Preliminary Economic Assessment (PEA)

The Full Technical Report for the Preliminary Economic Assessment on the Mother Lode project is expected to be filed and available on SEDAR and this website by November 20, 2020.

Highlights of the PEA:

Preliminary Economic Assessment - Mother Lode Project @ USD $1,500/oz Gold Price

Parameter Summary Data
Pre-Tax Cash Flow; IRR USD $564M; 27%
Post-Tax NPV5%; IRR USD $303M; 23%
Overall Strip Ratio 3.7 to 1 (waste: process tonne)
Cash Cost Years 1-3 (USD per produced Au ounce) $613
AISC Years 1-3 (USD per produced Au oz) $677
Year 1-8 Average Annual Gold Production 170,980 ounces
Mine Life 8 years
Total Gold Production 1,377,260 ounces
Initial Capital Cost (USD) $406M
Sustaining Capital Cost (USD) $44M
Average Mill Recovery1 (%) Au 91%
Ag 60%
Average Heap Leach Recovery (%) Au 74%
Ag 7%
Average Total Mining Rate1 (t/day) 91,200
Average Mineralization Mining Rate1 (t/day) 19,600
1-8 year rate including capitalized mining in year -1.

Mother Lode Project location map and conceptual infrastructure layout for area

Select Estimated Statistics the PEA production Plan for the Mother Lode Project

LOM Production (Mill & Heap Leach)
  Heap Leach Mill1 Total
Total Estimated Ozs of Mineralized Material Processed Au 549,990 1,066,230 1,616,220
Ag 1,066,510 939,650 2,006,160
Recovery (%) Au 74% 91% 85%
Ag 7% 60% 32%
Total Estimated Ozs from Mineralized Material Recoverable Au 406,990 970,270 1,377,260
Ag 74,660 563,790 638,450
Average Annual Gold Ozs Production 49,7002 121,2802 170,9802

1-Includes 5.1Mt of sulphide mineralized material mined at NBP
2-Includes impacts of timing adjustments for heap leach Au inventory         

Sensitivity Analysis for Preliminary Economic Assessment, Mother Lode (USD)   

Gold Price ($/Oz) Pre-Tax Free Cash Flow ($M) Pre-Tax IRR Post-Tax NPV @ 5% ($M) Post-Tax IRR Payback (Yrs)
$1,200 $173 6% $41 8% 6.0
$1,400 $428 21% $212 18% 3.0
$1,500 (base case) $564 27% $303 23% 2.7
$1,600 $699 33% $394 28% 2.5
$1,800 $971 44% $575 37% 2.2
$1,900 $1,106 49% $663 42% 2.1
$2,000 $1,242 55% $751 46% 2.0

Resource Assumptions1 for Mother Lode Project PEA

Parameter Unit Heap Leach Mill
Mining Cost USD/total tonne 1.45 1.45
Au Cut-Off g/tonne 0.06 0.44
Processing Cost USD/process tonne 1.70 18.60
Au Recovery % 74 91
Ag Recovery % 10 60
Administrative Cost USD/process tonne 0.50 0.50
Refining & Sales USD/Au oz 5.00 5.00
Au Selling Price USD/oz 1,500 1,500
Slope Angle Degrees 55 55
1-   Cost and recovery assumptions used in Whittle Pit Evaluations
Figure 1

Mother Lode Project PEA Mineral Resource Summary (effective Sept. 20, 2020)
(pit constrained at $1,500/oz gold price)

  Mill Resource Run of Mine Heap Leach
  (0.44 g/t Au cut-off grade) (0.06 g/t Au cut-off grade)
Mineral Resource Category Tonnes (M) Gold   (g/t) Gold (kozs) Tonnes (M) Gold   (g/t) Gold (kozs)
Measured 7.31 1.19 280 17.01 0.39 211
Indicated 13.67 1.64 722 22.24 0.47 339
Total M & I 20.98 1.49 1,002 39.26 0.44 550
Inferred 2.88 0.90 83 6.98 0.40 90
 
  Mill Resource Run of Mine Heap Leach
  (0.44 g/t  Au cut-off grade) (0.06 g/t Au cut-off grade)
Mineral Resource Category Tonnes (M) Silver   (g/t) Silver (kozs) Tonnes (M) Silver   (g/t) Silver (kozs)
Measured 7.31 0.76 179 17.01 0.98 713
Indicated 13.67 0.51 223 22.24 0.80 796
Total M & I 20.98 0.60 402 39.26 0.78 1,509
Inferred 2.88 1.77 164 6.98 1.26 399

Total Project Measured & Indicated ounces: 1.55Mozs Gold; 1.51 Mozs Silver
Total Project Inferred ounces: 0.17Mozs Gold;0.40 Mozs Silver

  • See Cautionary Note to US Investors below
  • The Mineral Resources above are effective as of September 20, 2020
  • Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability
  • There are no known legal, political, environmental, or other risks that could materially affect the potential development of the Mineral Resources
  • Assumes heap leach processing of disseminated oxidized mineralization
  • Assumes BiOx mill processing of MLP sulphide mineralization
  • Au Cut-Off - break-even grade derived from Whittle input parameters at USD $1,500 per ounce gold price

The Mother Lode PEA is preliminary in nature, and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized.  Mineral resources that are not mineral reserves do not have demonstrated economic viability

The National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) technical report for the Mother Lode PEA and updates of the Mother Lode mineral resource estimate is expected to be filed on the Company’s Sedar profile by the end of the business day on November 20, 2020.  For readers to fully understand the information in this news release, they should read the technical report in its entirety, including all qualifications, assumptions and exclusions that relate to the PEA. The technical report is intended to be read as a whole, and sections should not be read or relied upon out of context.

Cash Costs per Ounce of Gold – The Company calculates cash costs per ounce by dividing operating expenses per the consolidated statement of operations, net of silver sales by-product revenue, by the gold ounces sold during the applicable period. Operating expenses include mine site operating costs such as mining, processing and administration as well as royalties, however excludes depletion and depreciation and rehabilitation costs.

Sustaining Costs or AISC – The Company defines sustaining costs as the sum of operating cash costs (per above), sustaining capital (capital required to maintain current operations at existing levels), corporate administration costs, sustaining exploration, and rehabilitation accretion and amortization related to current operations. Sustaining costs excludes capital expenditures for significant improvements at existing operations deemed to be expansionary in nature, exploration and evaluation related to growth projects, financing costs, debt repayments, and taxes. 

Cautionary Note to US Investors

NI 43-101 is a rule developed by the Canadian Securities Administrators which establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects.  Unless otherwise indicated, all resource estimates contained in or incorporated by reference in this press release have been prepared in accordance with NI 43-101 and the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) Standards on Mineral Resource and Mineral Reserves, adopted by the CIM Council on November 14, 2004 (the “CIM Standards”) as they may be amended from time to time by the CIM.

United States investors are cautioned that the requirements and terminology of NI 43-101 and the CIM Standards differ significantly from the requirements and terminology of the SEC set forth in the SEC’s Industry Guide 7 (“SEC Industry Guide 7”).  Accordingly, the Company’s disclosures regarding mineralization may not be comparable to similar information disclosed by companies subject to SEC Industry Guide 7.  Without limiting the foregoing, while the terms “mineral resources”, “inferred mineral resources”, “indicated mineral resources” and “measured mineral resources” are recognized and required by NI 43-101 and the CIM Standards, they are not recognized by the SEC and are not permitted to be used in documents filed with the SEC by companies subject to SEC Industry Guide 7.  Mineral resources which are not mineral reserves do not have demonstrated economic viability, and US investors are cautioned not to assume that all or any part of a mineral resource will ever be converted into reserves.  Further, inferred resources have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically.  It cannot be assumed that all or any part of the inferred resources will ever be upgraded to a higher resource category.  Under Canadian rules, estimates of inferred mineral resources may not form the basis of a feasibility study or prefeasibility study, except in rare cases.  The SEC normally only permits issuers to report mineralization that does not constitute SEC Industry Guide 7 compliant “reserves” as in-place tonnage and grade without reference to unit amounts.  The term “contained ounces” is not permitted under the rules of SEC Industry Guide 7.  In addition, the NI 43-101 and CIM Standards definition of a “reserve” differs from the definition in SEC Industry Guide 7.  In SEC Industry Guide 7, a mineral reserve is defined as a part of a mineral deposit which could be economically and legally extracted or produced at the time the mineral reserve determination is made, and a “final” or “bankable” feasibility study is required to report reserves, the three-year historical price is used in any reserve or cash flow analysis of designated reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority. The mine economics presented herein and derived from the PEA are preliminary in nature and may not be realized. The PEA is not a feasibility study. U.S. investors are urged to consider closely the disclosure in our latest reports and registration statements filed with the SEC. You can review and obtain copies of these filings at http://www.sec.gov/edgar.shtml. U.S. Investors are cautioned not to assume that any defined resource will
ever be converted into SEC Industry Guide 7 compliant reserves
.