Resource World Magazine

MIN I NG AUST R ALIAN UP DAT E Spanish Mountain Gold releases favourable PEA Uranium One sees profitable future in nuclear power On November 14, Spanish Mountain Gold Ltd. [SPA-TSXV] released a positive NI 43-101 compliant Preliminary Economic Assessment (PEA) for its 100%-owned Spanish Mountain Gold Project located 70 km northeast of the city of Williams Lake, central British Columbia. The PEA demonstrated the potential technical and economic viability of establishing a new gold mine and mill complex on the project. Brian Groves, President, said, "This Preliminary Economic Assessment demonstrates robust economics for the project. The higher grade production, during the initial project years, provides the potential for rapid capital payback. The PEA provides a solid base from which to advance the project to full feasibility." The Spanish Mountain Project is entering the pre-production phase of its development. It is one of the first recognized occurrences of a sediment-hosted gold system in BC. The Cariboo region was the scene of the famous Barkerville placer gold rush in the 1860s. Historically, the area has produced 3.8 million ounces of gold. Prominent neighbours are the Imperial Metals' producing Mount Polley Mine (copper, gold, silver), and the Taseko Mines' producing Gibraltar Mine (copper, molybdenum, silver). According to an updated, July 2012, resource estimate, Spanish Mountain hosts measured and indicated resources of 216 million tonnes grading 0.46 grams gold/tonne and 0.68 grams silver/tonne (at a 0.2 g/t gold cutoff) and inferred resources of 316.7 million tonnes grading 0.36 g/t gold and 0.65 g/t silver. This translates to 3.18 million ounces gold and 4.7 million ounces silver measured and indicated and 3.6 million ounces gold and 6.6 million ounces silver inferred. The mine is planned to be a conventional truck and shovel, open pit operation at 40,000 tonnes per day of mill feed. Spanish Mountain can operate over a 15-year mine life producing an average of 197,000 ounces of gold per year for the first 14 years and a total life-of-mine (LOM) production of 2.8 million ounces of gold and 1 million ounces of silver. Average gold production over years one through three will be of 268,000 ounces per year, with an average feed-grade during the first three years of operation of 0.70 g/t gold and a life-of-mine average grade of 0.48 g/t gold. The financial analysis is based on a gold price assumption of US $1,462/oz. Initial capital costs (Q3 2012) are estimated to be US $755.9 million, including a contingency of $86 million. The life-of-mine sustaining capital is estimated at $168.1 million. The life-of-mine average gold recovery is estimated at 88%. There will be by-product silver production with a silver recovery of 25%. Cash costs will average US $526/oz gold for the first three years of production and US $774/oz over the life of the mine. Spanish Mountain Gold is preparing for additional infill drilling to upgrade inferred mineral resources within the PEA pit to at least an indicated classification. This infill program will be completed over the winter so that these resources can be incorporated in further economic studies leading to feasibility. Spanish Mountain Gold has signed a Memoranda of Understandings with three First Nations in the region: the Williams Lake Indian Band, Xat-ll First Nation and Lhtako Dene Nation. n 64 www.resourceworld.com by Greg Barns Despite hosting almost 40% of the world's recoverable uranium deposits, the issue of mining this clean energy source has been vexing for Australia for three decades. But for companies that have existing operations in Australia like Uranium One [UUU-TSX, JSE], the regulatory climate has improved markedly in the last year. Uranium One, which has operations in Kazakhstan and the US, also owns the Honeymoon Mine in South Australia. And the company's appetite for Australia might increase now that the state governments of New South Wales and Queensland have lifted bans on uranium exploration and mining and uranium sales to India are on the horizon. The Honeymoon Mine is near the South Australian and New South Wales border about 75 km from the mining centre of Broken Hill. It began as a joint venture between Japanese-based Mitsui and Uranium One; however, Mitsui withdrew from the project in May 2012, leaving Uranium One with 100% ownership. Mitsui's exit was based on a view that it "could not foresee sufficient economic return from the project." This is not a perception Uranium One holds. In its March 2012 quarterly update it noted that global demand for uranium "continues to grow as a result of the increasing reliance on nuclear power in emerging markets, including those of China, India, Russia, South Korea and the Middle East." Uranium One CEO, Chris Sattler, was sanguine about Mitsui's withdrawal from Honeymoon, simply noting that the Japanese company had simply decided the project was "not for them." In terms of its projects, Uranium One's Honeymoon Mine is relatively small. It has proven and probable reserves DECEMBER 2012/JANUARY 2013

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