TORONTO, Jan. 15, 2018
/CNW/ - Orefinders Resources Inc. ("Orefinders" or the "Company")
(TSX.V: ORX) is pleased to announce positive results of the
Company's Preliminary Economic Assessment (the "PEA") of the South
Zone Open Pit (the "Project"), part of the Mirado Gold Mine located
to the southeast of Kirkland Lake,
Ontario within the prolific gold producing Abitibi
Greenstone Belt.
Project Highlights
This PEA considers only production from a specific area which
encompasses approximately five percent of Orefinders' Mirado
Project. The Mineral Resource contemplated within this PEA for
mining is within the South Zone's open pit, and is near surface
mineralization which can be economically mined within a relatively
short time frame and without the use of an on-site processing or
tailings facility. The Company intends to use the free cash flow
from this operation to develop what it sees as the true upside
potential on the broader Mirado Project as well as other assets it
owns.
This PEA's economics indicate an after-tax internal rate of
return ("IRR") for the project of 158% and a pre-tax undiscounted
Net Present Value ("NPV") of $30.8
million and a $20.5 million
after-tax NPV at a 5% discount rate. Payback on capital is
reported at 7 months. Average gold price used is US$1,300 per ounce and an exchange rate of
1.00 USD=0.76
CAD.
The initial preproduction expenditure is estimated at
$2.4 million to achieve first
production from the open pit. The project life is three years,
after approximately six months of open pit pre-stripping. The Life
of Mine ("LOM") cash operating cost is US$941 per ounce of gold, and the LOM all-in
sustaining cost is US$969 per ounce
of gold.
The Project is considered economically viable with the current
Mineral Resource Estimate of 559,000 tonnes at an average grade of
2.61 g/t gold for 46,900 ounces of Indicated Mineral Resource and
additional Inferred Mineral Resource of 382,000 tonnes at an
average grade of 2.66 g/t gold for 32,700 ounces, based on a
cut-off grade of 1.0 g/t gold.
- Mineral Resources which are not Mineral Reserves do not have
demonstrated economic viability. The estimate of Mineral Resources
may be materially affected by environmental, permitting, legal,
title, taxation, sociopolitical, marketing, or other relevant
issues.
- The Inferred Mineral Resource in this estimate has a lower
level of confidence that that applied to an Indicated Mineral
Resource and must not be converted to a Mineral Reserve. It is
reasonably expected that the majority of the Inferred Mineral
Resource could be upgraded to an Indicated Mineral Resource with
continued exploration.
- The Mineral Resources in this press release were estimated
using the Canadian Institute of Mining, Metallurgy and Petroleum
(CIM), CIM Standards on Mineral Resources and Reserves, Definitions
and Guidelines prepared by the CIM Standing Committee on Reserve
Definitions and adopted by CIM Council.
- The rounded 1.0 g/t Au cut-off grade utilized in the Mineral
Resource Estimate was derived from US$1,300/oz Au, $0.76 US$ exchange rate, C$3.55/tonne mineral mining cost, C$25/tonne processing cost, C$2/tonne G&A cost, C$8.40/tonne haulage/crushing cost, 95% process
recovery, 3% mining losses and 15% mining dilution.
"We are very pleased with the robust economics that this PEA
defines. The objective behind this mine restart project as outlined
in this Technical Report is to define a small portion of our
overall project which leverages our existing on-site
infrastructure, but also the existing infrastructure available to
us given the Deposit's location near to Kirkland Lake and the availability of capacity
at proximal mills. While the numbers on this PEA are very strong,
the Mirado has much broader potential than this standalone project.
However, in light of the market's circumstances over the past few
years including the cost of capital, we thought it the best course
for our shareholders to evaluate a near term production scenario
which would allow us to bootstrap the exploration and development
of our assets. This project's low initial capital costs in
combination with its highly profitable operating margins and short
payback period means the open pit at Mirado could start delivering
free cash flow to the company's bottom line without unnecessary
share dilution", said Stephen
Stewart, Orefinders' CEO.
PEA Conclusions
The PEA demonstrates positive economics for the extraction of
the Mineral Resources using successive open pit phases. In
conducting this assessment, a gold price of US$1,300 per ounce of gold and exchange rate of
1.00 USD=0.76
CAD was assumed. The results indicate an undiscounted
pre-tax NPV of $30.8 million, a
post-tax NPV at a 5% discount rate of $20.5
million, and a payback period of 7 months from the start of
mill feed production of the open pit.
The project is robust at US$1,300/oz. gold which is less than spot gold
prices as of the effective date of the Technical Report. All mining
projects are positively and negatively impacted by the prices of
commodities, accordingly the Company assessed the sensitivity of
these results to different gold prices for undiscounted pre-tax and
5% discounted post-tax cash flows as presented in the table
below.
Gold
Price (US$/oz)
|
Undiscounted
Pre-Tax Cash
Flow ($ millions)
|
Discounted (5%)
Post-Tax
Cash Flow ($ millions)
|
1,375
|
37.7
|
25.0
|
1,350
|
35.4
|
23.5
|
1,325
|
33.1
|
22.0
|
1,300
|
30.8
|
20.5
|
1,275
|
28.4
|
19.0
|
1,250
|
26.1
|
17.4
|
1,225
|
23.8
|
15.9
|
1,200
|
21.5
|
14.4
|
1,175
|
19.1
|
12.9
|
An exchange rate of
1.00 USD=0.76 CAD
|
This PEA has an accuracy of +/- 35%, which is considered
industry standard for preliminary capital and operating cost
estimates.
PEA Background
The decision to move forward with this PEA was approved after
the Company's approximately 25,000 tonne bulk sample was completed
in early 2017 from the stockpiles remaining from the Mirado Mine
operations in the late 1980s. The Company completed the on-site
crushing and logistics and toll processing of the resource which
provided concrete data which was utilized in the PEA. The Company
cautions that mining always presents risks, however, we view the
project as contemplated in this PEA as a relatively low risk option
given the Mirado's previous mining operations as well as its
location in the prolific mining jurisdiction within Kirkland Lake and the Abitibi Greenstone Belt.
The Company feels confident with the expenses as outlined in this
report since many of them were actually incurred during the bulk
sampling. Additionally, the Company feels confident with the
Mirado's geology which underpins this PEA. The Mirado Deposit has
been extensively drilled not only by Orefinders but by previous
exploration and mining companies. Orefinders underwent a
significant resampling and re-assay program including all available
core it had in its possession. This new data and resampling was
focussed on Mineral Resources that it deemed minable in the context
of its current PEA. Mineral Resources that do not fit this profile,
including those found outside of the pit shell at depth or on
different zones of the Mirado were not included in the Mineral
Resource Estimate underpinning the PEA.
Mirado Land and Location
The Mirado gold project is located 35 km southeast of the gold
mining Town of Kirkland Lake in
northeastern Ontario. The entire
Mirado property encompasses 2,460 hectares, the focus of which
consists of 12 contiguous patented claims, with surface and mining
rights, owned 100% by Orefinders.
Surrounding the core patented claims, Orefinders has optioned
and/or staked 29 additional contiguous claims and 9 patents
covering approximately 9 km of prospective strike length. This
includes Orefinders 100% owned MZ property which forms the western
extension of the Mirado Mine's pit constrained Mineral Resource
Estimate.
The Mirado gold project is situated within the Abitibi Gold
District which has historically produced more than 150 million
ounces of gold over the past century, with more than 75 million
ounces of Gold in current Mineral Resources and Reserves (Gosselin
and Dube, 2005; GSC OF4896). The prolific Kirkland Lake mining camp is located in
eastern Ontario close to the
Quebec border and has historically
produced 25 million ounces of Gold (Ispolatov et al, 2008). Much of
the historical Kirkland Lake gold
production has taken place along or near a major regional
geological fault structure known as the Larder Lake-Cadillac Fault
(LLCF).
Operating and Capital Expenditures
Proposed initial capital expenditures will be minimal due to the
decision to seek a toll processing arrangement, the existence of
facilities on site, and the use of contractors in the mine
operation. It is estimated that the LOM capital requirement is
$2.6 million, of which $2.4 million are pre-production expenses The
table below presents the major capital items during the life of the
Project (excluding the open pit pre-stripping operation which is
treated as an operating expense.)
Capital Expenditures
($M)
|
Infrastructure
Refurbishment
|
$0.450
|
Permitting &
Environmental
|
$0.788
|
Sustaining
Capital
|
$0.250
|
Closure
|
$1.130
|
Total Capital
Expenditures
|
$2,618
|
The proposed mine plans for both the open pit and underground
scenarios use a production rate of 1,000 tonnes per day of
mineralized material. Based on this assumption, the following
tables highlight the major key performance indicators.
Operating
Parameters
|
Average Production
Rate
|
1,000 tpd
|
Average Gold
Recoveries
|
95%
|
Overburden
Stripping
|
$3.00 / t
|
Open Pit Mineral
Mining Cost
|
$3.55 / t
|
Waste Rock
Mining
|
$3.25 / t
|
Mineral Haulage to
Toll Process Plant
|
$4.90 / t
|
Crushing
|
$3.50 / t
|
Toll
Processing
|
$25.00 / t
|
General &
Administrative Cost
|
$2.00 /
t
|
Life of Mine
Costs
|
Cash Operating
Costs
|
US$941/oz
|
All-in
Cost
|
US$969/oz
|
Mining Method
The PEA schedule assumes mining of 996,000 tonnes of mineralized
material in the open pit at an average grade of 2.33 g/t Gold (at a
cut-off of 1.0 g/t Gold). Mining recovery has been estimated at 97%
and dilution at 15%.
Proposed mining would begin with pre-stripping and then
expanding the Mirado's existing open pit. The deposit was
explored and exploited by several past operators since the
1930's. The PEA proposes a conventional truck and shovel open
pit with ramp access. Since the LOM currently being contemplated is
relatively short, the mining operation would be conducted on a
contract basis.
Metallurgy
The PEA has relied on metallurgical test work conducted by SGS
Lakefield as reported in Orefinders 2014 report 'The Recovery of
Gold From Mirado Project Samples', as well as actual data received
from the Westwood Mill upon the processing of Mirado's 25,000 tonne
bulk sample completed in 2017.
Press Release
The technical contents of this press release have been reviewed
and approved by independent Qualified Persons Eugene Puritch, P.
Eng., FEC, CET, and Kirk Rodgers, P.
Eng., both of P&E Mining Consultants Inc. All individuals are
Qualified Persons pursuant to National Instrument 43-101 standards.
The reader is advised that the PEA summarized in this news release
is intended to provide an initial conceptual review of the project.
The PEA mine plan and economic model include the use of some
Inferred Mineral Resources which are considered too speculative
geologically to have any 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.
For further Mineral Resource Estimate information the reader may
reference the Company's Technical Report titled "Mirado South Zone
Open Pit Deposit Preliminary Economic Assessment" which will be
filed on SEDAR within 45 days of this news release.
Author of this Report
The PEA was completed by P&E Mining Consultants Inc. of
Brampton, Ontario. P&E's
National Instrument 43-101 Technical Report on the PEA will be
posted under Orefinders Resources Inc. filings on SEDAR at
www.sedar.com within 45 days of this news release. The PEA
referenced in this news release only considers the South Zone Open
Pit portion of the Mirado Gold Mine. It does not include any of the
other known zones that comprise the Mirado Mine or Project. The
Company intends to advance these additional zones which occur
laterally and at depth to the South Zone Open Pit which is
contemplated in this PEA.
All dollar values referenced in this press release are in
Canadian dollars unless otherwise stated.
Mirado Zones Not Contemplated in the Mineral Resource
Estimate Calculation or PEA
Orefinders view of the Mirado properties is that they are highly
prospective with regards to gold producing potential, significantly
more so than has been shown in this PEA. The Mirado property as a
whole is significantly under explored, and the following Zones were
not contemplated in the updated Mineral Resource Estimate
calculation and PEA:
Mirado North Zone - Mirado North Zone (UTM NAD83,
587,480E/5,318,660N) is a high priority drill target that is
situated in a very favourable geological environment where a
sizable Gold and polymetallic deposit can be developed. The Company
intends to complete a new trenching program to better understand
these zones and the controlling structures.
Mirado South Zone at Depth & MZ Zone - High value
drill targets identified from recent trenching (2013-14) at MZ with
trenches returning similar grades (21.8 g/t Gold over 4.80 metres)
to Mirado South High-grade zones as well as identical alteration
assemblages. The pyritic 'halo' surrounding MZ high-grade zones
(586,617E/5,318,370N) is similar in scale to Mirado suggesting
similar hydrothermal conditions.
Gold Hill - 2015 grab sampling identified the vein system
at surface, 100m along strike, and
returned up to 26.8 g/t Gold (585,622E/5,316,287N). Historical
underground sampling returned 77.1 g/t Gold across a 47 cm vein
along 42m of drift. Historical
reports show that two high-grade Gold veins were traced to the
1100′ level (335 metres) and possibly converge at depth (see News
Release 15 Oct. 2015). Veins are open
at depth and along strike.
Bank - New discovery on surface with narrow high-grade
polymetallic vein traced for over 30 metres in length averaging
4.80 g/t Gold up to 80 cm wide (587,161E/5,317,124N) (News Release
2 Nov. 2015). Major mineralized shear
up to 6 metres across carries irregular high-grade mineralization.
Grab and channel samples returned up to 20.9 g/t Gold and 7.36 g/t
Gold respectively.
Charest Syenite - Mineralized syenite intrusion with
Gold-rich quartz veins (585,065E/5,321,440N); grab samples returned
14.8 g/t, 10.6 g/t and 1.98 g/t Gold during 2014 prospecting (News
Release 2 Nov. 2015). Syenite
intrusive bodies are well known in the Abitibi to host large Gold
deposits. A 24 metre vertical shaft exists on the syenite but no
other details have been found of this work.
About Orefinders
Orefinders is a Gold exploration and development company which
is focussed exclusively within the Abitibi Greenstone Belt. The
Company owns all of its assets 100% and is listed on the Toronto
Venture Exchange under the symbol ORX.
Forward-Looking Statements
This news release may contain forward-looking statements based
on assumptions, uncertainties and management's best estimate of
future events. Actual events or results could differ materially
from the Company's expectations and projections. Investors are
cautioned that forward-looking statements involve risks and
uncertainties. Accordingly, readers should not place undue reliance
on forward-looking statements. When used herein, words such as
"anticipate", "will", "intend" and similar expressions are intended
to identify forward-looking statements. For a more detailed
discussion of such risks and other factors that could cause actual
results to differ materially from those expressed or implied by
such forward-looking statements, refer to Orefinders Resources
Inc.'s filings with Canadian securities regulators available on
www.sedar.com or the Company's website at www.orefinders.ca.
QP Statement
The technical information contained in this news release has
been reviewed and approved by Charles
Beaudry, P.Geo, Director and Vice President Exploration for
Orefinders and Eugene Puritch,
P.Eng, FEC, CET of P&E Mining Consultants Inc. both whom are
Qualified Persons as defined in "National Instrument 43-101,
Standards of Disclosure for Mineral Projects."
Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release. Certain information in this press release
may contain forward-looking statements. This information is based
on current expectations that are subject to significant risks and
uncertainties that are difficult to predict. Actual results might
differ materially from results suggested in any forward-looking
statements. Orefinders' assumes no obligation to update the
forward-looking statements, or to update the reasons why actual
results could differ from those reflected in the forward
looking-statements unless and until required by securities laws
applicable to Orefinders. Additional information identifying risks
and uncertainties is contained in filings by Orefinders with
Canadian securities regulators, which filings are available under
Orefinders' profile at www.sedar.com.
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SOURCE Orefinders Resources Inc.