Dynasty Metals gets positive assessment for Zaruma development

Vancouver – A positive preliminary assessment on Dynasty Metals & Mining’s (DMM-V, DMMIF-O) Zaruma gold project in southwestern Ecuador reviews development of a profitable mining operation and recommends advancing it to the feasibility stage.

The independent study highlights an underground mining operation, developed in two stages, using a flotation concentrator with a Merrill Crowe or carbon-in-pulp plant. Stage one mining will see extraction and processing about 2.4 million tonnes of ore averaging 13.9 grams gold per tonne over 10.5 years. The second stage projects processing of about 1.7 million tonnes of ore grading 12.7 grams gold over four years, and assumes an upgrade of at least half of the current inferred resource to the indicated level.

A one year payback is projected for the proposed mine along with a US$467 million operating surplus (pre-tax, undiscounted cash flow), yielding an annualized internal rate of return of about 116% over the estimated 14.5 year mine life. Direct capital expenditures to place the deposit into production are expected to come in at US$25 million.

Production estimates for the mine show 1.5 million ozs. of gold over its life span at an operating cost of US$181 per oz. Metallurgical recoveries for gold are projected to be 87%.

Dynasty recently secured rights to purchase the 3% net smelter royalty (NSR), held by the Ecuadorian subsidiary of Iamgold (IMG-T, IAG-N), covering the current Zaruma resource. The company can purchase one-half the NSR for US$1 million within 18 months and the balance for US$5 million within 30 months. Additionally, Iamgold will waive any royalty on the first 10,000 ozs. of gold production to assist in Dynasty’s plan to operate a pilot plant during its feasibility program.

Ecuador currently has a 25% corporate income tax rate and no federal or provincial royalties.

Shares of Dynasty Metals & Mining rose 36 to close at $6.30 apiece following the preliminary assessment announcement. With its 24.4-million shares outstanding, the company has a $154-million market capitalization.