Ovoca Bio Regulatory News (OVB)

15 Jan 2008 11:04

Ovoca Gold PLC15 January 2008 Ovoca Gold plc Bankable Feasibility Study Results for Goltsovoye: cash cost of production $4.11 per ounce of silver, pre-production capital cost of $73.9million, average production 6.4 million ounces of silver a year in early years. Ovoca Gold Plc, the London AIM (OVG.L) and IEX (OVX.IR) ("Ovoca") is pleased toannounce the results of the Bankable Feasibility Study (BFS) for itswholly-owned Goltsovoye silver project; prepared by Scott Wilson Ltd. Scott Wilson concludes: "The Goltsovoye project presents an opportunity todevelop an economically viable project for Ovoca that has the potential toprovide economic returns on investment. Based on Zone 1 resources, the cashflow analysis indicated robust project economics across a range of silver priceassumptions." The BFS states that the Goltsovoye mine project has apre-production capital cost of $73.9 million (without a 10% contingency). Theaverage production cost will be $4.11 per ounce of silver. Output will be over6.4 million ounces of silver per year for the first three years of operation.Scott Wilson's base case NPV for Goltsovoye at $12.50 per ounce of silver and ata 10% discount rate is $75.9 million on a pre income tax basis. At a $15 perounce silver price and a lead price of $772 per tonne (current prices are $16.15and $3453 respectively) and 10% discount rate, Goltsovoye's NPV, on a pre incometax basis, is $128.6 million. Internal Rate of return (IRR) and pre income tax Net Present Value (NPV) Silver Price USD per ounce Variation IRR NPV USD millions $10.00 -20% 22.4% 23.1 $11.25 -10% 34.8% 49.5 Base Case $12.50 0 46.3% 75.9 $13.75 +10% 57.1% 102.3 $15.00 +20% 67.5% 128.6 It is important to note that the BFS addresses only the first phase developmentof the Goltsovoye deposit, Ore Zone 1 resources, containing 41.3 million ouncesof silver measured and indicated, at 884 grams per tonne (Canadian NI 43-101standard). The BFS does not include Ore Zone 1 inferred resources of 3.2 millionounces of silver at 627 grams per tonne; Ore Zone 2 JORC catagorised resourcespreviously announced by Ovoca Gold in Q107, of 22 million ounces of silver (2.7indicated, 19.4 inferred) at 754 grams per tonne, or any of the 4 otheridentified Ore Zones. In the Study, Goltsovoye is designed as a compact underground operation, with anannual mined output of 260,000 tonnes of ore during the six-year mine life ofOre Zone 1. Ore processing is a combination of gravitation and flotation withthe end product being a silver-lead concentrate. Silver recoveries arepredicted to be 95% while lead recoveries are predicted at between 76% and 86%.The process plant will consist of three stage crushing and grinding, followed bythe gravitation and flotation circuits to produce two separate products: agravity concentrate and a flotation concentrate. Special attention has been paid to the environmental aspects of the project.Scott Wilson comments in the BFS: "Based on the information gathered to date, itis considered likely that environmental impacts arising from the project can beavoided or mitigated against in the project design and as such will notcompromise the success of the project." The tailings storage facility is contained as a valley dam with a rockfillembankment. Power will be supplied from six 1750 kV diesel generators. Processwater and potable water will be supplied from wells, and the process water willbe recycled from the tailings pond. A permanent man camp will house 260employees. The mine will directly employ 371 people (331 mining and processing)and will work a two-week-on-two-week-off rotating schedule. Leonid Skoptsov, Chief Executive Officer of Ovoca comments: "I am very pleasedwith the results of Scott Wilson's BFS, which confirms the attractiveness of ourGoltsovoye project. Even with a base case scenario of $12.50 per ounce ofsilver, Goltsovoye is a world-class property that would be a welcome addition inthe asset portfolio of any mining company. Of course, considering that silver isnow above $16/oz and above the top range for the BFS, I believe that Goltsovoyewill demonstrate financial performance in excess of the already robust economicsconcluded by Scott Wilson. I look forward to building Goltsovoye, and deliveringon our promises to shareholders, the local community and employees to create afirst-rate company around this wonderful asset that Ovoca has the good fortuneto own." The Executive Summary of the BFS can be viewed on the company's website:www.ovocagold.com. The above information has been reviewed and verified by Roger Turner, Chairmanand Director of Ovoca, for the purposes of Mining, Oil and Gas Companies issuedby The London Stock Exchange in March 2006. Mr. Turner with 41 years miningengineering, management and consulting experience, graduated as a miningengineer from the Camborne School of Mines and has an MSc degree in EconomicGeology from Leicester University. He is a member in good standing of theInstitute of Materials, Mining and Metallurgy and is a UK Chartered Engineer. Ovoca Gold Plc is an international exploration company with dual listing inLondon (OVG.L) and Ireland (OVX.IR), exploring for and developing precious andbase metals properties in Russia. For further information please visit www.ovocagold.com or contact: Leonid Skoptsov - Ovoca Gold PlcTel + 7 (0)495 648 2646Email: leonid.skoptsov@ovocagold.com John Frain - DavyTel : +353 (0)1 679 6363Email: john.frain@davy.ie John O'Connor - Ovoca Gold PlcTel: +353 (0)1 633 0523Email: john.oconnor@ovocagold.com This information is provided by RNS The company news service from the London Stock Exchange