Spur Ventures Inc SPVEF

life of mine plan

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Atlantic Gold - New Life of Mine plan at MRC boosts gold production above 200,000 ozs CNW GroupJanuary 29, 2018 Maintains industry lowest quartile AISC over new Life of Mine at CAD$692 / oz. Au (USD$555 / oz. Au) Canadian dollars unless otherwise noted VANCOUVER, Jan. 29, 2018 /CNW/ - Atlantic Gold Corporation (TSX-V:AGB.V - News) ("Atlantic" or the "Company") is pleased to announce the results of the Phase 2 Life of Mine Expansion Pre-Feasibility Study (the "Study"), led and prepared by Ausenco Engineering Canada Inc. ("Ausenco"), in accordance with National Instrument 43-101 ("NI 43-101") in respect of the Company's Moose River Consolidated Gold Mine ("MRC"), located in Nova Scotia, Canada. Highlights Figure 1 MRC Consolidated Operations Forecast Life of Mine Production Schedule Moose River Consolidated LOM Production ('000 ounces) (CNW Group/Atlantic Gold Corporation) View photos Moose River Consolidated LOM Production ('000 ounces) (CNW Group/Atlantic Gold Corporation) More Production ramping up to + 200,000 ounces of gold production per annum, maintaining our industry lowest quartile cash costs at an all-in sustaining cash cost ("AISC") of CAD$692 / oz. (USD$555 / oz.) The Study demonstrates the economic viability of mining the 100% owned Fifteen Mile Stream ("FMS") and Cochrane Hill ("CH") deposits as satellite operations to the Touquoy central processing facility with an initial incremental after-tax net present value ("NPV") of $188 million at a 5% discount rate. The Study adopts the 2015 feasibility output for Touquoy and Beaver Dam and incorporates production capital and operating expenditures for the development of FMS and CH deposits. It is also based on the maiden Proven and Probable Mineral Reserves outlined in Table 7 below for FMS and CH. The current Phase 3 expansion drilling program (the "Phase 3 Expansion Program") is not completed and therefore the Study excludes any results from this program. Given the robust results of the Study, the Company is proposing the staged development of both FMS and CH including the submission of the Environmental Impact Statement for both projects in H2 2018. A staged approach is proposed for the integration of the FMS and CH deposits into the production schedule of the fully-commissioned processing facility at MRC's Touquoy plant for final processing. The concept of a central processing facility at Touquoy forms the basis of the Company's planned future development in the region. Two pre-concentration plants will be built in sequence with the concentrate from both locations transported to the MRC's Touquoy plant for final processing in the existing circuit. Pre-concentration will be achieved by a processing sequence which includes crushing, grinding, gravity concentration and flotation. The result will be the production of up to 160,000 tonnes per annum of concentrate for transportation to the Touquoy facility, maintaining high overall recoveries. The pre-concentration process is a relatively benign one, and offers potential environmental permitting advantages as well as significant savings in transportation costs. One of the additional drivers of the pre-concentration concept is the fact that metallurgical testwork has demonstrated high gold recoveries by gravity processes. Expanded crushing and grinding capacity will be required regardless to process ore from FMS and CH, and there are clear advantages in locating these facilities at each deposit versus at Touquoy. Conventional open pit mining methods are proposed with a maiden Proven & Probable Mineral Reserve of 432,000 ounces for FMS and 393,000 ounces for CH (see Table 7 below). Waste to ore ratio is an industry low 2.0:1 for FMS and 2.9:1 for CH. The expansion capital expenditures will also be staged, starting with the development of FMS followed by CH approximately one year later. The capital expenditure requirements and financing will be managed with cashflow from operations at Touquoy and additional debt capacity from a larger production base, minimizing the need for additional equity financing. The Company does not intend to undertake any meaningful capital spending on development until 2020 at the earliest. Drilling is ongoing at FMS and CH with the aim of supporting upgrades of some or all of the Inferred Mineral Resources to higher confidence categories, and potentially extending the known mineralization limits. When the Phase 3 Expansion Program is completed, the results are expected to support an updated Mineral Resource estimate for the FMS and CH deposits. Table 1 Initial Incremental Economics of the Phase 2 Expansion Study (FMS and CH Deposits) Gold price: US$1,300 @ 0.8 USD/CAD Amount Pre-tax NPV (5%) $ 291 million Post-tax NPV (5%) $ 188 million Incremental Phase 2 Expansion Capital cost ($CAD) $ 259 million LoM Cash Operating Cost ($CAD/oz.) $ 627 LoM AISC ($CAD/oz.) $ 692 Incremental LoM gold production (000's oz.) 746 Average incremental annual gold production (000's oz.) 124 Incremental LoM waste/ore ratio 2.6:1 Incremental average grade (g/t) Au 1.17 Chairman and CEO Steven Dean commented, "We are very excited to issue the results of this study representing the initial estimation of the new life of mine plan at MRC for the Phase 2 expansion. This represents a placeholder which we expect will be added to as a result of the expected mineralization extensions from the drill programs at FMS and CH. Stay tuned for further updates during the course of 2018 from the Phase 3 drill program and planned updated resource estimates." Phase 2 Expansion Description MRC commenced operations with the first gold pour and initial production from the Company's Touquoy deposit in October 2017. The Phase 1 Life of Mine in the July 2015 Feasibility Study (with an effective date of July 2, 2015) was forecast to produce on average 87,000 oz. gold / year over a minimum 8.5 year mine life at an AISC of C$690/oz., and incorporated only 2 of the 4 deposits (Touquoy and Beaver Dam) into the Life of Mine plan. The central processing facility is now built and is in production at Touquoy. The Phase 2 expansion study demonstrates the potential to add significantly to Phase 1 Life of Mine production by incorporating the additional satellite deposits at FMS and CH, both located within trucking distance of the central processing facility at Touquoy and readily accessible by highway. Study The Study incorporates maiden Mineral Reserve estimates for the FMS and CH deposits. Mineral Resource estimates for these projects were included in a technical report released in September, 2017, entitled "Moose River Consolidated Phase 2 Project, Nova Scotia Canada, NI 43-101 Technical Report" with an effective date of July 20, 2017. The Company engaged a team of specialized consultants, led by Ausenco, with the assistance of Moose Mountain Technical Services ("MMTS") in respect of mine design and pit optimization as well as compiling the economic results for the Study. The Company also engaged Knight Piesold Ltd. in respect of the design of the Tailings Management Facility, Mr. Neil Schofield, a principal of FSSI Consultants (Australia) Pty Ltd. ("FSSI") in respect of the resource modelling, James Millard in respect of environmental and permitting aspects of the CH and FMS components of the Study and Jeffrey Parks of GHD Ltd. ("GHD") in respect of environmental and permitting aspects of the Touquoy and Beaver Dam components of the of the Study. Table 2 Initial Phase 1 + Phase 2 Economics Gold price: US$1,300 @ 0.8 USD/CAD Amount Pre-tax NPV (5%) $ 612 million Post-tax NPV (5%) $ 422 million Initial capital cost ($CAD) $ 396 million LoM cash operating cost ($CAD/oz.) $ 643 LoM AISC ($CAD/oz.) $ 692 Total LoM gold production (000's oz) 1,460 Average annual gold production (000's oz) 162 LoM waste/ore ratio 3.0:1 Average grade (g/t) Au 1.28 IRR (post-tax) 35% 1. Capital Costs inclusive of MRC Phase 1 are based on the July 2, 2015 Feasibility Study with no material changes aside from updating the gold price assumption as noted above and amending cash flow discounting parameters to 2018 as the base year versus 2015 in the Feasibility Study. 2. This LOM Plan assumes Atlantic exercises its rights with Touquoy partner MRRI to accommodate production from FMS and CH at Touquoy. 3. Economics calculated on an unlevered basis. Mine Plan The mining operations are planned to be typical of similar small-scale open pit operations in flat terrain. They are conventional drill-blast-load-haul open pit operations with excavators and haul trucks supported by ancillary equipment. Ore control drilling is planned in advance of mining activities to better delineate the mill feed material in upcoming benches. An ore control system is planned to provide field control for the loading equipment to selectively mine ore grade material separately from the waste. Direct mining and mine maintenance is planned as an Owner's fleet. Mining operations are based on 365 operating days per year with two 12 hour shifts per day. Process Plant Ore treatment at both locations will be essentially the same, with some differences in equipment sizes to suit ore properties such as ore hardness. The ore will be crushed in a three-stage crushing unit, essentially the same as that installed at Touquoy. A ball mill will grind the ore to a P80 of approximately 240 micrometers for FMS and 350 micrometers for CH. A part of the cyclone underflow will be screened and the undersize will be treated in two centrifugal gravity separators. The concentrate will be collected in custom made tote containers. It is expected that gold recovered in gravity concentrate will be significant and at times represent up to 60% of total gold production. The cyclone overflow will be treated in a split circuit with conventional flotation and hydrofloat separation to produce a concentrate. The concentrate will be cleaned, thickened and filtered. The tailings will be pumped to a conventional tailings management facility. Both concentrates will be trucked to the Touquoy processing facility, the gravity concentrate in tote boxes, the flotation concentrate as a bulk solid. The gravity concentrate will be treated in a new intensive cyanide leach unit and gold recovered from new electrowinning cells. The flotation concentrate will be fed into the cyclone feed pump of the existing circuit and gold will be recovered in the existing carbon-in-leach ("CIL") circuit. An extra tank will be provided in the CIL circuit to allow for increased volume throughput but the carbon treatment and gold recovery circuit has sufficient existing capacity. The overall recovery of gold from ore to final product is estimated to be 92-93%. Pre-Concentration Flowsheet for FMS and CH Production Profile The table below sets out gold production from the MRC over the Study Life of Mine: Table 3 MRC Consolidated Operations Forecast Life of Mine Production Table Description - Combined Waste (000's tonnes) Ore Processed (000's tonnes) Gold Production (000's oz.) Pre-Production 2,639 - - 2018 5,616 1,801 74 2019 4,897 2,001 96 2020 6,795 2,000 94 2021 15,413 3,700 171 2022 29,187 5,701 231 2023 26,711 6,001 254 2024 16,448 6,000 245 2025 6,306 6,000 202 2026 838 3,746 80 2027 - 1,457 13 Total LoM Production 114,850 38,407 1,460 Waste to ore ratio 3.0 : 1 Figure 2 MRC Consolidated Operations Forecast Life of Mine Production Schedule (CNW Group/Atlantic Gold Corporation) View photos Figure 2 MRC Consolidated Operations Forecast Life of Mine Production Schedule (CNW Group/Atlantic Gold Corporation) More Economic Highlights Fifteen Mile Stream Table 4 FMS Economic Highlights Description Unit FMS Mill Feed million tonnes 10.80 Head Grades Au (g/t) 1.24 Gold production ounces 000's 391 Pre-Production Capital CDN$ millions 123 Sustaining Capital CDN$ millions 25 Incremental Pre-Tax NPV CDN$ millions 186 IRR (pre-tax) % 60.9 LoM Cash Operating Cost $CAD/oz 567 LoM AISC $CAD/oz. 631 Cochrane Hill Table 5 CH Economic Highlights Description Unit CH Mill Feed million tonnes 11.20 Head Grades Au (g/t) 1.10 Gold production ounces 000's 355 Pre-Production Capital CDN$ millions 136 Sustaining Capital CDN$ millions 23 Incremental Pre-Tax NPV CDN$ millions 105 IRR (pre-tax) % 32.9 LoM Cash Operating Cost $CAD/oz 694 LoM AISC $CAD/oz. 759 MRC Phase 2 Expansion Sensitivity Analysis on NPV5 Table 6 MRC Phase 2 Expansion Sensitivity Analysis on NPV5 (base case is bolded) $CAD Gold Price Description $1,400 $1,500 $1,625 $1,700 $1,800 $1,900 $2,000 Pre-Tax NPV5 171,335 224,830 291,700 331,822 385,318 438,814 492,309 $CAD Gold Price Description $1,400 $1,500 $1,625 $1,700 $1,800 $1,900 $2,000 Post-Tax NPV5 104,169 141,646 188,662 216,533 253,690 290,847 328,004 1. Base Case Pricing assumption for the Study is CAD$1,625/oz. Au, calculated using a US$ Gold price of $1,300 at a USD/CAD exchange rate of 0.80. Permitting and Development Status Baseline environmental studies in respect of the proposed FMS and CH mine sites and have been in progress for about nine months. Following completion of another 4 months of seasonal observations, results will be incorporated into environmental impact statements ("EIS") to be submitted to provincial and federal regulators, and to the public, for approval. As a first step in the approval process, the company will file the Project Description with the Canadian Environmental Assessment Agency ("CEAA") once the NI 43-101 compliant Technical Report associated with the Study is completed. The company plans on filing the EIS for both FMS and CH later in 2018. The 365 day review period starts after the EIS submission is considered compliant with Federal guidelines for Environmental Assessment ("EA"). Aboriginal consultation is integrated into the EA process. Once the Environmental related approvals are in place, an Industrial Approval and the grant of a Mineral Lease will be sought from Nova Scotia Environment and the Nova Scotia Department of Natural Resources, respectively. Mineral Reserve Estimates Mineral Reserves from the MRC Consolidated Operations, with an effective date of January 24, 2018, have been developed by MMTS and are classified using the 2014 Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") Definition Standards for Mineral Resources and Mineral Reserves. The Mineral Reserves are based on an engineered open pit mine plan developed for each of the included four deposits. Table 7 Summary of MRC Mineral Reserves Tonnage (Mt) Grade (g/t) Gold oz's ('000's) Fifteen Mile Stream Proven Reserves 2.89 1.24 116 Probable Reserves 7.91 1.24 316 Total Proven and Probable Reserves 10.80 1.24 432 Cochrane Hill Proven Reserves 6.46 1.15 239 Probable Reserves 4.70 1.02 154 Total Proven and Probable Reserves 11.16 1.10 393 Moose River Consolidated, Phase 2 Proven Reserves 9.36 1.18 355 Probable Reserves 12.60 1.16 470 Total Proven and Probable Reserves 21.96 1.17 825 Touquoy and Beaver Dam Proven Reserves 6.65 1.45 310 Probable Reserves 9.80 1.43 450 Total Proven and Probable Reserves 16.45 1.44 760 Total Moose River Consolidated Proven Reserves 16.01 1.29 665 Probable Reserves 22.40 1.28 920 Total Proven and Probable Reserves 38.41 1.28 1,585 The Mineral Reserve estimates for Touquoy and Beaver Dam have an effective date of July 2, 2015; 1. Mineral Reserves are mined tonnes and grade, the reference point in the mill feed at the primary crusher; 2. Mineral Reserves are reported at a cut-off grade of 0.40 g/t Au, which assumes US$1,300/oz. Au at a currency exchange rate of 0.90 C$ per US$; 99.9% payable gold; $4.20/oz. offsite costs (refining and transport), and a 2% royalty. The cut off-grade covers processing costs of $9.73/t at Touquoy and $13.51/t at Beaver Dam, and general and administrative (G&A) costs of $1.71/t, and uses variable metallurgical recoveries; 3. Mining recovery of 98.4% and external mining dilution of 1.6% at 0.28 g/t Au grade is applied in addition to the modelled in-block dilution. Mining recovery is reduced to 40% for material between 0.40 g/t and 0.50 g/t Au cut-off grades; 4. The independent Qualified Person for the estimate is Mr. Marc Schulte, P.Eng. The Mineral Reserve estimates for FMS and CH have an effective date of January 24, 2018: 1. Mineral Reserves are mined tonnes and grade, the reference point in the mill feed at the primary crusher; 2. Mineral Reserves are reported at a cut-off grade of 0.30 g/t Au, which assumes US$1,250/oz. Au at a currency exchange rate of 0.78 C$ per US$; 99.0% payable gold; $5.00/oz. offsite costs (refining and transport), and a 2% royalty. The cut off-grade covers processing costs of $8.45/t for FMS ore and $9.05/t for CH ore, and general and administrative (G&A) costs of $3.50/t, and uses a 92% metallurgical recovery; 3. Mining recovery of 98.4% and external mining dilution of 1.6% at 0.20 g/t Au grade is applied in addition to the modelled in-block dilution; 4. The independent Qualified Person for the estimate is Mr. Marc Schulte, P.Eng. Any known legal, political, environmental, or other risks that could materially affect the potential development of the Mineral Reserves are detailed below in the section entitled "Forward-Looking Statements". Within the designed pits at FMS and CH, Inferred Mineral Resources are assumed to be waste. This Inferred material totals 2.03 million tonnes at 1.18 g/t Au containing 77,000 ounces Au. The Phase 3 Expansion Program is designed to tighten the drill spacing in these areas currently classified as Inferred so as to meet the drill spacing requirements for consideration for confidence category upgrades. The Mineral Resource estimates for Touquoy, Beaver Dam (MRC Phase 1) are presented in Table 8, and for FMS and CH (MRC Phase 2 Expansion) in Table 9. Table 8 Summary of MRC Phase 1 Mineral Resources Touquoy Beaver Dam Confidence Category Tonnage Grade Contained Gold Tonnage Grade Contained Gold (Mt) (g/t Au) (Au oz x 1,000) (Mt) (g/t Au) (Au oz x 1,000) Measured 2.75 1.47 130 4.07 1.55 202 Indicated 7.34 1.48 349 5.20 1.34 224 Total Measured and Indicated 10.09 1.48 479 9.27 1.43 426 Inferred 1.58 1.52 77 1.84 1.37 81 1. Touquoy Mineral Resources have an effective date of 1 August, 2014. The Qualified Person for the estimate is Mr. Neil Schofield, MAIG, an employee of FSSI Consultants (Australia) Pty Ltd. 2. Touquoy Mineral Resources are reported at a base case cut-off grade of 0.5 g/t Au. The cut-off grade includes the following considerations: assumption of open pit mining methods; gold price of US$1,300/oz; 94% metallurgical recovery; pit bench face angles that range from 4065; mining costs of $13.40/t; processing costs of $11.94/t, and general and administrative (G&A) costs of $1.71/t. 3. Beaver Dam Mineral Resources have an effective date of 16 April, 2015. The Qualified Person for the estimate is Mr. Neil Schofield, MAIG, an employee of FSSI Consultants (Australia) Pty Ltd. 4. Beaver Dam Mineral Resources are reported at a base case cut-off grade of 0.5 g/t Au. The cut-off grade includes the following considerations: assumption of open pit mining methods; gold price of US$1,300/oz.; exchange rate of C$1: US$0.90; 95% metallurgical recovery; pit bench face angles that range from 4070; mining costs of $2.90/t, and a $0.015/t bench increment; process costs of $13.51/t; and general and administrative (G&A) costs of $1.71. 5. Mineral Resources are reported inclusive of those Mineral Resources that have been converted to Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability 6. Estimates have been rounded, and may result in summation differences. Table 9 Summary of MRC Phase 2 Expansion Mineral Resources Fifteen Mile Stream Cochrane Hill Confidence Category Tonnage Grade Contained Gold Tonnage Grade Contained Gold (Mt) (g/t Au) (Au oz x 1,000) (Mt) (g/t Au) (Au oz x 1,000) Measured 2.71 1.33 116 6.17 1.22 242 Indicated 7.88 1.33 336 4.49 1.08 156 Total Measured and Indicated 10.59 1.33 452 10.66 1.16 398 Inferred 6.64 1.12 240 1.63 1.32 69 1. Mineral Resources have an effective date of 20 July, 2017. The Qualified Person for the estimate is Mr Neil Schofield, MAIG, an employee of FSSI Consultants (Australia) Pty Ltd. 2. Mineral Resources are reported at a base case cut-off grade of 0.35 g/t Au. The cut-off grade includes the following considerations: gold price of US$1,300/oz.; exchange rate of 0.80 US$:C$; mining cost of C$3.25/t; process costs (including general and administrative (G&A) cost) of C$11.73/t; process recovery of 95%; and over-all pit slope angle of 45. 3. Estimates have been rounded, and may result in summation differences. 4. Mineral Resources are reported inclusive of those Mineral Resources that have been converted to Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability and there is no certainty the results of the Study will be realized. The balance of inferred resources at FMS and CH are the subject of the current Phase 3 Expansion Program and will be updated during the course of 2018. Operating Costs Mine operating costs for FMS and CH have been estimated from the current Touquoy Pit unit costs. Processing, mining and concentrate haulage form the basis of the operating costs and also incorporate cost data from the processing facilities currently operating at Touquoy. Table 10 MRC Phase 1 + Phase 2 Operating Cost Summary Operating costs MRC Phase 1 MRC Phase 2 Expansion Item Unit Touquoy Beaver Dam FMS CH Mining (per tonne milled) C$/t 10.1 17.1 9.4 10.8 Processing C$/t 8.9 15.3 7.9 8.3 General & administrative (G&A) C$/t 1.9 2.2 1.9 1.9 Total Cost C$/t 20.9 34.6 18.8 20.5 Overall average annual costs C$M/a 41.8 69.2 39.1 43.4 LoM Cash Operating Cost C$/oz 626 567 694 LoM AISC C$/oz 690 631 759 Capital Costs The estimated pre-production capital cost for FMS is $123 million and for CH is $136 million. Pre-production costs include contingency, owner's costs, EPC costs, new mine equipment and infrastructure. Estimates incorporate current data from the recently constructed processing facilities at Touquoy. The modifications required at Touquoy to treat the gravity and flotation concentrates from FMS and CH are estimated at $4.3 million and this amount is included in the estimated capital costs for FMS. Incremental sustaining capital expenditures for the MRC Phase 2 Expansion are estimated at $48.2 million. Table 11 Initial Capital Costs of MRC MRC Phase 1 MRC Phase 2 Expansion Initial Capital Touquoy + Beaver Dam ($ millions) FMS ($ millions) CH ($ millions) Mine 17 16 27 Process Plants 51 52 56 On-site infrastructure 23 13 11 Off-site infrastructure 2 6 6 Subtotal Direct Costs 93 87 100 Indirects 15 16 15 Owners 16 7 7 Contingency 13 13 14 Subtotal Indirect Costs 44 36 36 Project Total 137 123 136 Next Steps Phase 3 Expansion Program The Company is nearing the completion of its Phase 3 Expansion Program at FMS and CH. The objectives of the Phase 3 Expansion Program are to: Tighten drill spacing within the designed pit limits; identify additional mineralization immediately peripheral to the estimated Mineral Resources at FMS and CH; potentially support upgrade of some or all of the previously-estimated Inferred Mineral Resources to higher-confidence categories at CH and at FMS particularly at the Hudson and Plenty zones; and seek additional mineralization that may be contained within the 350 m gap between the Plenty and Egerton-MacLean zones at FMS. A total of 28,000 m in 228 diamond drill holes of a planned program of 35,000 m in 315 holes, has been drilled to date. Up until the end of 2017, a total of 185 holes for 21,000 m had been drilled at FMS, with the first drilling for 2018 having just re-commenced. At Cochrane Hill, 6,900m in 44 holes have been drilled and drilling here has now largely been completed. Results from the Phase 3 Expansion Program released to date can be found under the Company's press releases dated December 20, 2017, January 17, 2018, and January 24, 2018. Mineralization identified from the results of this Phase 3 Expansion Program will be used to support an update of the Mineral Resource estimates for FMS and CH. The Company currently plans to have the updated estimates completed during H2 2018.. https://files.newswire.ca/1485/Drill-plan-mapsJAN26.pdf Over the coming months, the Company will be focused on: completing the Phase 3 Expansion Program completing the updated study that will incorporate the results from the Phase 3 Expansion Program advancing environmental permitting at Beaver Dam, CH and FMS. Technical Disclosure Internal data verification programs have included review of QA/QC data, re-sampling and sample reanalysis programs, and database verification for issues such as overlapping sample intervals, duplicate sample numbers, or lack of information for certain intervals. Validation checks are performed on data used to support estimation, and comprise checks on surveys, collar co-ordinates, lithology data, and assay data. A review of the Touquoy database was conducted in 2007 by external consultants, Hellman and Schofield. In the opinion of the QP, sufficient verification checks have been undertaken on the databases to provide confidence that the databases are reasonably error free and may be used to support Mineral Resource estimation. Report Filing A technical report prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects in respect of the Study will be filed on SEDAR www.sedar.com and the Company's website www.atlanticgoldcorporation.com within 45 days of the date of this news release. Qualified Persons