PRELIMINARY ECONOMIC ASSESSMENT

 

On June 10th, 2009, Advanced Explorations Inc. announced a preliminary economic assessment based on a previously released inferred resource estimate for the project's C-Zone.

"AEI believes that the PEA was completed to the highest standards using conservative estimates. Our base case forecast price is less than 50% of the peak prices of 2008. The Company sees potential for a stronger market recovery and growing demand for high quality electric arc furnace product and believes prices of $750 / tonne are possible. Under this circumstance the economics of a NPV of US $2.8 billion are exceptional".

John Gingerich
President & CEO
Advanced Explorations Inc.

Highlights of the preliminary economic assessment include:

• Annual production of 1 million tonnes of high value 96% - 98% Fe direct reduced iron ("DRI") nuggets.
• Forecast sale value of US $500 / tonne nugget, freight on board ("FOB")

• US $750 / tonne nugget assuming 70% of 2008 peak prices

• Operating Expenditure ("OPEX"): US $176 / tonne nuggeto  
• Net Present Value ("NPV") before taxes at a 10% discount rate:   

• US $1.16 billion at US $500 / tonne nugget
• US $2.76 billion at US $750 / tonne nugget

• Pre-tax Internal Rate of Return ("IRR"):

• 24.4 % at US $500 / tonne nugget
• 39.5 % at US $750 / tonne nugget

• Capital Expenditure ("CAPEX"): US $1.11 billion.
• Project payback of approximately three to five years on base case assumptions.
• Inferred Resource of 357 million tonnes grading 28.1 % total iron at a 25 % iron cut-off for the C-Zone only.
• The historical and non NI 43-101 compliant resource of 700 million tonnes from the proximal A, B and D-Zones was not included in this report but is considered an excellent exploration target for future drill programs.
• Three years of baseline environmental studies have been completed.
• The Project is located adjacent to a deep water ocean harbor providing AEI with a wide range of efficient construction, development and shipping options.

 

 The complete PEA report is available for download here.