ALL AMOUNTS DISCUSSED ARE DENOMINATED IN
U.S. DOLLARS
THUNDER BAY, ON, Dec. 16, 2020 /CNW/ - Premier Gold Mines
Limited (TSX: PG) (OTCPK: PIRGF) ("Premier", "the
Company") is pleased to announce the results of an updated
and optimized Feasibility Study for the Hardrock Project (the
"Project") in Northern Ontario.
This update was prepared by G Mining Services Inc. with support of
several other engineering consultants, summarizing significant
optimization and de-risking of the Project. The update is based on
a revised mineral reserve, life of mine plan, advances in detailed
engineering reflecting firm price bids for all major equipment
including the processing plant, mobile fleet, power plant, and the
water and sewage treatment plants. The updated study included the
mineral resource update released on October
3, 2019. Premier has a 50% interest in the
Project.
Highlights of the Study and updated life-of-mine Open Pit Mine
Plan ("LOM") on a 100% basis include:
- $1.05 Billion After-tax NPV5%
based on a US$1,400/oz gold price and
a $1.30 CAD to USD exchange
rate
- 20.1 % After-tax Internal Rate of return ("IRR")
- 3.2 year Payback Period
- AISC of $618 per oz and total
operating cost of $20.39 per
tonne
- 5.54 Moz of Proven & Probable mineral gold reserves
averaging 1.27 g/t Au (0.35 g/t Au cut-off grade)
- 5.05 Moz Total Gold Produced with a 91.2 % process recovery
and 5.1 to 1 strip ratio
- 358,000 oz LOM average annual gold production
- 414,000 oz First Five years average production at an average
head grade of 1.45 g/t Au;
- $952 Million Initial capital
cost and total LOM sustaining capital of $323 million (Initial capital cost includes
working capital and IBA payments);
- Study does not include upside opportunity from the Hardrock
underground mineral resources, nor the Brookbank, Kailey and Key
Lake deposits
The 39,000 hectare Greenstone Gold Property (the "Property") is
located approximately 275 kilometres northeast of Thunder Bay, Ontario, Canada and is host to a
number of historic and recently discovered gold deposits near
Geraldton. The Project update
contemplates the construction of a 27,000- tonne per day processing
facility and open-pit mining operation with production over a
14-year mine life. Gold production during the first five years is
expected to average 414,000 ounces per annum with an average head
grade of 1.45 g/t gold. The Project timeline accounts for a
20-month pre-production period and a 4-month plant commissioning
period. The life of mine (LOM) strip ratio averages 5.1 to 1.
Table 1: Project
Sensitivity Analysis
|
Gold Price
(US$/oz)
|
$
1,300
|
$
1,400
|
$
1,500
|
$
1,600
|
$
1,700
|
$
1,800
|
$
1,900
|
NPV5 (after tax) in
US$ millions
|
$
849
|
$
1,050
|
$
1,248
|
$
1,446
|
$
1,644
|
$
1,841
|
$
2,039
|
IRR (after
tax)
|
17.6%
|
20.1%
|
22.5%
|
24.7%
|
26.9%
|
28.9%
|
31.0
|
Sensitivity analysis has shown the Project is most sensitive to
changes in gold price (see Table 1) followed by exchange rates,
initial capital costs and operating costs. The sensitivity to
percentage changes in gold grade is identical to that of the gold
price and is therefore not presented in the figure. The Project is
somewhat less sensitive to the CAD/USD exchange rate than the gold
price in USD/oz as some of the CAPEX is in US dollars.
Production Profile
The total after-tax cash flow over the Project life is estimated
to be $2,089 Million providing an
after-tax NPV at a discount rate of 5% is estimated to be
$1,050 Million. The payback
period is 3.2 years from the commencement of commercial operations
resulting in an after-tax IRR of 20.1%.
Mineral Resources & Reserves
The mineral resource estimate at Hardrock is supported by
312,000 sampled intervals from 696,000 metres of core drilling in
1,682 holes and also nearly 12,000 sampled intervals from 26,000
metres of definition RC-drilling in 481 holes that were completed
in 2018 and 2019. In addition to the open-pit constrained Mineral
Resource estimate, the Hardrock Project also includes some 1.24
million ounces of Indicated and 3.06 million ounces of Inferred
Mineral Resources beneath the proposed Feasibility open-pit that
are not included in the project mine plan and may represent an
important future mining opportunity. The mineral reserve estimate
(see Table 2) includes a 17.2% mining dilution at a grade of 0.13
g/t Au and a 1.5% ore loss factor.
Table 2: Hardrock
Mineral Reserve Estimate (100% basis) as of August 8,
2019
|
GOLD
(Au)
|
PROVEN
RESERVES
|
PROBABLE
RESERVES
|
P+P
RESERVES
|
PROPERTY
|
Tonnes Mt
|
Grade g/t
Au
|
Au
Ounces 000's
|
Tonnes
Mt
|
Grade g/t
Au
|
Au
Ounces 000's
|
Tonnes Mt
|
Grade g/t
Au
|
Au
Ounces 000's
|
Hardrock (O/P;
0.35 COG)
|
5.62
|
1.28
|
232
|
129.70
|
1.27
|
5,307
|
135.32
|
1.27
|
5,539
|
Notes:
|
|
|
1.
|
CIM definitions were
followed for Mineral Reserves;
|
|
2.
|
Effective date of the
estimate is August 8th, 2019;
|
|
3.
|
Mineral Reserves are
estimated at a cut-off grade of 0.35 g Au/t;
|
|
4.
|
Mineral Reserves are
estimated using a long-term gold price of USD 1,250/oz and an
exchange rate of CAD / USD 1.30;
|
|
5.
|
A minimum mining
width of 5 m was used;
|
|
6.
|
Bulk density of ore
is variable but averages 2.78 t/m3;
|
|
7.
|
The average strip
ratio is 5.10:1;
|
|
8.
|
Dilution factor is
17.2%;
|
|
9.
|
Numbers may not add
due to rounding.
|
Table 3 summarizes Greenstone Gold Property Mineral Resources
exclusive of Mineral Reserves and highlights a potential
underground mining opportunity at Hardrock that has not been
reported in an economic study. Mineral resources were also updated
for the Brookbank, Kailey and Key Lake deposits, collectively known
as the "Hardrock Satellite Deposits". Open-pit optimization using
Whittle software, based on the Lerchs-Grossmann algorithm, was
completed to estimate in-pit Mineral Resources for the Satellite
Deposits and an underground Mineral Resource was also estimated at
Brookbank. The Hardrock Satellite Deposits Mineral Resources are
effective as of September 3rd, 2020
and there are no mineral reserves currently estimated for these
deposits.
Table 3:
Greenstone Gold Property Mineral Resources (100% basis; exclusive
of Mineral Reserves)
|
GOLD
(Au)
|
INDICATED
RESOURCES
|
INFERRED
RESOURCES
|
PROPERTY
|
Tonnes
Mt
|
Grade g/t
Au
|
Au
Ounces 000's
|
Tonnes
Mt
|
Grade g/t
Au
|
Au
Ounces 000's
|
Hardrock (O/P; 0.30
COG)
|
5.97
|
1.21
|
231
|
0.36
|
1.14
|
13
|
Hardrock (U/G; 2.0
COG)
|
9.79
|
3.93
|
1,237
|
24.59
|
3.87
|
3,059
|
Brookbank (O/P; 0.60
COG)
|
1.15
|
2.24
|
83
|
0.05
|
2.07
|
3
|
Brookbank (U/G; 2.40
COG)
|
2.28
|
7.06
|
517
|
0.71
|
3.38
|
77
|
Kailey (O/P; 0.40
COG)
|
11.28
|
0.96
|
348
|
4.86
|
0.87
|
136
|
Key Lake (O/P; 0.40
COG)
|
3.76
|
1.16
|
141
|
1.84
|
1.39
|
82
|
U/G
SUB-TOTAL
|
12.07
|
4.52
|
1,754
|
25.30
|
3.86
|
3,136
|
O/P
SUB-TOTAL
|
22.16
|
1.13
|
803
|
7.11
|
1.02
|
234
|
TOTAL
|
34.23
|
2.32
|
2,557
|
32.41
|
3.23
|
3,370
|
Mineral Resource
Estimate Notes:
|
1.
|
The independent
"qualified person" for the Hardrock Mineral Resource Estimate, as
defined by NI 43-101, is
Mr. Rejean Sirois,
B.Sc., P.Eng. of G Mining Services Inc., and the effective date of
the estimate is September 4, 2019;
|
2.
|
The independent
"qualified person" for the Brookbank, Kailey and Key Lake mineral
resource estimates is
Mr. James Purchase,
M.Sc., P.Geo. of G Mining Services Inc., and the effective date of
the estimates is September 3, 2020;
|
3.
|
These Mineral
Resources are not Mineral Reserves as they do not have demonstrated
economic viability;
|
4.
|
No Mineral Reserves
are quoted for the Brookbank, Kailey or Key Lake
Deposits;
|
5.
|
Hardrock Mineral
Resources are exclusive of Mineral Reserves;
|
6.
|
Hardrock In-Pit
results are presented undiluted within a merged surface of the pit
optimization shell 24 and the
2019 pit design,
using a USD 1,250 gold price and a revenue factor 0.78;
|
7.
|
Hardrock whittle
parameters (all amounts in Canadian dollars): Reference mining
cost: $1.98, Incremental bench
cost ($/10 m bench):
$0.033, Milling cost: $7.54/t, Royalty: 4.4%, G&A: $1.59/t,
Sustaining capital: $0.70/t, Milling recovery: 91.1%;
|
8.
|
The satellite
deposits open-pit Mineral Resources are constrained within a pit
shell using a gold price of US$1,500,
a USD:CAD exchange
rate of 1.3 and a metallurgical recovery of 92% for Brookbank, and
90% for Kailey and Key Lake.
An incremental ore
haulage cost of $17.90/t is assumed for Brookbank, $1.70/t for
Kailey and $4.51/t for Key Lake;
|
9.
|
Open Pit Mineral
Resources are reported at a cut-off grade of 0.30 g Au/t for
Hardrock, 0.60 g Au/t for Brookbank,
and 0.40 g Au/t for
Kailey and Key Lake. Underground Mineral Resources are reported at
a cut-off grade of 2.0 g Au/t for
Hardrock and 2.4 g
Au/t for Brookbank;
|
10.
|
Ounce (troy) = Metric
Tonnes x Grade / 31.10348. Calculations used metric units (metres,
tonnes and g/t);
|
11.
|
The number of metric
tonnes was rounded to the nearest thousand and ounces was rounded
to the nearest hundred.
Any discrepancies in
the totals are due to rounding effects; rounding followed the
recommendations in Regulation NI 43-101;
|
12.
|
GMS is not aware of
any known environmental, permitting, title-related, taxation,
socio-political, marketing or other
relevant issue that
could materially affect the Mineral Resource estimate;
|
13.
|
2014 CIM definitions
were followed for Mineral Resources.
|
Qualified Person
G Mining Services Inc., under the supervision of Louis-Pierre Gignac, P.Eng., Réjean Sirois,
P.Eng., James Purchase, P.Geo each
being Qualified Persons within the meaning National Instrument (NI)
43-101, was the lead consultant for the Project update. A technical
report detailing the project update will be filed within
45-days.
All abbreviations used in this press release are available by
following this link (click
here).
Non-IFRS Measures
The Company has included certain terms and performance measures
commonly used in the mining industry that are not defined under
International Financial Reporting Standards ("IFRS") within this
document. These include: cash cost per ounce sold, all in
sustaining cost ("AISC") per ounce sold. Non-IFRS measures do not
have any standardized meaning prescribed under IFRS, and therefore,
they may not be comparable to similar measures employed by other
companies. The data presented is intended to provide additional
information and should not be considered in isolation or as a
substitute for measures prepared in accordance with IFRS. Readers
should refer to the Company's Management Discussion and Analysis
under the heading "Non-IFRS Measures" for a more detailed
discussion of how such measures are calculated.
Certain statements in this release constitute "forward-looking
statements" or "forward-looking information" within the meaning of
applicable securities laws. Such statements and information involve
known and unknown risks, uncertainties and other factors that may
cause the actual results, performance or achievements of the
company, its projects, or industry results, to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements or
information. Such statements can be identified by the use of words
such as "may", "would", "could", "will", "intend", "expect",
"believe", "plan", "anticipate", "estimate", "scheduled",
"forecast", "predict" and other similar terminology, or state that
certain actions, events or results "may", "could", "would", "might"
or "will" be taken, occur or be achieved. These statements reflect
the Company's current expectations regarding future events,
performance and results and speak only as of the date of this
release.
Such forward-looking statements include but are not limited to
the updated results of the Feasibility Study on the Project, such
as future estimates of internal rates of return, net present value,
future production, estimates of cash cost, proposed mining plans
and methods, mine life estimates, cash flow forecasts, metal
recoveries, estimates of capital and operating costs and the size
and timing of phased development of the Project. Furthermore, with
respect to this specific forward-looking information concerning the
development of the Project, the company has based its assumptions
and analysis on certain factors that are inherently uncertain.
Uncertainties include: (i) the adequacy of infrastructure; (ii)
geological characteristics; (iii) metallurgical characteristics of
the mineralization; (iv) the ability to develop adequate processing
capacity; (v) the price of gold; (vi) the availability of equipment
and facilities necessary to complete development; (vii) the cost of
consumables and mining and processing equipment; (viii) unforeseen
technological and engineering problems; (ix) accidents; * currency
fluctuations; (xi) changes in regulations; (xii) the compliance by
joint venture partners with terms of agreements; (xiii) the
availability and productivity of skilled labour; (xiv) the
regulation of the mining industry by various governmental agencies;
(xv) the ability to raise sufficient capital to develop such
projects; (xiv) changes in project scope or design; and (xv)
political factors.
Forward-looking statements and information involve significant
risks and uncertainties, should not be read as guarantees of future
performance or results and will not necessarily be accurate
indicators of whether or not such results will be achieved. A
number of factors could cause actual results to differ materially
from the results discussed in the forward-looking statements or
information, including, but not limited to, the factors discussed
below and elsewhere in this release, as well as unexpected changes
in laws, rules or regulations, or their enforcement by applicable
authorities; the failure of parties to contracts with the company
to perform as agreed; social or labour unrest; changes in commodity
prices; and the failure of exploration programs or studies to
deliver anticipated results or results that would justify and
support continued exploration, studies, development or
operations.
Although the forward-looking statements contained in this
release are based upon what management of the company believes are
reasonable assumptions, the company cannot assure investors that
actual results will be consistent with these forward-looking
statements. These forward-looking statements are made as of the
date of this release and are expressly qualified in their entirety
by this cautionary statement. Subject to applicable securities
laws, the company does not assume any obligation to update or
revise the forward-looking statements contained herein to reflect
events or circumstances occurring after the date of this
release.
The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of the
factors described herein and set out in the "Risks and Risk
Management" section in the company's Q3 2020 MD&A and under the
heading "Risk Factors" in its current annual information form.
SOURCE Premier Gold Mines Limited