Goldrock Advances Lindero - Increases After-Tax by 31M Goldrock Advances Lindero Gold Project - Completes Basic Engineering - Extends Mine Life - Shortens Construction Schedule - Increases After-Tax NPV by US$31 Million Goldrock Mines Corp ("Goldrock" or the "Company") is pleased to announce the results of an updated feasibility study (the "2016 Feasibility Study") on its 100% owned Lindero gold project (the "Lindero Project") located in the mine friendly province of Salta, Argentina. The 2016 Feasibility Study, using a gold price of US$1,200, indicates that the Lindero Project represents a robust, rapid pay-back, high margin, twelve year open pit mining and heap leach project that works in the current gold price environment. The Company has also completed the basic engineering for the construction stage of the Lindero Project which involved over 22,000 man hours with leading engineering firms. This level and quantity of engineering and cost estimation materially advances the Lindero Project, making it one of a few fully permitted, shovel ready gold projects poised to commence construction in the world. The Company is well positioned to secure mine construction financing, an accretive merger transaction, or attract joint venture partners.
2016 Feasibility Study Highlights 1, 2, 3 - An increase of 11% (112,000 ozs) in total life of mine gold production to 1,149,000 ounces.
- An increase of 22% in after-tax Internal Rate of Return to 26%*.
- An increase of 25% in After-tax NPV to US$151.75 million (C$216.79 million)*.
- After-tax Internal Rate of Return at US$1,100 and US$1,300/oz gold are 20% and 33%.
- Cash operating costs of US$666/oz gold (first 9 years)4.
- All-in sustaining cash costs of US$777/oz gold (first 9 years)5.
- A 20% increase in mine life by two years to twelve years.
- After-tax payback period of 24 months.
- An average of 128,000 ounces gold production in the first three years (peak annual gold production of 138,000 ounces in project Year 2) and average, steady state, annual gold production of 108,000 ounces (Years 1- 9).
- A 32% lowering of the life of mine strip ratio to 1.22 (previously 1.79).
- A significantly de-risked mine site construction period of only 14 months until first gold pour.
* For the comparison of IRR and NPV between the 2013 Feasibility Study and 2016 Feasibility Study, the 2013 Feasibility Study gold price of US$1,400/oz gold was adjusted to the current price of US$1,200/oz gold.
Paul Matysek, President and CEO, commented
"With the conclusion of the basic engineering construction stage, the fully permitted, shovel-ready gold heap leach Lindero Project is poised for mine site construction. Recent value engineering and significant and positive changes to Argentina government policies have resulted in a technically and financially robust project with modest capital requirement and a shorter, simpler and de-risked construction schedule. The Company has taken a conservative view and has not included potential savings in capital and operating costs resulting from the recent Argentina peso devaluation and lower oil price environment. Any realized savings from these factors will add value to an already robust project in the current gold price environment." Opportunities to Enhance Value The Company has identified three potentially value-enhancing opportunities which may positively impact the project's economics.
- The 2016 Feasibility Study used a long-term oil price of US$65 per barrel for costing of diesel fuel used in the project, significantly (75%) above the recent spot price for oil. At a long-term oil price of US$37 per barrel this would equate to a life of mine operating cost savings of US$25.86 million or US$22.52/oz gold. Each US$10 price per barrel below the long-term oil price assumption of US$65 per barrel, equates a savings of approximately US$8/oz gold in operating costs.
- A devaluation of the Argentine Peso by approximately 35% occurred after currency controls were lifted in December 2015. This may likely have a positive impact on capital costs although price inflation may offset some of the full impact. The Company has estimated at a 14 Peso to dollar exchange rate, resulting in potential initial capital cost reductions between 7% and 10%.
- There may also be a positive impact on the life of mine operating costs due to the Peso devaluation. All operating labor, local freight, lime and other locally sourced reagents, and the G&A fixed and variable costs are potentially affected by the devaluation. The Company has estimated at a 14 Peso to dollar exchange rate, resulting in potential operating cost reductions between 7% and 10% /oz gold.
2016 Feasibility Study Update The 2016 Feasibility Study work and basic engineering was undertaken by a consortium comprised of SAXUM Ingenieria S.A., an Argentina engineering firm, and Kappes Cassiday & Associates ("KCA") of Reno, Nevada with the open mining portion completed by Mine Development Associates ("MDA") of Reno, Nevada.
A comparison of the 2016 Feasibility Study and the previous 2013 feasibility study (the "2013 Feasibility Study") are presented in Table 1 with the highlights summarized below:
- An updated long term gold price assumption of US$1,200/oz.
- The removal of the 5% export tax.
- Increasing the initial production throughput rate to 18,750 TPD during the first year of operation through an earlier installation of the third cone crusher. The 2013 Feasibility Study production rate was 15,000 TPD for the first six months before ramping up to 18,750 TPD.
- The use of contract power supply instead of an owner supplied and operated power station.
- The use of truck stacking of the heap leach pad for the first 3 years using 90 tonne capacity trucks, before changing over to conveyor stacking of the heap leach pad. The 2013 Feasibility Study was developed with conveyor stacking starting in Year 1.
- The use of alternative heap leach pad liners and pad foundation construction methods.
- Processing of stockpiled low grade ore (16Mtonnes at 0.30 g/t Au) at the cessation of open pit mining, providing an additional two and half years project life.
- The use of an alternative main site access road from Pocitos to Tolar Grande which is shorter and traverses more favorable terrain.
- An improved accuracy of the capital and operating cost estimation due to the completion of construction basic engineering stage studies. These studies and value engineering included the preparation of construction bid packages which were tendered as part of the overall cost build-up. The Argentinean domiciled costs used prices obtained prior to December 2015 and therefore do not reflect potential savings from the devaluation of the Argentina Peso.
The following changes to the capital and operating costs from the 2013 Feasibility Study reflect substantial efforts by the Company to significantly de-risk the implementation and timing of the overall site construction schedule and activity as well as minimizing the potential for unplanned capital cost escalation and cost over runs:
- The assumption of a contract gas fired power plant used to supply electricity to the project. The Company envisages a similar facility to the recently constructed plant at Orocobre's Salar de Olaroz lithium project in adjacent Jujuy province. Although this option has a higher operating cost, these gas-fired generators are currently available in Argentina and the power station can be installed and operational within nine months.
- The use of truck stacking for the first three years instead of overland and grass hopper conveyors to place ore onto the heap leach pad. Truck stacking has deferred this upfront capital. Due to the favourable topography at the Lindero Project, the haulage from the truck loading station to the leach pad for the first three years is downhill providing favourable cycle times and operating costs. At the end of three years, these two trucks will be allocated to the Owner's mining fleet.
- The US$6.9M purchase and delivery into Argentina of the High Pressure Grinding Roll ("HPGR") crusher, the longest single lead time item which was delivered well ahead of schedule. The purchase included all tooling to install and maintain the equipment.
- For project water supply, the Company has permitted and completed five bores with total capacity of over 200 cubic metres per hour, with long term water requirements estimated at only 90 cubic metres per hour. The five bore holes are comprised of three at the mine site and two process water production bores.
| Table 1 - Lindero Project Operating Highlights and Project Performance |
| | 2016 Feasibility Study | 2013 Feasibility Study |
| Financial Analysis (All funds in US$000) | | |
| Gold Price Assumption (US$/oz)* | US$1200 | US$1,200 |
| Internal Rate of Return (IRR), Pre-tax* | 31.6% | 25.2% |
| Internal Rate of Return (IRR), After-tax* | 26.5% | 21.7% |
| Average Annual Cash Flow, Pre-tax7,8 | $57,545 | $60,296 |
| Net Present Value at 5%, Pre-tax* | $217,655 | $169,470 |
| Average Annual Cash Flow, After-tax7 | $46,550 | $44,429 |
| Net Present Value at 5%, After-tax* | $151,752 | $121,073 |
| After-tax Pay Back Period* | 24 months | 41 months |
| |
| Capital Costs (All funds in US$000) | | |
| Pre-Production Capital | $135,839 | $139,802 |
| Working Capital and Initial Fills | $16,102 | $15,578 |
| Total Initial Capital (including VAT) | $166,836 | $170,910 |
| Sustaining and Expansion Capital (life of mine) | $67,541 | $64,072 |
| |
| Operating Costs (average first 9 years) | | |
| Mining | $4.61/tonne ore | $4.87/tonne ore |
| Processing | $4.46/tonne ore | $4.07/tonne ore |
| General and Administration | $1.24/tonne ore | $1.08/tonne ore |
| Total Operating Cost per /Tonne Ore | $10.31/tonne ore | $10.02/tonne ore |
| Cash Operating Costs (per oz of gold)4 | $666 | $646 |
| All-in Sustaining Cash Costs5 | $ 777 | $757 |
| |
| Production Data | | |
| Life of Mine Gold Production | 1,149,000 ozs | 1,037,000 ozs |
| Life of Mine | 12 years | 10 years |
| Mine Throughput (Ore) | 82,534,000 tonnes | 65,546,000 tonnes |
| Metallurgical Recovery Gold | 68.3% | 68.3% |
| Average Annual Gold Production6 | 107,750 ozs | 109,000 ozs |
| Average LOM Strip Ratio (Waste:Ore) | 1.22:1 | 1.79:1 |
| * For comparison, the gold price for the 2013 Feasibility Study was adjusted to the updated 2016 Feasibility Study gold price of US$1,200/oz Au. |
Mineral Resources and Reserves For the 2016 Feasibility Study, the Company retained David Thomas, P.Geo of DKT Geosolutions Inc. to complete a re-tabulation of the Mineral Resources for the project using a revised lower long-term gold price assumption of US$1,350. The Mineral Resource estimation is based on a block model that includes 17,753 samples from 121 core holes (34,656m) and 32 trenches (1,268m). The block grade estimates and Mineral Resource classification have not changed from the previous AMEC study (SEDAR filing dated May 6, 2010).
David Thomas applied updated gold prices, mining, and processing costs provided by the Company, using data from MDA and KCA, to calculate a marginal cut-off grade and generate an updated optimized pit shell. Mineral Resources were constrained within a pit shell established using Whittle® mine optimization software.
| Table 2 - Lindero Project Mineral Resource Summary (0.2 g/t Au cut-off grade) |
| | Gold Contained (ounces) | Gold Grade
(g/t) | Copper Grade (%) | Tonnage
(t) |
| |
| Total Measured & Indicated Mineral Resource | 2,140,000 | 0.57 | 0.11 | 117,300,000 |
| |
| Measured Mineral Resource | 695,000 | 0.76 | 0.11 | 28,400,000 |
| Indicated Mineral Resource | 1,445,000 | 0.51 | 0.10 | 88,900,000 |
| |
| Inferred Mineral Resource | 605,000 | 0.41 | 0.09 | 46,500,000 |
Notes related to Mineral Resource Summary Table:
- Mineral Resources are reported above using a 0.2 g/t Au cut-off grade.
- Mineral Resources are reported with internal dilution appropriate for a 10 x 10 x 8 m selective mining unit and assuming cut-off grades between 0.1 g/t Au and 0.5 g/t Au. No external dilution is included.
- Mineral Resources are reported using a long-term gold price of US$1,350/oz, mining costs at US$1.80 per tonne of material, with total processing and process G&A costs of US$5.72 per tonne of ore and an average process recovery of 70%. The refinery costs net of pay factor were estimated to be US$10.21 per ounce gold.
- Mineral Resources are reported within a conceptual pit shell using a slope angle (52°) consistent with the geotechnical consultant's recommendations (Seegmiller, August 2012).
- Note that Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
- Rounding of numbers in the Mineral Resources listed above may cause apparent inconsistencies.
- Measured and Indicated Mineral Resources are inclusive of those Mineral Resources modified to produce the Mineral Reserves.
|
Mineral Reserves For the 2016 Feasibility Study, the Company retained MDA to complete a re-tabulation of the Mineral Reserves for the project using a revised lower long term gold price of US$1,200 replacing the US$1,400 used previously. The Mineral Reserves were developed by applying relevant economic criteria to define the economically extractable portions of the resource. MDA developed the reserves to meet NI 43-101 standards. The NI 43-101 standards rely on the CIM Definition Standards on Mineral Resources and Mineral Reserves adopted by the CIM council.
| Table 3 - Lindero Project Mineral Reserve Summary |
| | Gold Contained (ounces) | Gold Grade
(g/t) | Tonnage
(t) |
| |
| Total Proven & Probable Mineral Reserve | 1,684,000 | 0.63 | 82,533,000 |
| |
| Proven Mineral Reserve | 661,000 | 0.78 | 26,349,000 |
| |
| Probable Mineral Reserve | 1,022,000 | 0.57 | 56,184,000 |
Notes related to the Mineral Reserve Summary Table:
- Mineral reserves are reported based on open pit mining within designed pits based on variable gold cut-off grades by metallurgical type. Met type 1 cutoff 0.25 g Au/t; Met type 2 cutoff 0.23 g Au/t; Met type 3 cutoff 0.24 g Au/t; Met type 4 cutoff 0.27 g Au/t
- The cut-off grade and pit designs are considered appropriate for long term gold prices of US$1,200/oz gold.
- Rounding of numbers in the mineral reserves listed above may cause apparent inconsistencies.
|
Qualified Persons The scientific and technical data contained in this news release pertaining to the Lindero Project has been reviewed and approved by the following Qualified Persons under NI 43-101, who consent to the inclusion of their names in this release. The 2016 Feasibility Study was prepared by Kappes, Cassiday & Associates under the supervision of Carl Defilippi, the Mineral Reserve calculation was completed under the supervision of Thomas L. Dyer, P.E., from Mine Development Associates, the Mineral Resource estimation was completed under the supervision of David Thomas of DKT Geosolutions Inc, who are independent Qualified Persons as defined under National Instrument 43-101. David Keough, F.AusIMM (CP), COO and a Director of Goldrock Mines Corp., is the Company's designated Qualified Person for the purposes of the 2016 Feasibility Study. Messrs. Defilippi, Dyer, Thomas, and Keough have reviewed and approved the scientific and technical contents of this press release.
Detailed Report The NI 43-101 Technical Report -- 2016 Feasibility Study will be filed within 45 days on SEDAR at
www.sedar.com and will be also available at that time on the Company's website at
www.goldrockmines.com.
ON BEHALF OF THE BOARD OF DIRECTORS,
"Paul Matysek" Paul Matysek, M.Sc., P.Geo
President and CEO