TORONTO, ONTARIO — (Marketwired) — 04/12/13 — Southeast Asia Mining Corp. (the „Company“ or „SEA“) is pleased to announce the results of a NI 43-101 compliant Preliminary Economic Assessment („PEA“) for the historical operating Song Toh and Boh Yai silver-lead-zinc deposits in Thailand (the „Project“). The Company has a joint venture agreement whereby it has an option to earn an 80% interest in the mining lease applications, flotation plant and equipment.
The PEA was prepared by ACA Howe International Limited and the full results of the study will be disclosed in a NI 43-101 Technical Report within 45 days of this press release. The PEA was prepared under the supervision of Mr. Felix Lee BSc, MBA, PGeo, President, A.C.A. Howe International Limited. Mr. Lee is an independent QP in accordance with NI 43-101 and has reviewed and approved the technical information in this release.
„The results of the PEA are very encouraging,“ said Brian Jennings, President and CEO. „It demonstrates robust economics with manageable pre-production capital of $12.6 million, strong operating cash flows, and a payback of 1.5 years. The PEA is based on 22 years of historical operating history which further enhances its reliability.“
Highlights:
Unless otherwise noted, all amounts in the press release are expressed in US currency. The PEA is prepared for 100% of the project revenues and expenditures and does not take into consideration the cost for SEA to earn an 80% interest in the mining lease applications comprising the mines, an 80% interest in the flotation plant, buildings and equipment, or its partner-s 20% interest pursuant to the JVA. The preliminary assessment includes Inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary assessment will be realized.
The Project consists of two historical operating underground mining operations (Song Toh and Boh Yai) located in Thailand. The mines were operated by Cominco in 1948 and explored and operated by the German mining company Metalgesellschaft from 1969 to 1991 and subsequently by a private Thai company Kemco until 2002 when they were closed due to depressed metal prices. Historically the mines processed approximately 5.4 million tonnes of ore producing 520,000 tonnes of Pb and Zn concentrates at the 1,000 tonnes per day flotation plant. The plant was refurbished in 2008 by SEA and its joint venture partner when approximately 60,000 tonnes of ore was processed.
The PEA assumes the re-start of the mining operations subsequent to mine permitting at an average annual production rate of 300,000 tonnes per annum over a mine life of approximately 13.6 years. The mined material will be processed at the existing 1,000 tonnes per day flotation plant located at the Song Toh mine site. It is assumed the mining operations and processing will be carried out using the same methods employed in 2002 when the plant ceased operations due to low metal prices. The mine development of Song Toh and Boh Yai is based on the existing resources which are optimized in the early years of production.
The deposits remain open along strike and to depth providing future potential to significantly increase the size of the resource and further enhance the economics of an already robust economic model. Exploration to date, including soil geochemistry and geophysical results, clearly indicate that substantial potential exists for additional discoveries.
Financial Assumptions and Results
Metal prices
Metal prices used in the PEA are based on the 3 year trailing average London Metal Spot price for lead and zinc and the 3 year trailing average for the London fixing for silver and are set out below.
Breakdown of revenues
Net smelter return generated after the deduction of Thailand government royalties are set out below.
Operating costs
Operating costs per tonne during the full mine life, including the two year period of production ramp-up are:
Capital costs
Capital costs are categorized as pre-production capital and post-production capital. Pre-production capital consists primarily of mining equipment, tailing storage upgrade, an allowance for water treatment, and upgrades to local infrastructure. Post-production capital for year 1 and 2 consists of further additions to mining equipment during production ramp-up, and underground development. Post production capital for years 3 through 15 which is funded from operations and consists primarily of the ongoing replacement of mining equipment, sustaining capital, underground development, and an allowance for closure costs.
Net present value analysis sensitivities
The financial analysis for the Base Case indicates a pre-tax NPV of $88.8 million, discounted at 7.5%, with a IRR of 148% and payback of 1.3 years and an after-tax NPV $69.6 million, discounted at a 7.5%, with an IRR of 112% and a payback of 1.5 years. Sensitivities to varying discount rates and corporate tax rates are set out in additional detail in the PEA.
Metal prices sensitivities
The PEA sets out in detail the sensitivities to increases and decreases in metal prices, operating and capital costs. The analysis indicates that the Project generates after tax cash flows of $30 million when metal prices are reduced by 30% and that the breakeven prices, where the project repays capital but no profit is generated, are $0.61 /lb for lead, $0.58 /lb for zinc, and $18.21 /oz for silver.
Resource Estimate
The following table presents the resource estimate used in the preparation of the PEA. The resource estimation procedure is fully described in the November 2012 NI 43-101 Technical Report.
Notes for Resource Estimate
The technical aspects of this press release have been reviewed and approved by Mr. Felix Lee BSc, MBA, PGeo, President, A.C.A. Howe International Limited and the „Qualified Person“ as defined by National Instrument 43-101 for the Project.
About Southeast Asia Mining Corp.
Southeast Asia Mining Corp. is a junior exploration and mining company focused in Thailand. The Company has a joint venture agreement whereby it has an option to earn an 80% interest in the mining lease applications of the two historical operating silver-lead-zinc mines (Song Toh and Boh Yai), flotation plant and equipment. The mines were operated by Cominco in 1948 and explored and operated by the German mining company Metalgesellschaft from 1969 to 1991 and subsequently by a private Thai company Kemco until 2002 when they were closed due to depressed metal prices. Historically the mines processed approximately 5.4 million tonnes of ore producing 520,000 tonnes of Pb and Zn concentrates at the 1,000 tpd flotation plant. The plant was refurbished in 2008 by SEA and its joint venture partner when approximately 60,000 tonnes of ore were processed. The Company also has a 100% interest in three special prospecting licenses (1,308 hectares) and seven special prospecting licence applications (4,400 hectares) surrounding the Song Toh and Boh Yai mines and two special prospecting license applications (2,878 hectares) for copper-gold exploration in the Province of Lopburi and Nakon Sawan within the area of the Loei-Phetchabun Gold Belt.
Statements in this release that are forward-looking reflect the Company-s current views and expectations with respect to its performance, business, and future events. Such statements are subject to various risks and assumptions, some, but not necessarily all, are disclosed elsewhere in the Company-s disclosure filings with Canadian securities regulators. Such statements and information contained herein represent management-s best judgment as of the date hereof based on the information currently available; however actual results and events may vary significantly. The Company does not assume the obligation to update any forward-looking statement.
Contacts: Southeast Asia Mining Corp. Brian Jennings President and CEO 416 361-2810
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