Rio Novo Gold Inc. (TSX:RN) (TSX:RN.WT) ("Rio Novo" or the "Company") is pleased to announce the results of the definitive Feasibility Study ("the FS") for its 100%-owned Almas Gold Project ("Almas" or "the Project"), located in Tocantins State, Brazil. The FS is authored by Pincock Allen & Holt (PAH), Rio Novo's independent engineering consultant, and complies with the requirements of National Instrument 43-101 "Standards of Disclosure for Mineral Projects".
The results of the FS were presented to Rio Novo's Board of Directors and unanimously approved. The construction of the Project is now subject to the successful arrangement of project financing. Rio Novo sees strong interest from various financial institutions to finance the project. A number of indicative term sheets have been received from financial institutions and the company is now working along with its financial advisor to arrange the most optimal financial structure for the Project.
Commenting on the announcement, Rio Novo's President & CEO, Julio Carvalho, stated, "The completion of the FS of the Almas Gold Project is a major achievement for Rio Novo and puts the company back on track to achieve its plan of becoming a gold producer. We always thought of this project as being at the core of our strategy to support and self-fund future growth of the Company, and the positive outcome of the FS further enhances the realization of this objective. The positive FS is another key element of project de-risking, along with the previously granted Construction License and the purchased ball mill, which is now on the Almas site. We continue to see opportunities to optimize the project as we work on detailed engineering over the next several months. In addition, Rio Novo's dominant land position in the Almas gold district creates future upside potential to grow our resource base through continuing exploration".
Total reserves are to be mined from three deposits; Paiol, the project's primary deposit, and two satellite deposits, Vira-Saia and Cata Funda, located 5km and 15km away, respectively. The total reserves to be processed also include spent heap leach residue stockpiled by Vale, Almas' previous operator.
The project development concept, as envisioned in the FS, begins with the construction of a new gold mill which will utilize crushing, ball milling, gravity and carbon-in-leach ("CIL") to recover gold bullion. The facility will be located in the Paiol area. Simultaneously, the Paiol open pit will be dewatered and pre-stripped to prepare for production. Mine production will be by a conventional open pit, drill and blast, truck and shovel operation.
The cash flow model was based on the production schedule, associated gold grades, metallurgical recoveries and capital and operating expenditures ("Capex" & "Opex") outlined in this press release. The analysis assumed delivery of refined gold bars with a payable gold content of 99.8% at a flat LOM market price of US$1,450/oz, less a cost of US$7.00/oz for refining, freight on delivery and insurance. The average net revenue per year is US$79.5 million in the first 10 years of operation starting in 2014. The average annual after-tax free cash flow is estimated to be about US$29.6 million in the same period.
The table below summarizes the sensitivity of the Project's Net Present Value ("NPV") to variations in gold price, and capital and operating costs.