March 15, 2011
Woulfe Mining is pleased to update shareholders on the Company's activities and plans at the Sangdong tungsten molybdenum project in South Korea. Woulfe is advancing the Sangdong project by simultaneously working on five key project objectives. The plan is to have four critical items completed by end of 2011 with project development to be completed during 2012.
-- Resource to support feasibility - Woulfe is drilling the upper part of the current inferred resource of 103.6 Mt at 0.37% WO3 and 0.04% MoS2 cut off 0.1% WO3 (please see press release April 8th 2010). The drilling is focused above the valley floor in an area which is mostly unmined. There are 6 drill rigs on site and the program is forecasted to be complete in May 2011.
The Scoping Study (Wardrop, March 2010) did not take into consideration the molybdenum stock work ore body located below the skarn mineralisation. This zone was drilled by Korea Resources Corporation (KORES) who produced a historical non-compliant reserve estimate of 15 million tonnes at 0.4% MoS2. The 42 holes drilled in the lode were at a steep angle to the interpreted mineralised structures, as were the two subsequent holes drilled by Woulfe. A follow-up drilling program will be considered following the completion of the current program.
-- Mine development permitting - Mine development approval based sufficient area to open the mine was granted in June 2010. Woulfe is currently applying for an expanded area to include the proposed plant site and full site permitting is expected to be obtained by July 2011. -- Definitive design - A crushing circuit has been purchased and definitive design is in progress. Detailed metallurgical test work is to be carried out to finalise design of the grinding and flotation circuits. -- Feasibility - Wardrop Engineers (A Tetra Tech Company) were commissioned in 2010 to complete the definitive feasibility study due in latter part of 2011. -- Financing - Woulfe has determined that the CDN$289 million build cost estimated in the Wardrop Scoping Study is high when compared to a recent mine and processing plant developed in South Korea. Management is considering a number of options to finance this step, which will prevent or minimize dilution to shareholders.
Brian Wesson CEO and President of Woulfe Mining stated, "Focusing on these 5 facets of the Sangdong project simultaneously, accelerates Woulfe towards our goal of production at the Sangdong tungsten molybdenum project in 2012. We achieved a number of significant milestones in 2010, not in the least, securing a strategic relationship with Korea Zinc, which has laid the foundations for us to complete the major project challenges this year. We will keep shareholders updated as we move towards and achieve the goals we have outlined for 2011."
Readers should note that the mine was previously operated for 40 years and closed at an APT price of US$40/mtu in 1993. Management is of the view that the project risks are sufficiently low to warrant moving forward with the definitive design prior to completing a NI 43-101 compliant definition of reserves and the feasibility study. This is based on a current APT price of approximately US$400/mtu, some 40 years of operational knowledge, input from former project technical staff, and the robust Scoping Study based on an APT price of US$250/mtu.
The work outlined above is required to measure the project against the requirements of NI 43-101 to be compliant under the Canadian disclosure regulations. Investors and potential investors need to be aware that the historical data is not compliant and may or may not be compliant even after the above work is done. There is significant risk associated with the project until the work is done and assessed in terms of NI 43-101. Readers are urged to take advice and/or draw their own conclusions based on the Company's plan moving forward.
Resource Drilling
Woulfe currently has six drilling rigs onsite, including three surface rigs and three underground rigs. The planned 5,000 metre drilling program was scheduled to be completed by January 2011, however, progress was delayed due to extreme winter conditions which restricted surface access and the installation of power underground.
Underground drilling is being carried out from the main Sangdong Level, which has been partly rehabilitated to 850m lateral extent from the adit. This provides drilling coverage for approximately half of the strike length of the infrastructure pillar, with the remaining strike length to be drill tested from the surface.
On 7th March 2011, Woulfe received clearance from the Korean Forestry Department for access to the surface drill sites and three rigs have been moved onto the site. To date, approximately 1,000 metres of the 5,000 metres drill program has been completed. The core is being logged onsite and the sample preparation facilities are being re-commissioned.
The samples will be analysed at SGS in Perth, Australia, which currently has the capacity for a quick turn over of the assay results. Results will be released in batches commencing April 2011.
The 5,000 metre drilling program is scheduled to be completed by May 2011 and an updated NI 43-101 resource statement for the upper area targeted by the drilling program is on course for financial year end June 2011.
Mine Development Permitting
Woulfe has spent approximately US$900,000 on detailed environmental work on the Sangdong project area using internationally accepted consultants. The current focus is on final permitting for the process plant site and infrastructure. The permit is expected by July 2011.
Mine Processing Design
Woulfe has the design capability and responsibility to develop the Sangdong project. In addition, Woulfe is using Canadian consultants with tungsten expertise to manage the detailed metallurgical testwork. Half of the cores from the current drilling program will be used for metallurgical testwork, which will cover all aspects of processing from grinding and flotation to APT production.
Detailed design of the process plant is well advanced as the design is the critical path to the aggressive development schedule. The process design will be based on mill throughput of 1.2 million tonnes per annum to produce approximately 400,000 mtu per annum of ammonium paratungstate (APT) and approximately 500,000 pounds of molybdenum half of that considered in the Scoping Study.
The primary crushing circuit has been acquired and the detailed design of the crushing and fine ore storage components is underway. The grinding circuit will be comprised of two rod mills, to be installed in series. Given the delivery period for new mills, typically in excess of nine months, various options are being reviewed so that Woulfe will be in a position to acquire the mills as soon as the testwork is completed. The mills will be approximately 1300kW each and 4.5 diameter and 6.1 metres long.
Woulfe estimates that the initial capital cost for the project will be significantly lower than the US$289 million included in the Scoping Study after comparing costs of a recent mine and processing plant completed in South Korea using local labour and fabrication. Woulfe estimates a requirement of US$15 million working capital.
Feasibility Study
Wardrop Engineers completed the Scoping Study for the Sangdong project in March 2010 and have been commissioned to progress the feasibility study. Progress has been delayed due to the delay in the drilling program. The study is now expected to be completed towards the end of the 2011.
Finance
Korea Zinc Co., Ltd. ("Korea Zinc") (a US$5 billion Korea listed smelter company) invested CDN$10 million into Woulfe in January 2011. Currently, Woulfe has CDN$11 million cash and approximately CDN$6 million in warrants that are 100% in the money and likely to be exercised before the December 2011 due date. This will provide sufficient finance to take the project forward into 2012.
As the management of Woulfe believes that the share price of Woulfe does not reflect the true value of the company and is conscious of dilution, financing in the 100% owned subsidiary, Sangdong Mining Corp in Korea, is being considered. The Heads of Agreement signed between Woulfe and Korea Zinc stipulates that following the CDN$10 million investment into Woulfe Mining Corp, a subsequent investment of CDN$38 million into Sangdong Mining Corp by Korea Zinc for a 51% ownership in the project will follow subject to fulfilment of certain preconditions, including completion of the 5,000m drilling program. Korea Zinc will further arrange CDN$75 million in debt based on the project feasibility. Korea Zinc has exclusivity for a deal, through to the completion of drilling and the update NI 43-101.
With rising tungsten price and due to its status being the largest tungsten project with geographical proximity to markets, Woulfe has been approached by various parties and has received several unsolicited enquiries.
Colin Lutherborrow MAusIMM is a geologist who has 30 years experience in underground mines and the delineation of resources and reserves. Mr. Lutherborrow is a Qualified Person as defined in the Canadian National Instrument 43-101 and has read and approved this release.
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