Highlights include:
-- Mining of 1.0 million ounces gold at an average grade of 1.2 g/t and 101
million pounds copper at an average grade of 0.18% from the fresh rock
mining operation over the first five years of operation.
--
$750 million cumulative cash flow during first five years of production
at
December 31, 2011 three-year trailing average gold price of
$1,255/oz.
-- Pre-production capital costs of
$482 million through development of more
capital efficient operation for the first five years of mine life.
-- Average cash costs including royalties of
$450/oz. gold (net of copper
credits) in first five years of operation and
$600/oz. gold (net of
copper credits) over the 14-year mine life.
-- Mining of 4.0 million ounces gold from fresh and saprolite
mineralization at an average grade of 1.0 g/t Au over a 14-year mine
life at 4.1: 1 strip ratio, and 5.0 million ounces gold over 22-year
life of project.
-- Definitive Mineral Agreement signed with government of
Guyana on
November 9, 2011, the terms of which have been incorporated into the
Updated PEA.
-- Environmental authorization reviewed by
Guyana Environmental Protection Agency with no fatal flaws found; and final approval is pending.
-- Open pit operations anticipated to commence in 2015.
Financial Results for the Higher Grade Startup Case at a Range of Gold
Prices
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Life of Project
Select Financial Projections(1) (14 year LOM + 8 year stockpile)
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Base Gold Price Sensitivities
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Gold Price ($/oz)(2) $1,255 $1,400 $1,550 $1,700 $ 2,000
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Undiscounted Pre-Tax Free Cash Flow
(Millions USD) $1,743 $2,322 $2,921 $3,520 $ 4,718
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Gold Royalty Cost ($/oz)(3) $ 100 $ 112 $ 124 $ 136 $ 160
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NPV @ 5% (Pre-Tax)(Millions USD) $ 805 $1,125 $1,455 $1,786 $ 2,447
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IRR (Pre-Tax) 21.3% 26.3% 31.1% 35.6% 44.1%
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NPV @ 5% (After Tax)(Millions USD) $ 540 $ 859 $1,190 $1,520 $ 2,181
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IRR (After-Tax) 17.9% 23.6% 28.9% 33.8% 42.7%
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Up-Front Capital(4)(Millions USD) $ 482 $ 482 $ 482 $ 482 $ 482
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(1) Base case and gold price sensitivities make use of Inferred resources.
The Updated PEA is preliminary in nature and includes Inferred mineral
resources that are considered too speculative geologically to have the
economic considerations applied to them that would enable them to be
categorized as mineral reserves.
(2) Copper price set at 3-year trailing average effective January 31, 2011
of $3.25 per pound for all sensitivity cases.
(3) Gold royalty set at 8% of gold receipts as per Mineral Agreement between
Government of Guyana and Sandspring Resources Ltd. dated November 9, 2011.
(4) Up-front capital includes all pre-production development capital and 15%
capital contingency prior to commencement of commercial production.