, 2009 | Common Shares | 2,375,000 | $ | 4.00 | Private placement of flow-through common shares | |||||||
January 4, 2010 | Common Shares | 50,000 | $ | 1.65 | Exercise of stock options | |||||||
January 5, 2010 | Common Shares | 3,750 | $ | 1.65 | Exercise of stock options |
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Period | High | Low | Volume | |||||||||
2009 | ||||||||||||
January | $ | 1.89 | $ | 1.16 | 706,500 | |||||||
February | $ | 2.14 | $ | 1.33 | 963,800 | |||||||
March | $ | 1.80 | $ | 1.40 | 465,200 | |||||||
April | $ | 1.76 | $ | 1.40 | 649,300 | |||||||
May | $ | 2.35 | $ | 1.45 | 1,776,300 | |||||||
June | $ | 2.73 | $ | 2.11 | 1,107,000 | |||||||
July | $ | 2.34 | $ | 1.98 | 761,800 | |||||||
August | $ | 2.39 | $ | 2.05 | 471,300 | |||||||
September | $ | 2.91 | $ | 2.25 | 1,037,200 | |||||||
October | $ | 3.15 | $ | 2.53 | 1,747,100 | |||||||
November | $ | 3.07 | $ | 2.66 | 2,046,900 | |||||||
December | $ | 4.45 | $ | 2.87 | 2,324,300 | |||||||
2010 | ||||||||||||
January 1-18 | $ | 4.00 | $ | 3.73 | 1,333,124 |
Period | High | Low | Volume | |||||||||
2009 | ||||||||||||
January | $ | 1.61 | $ | 0.96 | 1,526,867 | |||||||
February | $ | 1.76 | $ | 1.04 | 1,818,682 | |||||||
March | $ | 1.52 | $ | 1.08 | 1,202,535 | |||||||
April | $ | 1.40 | $ | 1.13 | 1,393,412 | |||||||
May | $ | 2.16 | $ | 1.27 | 4,930,174 | |||||||
June | $ | 2.53 | $ | 1.86 | 3,416,837 | |||||||
July | $ | 2.1599 | $ | 1.72 | 2,015,638 | |||||||
August | $ | 2.40 | $ | 1.85 | 1,537,713 | |||||||
September | $ | 2.79 | $ | 2.05 | 3,719,785 | |||||||
October | $ | 3.50 | $ | 2.35 | 4,055,297 | |||||||
November | $ | 2.95 | $ | 2.28 | 3,302,066 | |||||||
December | $ | 3.98 | $ | 2.75 | 6,689,982 | |||||||
2010 | ||||||||||||
January 1-18 | $ | 3.99 | $ | 3.60 | 1,524,005 |
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a. | Annual Information Form dated September 28, 2009 for the year ended June 30, 2009 and filed on SEDAR on September 28, 2009 under National Instrument 51-102; |
39
b. | Audited consolidated financial statements of Alexco for the years ended June 30, 2009 and June 30, 2008, together with the notes thereto and the auditors’ report thereon and related management’s discussion and analysis, filed on SEDAR on September 28, 2009; | ||
c. | Unaudited consolidated financial statements of Alexco for the three months ended September 30, 2009 and September 30, 2008, together with the notes thereto and related management’s discussion and analysis, filed on SEDAR on November 16, 2009; | ||
d. | Material change report dated and filed on SEDAR on November 19, 2009 in respect of a material change that occurred November 11, 2009, being the completion of the development plan in respect of the Bellekeno mine; | ||
e. | Material change report dated and filed on SEDAR on November 19, 2009 in respect of a material change that occurred November 18, 2009, being the issuance by the Government of Yukon of a Quartz Mining Licence for the Bellekeno mine; | ||
f. | Material change report dated and filed on SEDAR on December 15, 2009 in respect of a material change that occurred December 10, 2009, being the entering into an underwriting agreement with respect to the offer and sale of up to 1,875,000 flow-through common shares of the Company (the “Private Placement”); | ||
g. | Material change report dated and filed on SEDAR on December 15, 2009 in respect of a material change that occurred December 14, 2009, being the increase in the size of the Private Placement to 2,375,000 flow-through common shares of the Company; | ||
h. | Management information circular dated October 27, 2009 and filed on SEDAR on November 4, 2009 prepared in connection with Alexco’s annual general meeting of shareholders held on December 1, 2009; and | ||
i. | The Technical Report. |
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41
Exhibit No. | Description | |
3.1** | Underwriting Agreement | |
4.1* | Annual Information Form dated September 28, 2009 for the year ended June 30, 2009, filed with the Commission on September 28, 2009 as Exhibit 1 to the Registrant’s Annual Report on Form 40-F for the fiscal year ended June 30, 2009 | |
4.2* | Audited consolidated financial statements of the Registrant for the years ended June 30, 2009 and June 30, 2008, together with the notes thereto and the auditors’ report thereon and related management’s discussion and analysis, filed with the Commission on September 28, 2009 as Exhibits 2 and 3, respectively, to the Registrant’s Annual Report on Form 40-F for the fiscal year ended June 30, 2009 | |
4.3* | Unaudited consolidated financial statements of the Registrant for the three months ended September 30, 2009 and September 30, 2008, together with the notes thereto and related management’s discussion and analysis, furnished to the Commission under cover of Form 6-K on November 17, 2009 | |
4.4* | Material change report dated November 19, 2009 in respect of a material change that occurred November 11, 2009, being the completion of the development plan in respect of the Bellekeno mine, furnished to the Commission under cover of Form 6-K on November 20, 2009 |
II-1
Exhibit No. | Description | |
4.5* | Material change report dated November 19, 2009 in respect of a material change that occurred November 18, 2009, being the issuance by the Government of Yukon of a Quartz Mining Licence for the Bellekeno mine, furnished to the Commission under cover of Form 6-K on November 20, 2009 | |
4.6* | Material change report dated December 15, 2009 in respect of a material change that occurred December 10, 2009, being the entering into an underwriting agreement with respect to the offer and sale of up to 1,875,000 flow-through common shares of the Company (the “Private Placement”), furnished to the Commission under cover of Form 6-K on December 16, 2009 | |
4.7* | Material change report dated a December 15, 2009 in respect of a material change that occurred December 14, 2009, being the increase in the size of the Private Placement to 2,375,000 flow-through common shares of the Company, furnished to the Commission under cover of Form 6-K on December 16, 2009 | |
4.8* | Management information circular dated October 27, 2009 prepared in connection with the Registrant’s annual general meeting of shareholders held on December 1, 2009, furnished to the Commission under cover of Form 6-K on November 4, 2009 | |
4.9* | The technical report, dated December 2, 2009, and entitled “Bellekeno Project — Updated Preliminary Economic Assessment Technical Report,” furnished to the Commission under cover of Form 6-K on December 7, 2009 | |
5.1 | Consent of PricewaterhouseCoopers LLP | |
5.2 | Consent of DuMoulin Black LLP | |
5.3 | Consent of Thorsteinssons LLP | |
5.4 | Consent of Stanton Dodd, L. Geo | |
5.5 | Consent of Vince Scartozzi, L. Geo. | |
5.6 | Consent of G. David Keller, P. Geo. | |
5.7 | Consent of Ken Reipas, P. Eng. | |
5.8 | Consent of Hassan Ghaffari, P. Eng. | |
5.9 | Consent of Bruce Murphy, FSAIMM | |
6.1 | Power of Attorney of certain officers and directors of the Registrant (included on signature page) |
* | Previously filed or furnished to the Commission | |
** | To be filed by amendment |
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III-1
ALEXCO RESOURCE CORP. (Registrant) | ||||
By: | /s/ Clynton R. Nauman | |||
Clynton R. Nauman | ||||
President and Chief Executive Officer | ||||
Signature | Title | Date | ||
/s/ Clynton R. Nauman | President, Chief Executive Officer and Director | January 19, 2010 | ||
/s/ David Whittle | Chief Financial Officer | January 19, 2010 | ||
/s/ Michael Winn | Chairman and Director | January 19, 2010 | ||
/s/ Rick Van Nieuwenhuyse | Director | January 19, 2010 | ||
/s/ David Searle | Director | January 19, 2010 | ||
/s/ George Brack | Director | January 19, 2010 | ||
/s/ Terry Krepiakevich | Director | January 19, 2010 |
ALEXCO RESOURCE U.S. CORP. | Authorized Representative in United States | January 19, 2010 | ||
Chief Financial Officer |
III-2
Exhibit No. | Description | |
3.1** | Underwriting Agreement | |
4.1* | Annual Information Form dated September 28, 2009 for the year ended June 30, 2009, filed with the Commission on September 28, 2009 as Exhibit 1 to the Registrant’s Annual Report on Form 40-F for the fiscal year ended June 30, 2009 | |
4.2* | Audited consolidated financial statements of the Registrant for the years ended June 30, 2009 and June 30, 2008, together with the notes thereto and the auditors’ report thereon and related management’s discussion and analysis, filed with the Commission on September 28, 2009 as Exhibits 2 and 3, respectively, to the Registrant’s Annual Report on Form 40-F for the fiscal year ended June 30, 2009 | |
4.3* | Unaudited consolidated financial statements of the Registrant for the three months ended September 30, 2009 and September 30, 2008, together with the notes thereto and related management’s discussion and analysis, furnished to the Commission under cover of Form 6-K on November 17, 2009 | |
4.4* | Material change report dated November 19, 2009 in respect of a material change that occurred November 11, 2009, being the completion of the development plan in respect of the Bellekeno mine, furnished to the Commission under cover of Form 6-K on November 20, 2009 | |
4.5* | Material change report dated November 19, 2009 in respect of a material change that occurred November 18, 2009, being the issuance by the Government of Yukon of a Quartz Mining Licence for the Bellekeno mine, furnished to the Commission under cover of Form 6-K on November 20, 2009 | |
4.6* | Material change report dated December 15, 2009 in respect of a material change that occurred December 10, 2009, being the entering into an underwriting agreement with respect to the offer and sale of up to 1,875,000 flow-through common shares of the Company (the “Private Placement”), furnished to the Commission under cover of Form 6-K on December 16, 2009 | |
4.7* | Material change report dated a December 15, 2009 in respect of a material change that occurred December 14, 2009, being the increase in the size of the Private Placement to 2,375,000 flow-through common shares of the Company, furnished to the Commission under cover of Form 6-K on December 16, 2009 | |
4.8* | Management information circular dated October 27, 2009 prepared in connection with the Registrant’s annual general meeting of shareholders held on December 1, 2009, furnished to the Commission under cover of Form 6-K on November 4, 2009 | |
4.9* | The technical report, dated December 2, 2009, and entitled “Bellekeno Project — Updated Preliminary Economic Assessment Technical Report,” furnished to the Commission under cover of Form 6-K on December 7, 2009 | |
5.1 | Consent of PricewaterhouseCoopers LLP | |
5.2 | Consent of DuMoulin Black LLP | |
5.3 | Consent of Thorsteinssons LLP | |
5.4 | Consent of Stanton Dodd, L. Geo | |
5.5 | Consent of Vince Scartozzi, L. Geo. | |
5.6 | Consent of G. David Keller, P. Geo. | |
5.7 | Consent of Ken Reipas, P. Eng. | |
5.8 | Consent of Hassan Ghaffari, P. Eng. | |
5.9 | Consent of Bruce Murphy, FSAIMM | |
6.1 | Power of Attorney of certain officers and directors of the Registrant (included on signature page) |
* | Previously filed or furnished to the Commission | |
** | To be filed by amendment |
III-3