Golden Predator Announces Positive Preliminary Economic Assessment (PEA) Results for the Brewery Creek Project, Yukon
Golden Predator Mining Corp. (TSX.V: GPY) (the “Company” or “Golden Predator”) is pleased to announce the results of a Preliminary Economic Assessment (PEA) for the company’s year-round road accessible Brewery Creek Gold Project. The NPV of the project ranges from $18.1 million at $1,150 gold to $114.5 million at $1,500 gold with IRRs ranging from 12% to 45% with corresponding gold prices; these scenarios are pre-tax and assume a 5% discount rate. Total Life of Mine Capital is estimated to be $89.4 million which includes initial capital, sustaining capital, indirect costs and owner costs.
“We are happy to have our belief regarding the potential economics of re-opening the Brewery Creek mine confirmed by this study. Having a project with truly modest CAPEX and a break-even point around $1,100 gold provides us with a quality asset with only a minimal revival in the price of gold,” said Janet Lee-Sheriff, Chief Executive Officer, “The compelling low start-up cost along with the untapped exploration potential of the project should make this an attractive opportunity for a prospective joint venture candidate.”
The PEA evaluated the economics of resuming mining at Brewery Creek through a combination of open pit mining and reprocessing former heap leach material for gold recovery to doré. The study was prepared by Tetra Tech EBA Inc. in cooperation with Tetra Tech Inc. of Tucson, AZ; SGS-E&S Engineering Solutions Inc. of Tucson, AZ; Resource Modeling Inc. of Stites, ID; Gustavson and Associates of Lakewood, CO and Access Consulting Group of Whitehorse, YT.
| PEA Summary Mine Plan and Operating Assumptions | |||
| Total Oxide mined from Open Pits (tonnes) | 10,264,000 | ||
| Total Waste mined from Open Pits (tonnes) | 43,520,000 | ||
| Strip Ratio open pits | 4.2:1 | ||
| Total Gold Ounces Contained | 445,000 | ||
| Average Diluted Grade g/t Gold Open Pits | 1.351 | ||
| Total Material Re-processed from Old Heap Leach (tonnes) | 4,195,000 | ||
| Total Waste Moved on Old Heap (tonnes) | 3,366,000 | ||
| Total Gold Ounces Contained Old Heap Material | 104,000 | ||
| Average Diluted Grade g/t Gold Old Heap Material | 0.772 | ||
| Total Gold Ounces Recovered | 372,000 | ||
| Life of Mine | 9 years | ||
| 1 | Based on a cut-off grade of 0.50 g/t gold | |
| 2 | Based on a cut-off grade of 0.30 g/t gold |
| PEA Summary Capital and Operating Costs | ||||
| Capital Costs (including contingency) | ||||
| Total Direct Capital | $ | 59,480,000 | ||
| Capitalized Mining Costs (pre-stripping) | $ | 11,365,000 | ||
| Indirect Costs | $ | 8,406,000 | ||
| Owner Costs (G&A year -2 & -1) | $ | 5,998,000 | ||
| Sustaining Capital | $ | 4,161,000 | ||
| Total Life Mine Capital | $ | 89,410,000 | ||
| Unit Operating Costs (per tonne leached) | ||||
| Mining leach feed from pits1 | $ | 3.522 |
| |
| Mining waste from pits | $ | 2.612 |
| |
| Mining leach feed from old heap | $ | 1.17 | ||
| Processing (includes placement on heap leach pad) | $ | 8.41 | ||
| General & Administrative | $ | 3.11 | ||
| 1 | Mining cost of leach feed from pits is higher than waste mining due to longer haul distance to deliver feed to crushers than to deliver waste rock to repositories. | ||
| 2 | Includes $0.59 per tonne for equipment leasing | ||
| PEA Summary Economics at $1250/oz. Gold | |||||
| Pre-tax and Royalty NPV at 5% | $ | 45,658,000 | |||
| Pre-tax and Royalty IRR | 22% |
| |||
| Pre Tax payback | 2.7 | ||||
| Post Tax and Royalty NPV at 5% | $ | 23,315,000 | |||
| Post Tax and Royalty IRR | 15% |
| |||
| Post Tax payback | 3.2 | ||||
| Total LOM Revenue | $ | 463,089,000 | ||
| Total LOM Operating Costs | $ | 288,232,000 | ||
| Total LOM Capital including sustaining and contingency | $ | 89,410,000 | ||
| Reclamation Costs | $ | 8,000,000 | ||
| Total LOM Royalties | $ | 16,342,000 | ||
| Total LOM Taxes | $ | 14,864,000 | ||
| Total cash Flow after taxes and royalties | $ | 46,578,000 | ||
| Cash Cost ($/oz gold) | $ | 788 |
The base case summarized above assumes the owner will lease all mining equipment, instead of owner purchasing all mining equipment, to result in a lower initial capital cost. The base case assumes mining and crushing for 230 days per year at an average rate of 7,500 tonnes per day. All heap leach feed material would be crushed to 80% passing 9.5 mm. Some material on the old heap leach pad would be re-processed by crushing and re-leaching on an as needed basis to meet demand when open pit mining is not at full capacity. The existing leach pad would have the last three original designed cells built. Recent geotechnical studies indicate the pad can safely accommodate an increase in stacking height from 30 meters to 40 meters providing more capacity on the pad. Solutions would be circulated and gold recovered year round through a carbon Adsorption Desorption Recovery (ADR) plant to produce doré on site.
The existing road to Brewery Creek will continue to provide access. Power generation for the PEA was modeled as diesel powered providing a total of 5.0 megawatts with normal power draws of 3.93 MW. Waste rock generated from some of the new open pits has been designed to be used to backfill existing and new pits as scheduling allows.
| Sensitivities | ||||||||||||||||||||
| Gold Price US$/oz | $ | 1150 | $ | 1250 | $ | 1375 | $ | 1500 | ||||||||||||
| Pre-Tax NPV 5% $000 | $ | 18,112 | $ | 45,658 | $ | 80,091 | $ | 114,524 | ||||||||||||
| Post-Tax NPV 5% $000 | $ | 4,001 | $ | 23,315 | $ | 46,858 | $ | 69,360 | ||||||||||||
| Pre-Tax IRR | 12% |
| 22% |
| 34% |
| 45% |
| ||||||||||||
| Post-Tax IRR | 7% |
| 15% |
| 24% |
| 32% |
| ||||||||||||
Opportunities to Enhance Value
Trade off studies were evaluated against the base case and these included the owner purchasing all mining equipment. The owner purchase scenario, while increasing initial capital costs, project NPV remained relatively consistent, with less $1 million decrease in NPV. This scenario will be evaluated further in the future engineering studies. The current model includes commencing drilling and blasting activities at the surface of the deposits but in the previous operation it was found that level of oxidation was such that the surface material and some initial mining benches did not require drilling and blasting which would provide a positive effect on the economics. Additional economic enhancements could be found by reducing the base case throughput rate of 7,500 tonnes per day which would result in lower capital costs and extend mine life. The opportunity to mine and crush more than 230 days per year would also provide enhanced economics to the project. The property has high potential for resource expansion and discovery of new deposits. The known resources at the Classic and Lone Star deposits were not considered in this PEA and both deposits remain open to expansion. The Lone Star deposit has encountered higher grade skarn mineralization which has not been found before on the property and could develop in to a higher grade resource.
Mineral Resources
The mineral resources used in this PEA include Indicated and Inferred mineral resources estimated by three independent Qualified Persons (QP), Don Hulse, P.E., of Gustavson, Michael J. Lechner, P. Geo. of RMI, and James Barr, P. Geo., of Tetra Tech EBA. The resources are found in fifteen different deposits currently identified on the Brewery Creek property and the run of mine material (not crushed) on the old heap leach pad. The in-situ estimates used sample data from 2,608 drill holes and over 198,829 meters of drilling and the remaining resources in the existing heap were estimated using 18 sonic drills with a total of 266 meters of drilling.
The PEA utilized Indicated and Inferred resources from eight of the fifteen deposits and the old heap leach pad to develop the plans included in this PEA. The PEA mines a total of 10.2 million tonnes of oxide material at 1.35 g/t gold from the eight open pits and reprocesses 3.1 million tonnes from the old heap at 0.77 g/t gold. The total oxide resources for the Brewery Creek are estimated at 14.1 million tonnes at 1.27 g/t gold classified as Indicated and 9.3 million tonnes at 0.93 g/t gold classified as Inferred. For further details on the mineral resources the reader is referred to the complete PEA document.
| Capital and Operating Costs | ||||||||||||||||||||
| Capital Costs in US$000 | ||||||||||||||||||||
| Capital cost item | Estimated | Contingency % | Total Initial | Sustaining | Total capital | |||||||||||||||
| Direct | ||||||||||||||||||||
| General site | $ | 64 | 5 | % | $ | 67 | $ | 67 | ||||||||||||
| Site infrastructure | $ | 2,857 | 15 | % | $ | 3,286 | $ | 3,286 | ||||||||||||
| Preproduction and haul roads | $ | 812 | 10 | % | $ | 890 | $ | 890 | ||||||||||||
| Mining equipment | $ | 65 | 25 | % | $ | 81 | $ | 81 | ||||||||||||
| Mining infrastructure | $ | 615 | 15 | % | $ | 708 | $ | 708 | ||||||||||||
| Total mining and site infrastructure | $ | 4,413 | 14 | % | $ | 5,031 | $ | 5,031 | ||||||||||||
| Processing excluding heap leach construction | ||||||||||||||||||||
| Crushing | $ | 10,902 | 20 | % | $ | 13,082 | $ | 13,082 | ||||||||||||
| Agglomeration | $ | 3,349 | 20 | % | $ | 4,019 | $ | 4,019 | ||||||||||||
| Ore stacking | $ | 728 | 20 | % | $ | 874 | $ | 874 | ||||||||||||
| ADR facility and heap leach equipment | $ | 9,918 | 20 | % | $ | 11,901 | $ | 4,128 | $ | 16,029 | ||||||||||
| Process infrastructure | $ | 8,159 | 20 | % | $ | 9,790 | $ | 9,790 | ||||||||||||
| Total processing | $ | 33,055 | 20 | % | $ | 39,666 | $ | 4,128 | $ | 43,795 | ||||||||||
| Heap leach and water management | ||||||||||||||||||||
| Heap leach facility including ponds | $ | 12,764 | 15 | % | $ | 14,679 | $ | 14,679 | ||||||||||||
| Water management | $ | 83 | 25 | % | $ | 103 | $ | 103 | ||||||||||||
| Total HLF and water management | $ | 12,847 | 15 | % | $ | 14,782 | $ | 14,782 | ||||||||||||
| Total direct | $ | 50,316 | 18 | % | $ | 59,480 | $ | 4,128 | $ | 63,608 | ||||||||||
| Indirect | ||||||||||||||||||||
| Capitalized mining | $ | 11,365 | $ | 11,365 | $ | 11,365 | ||||||||||||||
| Process indirects | $ | 5,550 | 20 | % | $ | 6,661 | $ | 33 | $ | 6,694 | ||||||||||
| Mining and other indirects | $ | 1,517 | 15 | % | $ | 1,745 | $ | 1,745 | ||||||||||||
| Owners costs (Overheads year -2 and -1) | $ | 5,998 | 0 | % | $ | 5,998 | $ | 5,998 | ||||||||||||
| Total indirect | $ | 24,431 | 5 | % | $ | 25,769 | $ | 33 | $ | 25,802 | ||||||||||
| Total capital in US$000 | $ | 74,746 | 14 | % | $ | 85,249 | $ | 4,161 | $ | 89,410 | ||||||||||
| Operating Costs per tonne processed | ||||
| Average for mining leach feed from pits | $ | 3.521 |
| |
| Mining waste in pits | $ | 2.611 |
| |
| Re-handling old leach feed | $ | 1.17 | ||
| Processing (includes crushing) | $ | 8.37 | ||
| G&A | $ | 3.11 | ||
| Life of Mine Operating Costs | $ | 19.95 | ||
| 1 | Includes $0.59 per tonnes for equipment leasing |
Mining
The Brewery Creek project was evaluated for mining in the PEA as open pit truck and shovel operation. Mining was considered on the oxide portions of eight deposits aligned in a more or less east-west trend along 8 kilometers in what is known locally as the “reserve trend”. The deposits are West Big Rock, East Big Rock, Lower Fosters, Kokanee, Golden, Lucky, Bohemian and Schooner. The mine schedule shows calls for mining and processing over 10.0 million tonnes of heap leach feed and 43.5 million tonnes of waste for a strip ratio of 4.2:1. The current life of mine is nine years. The mine plan also includes reprocessing 4.1 million tonnes of material from the old heap leach pad. An additional 3.3 million tonnes of old heap material will be moved but not processed. Recent studies have shown that since the original material was not crushed an additional 45% of the remaining contained gold can be recovered after crushing. The old pad material will be mined and processed when the mining in the open pits is not at full capacity.
| Pit Area | Process Feed Over Life | Gold Grade (gpt) | ||
| Schooner | 1,044 | 2.07 | ||
| Fosters | 1,275 | 1.62 | ||
| Bohemian | 1,577 | 1.22 | ||
| Golden | 878 | 1.34 | ||
| Kokanee | 1,243 | 1.06 | ||
| West Big Rock | 809 | 1.17 | ||
| East Big Rock | 465 | 1.07 | ||
| Lucky | 2,973 | 1.27 | ||
| Total from Pits | 10,264 | 1.351 | ||
| Total from old Heap | 4,180 | 0.772 |
1Based on a cut-off grade of 0.50 g/t gold
2Based on a cut-off grade of 0.30 g/t gold
The mine plan was developed by importing the resource block models for the deposits into a pit optimization software package called GeoviaTM. Criteria were applied to the mining and processing of the mineralized and waste blocks that would be mined to create pit shells. The criteria included pit slopes generally ranging from 45o to 55o with small portions of individual pits allowing for slightly steeper or shallower pit slopes based on geotechnical assessment by Tetra Tech EBA. Gold recoveries for the pits ranged from 70.0% to 82.9% based on metallurgical testing including column leach tests.
The mining equipment was matched to achieve the planned daily mining rate of 7,500 tonnes on seasonal basis. The mining season is an anticipated 230 days of active mining and based on what the former Viceroy operation at Brewery Creek was able to achieve during its mine life. The PEA considered leasing of mining equipment to keep the initial capital costs low but does result in increasing the operating costs.
Operating costs average US$19.95/tonnes processed over the life of mine, including equipment leasing, which equates to US$778 per troy ounce sold. The estimation of operating costs is based on consumables, labor, maintenance and other requirements. Since the deposits considered in the PEA lie along an 8 kilometer trend and a crushing and heap leach pad which are located near the western end of the deposit trend different haulage costs of ore were estimated for each deposit. The cost of waste transport is generally less than the transport of the heap leach feed because the waste material is generally schedule to be deposited in engineered facilities near the respective open pits.
| Operating Cost Estimates | |||||||
| Item | Cost in | Source | |||||
| LOM average unit cost of mining process feed from pits | $ | 3.521 |
| Runge XerasTM software | |||
| LOM unit cost of mining waste rock in pits | $ | 2.611 |
| Runge XerasTM software | |||
| LOM cost of mining (re-handling) process feed from old heap | $ | 1.17 | Runge XerasTM software | ||||
| General and Administrative costs per tonne process feed | $ | 3.11 | Modeled by Year | ||||
| 1 | Includes $0.59 per tonnes for equipment leasing |
Processing
The process plant flow sheet was developed by SGS and is designed to crush and stack heap leach feed approximately 230 days per year and to recover gold from the heap leach solutions 365 days per year. The flow sheet used a daily feed rate of 7,500 tonnes per day or an annual feed rate of 1.7 million tonnes.
Material will be delivered to the crushing area and reduced to a nominal 80% passing 9.5 mm after tertiary crushing with modular crushing units. Feed material from the Fosters deposit and re-processed material from the old heap are planned to be agglomerated. The crushed material will be stacked on the leach pad by truck. Gold recovery for the leach solutions is done by through an ADR plant.
Estimates for gold recovery and consumption rates of regent is based on recent metallurgical testing conducted by McClelland Laboratories for five of the deposits and the old heap leach material. Recoveries and consumption rates for three of the deposits which were previously mined by Viceroy are based on historical data.
| Heap Leach Feed Source | Au Extraction | NaCN | Lime | Cement | ||||
| Schooner | 73.9 | 0.26 | 2.53 | 0 | ||||
| Fosters | 72.5 | 0.23 | 1.73 | 2.00 | ||||
| Bohemian | 77.0 | 0.31 | 3.00 | 0 | ||||
| Golden | 70.0 | 0.37 | 2.89 | 0.40 | ||||
| Kokanee | 70.0 | 0.37 | 2.89 | 0.40 | ||||
| West Big Rock | 82.9 | 0.30 | 3.87 | 0 | ||||
| East Big Rock | 77.0 | 0.73 | 3.30 | 0 | ||||
| Lucky | 70.0 | 0.37 | 2.89 | 0.40 | ||||
| Old Heap | 45.0 | 0.27 | 0 | 5.75 |
Operating costs for the processing at Brewery Creek are estimated to be slightly variable depending on the material being processed and the table below shows the overall average processing plant operating costs. The costs include crushing, reagents, fuel, power, assay laboratory, labor and maintenance.
| Item | Total US$(000) | US$/tonne feed | ||
| Reagents | 39,892 | 2.96 | ||
| Fuel | 2,955 | 0.22 | ||
| Power | 40,768 | 3.03 | ||
| Labor | 23,962 | 1.78 | ||
| Other | 5,075 | 0.38 | ||
| Total | 112,655 | 8.37 |
First Nations, Community Engagement and Environment
Community and First Nation engagement has been a strong component of the Brewery Creek Project dating to the initial mine operator, Viceroy Resources. In 2011 Golden Predator updated and modernized the Socio Economic Agreement with the Tr’ondek Hwech’in (TH), which addresses environmental responsibilities, permitting, education and employment as well as preferential contracting opportunities and wealth sharing. The Brewery Creek Project lies with the traditional territory of both the Tr’ondek Hwech’in and the First Nation of Na Cho Nyak Dun (NND). Regardless of the pre-existing relationship and agreement with TH and the proximity to Dawson City, Yukon the Company has and will continue to consult with both First Nations on all permitting and regulatory matters.
The previous operator and the company have conducted extensive environmental studies and monitoring programs that document the property since the early 1990’s. Studies include water quality, fisheries, wildlife, heritage and vegetation. The company continues to conduct regular environmental sampling and monitoring on the property.
Disclosure
The PEA is only summarized in this press release as an initial high-level review of the project the complete detailed report will filed on SEDAR within 20 days of this press release. The PEA is preliminary in nature and it includes inferred mineral resources that are considered too speculative to be used in an economic analysis except as allowed for by Canadian Securities Administrator’s National Instrument 43-101 in PEA studies. There is no guarantee that the inferred mineral resources can be converted to Indicated or Measured mineral resources, and as such, there is no guarantee the project economics described in this report will be achieved.
Qualified Persons
The independent qualified persons responsible for preparing the Brewery Creek Preliminary Economic Assessment are James Barr, P. Geo., of Tetra Tech EBA Inc. Mark Horan, P. Eng., of Tetra Tech EBA Inc., Marvin Silva, Ph.D., P. Eng., of Tetra Tech EBA Inc., Joseph Keane, P. E., of SGS-E&S Engineering Solutions Inc., Mike Lechner, P. Geo., of Resource Modeling Inc., Donald E. Hulse, P.E., of Gustavson and Associates and Claiborne Newton, III, Ph.D., SME(RM), of Gustavson and Associates.
Michael Maslowski, CPG, a consultant to the company is the Company’s designated QP for this news release within the meaning of NI 43-101 and has reviewed and validated that the information contained in the release is consistent with that provided by the QP’s responsible for the PEA.
Golden Predator Mining Corp.
Golden Predator’s corporate mandate is to advance the Brewery Creek project towards production through a joint venture arrangement. The Brewery Creek mine operated from 1996 to 2002, before closing due to low gold prices. Mining licenses and permits are in place for continued exploration along with a Socio Economic Accord with the Tr'ondek Hwech'in. The Company holds additional projects with current resources and/or new discovery potential, including the high-grade 3 Aces and Grew Creek gold projects and the Marg and Clear Lake polymetallic massive sulfide deposits.
For additional information:
Janet Lee-Sheriff, Chief Executive Officer
(208) 635 5415
info@goldenpredator.com
www.goldenpredator.com
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. This press release contains projections and forward-looking information that involve various risks and uncertainties regarding future events. Such forward-looking information can include without limitation statements based on current expectations involving a number of risks and uncertainties and are not guarantees of future performance. There are numerous risks and uncertainties that could cause actual results and the Company’s plans and objectives to differ materially from those expressed in the forward-looking information. Actual results and future events could differ materially from those anticipated in such information. These and all subsequent written and oral forward-looking information are based on estimates and opinions of management on the dates they are made and are expressly qualified in their entirety by this notice. Except as required by law, the Company assumes no obligation to update forward-looking information should circumstances or management's estimates or opinions change.
NR 14-08
Contact
Golden Predator Mining Corp.
Janet Lee-Sheriff, 208-635-5415
Chief Executive Officer
info@goldenpredator.com
www.goldenpredator.com