YOU WANTED A LIFT, WELL, YOU GOT IT! PONTIAC.....Charts to follow, later in the day!
J 103 Well, he did say, Homestakes alone was worth the market cap unto its own!
Mr. Ivan Bebek reports
AURYN DELIVERS POSITIVE PRELIMINARY ECONOMIC ASSESSMENT FOR HOMESTAKE RIDGE GOLD DEPOSIT
Auryn Resources Inc. has released positive results from an independent preliminary economic assessment (PEA) and an updated resource estimate for its 100-per-cent-owned 7,500-hectare Homestake Ridge gold project located in the prolific Iskut-Stewart-Kisault gold belt in northwestern British Columbia, Canada (Figure 1). The PEA demonstrates the project's potential to become a high-grade, small footprint, underground gold mine with positive economics and upside potential from both a rising gold price and prospective expansion. The PEA presentation can be viewed by clicking here, and a visualization of the Life Of Mine (LOM) model can be viewed here.
A Message from Ivan Bebek, Executive Chairman and Director:
"This is an early look into the Homestake Ridge high-grade gold project's current value, which demonstrates a highly profitable deposit with a low capex in an established mining jurisdiction, and importantly, it is open for considerable expansion.
"We took a conservative approach in our study to see the project's resilience at $1,350 gold, which generated a 23.6% IRR, however, at $1,620 gold the project generates an IRR of 32% and an NPV of over US$173 million.
"The Homestake Ridge gold project is a valuable part of our portfolio, which also includes multiple tier-one exploration opportunities, such as Sombrero and Curibaya in southern Peru and Committee Bay in northern Canada. We are very much looking forward to advancing our portfolio as we continue to see improving metal prices."
PEA Summary:
Base Case: $1,350/oz gold, $12/oz silver, $3.00/pound copper, $1.00/pound lead and an exchange rate of 0.70 (US$/C$)
Net present value (NPV 5%) after tax and mining duties US$108 million Internal rate of return (IRR) after tax 23.6% Pre-production capital costs US$88 million After tax payback period 36 months All in sustaining costs (AISC) per ounce gold US$670 PEA life of mine (LOM) 13 years LOM metal production gold equivalent ounces 590,040 AuEq ounces LOM average diluted head grade 6.42g/t AuEq Peak year annual production (year three) 88,660 AuEq ounces Average LOM payable production 45,400 AuEq ounces LOM mineralized material mined 3.4 Million tonnes Mining scenario tonnes per day 900 tonnes
The Company cautions that the PEA is preliminary in nature in that it includes Inferred Mineral Resources which are considered too speculative geologically to have the economic considerations applied to them that would enable them to be characterized as mineral reserves, and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
The PEA was prepared in accordance with National Instrument 43-101 ("NI 43-101") by MineFill Services Inc. of Seattle, WA with other contributors including Roscoe Postle Associates Inc. (RPA), now part of SLR Consulting Ltd. (SLR), (QP for updated mineral resource estimate) and One-Eighty Consulting Group (environmental, permitting and social). The Company plans to file the PEA on SEDAR at www.sedar.com within 45 days in accordance with NI 43-101.
Updated Mineral Resource Estimate:
The PEA is based on an updated mineral resource estimate that was prepared in-house by Auryn and audited by RPA using block models constrained to new geological wireframes. Grades for gold, silver, lead, arsenic and antimony were estimated using Inverse Distance (ID3) weighting. Two block models were constructed in Leapfrog Geo Edge software: one for the Homestake Main and Silver deposits and the other for South Reef.
The updated mineral resource estimate was developed using a revised geological model based on a complete re-log of the deposits that defined the geometry of breccia bodies and vein arrays that were successfully traced both laterally and vertically within the deposits. These resulting geometries provided additional confidence in tracing high-grade mineralization within the deposits. The resource remains open for expansion at depth and along strike (Figure 2). The updated mineral resource estimate demonstrates higher grades with a decrease in tonnes as compared to the previous resource estimate dated September 1, 2017 (detailed in a Canadian National Instrument 43-101 Technical Report dated September 29, 2017 as amended October 23, 2017 and filed on SEDAR) with overall metal content largely unchanged. The updated 2019 mineral resource estimate is summarized in Table 1.1 below:
Table 1.1 Mineral Resource by Zone - Effective Date: December 31, 2019 Average Grade Metal Content Classification ZoneTonnageMtGold g/tSilverg/tCopper %Lead%Goldoz Silver MozCopper MlbLeadMlb Indicated HM 0.736 7.02 74.8 0.18 0.077165,9931.8 2.87 1.25 Total Indicated 0.736 7.02 74.8 0.18 0.077165,9931.8 2.87 1.25 Inferred HM 1.747 6.33 35.9 0.35 0.107355,5532.0 13.32 4.14 HS 3.354 3.13 146.0 0.03 0.178337,01315.7 2.19 13.20 SR 0.445 8.68 4.9 0.04 0.001124,1530.1 0.36 0.00 Total Inferred 5.545 4.58 100.0 0.13 0.142816,71917.8 15.87 17.34
Notes:
1. Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards for Mineral Resources and Mineral Reserves dated May 10, 2014 (CIM (2014) definitions), as incorporated by reference in NI 43-101, were followed for Mineral Resource estimation.2. Mineral Resources are estimated at a cut-off grade of 2.0 g/t AuEq.3. AuEq values were calculated using a long-term gold price of US$1,300 per ounce, silver price at US$20 per ounce and copper price at US$2.5 per pound and an exchange rate of US$/C$1.20. The AuEq calculation included provisions for metallurgical recoveries, treatment charges, refining costs and transportation.4. Bulk density ranges from 2.69 t/m3 to 3.03 t/m3, depending on the domain.5. Differences may occur in totals due to rounding.6. The Qualified Person responsible for this mineral resource estimate is Philip A. Geusebroek, P. Geo., RPA.
The Mineral Resource sensitivity to cut-off grade is shown on Table 1.2 below.
Table 1.2 Mineral Resource Sensitivity by Cut-Off GradeAverage Grade Metal Content Cut-off g/t AuEqTonnageMtGoldg/tSilverg/tCopper%Lead%Goldoz SilverMozCopperMlbLeadMlb Total Indicated 5.0 0.372 10.99 131.3 0.20 0.120131,4631.6 1.7 0.99 4.0 0.465 9.57 111.2 0.20 0.105142,9111.7 2.0 1.07 3.0 0.592 8.18 90.5 0.19 0.090155,7301.7 2.5 1.18 2.0 0.736 7.02 74.8 0.18 0.077165,9931.8 2.9 1.25 1.0 0.862 6.19 65.2 0.17 0.069171,4411.8 3.1 1.32 Total Inferred 5.0 2.158 8.25 145.7 0.21 0.216572,44410.1 9.8 10.26 4.0 2.972 6.78 133.4 0.18 0.189648,21212.8 11.9 12.36 3.0 4.136 5.52 118.6 0.15 0.163734,27515.8 14.0 14.84 2.0 5.545 4.58 100.0 0.13 0.142816,71917.8 15.9 17.34 1.0 6.448 4.09 90.9 0.12 0.127847,99618.9 17.0 18.07
PEA Project Overview:
To-date the project has been investigated with more than 275 drill holes, totaling more than 90,000 meters. In addition to the three known zones of mineralization, multiple exploration targets remain to be tested. The PEA envisions a 900 tonne per day underground mining operation spanning a 13-year mine life based on a mine plan using a gold price of US$1,300/oz. Mining would commence in the larger Homestake Main zone first, followed by the Homestake Silver zone around year six and finally the South Reef zone. The material would be treated in a conventional crushing, grinding and flotation plant to produce a copper concentrate, a lead/zinc concentrate and finally Au-Ag dore from cyanide leaching of regrind tailings.
Mining and Processing:
The mine plan and production schedule were developed in Deswik mine stope optimizer software (MSO). The principal mining method in the MSO runs was overhand longhole retreat mining on 20-meter sublevel intervals. The minimum mining width was 2.5 meters and a mining cutoff grade of 3.5 g/t AuEq was used to develop the stope wireframes. An ELOS (equivalent linear overbreak) of 0.25 meters was added at the hanging-wall and footwall to account for dilution.
Processing of the Homestake Ridge mineralization is determined by the difference in metal contents across the three deposits included in the study. Given that 97% of the metal value is gold and silver, the realization of the value of the Homestake Ridge deposits will be dependent on the recovery of precious metals. Based on recent metallurgical test work, the optimal processing stream appears to be campaign processing of each deposit in sequence, rather than blending. The flowsheet thus consists of an initial rougher flotation to produce a base metal concentrate, followed by secondary flotation to produce a pyrite concentrate. The pyrite concentrate is then reground and subjected to cyanide leaching to recover the remaining gold and silver in rougher tailings.
The Homestake Main mineralization would be processed first to produce a copper concentrate rich in gold, then Homestake Silver to produce a lead/zinc concentrate rich in silver and finally South Reef to produce a gold concentrate. The metallurgical recoveries are estimated to be 86% for gold, 74% for silver, 70% for copper and 66% for lead.
Capital and Operating Costs:
The pre-production capital is estimated at US$88 million (CAD$126 million) with US$86 million (CAD$123 million) in sustaining capital, primarily capitalized development underground. The PEA is based on owner-operated equipment and manpower. A contingency of 15% has been applied to all direct costs. Details of the pre-production and sustaining capital are shown on Table 2 below:
Table 2: Capital Cost Summary Expenditure Initial (US$M)Sustaining (US$M) Mining Equipment $3.0 $2.1 Surface mobile equipment $3.5 $2.5 Capitalized Underground Development $66.4 Tailings $8.4 Site Development - Roads, Airport $6.3 Camp Facilities $3.2 Site Infrastructure $3.5 Power Supply $8.4 Process Plant $26.2 Access Upgrades - barge landing and roads$2.1 EPCM costs - 15% of directs $8.7 Owner Costs - 10% of directs $5.8 Reclamation - tailings $3.5 Closure $3.5 Water Treatment $1.4 Environmental Permits/Baseline Data $0.6 End of Life Salvage ($3.5)
Operating costs were developed from unit costs for projects of a similar scale in Canada and translated to USD at an exchange rate of 0.70 (US$/C$). A summary of the operating costs is shown in Table 3 below.
Table 3: Operating Cost Summary Area Unit Cost (US$)Life-of-Mine (US$) Mining ($/t mined) $63.50 $182.9 million Processing ($/t milled) $21.00 $71.9 million General and Administration ($/t) $14.00 $48.0 million Environmental/Water Treatment $0.82 $2.8 million Community/Social $0.17 $0.6 million Total Operating Costs ($/t milled)$89.39 $306.2 million
Project Economics and Sensitivity Analyses:
The following tables illustrate the PEA project economics and the sensitivity of the project to changes in the base case metal prices, operating costs and capital costs. As is typical with precious metal projects, the project is most sensitive to metal prices, followed by operating costs and initial capital costs.
Project Economics at $1,350 Gold NPV at 0% (US$M)NPV at 5% (US$M)NPV at 7% (US$M)IRR Payback (Mo) Before Tax$278 $170 $140 30.1%26 After Tax $184 $108 $87 23.6%36 Metal Price Sensitivity - After-Tax Gold Price (US$/oz)Silver Price (US$/oz)NPV at 0% (US$M)NPV at 5% (US$M)IRR Payback (Mo) 40% $1,890 $16.80 $373 $239 39.4%31 30% $1,755 $15.60 $326 $206 35.8%32 20% $1,620 $14.40 $278 $173 32.0%33 10% $1,485 $13.20 $231 $141 28.0%34 Base Case$1,350 $12.00 $184 $108 23.6%36 -10% $1,215 $10.80 $137 $75 18.8%40 -20% $1,080 $9.60 $90 $42 13.2%46 -30% $945 $8.40 $39 $6 6.4% 75 Operating Cost Sensitivity - After-Tax NPV at 0% (US$M)NPV at 5% (US$M)IRR Payback (Mo) 20% $145 $82 20.1%39 10% $165 $95 21.9%38 Base Case$184 $108 23.6%36 -10% $203 $121 25.3%35 -20% $223 $134 26.9%35 Capital Cost Sensitivity - After-Tax NPV at 0% (US$M)NPV at 5% (US$M)IRR Payback (Mo) 20% $149 $79 17.1%43 10% $167 $93 20.1%40 Base Case$184 $108 23.6%36 -10% $201 $128 27.7%34 -20% $219 $137 32.5%33
Indigenous and Community Relations:
The pursuit of environmentally sound and socially responsible mineral development guides all of Auryn's activities as the Company understands the broad societal benefits that responsible mining can bring, as well as the risks that must be managed through the implementation of sustainable development practices. Auryn strives to maintain the highest standards of environmental protection and community engagement at all of its projects.
Auryn considers sustainability to include the pursuit of three mutually reinforcing pillars: environmental and cultural heritage protection; social and community development; and, economic growth and opportunity. The Company assesses the environmental, social and financial benefits and risks of all our business decisions and believes this commitment to sustainability generates value and benefits for local communities and shareholders alike.
Auryn places a priority on creating mutually beneficial, long-term partnerships with the communities and countries in which it operates, and with its shareholders, respecting their interests as its own. At the community level, the Company works to establish constructive partnerships to address and contribute to local priorities and interests and ensure that local people benefit both socially and economically from its activities.
Auryn has undertaken early and ongoing engagement with respect to the Homestake Ridge gold project since January 2017. Engagement goals include providing Indigenous groups, residents of nearby communities and other regional interests with corporate and project-related information, details of work programs and other activities being undertaken in the field, project updates and opportunities for feedback and local involvement in the Homestake Ridge project.
Auryn's approach to Indigenous and stakeholder engagement provides opportunities and benefits through:the provision of jobs and training programscontracting opportunitiescapacity funding for Indigenous engagementsponsorship of community events
Members of local Indigenous groups comprise approximately 40% of Auryn's Homestake Ridge project team. Two of our primary contractors are local Indigenous-owned companies. Auryn and the Nisga'a Lisims Government entered into a Confidentiality Agreement in January 2020. The parties look forward to a collaborative relationship based on mutual respect and a desire for economic prosperity generated by responsible natural resource development in British Columbia.Image: https://www.accesswire.com/users/newswire/images/585183/e083ea4f-bf0a-41bf-a135-b2ece577c96d.jpegFigure 1: Illustrates the general location and access to infrastructure at the Homestake Ridge project.Image: https://www.accesswire.com/users/newswire/images/585183/83f1b266-c401-47dd-953c-f12546b396d7.jpegFigure 2: Illustrates a long section of the Homestake Main and Homestake Silver deposits demonstrating the deposits are open at depth and along strike.
QUALIFIED PERSON:
The foregoing technical information contained in this news release has been prepared in accordance with the Canadian regulatory requirements set out in National Instrument 43-101 (Standards for Disclosure for Minerals Projects) and reviewed on behalf of the Company by Dr. David Stone, P.Eng., a Qualified Person.
About Auryn
Auryn Resources is a technology-driven junior exploration company focused on finding and advancing globally significant precious and base metal deposits. The Company has a portfolio approach to asset acquisition and has six projects, including two flagships: the Committee Bay high-grade gold project in Nunavut and the Sombrero copper-gold project in southern Peru. Auryn's technical and management teams have an impressive track record of successfully monetizing assets for all stakeholders and local communities in which it operates. Auryn conducts itself to the highest standards of corporate governance and sustainability.
We seek Safe Harbor.