Chesapeake’s Water Management Analysis at Metates Nearly Completed
June 26, 2015 (Source: Marketwired) — Chesapeake Gold Corp. (“Chesapeake” or “Company”) (TSX VENTURE:CKG) reports on the current status of the updated pre-feasibility study (“updated PFS”) being prepared on its 100% owned Metates project located in Durango State, Mexico.
As stated in the Company’s news release dated March 30, 2015, the Mexican national water agency (Conagua) increased the 2015 consumptive water rates by approximately 100% from the rates used in the original pre-feasibility study dated March, 2013. A reliable and long term water supply at a manageable cost is critically important to world class projects such as Metates. As an alternative, Chesapeake has been evaluating the use of desalinated seawater from the Pacific coast as a possible source compared to conventional surface water. During the past few months, Chesapeake has undertaken the following tasks to determine the viability of adopting the desalination option:
- Several large international companies were approached with experience in the construction and operation of large scale sea water reverse osmosis (SWRO) desalination plants
- A tender process was initiated for SWRO proposals to supply approximately 20 million cubic meters of desalinated water annually
- The use of desalinated water was reviewed with government authorities and other stakeholders in the region
- Evaluated the logistics and implications of integrating the SWRO water into the Metates distribution network as well as that of the existing surface water users
Overall, the Company has now determined that for Metates’ plus 30 year mine life desalination provides a cost effective, reliable and responsible water supply solution. SWRO water is projected to have lower overall capital and operating costs compared to conventionally sourced surface water. The natural gas pipeline under construction down the northwest coast of Mexico and proposed dedicated gas-fired power plant for Metates contributes significantly to the economics of SWRO. From a stakeholder and environmental perspective, desalination will not compete or conflict with the expanding demand from surface water users in the region during Metates’ mine life. As such, Chesapeake has decided to adopt desalination as the project’s base case water source. For the updated PFS, Chesapeake plans to outsource the construction and operation of a SWRO desalination plant and will integrate this option into the water supply network.
As part of the water supply and management analysis, Chesapeake has identified additional benefits and opportunities related with desalination:
- The proposed SWRO plant will be located within the same hydrologic basin and irrigation district as the existing surface water users which will simplify stakeholder water transfer and trade agreements
- The primary water storage reservoirs for the Metates mine site and the off-site processing location can now be relocated closer to nearby larger drainage basins
- Water supply from the larger drainage basins system significantly reduces the size of the required storage reservoirs and environmental footprint
- Political and stakeholder support will streamline the permitting process for the project’s development
Chesapeake and its consultants are actively working to fully integrate SWRO desalination into the overall project wide water supply and demand balance. The design, engineering and costing of the two relocated proposed reservoirs is nearly complete. As a result, the updated PFS will be available in the third quarter.
Randy Reifel, President, stated “It is important the updated PFS reflects the best possible economic outcome for Metates together with meeting the industry’s highest and best sustainable practices. Besides the economic benefits, desalination decouples the water supply and demand for Metates. In the event of a possible drought condition, desalination can supplement water for mine operations and surface water consumers in the same basin. Desalination will also minimize the project’s environmental impact which benefits eventual mine closure and reclamation.”
Metates is unique among other large scale development projects combining world-class reserves of gold, silver and zinc in a favourable mining jurisdiction that is situated near excellent regional infrastructure, low cost natural gas power, available water and a skilled labour pool.
Currently, Chesapeake has $28 million in cash and marketable securities.
Gary Parkison, CPG, Chesapeake Vice President Development and a Qualified Person as defined by NI43-101, has reviewed the technical information presented in this release in regards to the Metates project.
CHESAPEAKE GOLD CORP
P. Randy Reifel, President
Neither TSX Venture Exchange nor its Regulation Services Provider (as defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This news release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Such forward looking statements and information herein include, but are not limited to, statements regarding prospective gold, silver and related metal production, timing and expenditures to explore and develop prospective mineral properties, gold, silver and related metal resources, grades and recoveries, cash costs per ounce, capital and operating expenditures and sustaining capital and the ability to fund mine development. The Company does not intend to, and does not assume any obligation to update such forward-looking statements or information, other than as required by applicable law. Forward-looking statements or information involve known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Chesapeake and its operations to be materially different from those expressed or implied by such statements. Such factors include, among others: ability to finance mine development, fluctuations in the prices of gold, silver and zinc, fluctuations in the currency markets (particularly the Mexican peso, Canadian dollar and U.S. dollar); changes in national and local governments, legislation, taxation, controls, regulations and political or economic developments in Canada and Mexico; operating or technical difficulties in mineral exploration, development and mining activities; risks and hazards of mineral exploration, development and mining (including environmental hazards, industrial accidents, unusual or unexpected geological conditions, pressures, cave-ins and flooding); inadequate insurance, or inability to obtain insurance; availability of and costs associated with mining inputs and labour; the speculative nature of mineral exploration and development, diminishing quantities or grades of mineral reserves as properties are mined; risks in obtaining necessary licenses and permits, and challenges to the Company’s title to properties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or information, there may be other factors that cause results to be materially different from those anticipated, described, estimated, assessed or intended. There can be no assurance that any forward-looking statements or information will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements or information. Accordingly, readers should not place undue reliance on forward-looking statements or information.
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