LAKEWOOD, Colo., June 5, 2017 /PRNewswire/ -- Pershing Gold
Corporation (NASDAQ:PGLC) (TSX:PGLC) (FWB:7PG1) ("Pershing Gold" or
the "Company"), the emerging Nevada gold producer, today announces the
completion of a NI 43-101 compliant resource and Preliminary
Feasibility Study ("PFS") on its Relief Canyon Mine in Pershing County, Nevada.
Mine Development Associates ("MDA"), Kappes Cassidy &
Associates, of Reno, NV and
Jorgensen Engineering and Technical Services, of Centennial, CO, completed the PFS for the
Company's Relief Canyon gold mine with an effective date of
May 26, 2017. The positive PFS by
MDA recommends that Pershing Gold advance the Relief Canyon Project
to a production decision. Highlights from the PFS include a
pre-tax net present value ("NPV") of $144.6 million, an internal rate of return
("IRR") of 89% and Net Cash Flow of $192.7 million. This NPV, IRR and Net Cash
Flow assume pre-tax economics using $1,250 per ounce ("/oz") of gold ("Au"),
$16.75/oz of silver ("Ag") and a 5%
discount rate. Further highlights from the PFS are listed below in
Table 1 (showing updates to the Preliminary Economic Assessment
("PEA") the Company announced on June 24,
2016), and PFS gold price sensitivities are listed below in
Table 2.
"The PFS is a major milestone for Pershing Gold. We announced an
upgraded mineral resource that includes proven and probable
reserves of approximately 635,000 ounces of gold and 1.6 million
ounces of silver," stated Stephen D.
Alfers, Pershing Gold's Chairman and CEO. "The PFS is based
on a mine plan and financial model with an annual average
production of over 90,000 ounces of gold per year over a mine life
of approximately six years. The Relief Canyon deposit remains open
in three directions, presenting the opportunity for continued
expansion and extension of this mine," Alfers explained.
Table 1: Relief
Canyon PFS vs. PEA Highlights
|
|
|
PFS
|
PEA
|
Life of mine
("LOM")
|
5.6 years
|
5.8 years
|
Average LOM
production
|
93,900 oz
Au/year
|
88,500 oz
Au/year
|
Cash Cost
|
$770/oz Au
|
$772/oz Au
|
AISC
|
$802/oz Au
|
$804/oz Au
|
Initial
CAPEX
|
$23.6
million
|
$12.2
million
|
Sustaining
CAPEX
|
$22.8
million
|
$16.6
million
|
Working
Capital
|
$11.0
million
|
$14.9
million
|
Pre-tax NPV,
5%
|
$145
million
|
$159
million
|
Pre-tax
IRR
|
89%
|
125%
|
Pre-tax Net Cash
Flow
|
$192.7
million
|
$206
million
|
After-tax NPV,
5%
|
$126
million
|
$121
million
|
After-tax
IRR
|
85%
|
109%
|
After-tax Net Cash
Flow
|
$167.7
million
|
$157.6
million
|
|
|
|
*The PEA evaluated
the economics of two alternative mining scenarios: self-mining by
the Company with its own manpower and equipment, and mining through
mine contractors who supply the manpower and equipment to deliver
material to the Company's processing facilities. The results shown
are based on the contractor mining estimates.
|
"The Company will be reviewing various options to cover future
capital needs, including debt, royalty or stream financing, gold
off-take agreements, investment from strategic investors, or
combinations of those approaches," said Alfers.
"Pershing Gold thanks MDA, its staff, and its associated
engineering and metallurgical groups assisting in the development
of this PFS. The quality of the work and effort put into this study
is apparent in the excellent report they have produced," stated
Alfers.
Operating Cost and CAPEX
The favorable economics of
Relief Canyon are reinforced throughout the PFS. The PFS indicates
the viability of contract-mining and conveyor
stacking to bring the project into production. Under the PFS,
525,790 oz Au are expected to be produced with average life of mine
("LOM") production of 93,900 oz Au/year over the 5.6 year
LOM. The PFS highlights the low cost nature of this project
with an average cash cost of $770/oz Au and All in Sustaining Cost
("AISC") of $802/oz Au. The
modest capital expense ("CAPEX") nature of this project is
reaffirmed with the PFS Initial CAPEX of $23.6 million. The full PFS will be posted
within the next 45 days on the Company's website at
www.pershinggold.com/relief-canyon/technical-reports.
Table 2: PFS Gold
Price Sensitivity
Analysis, Before Tax
|
Gold Price
/ oz Au
|
PFS Plan NPV,
5%
|
PFS
IRR
|
$1,450
|
$226
million
|
140%
|
$1,400
|
$206
million
|
127%
|
$1,350
|
$185
million
|
114%
|
$1,300
|
$165
million
|
102%
|
$1,250
|
$145
million
|
89%
|
$1,200
|
$124
million
|
77%
|
$1,150
|
$104
million
|
65%
|
$1,100
|
$84
million
|
53%
|
Mineral Reserve and Resource Estimate
The PFS also
allows for the categorization of approximately 80% of the gold
ounces and 73% of the tons within the NI 43-101 measured and
indicated resource at Relief Canyon as proven and probable
reserves (Table 3). This conversion percentage from resource to
reserve highlights the quality and quantity of work in 2016 to
upgrade the Relief Canyon deposit. To date more than 1,100
holes and approximately 500,000 feet of drilling have been
completed at Relief Canyon. This includes 430 core holes and
nearly 290,000 feet of drilling completed by Pershing Gold.
Table 3: 2017
Relief Canyon Oxide Reserve
|
|
|
|
Classification
|
Cutoff
|
Tons
|
Gold
Grade
|
Total
Gold
|
(opt
Au)
|
000's
|
(opt)
|
(gpt)
|
(Ounces)
|
Proven
|
0.005
|
13,095,400
|
0.024
|
0.822
|
308,500
|
Probable
|
0.005
|
17,434,300
|
0.019
|
0.651
|
326,500
|
|
|
|
|
|
|
Proven
&
Probable
|
|
30,529,700
|
0.021
|
0.719
|
634,900
|
This PFS has calculated Proven and Probable reserves for the
deposit based on the estimated resources that have an effective
date of November 1, 2016. A designed
PFS three-phase pit contains the Measured and Indicated material
shown in Table 3, which constitute the reserves for the property
using a gold price of $1,250 per
ounce, a cutoff grade of 0.005 ounces per ton ("opt") Au, and the
detailed mine economics outlined in the PFS. In addition, a silver
reserve grade can be reported for a portion of the deposit shown in
Table 4 below.
Table 4: 2017
Relief Canyon Reserve with Silver Grade
|
|
Classification
|
Tons
|
Silver
Grade
|
Total
Silver
|
|
000's
|
(opt)
|
(gpt)
|
(Ounces)
|
Proven
|
4,123,900
|
0.095
|
3.253
|
391,300
|
Probable
|
10,268,600
|
0.121
|
4.144
|
1,241,300
|
|
|
|
|
|
Proven &
Probable
|
14,392,500
|
0.113
|
3.87
|
1,632,600
|
The Mineral Reserves have an effective date of May 26, 2017. The Proven and Probable reserves
are contained in the designed PFS final pit and include only oxide
materials. The Measured and Indicated oxide resources are inclusive
of the estimated PFS reserves.
Table 5: 2016
Relief Canyon Gold Resource
|
|
|
|
Classification
|
Cutoff
|
Tons
|
Gold
Grade
|
Total
Gold
|
(opt
Au)
|
|
(opt)
|
(gpt)
|
(Ounces)
|
Measured-Oxide
|
0.005
|
14,232,000
|
0.022
|
0.753
|
312,000
|
Measured-Mixed
|
0.010
|
259,000
|
0.058
|
1.990
|
15,000
|
Measured-Total
|
variable
|
14,491,000
|
0.023
|
0.788
|
327,000
|
|
|
|
|
|
|
Indicated-Oxide
|
0.005
|
26,854,000
|
0.016
|
0.548
|
439,000
|
Indicated-Mixed
|
0.010
|
162,000
|
0.033
|
1.130
|
5,000
|
Indicated-Sulfide
|
0.020
|
369,000
|
0.050
|
1.712
|
18,000
|
Indicated-Total
|
variable
|
27,385,000
|
0.017
|
0.582
|
462,000
|
|
|
|
|
|
|
Meas. + Ind
Total
|
variable
|
41,876,000
|
0.019
|
0.651
|
789,000
|
|
|
|
|
|
|
Inferred-Oxide
|
0.005
|
5,238,000
|
0.009
|
0.308
|
45,000
|
Inferred-Mixed
|
0.010
|
4,000
|
0.018
|
0.616
|
100
|
Inferred-Sulfide
|
0.020
|
4,000
|
0.028
|
0.959
|
100
|
Inferred-Total
|
variable
|
5,246,000
|
0.009
|
0.308
|
45,200
|
|
|
|
|
|
|
* Mineral resources
that are not mineral reserves do not have demonstrated economic
viability.
|
The mineral resources at Relief Canyon were modeled and
estimated by evaluating the drill data statistically, utilizing the
geologic interpretations provided by Pershing Gold to interpret
mineral domains on cross sections spaced at 50-foot intervals,
rectifying the mineral-domain interpretations on long sections
spaced at 10-foot intervals, analyzing the modeled mineralization
geostatistically to establish estimation parameters, and estimating
grades into a three-dimensional block model.
The Relief Canyon gold mineral resource is listed in Table 5
using a cutoff grade of 0.005 opt Au for oxide material, 0.01 opt
Au for mixed material, and 0.02 opt Au for sulfide material. The
oxide and mixed cutoffs were chosen to capture mineralization
potentially available to open-pit extraction and heap-leach
processing, with the higher cutoff for mixed material reflecting
the expected reduction in recovered gold. The sulfide cut-off was
chosen to reflect the potentially higher costs associated with
sulfide processing. The effective date of the mineral resources
estimate is November 1, 2016, and
these Measured and Indicated resources are inclusive of the
estimated PFS reserves.
Table 6: 2016
Relief Canyon Silver Resource
|
|
|
Classification
|
Tons
|
Silver
Grade
|
Total
Silver
|
(opt)
|
(gpt)
|
(Ounces)
|
Measured-Oxide
|
10,550,000
|
0.119
|
4.075
|
1,260,000
|
Measured-Mixed
|
259,000
|
0.251
|
8.600
|
65,000
|
Measured-Total
|
10,809,000
|
0.123
|
4.212
|
1,325,000
|
|
|
|
|
|
Indicated-Oxide
|
6,236,000
|
0.094
|
3.219
|
584,000
|
Indicated-Mixed
|
162,000
|
0.206
|
7.055
|
33,000
|
Indicated-Sulfide
|
369,000
|
0.313
|
10.720
|
115,000
|
Indicated-Total
|
6,767,000
|
0.108
|
3.700
|
732,000
|
|
|
|
|
|
Meas. + Ind
Total
|
17,576,000
|
0.117
|
4.007
|
2,057,000
|
|
|
|
|
|
Inferred-Oxide
|
781,000
|
0.066
|
2.260
|
52,000
|
Inferred-Mixed
|
4,000
|
0.125
|
4.281
|
1,000
|
Inferred-Sulfide
|
4,000
|
0.164
|
5.616
|
1,000
|
Inferred-Total
|
789,000
|
0.068
|
2.323
|
54,000
|
Metallurgical Testing
Additional metallurgical testing
incorporated into the PFS resulted in average gold recovery
rates of approximately 83% on crushed and agglomerated
material, an improvement from the recovery rate of 80% identified
in the PEA. The Relief Canyon ore deposit contains an oxidized and
partially oxidized gold mineral resources and reserves that
metallurgical testing and historical mining experience indicate are
amenable to cyanide heap-leach processing. In 2015 and 2016,
Pershing Gold conducted metallurgical test work on drill core and
bulk samples to confirm heap-leach processing on additional
resources and reserves that have been identified within the
existing pit. The metallurgical test work was based on identifying
three distinct zones on cross-section identified as the Main,
Lower, and Jasperoid zones.
Results from column leach testing demonstrate that the major
Relief Canyon ore types (limestone breccia, clay matrix breccia,
and jasperoid) contained in the Main Zone, as well as the Jasperoid
and Lower Zones, generally would be amenable to heap-leach
cyanidation treatment.
The column-leach and permeability tests indicate that
agglomeration is required in order to achieve hydraulic
conductivity and a corresponding gold recovery on a consistent
basis. There is also evidence that blending of low and high fines
content material will aid hydraulic conductivity.
The planned processing method is heap-leach cyanidation of
primary crushed ore (80% passing three inch) that has been
agglomerated using eight pounds per ton of cement as a binder.
Permitting
Currently, Pershing Gold has all of
the state and federal permits necessary to start the Phase
I mining and heap-leach processing operations. Pershing Gold is
planning a two-phase permitting and development scenario for the
project. Phase I, which has been approved, is the re-purposing of
previously approved disturbance for expanded mining to a pit bottom
elevation of 5,080 feet, partial backfilling of the Phase I pit to
approximately 20 feet above the historical groundwater elevation to
eliminate a pit lake, expanded exploration operations, full
build-out of the heap leach pad to accommodate
leaching of the Phase I ore, and construction of a new
waste rock storage facility. Phase II will include additional mine
expansion activities and allow mining further below the water
table. Pershing Gold will use the mine plan in the PFS as the
basis for the Phase II permit application, and anticipates it will
submit the Phase II permit applications in the second half of
2017.
Opportunities
Resource growth opportunities
remain available through additional exploration and/or development
drilling. The deposit is open to the west, and offers opportunity
for growth. Additional opportunities could include:
- Converting inferred resource tons to measured and indicated
resource or proven and probable reserves
- Utilizing historic low-grade stockpile
- Expanding and/or demonstrating continuity of the high-grade
gold grade shells
- Expanding on the 2016 Phase 2 drilling that identified new
zones of mineralization southeast of the Lightbulb Pit, with
potential to elevate these zones of mineralization to a mineral
resource status
- Increasing silver credit
Greenfields exploration activity has taken place over
approximately 20% of the 40 square miles of Pershing Gold's land
package. It has already identified growth opportunities including
the Blackjack Project, which is a potential satellite deposit
southeast of the Relief Canyon Mine. Drilling is currently in
progress at Blackjack.
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 historic open-pit mines
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 and the
Toronto Stock Exchange under the symbol PGLC and on the Frankfurt
Stock Exchange under the symbol 7PG1.
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--
Standards of Disclosure for Mineral Projects ("NI 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.
Pershing is a reporting issuer
in the United States and is
required to discuss mineralization estimates in accordance with US
reporting standards. The estimates of proven and probable mineral
reserves used in this press release are in reference to the mining
terms defined in the Canadian Institute of Mining, Metallurgy and
Petroleum Standards, which definitions have been adopted by NI
43-101. The definitions of proven and probable reserves used
in NI 43-101 differ from the definitions in the United States Securities and Exchange
Commission's Industry Guide 7. In the
United States, 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 reserve determination is made.
Accordingly, information contained in this press release containing
descriptions of our mineral deposits in accordance with NI 43-101
may not be comparable to similar information made public by other
U.S. companies under the United
States federal securities laws and the rules and regulations
thereunder. Moreover, 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. US
investors are urged to consider closely the disclosure in our Form
10-K for the year ended December 31,
2016 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,
Carl Defilippi, registered member
SME#775870RM, or Mark Jorgensen,
MMSA#01202QP 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 while the other half is returned to the core box and
stored at Relief Canyon in a secure, fenced-off, area. Pershing
Gold 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.
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 the timing of the release
of the full PFS and those statements with respect to the expected
project economics for Relief Canyon, such as estimates of life of
mine, average production, cash costs, AISC, initial CAPEX,
sustaining CAPEX, working capital, pre-tax IRR, pre-tax NPV, net
cash flows and recovery rates, the viability of contract mining and
conveyor stacking, gold price sensitivity analysis, 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 gold and silver mineral reserve (including
proven and probable reserves) and resource estimates, assumptions
regarding available processing methods, plans regarding additional
permitting and phased development of the mine, expectations
regarding the ability to expand the mineral resource through future
exploration or drilling and the anticipated results of further
drilling, and development potential of satellite areas , 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, 2016. The Company assumes no
obligation to update any of the information contained or referenced
in this press release.
www.PershingGold.com
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SOURCE Pershing Gold Corporation