VANCOUVER, Oct. 11, 2017 /CNW/ - Eros Resources
Corp. (TSX.V: ERC) ("Eros" or the "Company") hereby provides the results of a Preliminary
Economic Assessment ("PEA") on its 100% owned Bell Mountain gold project (the "Bell Mountain Property" or
the "Project") in Churchill County, Nevada. The PEA provides a base case assessment
of the current status of the Project notwithstanding the Bureau of Land Management ("BLM") September 1, 2016 notice that the US Navy had applied to expand the Fallon Range Training Facility and withdraw
604,789 acres of public land, an area that includes the entire Bell Mountain Property. As a result, the BLM has segregated the
proposed expansion area for a two-year period such that no entry or work can be conducted on existing mining claims therein
(including the Bell Mountain Property) while an environmental impact statement ("EIS") respecting the expansion proposal
is completed by the US Navy. The withdrawal will require ratification by the US Congress, who are expected to make a final
decision following the completion of the EIS and upon receiving a recommendation from the Secretary of the Interior.
"The PEA was compiled to provide an assessment of the Project as it stands today. The restriction placed on Eros to explore
and advance the Project has prevented us from attempting to expand and upgrade the resource base and further enhance the
potential economics of the Project. Nonetheless, the results of the study clearly indicate continued investment into the
Bell Mountain Property is justified," stated Ron Stewart, President and CEO of Eros.
PEA Highlights
The base case PEA economics assumed a gold price of $1,300/oz and a silver price of $17.50/oz. All currencies are stated in US dollars.
- Pre-Tax Net Present Value ("NPV") @ 5% and Internal Rate of Return ("IRR") of $17.6
million and 41.4%, respectively with a payback period of ~1.7 years;
- After-Tax Net Present Value @ 5% and IRR of $9.3 million and 24.7%, respectively with a
payback period of ~2.7 years;
- Pre-production capital cost estimated at $18.5 million including a $1.7 million contingency;
- Life of Mine ("LOM") production of 60,056 ounces of gold and 408,498 ounces of silver over a 4.0 year mine-life;
and
- LOM cash cost of US$759/oz, net of by-product silver credits and including royalty payments
totalling $2.56 million.
The PEA was prepared by Welsh Hagen Associates ("WHA") of Reno, Nevada in accordance
with National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101"). The study is being
summarized into a technical report entitled "NI 43-101 Technical Report on the Bell Mountain Project Preliminary Economic
Assessment, Churchill County, Nevada, USA" (the "Technical Report"), to be filed on SEDAR
in accordance with NI 43-101 within 45 days.
The reader is cautioned that the PEA is preliminary in nature and includes some 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. There is no certainty that the PEA will be realized. There is no certainty that the inferred mineral resources
will be converted to the indicated or measured categories, or that the potential measured or indicated resources would be
converted to the proven or probable mineral reserve categories. Mineral resources that are not mineral reserves do not have
demonstrated economic viability.
The estimates of mineral resources in the PEA and the mineral resource statement may be materially affected by environmental,
permitting, legal, title, taxation, socio-political, marketing, or other relevant issues. The PEA recommends that the Project be
advanced to a feasibility level for a total estimated cost of $1,787,500. The scope of work
recommended includes additional exploration and infill drilling, water well maintenance, metallurgical testing, engineering and
environmental studies.
Mineral Resource
The mineral resource estimate was prepared by Zachary J. Black, SME-RM, with Hard Rock
Consulting ("HRC"). The Project is subdivided into four (4) individual areas known as Spurr, Varga, Sphinx and East Ridge.
Each modelled area was divided into three domains: country rock, stockwork and vein. HRC estimated the mineral resource using an
ordinary krige algorithm. In order to meet the test of 'reasonable prospects for economic extraction,' HRC constructed a
Lerchs-Grossmann pit shell based on $1,300/oz gold and $17.50/oz
silver. Resources were assigned measured, indicated and inferred classifications based on the confidence of the estimate,
domain of the geologic model and proximity to drill holes.
Resource Statement for the Bell Mountain Project, Churchill County, Nevada
Table image located at: https://www.erosresourcescorp.com/site/assets/files/1370/resource_statement_bell_mountain.jpg
Note: Open pit optimization was used to determine potentially mineable tonnage. Measured, Indicated and Inferred mineral
classification was determined according to CIM Standards. Mineral resources, which are not mineral reserves, do not have
demonstrated economic viability. The 2017 Measured, Indicated and Inferred resource is constrained within a $1,300/oz Au and $17.50/oz Ag Lerchs-Grossman Pit
shell. The base case estimate applies a AuEq cutoff grade of 0.005 oz/t for Varga and 0.004 oz/t for all other areas based on the
estimated operating costs. Metallurgical recoveries used for the cutoff calculations were 83.7% on gold and 29.6% on silver for
Spurr, 68.6% on gold and 12.8% on silver for Varga and 80% on gold and 10% on silver for Sphinx and East Ridge.
Capital Costs
Capital costs were developed based on scaling costs from similar facilities for production rates and from design assumptions
including a contractor operated mining fleet. The estimated life of mine capital cost for the base case is summarized below.
Estimated Life of Mine Capital Costs
|
|
|
|
|
|
|
Cost in US$
|
Mining
|
|
|
|
|
Haul Roads
|
|
$
|
97,380
|
Process
|
|
|
|
|
Mobilization and Site Preparation
|
|
$
|
273,708
|
|
Earthworks
|
|
$
|
661,388
|
|
Heap Leach Pad
|
|
$
|
3,912,475
|
|
Solution Collection / Distribution System
|
|
$
|
191,194
|
|
Process Ponds
|
|
$
|
611,450
|
|
Crushing Circuit
|
|
$
|
3,706,642
|
|
Carbon Plant
|
|
$
|
779,698
|
|
Buildings (Shop, warehouse, lab, offices)
|
|
$
|
460,000
|
|
Concrete
|
|
$
|
150,000
|
|
Miscellaneous Facility Elements
|
|
$
|
1,110,400
|
|
Mine Site Mobile Fleet
|
|
$
|
1,950,000
|
Indirect
|
|
|
|
|
|
Engineering, Procurement, Construction Management
|
|
$
|
250,000
|
|
Owner Costs
|
|
$
|
2,667,000
|
|
Contingency
|
10%
|
$
|
1,682,133
|
Total
|
$
|
18,503,468
|
Operating and Reclamation Costs
Operating cost assumptions were based on similar scale surface mining operations using heap leach processing in northern
Nevada. Reclamation cost is consistent with the projected scale of the mining operation.
Operating and reclamation cost assumptions per ton of material processed are summarized as follows:
Estimated Operating and Reclamation Costs
Category
|
US$ per Ton Processed
|
Mining Cost
|
$ 2.30
|
Processing Cost
|
$ 4.15
|
G&A Cost
|
$ 0.80
|
Reclamation Cost
|
$ 0.25
|
Total
|
$ 7.50
|
Processing and Metallurgical Recovery
The deposits of the Bell Mountain Property (Spurr, Varga, Sphinx and East Ridge) generally are quite amenable to processing by
heap leaching. Metallurgical recoveries used were 83.7% on gold and 29.6% on silver for Spurr, 68.6% on gold and 12.8% on silver
for Varga and 80% on gold and 10% on silver for Sphinx and East Ridge. Additional metallurgical testing will be required to
confirm the leaching characterization of the mineralization and will provide information for the heap design, project operation
plans and insight into leach cycles.
Mine Plan
The PEA assumed a contractor operated, conventional open pit mine, with drill and blast rock breakage and truck and loader
materials handling. The mine production schedule was based on an average of 5,000 tons / day delivered to the crusher and then
placed on the heap leach pad as crushed mineralized material.
Mineral resources within the pits volumes were evaluated and scheduled. The average cutoff grade for the mine life of the
conceptual mining project is 0.004 Au opt for the Spurr, Sphinx and East Ridge deposits, and 0.005 Au opt for the
Varga. A detailed conceptual mine schedule is summarized by year as follows.
Conceptual Mine Schedule
|
|
|
|
|
|
|
Item
|
Units
|
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Totals
|
Total Mineralized Material
|
Tons
|
000's
|
1,500.0
|
1,500.0
|
1,500.0
|
406.6
|
4,906.6
|
Au Equivalent
|
Grade
|
AuEq opt
|
0.020
|
0.017
|
0.015
|
0.024
|
0.018
|
Contained oz Au Equivalent1
|
Oz AuEq
|
000's
|
29.3
|
25.6
|
22.5
|
9.6
|
87.0
|
Waste Rock
|
Tons
|
000's
|
966.9
|
564.1
|
1,236.7
|
990.8
|
3,758.6
|
Total Mined
|
Tons
|
000's
|
2,466.9
|
2,064.1
|
2,736.7
|
1,397.5
|
8,665.2
|
1 Gold Equivalent (AuEq) = Au + (Ag/AuEq Factor) where AuEq
Factor = (Au Rec/Ag Rec) x ($1,300/oz gold/$17.50/oz silver)
|
Project Economics
A gold price of $1,300/oz and a silver price of $17.50/oz were
chosen for the base case economic evaluation based roughly on the 3-year trailing London Gold Fix prices in combination with the
current gold and silver prices at the effective date of the PEA. The economic evaluation base case is considered realistic and
meets the test of reasonable prospect for eventual economic extraction. The base case economic results for the metal price
assumptions are shown as follows
Cash Flow Summary
|
Pre-tax
|
After Tax
|
IRR
|
41.4%
|
24.7%
|
NPV @ 5% Discount Rate (US$m)
|
$17.64
|
$9.31
|
Average Annual Cash Flow (US$m)
|
$10.22
|
$7.87
|
Average Operating Margin
|
$170.11/oz Au
|
$131.09/oz Au
|
Payback Period
|
~1.7 years
|
~2.7 years
|
Qualified Persons and NI 43-101 Disclosure
John Welsh, P.E., Douglas Willis (CPG) and Carl Nesbitt (SME-RM)
representing Welsh Hagen Associates, Zachary Black (SME-RM) representing Hard Rock Consulting,
LLC, and Walter Martin (CPG) representing Stantec Consulting Services Inc., the Qualified Persons,
as defined under NI 43-101, responsible for the preparation of the Technical Report, have reviewed the contents of this press
release for accuracy of the technical and economic information presented. The Technical Report, with an anticipated effective
date of October 9, 2017 will be prepared by Welsh Hagen Associates, an independent geological
consulting firm located in Reno, Nevada, USA. This report will be available on SEDAR (www.sedar.com) within 45 days.
The technical contents of this news release have also been reviewed and approved by Ronald
Stewart, P.Geo. a Qualified Person as defined by NI 43-101.
About Eros
Eros Resources Corp. is a Canadian public company focused on the exploration and development of resource projects in
North America. Eros has as its prime business objective the identification, acquisition and
exploration of advanced resource projects with a North American focus. A secondary focus of the Company is to make strategic
investments with a global focus and a diverse commodity base. The Company's expertise in the resource sector supports the
selection of these strategic investments.
On behalf of the Board of Directors of
Eros Resources Corp.,
Ron Stewart
President & CEO
Cautionary note regarding forward-looking statements
Certain statements made and information contained herein may constitute "forward looking information" and
"forward looking statements" within the meaning of applicable Canadian and United States
securities legislation, including, among other things, this press release includes references to mineral resources and future
potential forecast economics of extracting those resources. These statements and information are based on facts currently
available to the Company and there is no assurance that actual results will meet management's expectations. Forward-looking
statements and information may be identified by such terms as "anticipates", "believes", "targets", "estimates", "plans",
"expects", "may", "will", "could" or "would". Forward-looking statements and information contained herein are based on certain
factors and assumptions regarding, among other things, there is no certainty that any portion of the resources will be confirmed
with greater certainty, if confirmed, there is no certainty that it will be commercially viable to extract any portion of the
resource, there is no certainty that access to the resource area will be re-established, and if access to the resource area is
blocked for an extended period of time, or permanently, there is no certainty that any compensation will be received by the
Company. Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual
results or events to differ materially from those expressed or implied by such forward-looking information, including the
re-establishment of physical access to the property, the availability of adequate and secure sources of funding to construct the
extraction facilities required to extract the mineral resources, prevailing commodity prices, the receipt of regulatory
approvals, environmental risks and the performance of personnel. While the Company considers its assumptions to be
reasonable as of the date hereof, forward-looking statements and information are not guarantees of future performance and readers
should not place undue importance on such statements as actual events and results may differ materially from those described
herein. The Company does not undertake to update any forward-looking statements or information except as may be required by
applicable securities laws.
Neither TSX Venture Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release.
SOURCE Eros Resources Corp.
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