LAKEWOOD, Colo., June 29, 2016 /PRNewswire/ -- Pershing Gold
Corporation (NASDAQ:PGLC) (FWB:7PG1) ("Pershing Gold" or the
"Company"), an emerging gold producer, today announces completion
of the Preliminary Economic Assessment ("PEA") on its Relief Canyon
Mine in Pershing County,
Nevada.
Mine Development Associates ("MDA") of Reno, NV completed a PEA for the Company's
Relief Canyon gold mine with an effective date of June 2, 2016. The PEA uses approximate three-year
average prices of $1,250 per ounce
("/oz") of gold ("Au") and $17/oz of
silver. The full PEA will be posted within the next week on the
Company's website at
www.pershinggold.com/relief-canyon/technical-reports.
"We are pleased to report completion of the PEA for Relief
Canyon. Achieving this milestone is key in our critical path to
advancing the Relief Canyon Mine," stated Stephen D. Alfers, Pershing Gold's Chairman and
CEO. "Moving this low-cost, low capital project forward continues
to be our priority, and the high IRR shown by this PEA validates
the last several years of work our team has put into the project.
The PEA also highlights the gold resource at Relief Canyon that
continues to be geologically open in three directions, presenting
the potential to grow the deposit through continued drilling.
Growing the deposit could allow for continued operation several
years beyond the current life of mine without replacement capital,"
Alfers explained.
The PEA evaluates the economics of two alternative mining
scenarios: first, self mining by Pershing Gold with its own
manpower and equipment, and second, mining through mine contractors
who supply the manpower and equipment to deliver material to the
Company's processing facilities. "The PEA highlights the potential
opportunity to increase net cash flows and Project NPV by 20% (as
shown below) through the use of self mining," stated Alfers. "We
will evaluate very carefully those two alternatives as we approach
the decision to restart the mine."
Table 1: Relief
Canyon PEA Highlights
|
|
|
|
Self
Mining
|
Contract
Mining
|
Life of mine
("LOM")
|
5.8 years
|
5.8 years
|
Average LOM
production
|
88,500 oz
Au/year
|
88,500 oz
Au/year
|
Cash Cost
|
$677/oz Au
|
$772/oz Au
|
All in Sustaining
Cost ("AISC")
|
$709/oz Au
|
$804/oz Au
|
Initial capital
expenditure ("CAPEX")
|
$22
million
|
$12.2
million
|
Sustaining
CAPEX
|
$15.8
million
|
$16.6
million
|
Pre-tax Net Present
Value ("NPV"), 5%
|
$189
million
|
$159
million
|
Pre-tax Internal Rate
of Return ("IRR")
|
98%
|
125%
|
Pre-tax Net Cash
Flow
|
$247.6
million
|
$206
million
|
LOM strip
ratio
|
3.45
|
3.45
|
LOM crush and
agglomerate recoveries
|
80%
|
80%
|
Initial CAPEX principally includes costs to construct leach pad
space for initial leaching operations, plant upgrades, optimization
and relocation of the crusher facility, mobilization of contract
mining equipment or down-payment on equipment purchases for self
mining, and start-up equipment and supplies. Sustaining CAPEX
includes additional leach pad space for later years of production,
normal maintenance, and wells, drains and other de-watering
activities.
Table 2: PEA Gold
Price Sensitivity Analysis, Before Tax
|
|
Gold Price / oz
Au
|
Self Mining NPV,
5%
|
Self Mining
IRR
|
Contract Mining
NPV, 5%
|
Contract Mining
IRR
|
$1,100
|
$128
million
|
67%
|
$98
million
|
76%
|
$1,150
|
$148
million
|
77%
|
$118
million
|
91%
|
$1,200
|
$169
million
|
88%
|
$138
million
|
108%
|
$1,250
|
$189
million
|
98%
|
$159
million
|
125%
|
$1,300
|
$209
million
|
109%
|
$179
million
|
143%
|
$1,350
|
$230
million
|
120%
|
$199
million
|
162%
|
Since acquiring the Relief Canyon Project in August 2011, Pershing Gold has made significant
progress in expanding the gold resource and conducting important
metallurgical tests to evaluate the heap leach characteristics of
the Relief Canyon deposit. The work done to date as presented in
the PEA prepared by MDA provides the economic data to support
further efforts to advance the project. Pershing Gold intends
to commission a third-party Pre-Feasibility Study ("PFS") to
support the decision to restart the mine, and to support future
financing efforts or other corporate objectives. Once
permitting is obtained as described below, the project will be
submitted to the Company's Board of Directors for final investment
decision. Once approved, Pershing Gold would expect to move forward
with the decision of whether to implement self mining or contract
mining, and the subsequent financing for the project. The Company
would expect initial gold production within approximately six to
nine months from investment decision and obtaining full financing
for the project. The Company is currently evaluating various
financing options which include, but are not limited to: debt,
royalties, equity, and off take agreements, and may elect to
utilize some combination of these options.
Permitting
Pershing Gold anticipates that the necessary state and
federal permits for phase 1 of the project will be issued in Q3
2016. The data currently available for the Relief Canyon
deposit are generally sufficient to support preparation of a PFS
with the exception of a pit-slope geotechnical evaluation that is
currently underway. The completion of a PFS is not expected to
negatively affect the Company's timeline to production.
Self versus Contract Mining
The PEA evaluates both Self and Contract open-pit mining options
with heap-leach processing. Over the 5.8 year LOM, 513,000 oz Au
are expected to be produced with average production of 88,500 oz
Au/year. The NPV calculations listed below use a 5% discount
rate and $1,250/oz Au.
The Self Mining option outlined in the PEA at $1,250/oz Au gives the Relief Canyon project a
pre-tax NPV of $189 million.
It estimates an average cash cost of $677/oz Au and AISC of $709/oz Au. Under this option Initial
CAPEX would be approximately $22
million with Sustaining CAPEX of $15.8 million, and would produce a pre-tax
IRR of 98% with pre-tax Net Cash Flow of $247.6 million.
The Contract Mining option outlined in the PEA gives the Relief
Canyon project a pre-tax NPV of $159
million. It estimates an average cash cost of
$772/oz Au and AISC of $804/oz Au. Under this option Initial
CAPEX would be approximately $12.2
million with Sustaining CAPEX of $16. 6 million, and would produce a pre-tax
IRR of 125% with pre-tax Net Cash Flow of $206 million.
Metallurgy
Pershing Gold has performed extensive metallurgical test work,
most of which has been conducted at McClelland Laboratories, Inc.
in Sparks, Nevada. These tests
include 70 bottle-roll tests, 19 column-leach tests and 18
load-permeability (hydraulic conductivity) tests. This work
demonstrates that the Relief Canyon mineralized material is
amenable to heap leach processing. Key findings from these
tests include the following:
- The individual column leach testing of the nine mineralization
types present, as well as composites with 2016 resource
model-weighted contributions from the various types, showed an
overall average recovery of 80% for crushed and agglomerated
material.
- Most of the mineralization types to be processed will require
agglomeration.
- The Relief Canyon material recovery is not very sensitive to
crush size. This relative lack of crush size sensitivity supports
the proposed plan for single-stage crushing to 80% minus
three-inch size. The crushing plant will have an annual
throughput capacity of about 5.4 million tons.
- Run-of-mine processing should be possible, but would be limited
to low grade, low fines material. Column testing supports the
60% recovery rate assumed for run-of-mine processing.
- The PEA assumes treatment of approximately 78% of the
mineralized material tonnage by crush and agglomeration, with the
remaining 22% treated as run-of-mine.
- The lower grade of run-of-mine material equates to about 6%
of recovered gold with the remaining 94% of recovered gold
resulting from processing of crushed and agglomerated
material.
Load permeability testing of individual mineralization types
with high fines indicated that agglomeration cement additions in
excess of 10 pounds per ton processed would be required to maintain
adequate solution permeability if placed in the deepest portions
(200 feet down) of the heap-leach pad. In contrast, low-fines
mineralization types showed that adequate permeability could be
maintained at that depth with less than 5 pounds of cement per ton
processed.
Load permeability testing of blended material consisting of 30%
of high-fines and 70% low- fines material showed adequate
permeability would be maintained to depths in excess of the 200
feet planned heap leach pad height with a cement dosage rate of 5
pounds per ton. The PEA assumes a cement addition rate of 8 pounds
per ton as a conservative budget number. Ongoing test work
will establish cement addition requirements for varying ratios of
high-fines to low-fines material.
2016 Mineral Resource Estimate
The 260,000 feet of drilling the Company has performed since
2011, plus the intercepts discovered in the historical drilling
have produced a resource of 778,000 Measured and Indicated oz Au
and 47,500 Inferred oz Au. The Measured and Indicated Resource
has an average grade of 0.020 ounces/ton, 0.68 grams/tonne and the
Inferred Resource has an average grade of 0.009 ounces/ton, 0.31
grams/tonne. Future drilling is expected to expand this
resource due to untested targets surrounding the proposed PEA pit
to the west, east and south.
Table 3: 2016
Relief Canyon Resource
|
|
|
|
Category
|
Cutoff
|
Tons
|
Gold
Grade
|
Total
Gold
|
(opt
Au)
|
(opt)
|
(gpt)
|
(Ounces)
|
Measured-
Oxide
|
0.005
|
13,201,000
|
0.024
|
0.82
|
315,000
|
Indicated –
Oxide
|
0.005
|
24,654,000
|
0.017
|
0.58
|
428,000
|
Indicated -
Sulfide
|
0.020
|
613,000
|
0.057
|
1.95
|
35,000
|
Indicated
Total
|
Variable
|
25,267,000
|
0.018
|
0.62
|
463,000
|
|
|
|
|
|
|
Measured &
Indicated Total
|
Variable
|
38,468,000
|
0.020
|
0.68
|
778,000
|
|
|
|
|
|
|
Inferred -
Oxide
|
0.005
|
5,267,000
|
0.009
|
0.31
|
47,000
|
Inferred -
Sulfide
|
0.020
|
16,000
|
0.029
|
0.99
|
500
|
Inferred
Total
|
Variable
|
5,283,000
|
0.009
|
0.31
|
47,500
|
Notes:
- Canadian Institute of Mining, Metallurgy and Petroleum
definitions were used to categorize the Mineral Resource.
- Mine Development Associates Geologist, Paul Tietz, is the qualified person responsible
for this resource estimate.
- This updated resource estimate includes the results from the
~160 core hole drilling program (~95,000 feet, ~24,000 meters)
completed in 2015.
- Rounding may cause apparent inconsistencies.
Recommendations
MDA's evaluation of Relief Canyon through this PEA supports
ongoing work and evaluation of the project. Having completed this
key milestone, Pershing Gold intends to continue to advance and
optimize the project. Recommendations from MDA for ongoing work at
Relief Canyon include the following:
- Continue drilling to expand the resource, which is
geologically open in three directions, to the west, east and
south.
- Complete the geotechnical studies currently underway to support
a more detailed economic study (PFS).
- Continue the metallurgical studies, including the ongoing
agglomeration test work to develop an operating database to
allow optimization (likely reductions) of cement addition
requirements.
- Conduct additional evaluations of low cyanide solubility
portions of the resource to refine operating controls for selection
of material to be processed.
- Seek favorable financing terms for a self mining equipment
fleet, in particular to reduce the high initial down payment
assumed in the PEA. The significantly lower operating costs
under the self mining option should benefit resource expansion with
ongoing exploration and allow continued operation for several
additional years without need for replacement capital.
Cautionary Note to United States Investors Regarding
Estimates of Measured, Indicated, and Inferred
Resources
This press release uses the terms "Measured," "Indicated" and
"Inferred" mineral resources, which are defined in Canadian
Institute of Metallurgy guidelines, the guidelines widely followed
to comply with Canadian National Instrument 43-101. We advise U.S.
investors that these terms are not recognized by the United States
Securities and Exchange Commission (the "SEC"). The estimation of
measured and indicated resources involves greater uncertainty as to
their existence and economic feasibility than the estimation of
proven and probable reserves. Mineral resources are not mineral
reserves. Mineral resources that are not mineral reserves do not
have demonstrated economic viability. U.S. investors are
cautioned not to assume that measured or indicated mineral
resources will be converted into reserves. Inferred mineral
resources have a high degree of uncertainty as to their existence
and their economic and legal feasibility. It cannot be assumed that
all or any part of an inferred mineral resource exists, or is
economically or legally viable. Under Canadian rules,
estimates of "inferred mineral resources" may not form the basis of
feasibility studies, pre-feasibility studies or other economic
studies, except in prescribed cases, such as in a preliminary
economic assessment under certain circumstances. This PEA and the
information provided in this news release is preliminary in nature
as it includes inferred mineral resources.
The SEC normally only permits issuers to report mineralization
that does not constitute "reserves" as in-place tonnage and grade
without reference to unit measures. Under U.S. standards,
mineralization may not be classified as a "reserve" unless the
determination has been made that the mineralization could be
economically and legally produced or extracted at the time the
reserve determination is made. U.S. investors are cautioned not to
assume that any part or all of a "measured", "indicated" or
"inferred" mineral resource exists or is economically or legally
mineable. US investors are urged to consider closely the
disclosure in our Form 10-K and other SEC filings. You can review
and obtain copies of these filings from the SEC's website at
http://www.sec.gov/edgar.shtml.
Scientific and Technical Data
All scientific and technical information related to drill and
surface samples, resource estimate, mineral processing, metallurgy
and recovery methods, and mining for the Relief Canyon project has
been reviewed and approved by either Paul
Tietz, Certified Professional Geologist #11720, Neil Prenn,
P.E. #7844 or Jack McPartland,
M.M.S.A., #01350QP, who are each Qualified Persons under the
definitions established by Canadian National Instrument 43-101.
Drill core at Relief Canyon is boxed and sealed at the drill rig
and moved to the Relief Canyon logging and sample preparation
facilities by trained personnel. The core is logged and split down
the center using a typical table-fed circular rock saw. One half of
the core is sent for assay to Skyline Assayers & Laboratories
of Sparks, Nevada, while the other
half is returned to the core box and stored at Relief Canyon in a
secure, fenced-off, area. Pershing Gold Corporation quality
assurance/quality control (QA/QC) procedures include the regular
use of blanks, standards, and duplicate samples.
Non-GAAP Measures
Cash costs is a non-GAAP financial measure calculated by the
Company as set forth below, and may not be comparable to similar
measures reported by other companies. Cash costs include all direct
and indirect costs that would generate gold ounces for sale to
customers, including mining of mineralized materials and waste,
leaching, processing, refining and transportation costs, on-site
administrative costs and royalties, net of by-product credits for
silver ounces sold. Cash costs do not include depreciation,
depletion, amortization, exploration expenditures, reclamation and
remediation costs, sustaining capital, financing costs, income
taxes, or corporate general and administrative costs not directly
or indirectly related to the Relief Canyon project. Cash costs are
divided by the number of gold ounces produced for the period to
arrive at cash costs per gold ounce produced.
Cost of sales is the most comparable financial measure,
calculated in accordance with GAAP, to cash costs. As compared to
cash costs, cost of sales includes adjustments for changes in
inventory and excludes net revenue from by-product, refining and
transportation costs, which are reported as part of revenue in
accordance with GAAP.
AISC is a non-GAAP financial measure calculated by the Company
as set forth below, and may not be comparable to similar measures
reported by other companies. AISC includes cash costs, as defined
above, plus exploration costs at the Relief Canyon project and
sustaining capital expenditures (including additional leach pads,
permitting and customary improvements to the operations over the
life of the project). AISC are divided by the number of gold ounces
produced for the period to arrive at all-in sustaining costs per
gold ounce produced.
About Pershing Gold Corporation
Pershing Gold is an emerging gold producer whose primary asset
is the Relief Canyon Mine in Pershing County, Nevada. Relief Canyon
includes three open-pit mines, expanding adjacent open-pit-able
gold deposits, and a state-of-the-art, fully permitted and
constructed heap-leach processing facility. Pershing Gold is
currently permitted to resume mining at Relief Canyon under the
existing Plan of Operations.
Pershing Gold's landholdings cover approximately 25,000 acres
that include the Relief Canyon Mine asset and lands surrounding the
mine in all directions. This land package provides Pershing Gold
with the opportunity to expand the Relief Canyon Mine deposit and
to explore and make new discoveries on nearby lands.
Pershing Gold is listed on the NASDAQ Global Market under the
symbol PGLC and the Frankfurt Stock Exchange under the symbol
7PG1.
Legal Notice and Safe Harbor Statement
This press
release contains "forward-looking statements" within the meaning of
the safe harbor provisions of the U.S. Private Securities
Litigation Reform Act of 1995. All statements, other than
statements of historical fact, including those with respect to the
expected project economics for Relief Canyon, including estimates
of life of mine, average production, cash costs, AISC, initial
CAPEX, sustaining CAPEX, pre-tax IRR, pre-tax NPV, net cash flows
and recovery rates, the impact of self-mining versus contract
mining, the timing to obtain necessary permits, the submission of
the project for final investment approval and the timing of initial
gold production after investment approval and full financing,
metallurgy and processing expectations, the mineral resource
estimate, expectations regarding the ability to expand the mineral
resource through future drilling, ongoing work to be conducted at
Relief Canyon and the potential results of such efforts, the
potential commissioning of a Pre-Feasibility study and the effects
on timing of the project, are "forward-looking statements."
Although the Company's management believes that such
forward-looking statements are reasonable, it cannot guarantee that
such expectations are, or will be, correct. These forward-looking
statements involve a number of risks and uncertainties, which could
cause the Company's future results to differ materially from those
anticipated. Potential risks and uncertainties include, among
others, interpretations or reinterpretations of geologic
information, unfavorable exploration results, inability to obtain
permits required for future exploration, development or production,
general economic conditions and conditions affecting the industries
in which the Company operates; the uncertainty of regulatory
requirements and approvals; fluctuating mineral and commodity
prices, final investment approval and the ability to obtain
necessary financing on acceptable terms or at all. Additional
information regarding the factors that may cause actual results to
differ materially from these forward-looking statements is
available in the Company's filings with the Securities and Exchange
Commission, including the Annual Report on Form 10-K for the year
ended December 31, 2015. The Company
assumes no obligation to update any of the information contained or
referenced in this press release.
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SOURCE Pershing Gold Corporation