Creston boosts NPV at El Creston (December 17, 2010)

Vancouver – A year of drilling and metallurgical work has given Creston Moly (CMS-V) a big bump in the net present value for its El Creston molybdenum deposit in Mexico.

The new preliminary economic assessment estimates an after-tax NPV of US$562 million, compared with US$306 million for a 2009 pre-feasibility study. Both used an 8% discount and US$15 per lb. molybdenum, while the new study increased the copper price used from US$1.75 per lb. to US$2.60 per lb.

Creston released its pre-feasibility study in early 2009, just as molybdenum prices were crashing from a high of close to US$35 per lb in late 2008 to a low of around US$8 per lb in April 2009; the metal is now sells around US$16 per lb.

With the new study, the Internal rate of return has improved slightly, from 20.2% to 22.3%,. Estimated capital expenditures went from US$576.2 million to US$655.9 million, with a corresponding increase in payback time from 3.6 years to 4 years.

The project, sitting 175 km from the United States border in the State of Sonora, is planned as a conventional open-pit operation with a 13-year mine life. The strip ratio for the first four years, including pre-stripping, is 2.1 and then drops to 0.5 for the other nine years. Daily throughput is estimated to be 50,000 tonnes, an increase of 10,000 tonnes from the previous study thanks in part to the use of a coarser grind.   

The increased throughput is sited as one of the reasons for the improved economics, as are finding a copper enriched zone below the oxide cap, the planned use of a coarser grind after more metallurgical work was done, and an increased resource. 

Creston released an updated resource in October, in which it managed to add 34% more contained molybdenum and 77% more contained copper. El Creston now hosts 215.4 million measured and indicated tonnes grading 0.071% molybdenum and 0.06% copper, for 335 million lbs. of moly and 281 lbs. of copper. Inferred tonnes stand at 7.6 million tonnes grading 0.057% moly and 0.06% copper.

The company also managed to secure land ownership for its preferred tailings site, and has therefore been able to factor in the design and cost estimates for the site.

As to extending the mine life, Creston continues working to increase the resource at the Main and Red Hill zones, while also exploring the A 37 and Alejandra zones.

The 19,000-hectare project is road-accessible, 42 km from 230kV grid power, and 105 km away from a custom molybdenum roaster owned by Molymet. Creston has surface rights on 3,500 hectares, just under 3,000 of which the company wholly owns.

The company plans to have a feasibility study completed by mid-2011, and is working through the permitting process.

Helping to fund the next study, the company completed an $11.5 million financing in November, selling 27.75 million special warrants at 40¢ each. Creston will convert the warrants to shares on a one for one basis once it secures a qualifying prospectus. The company had 256.3 million shares outstanding, or 297.6 million fully diluted before the last financing.

Creston Moly also controls the Moly Brook project in Newfoundland that hosts 86.8 million indicated tonnes grading 0.065% moly and 0.034% copper, and 31.3 million inferred tonnes grading 0.056% moly and 0.027% copper, and the Ajax project in northern British Columbia that hosts 69 million indicated tonnes grading 0.065% moly and 483 million inferred tonnes grading 0.061% moly.

Creston Moly’s share price was up 2¢ to 43¢ on 1.4 million shares traded. The company has a 52-week share price range between 16¢ and 53¢.