Northern Vertex Mining Corp. (TSX-V:NEE) (OTC Nasdaq Intl.: NHVCF) is pleased to announce the results of a Preliminary Economic Assessment of the technical and economic viability of expanding the Moss mine to include resources that could be accessed by a future expansion of operations onto the Company’s adjacent un-patented mining claims. This scenario includes surface disturbance and an expansion of the mine facilities onto Federal public lands administered by the Bureau of Land Management and would therefore require the submission to, and approval by, the BLM of the necessary Federal and environmental permits.
Kenneth Berry, President and CEO, stated: “Our team continues to execute its development plan to launch the next producing gold mine in the USA. Construction of the Company’s Phase II operations is well advanced and production is anticipated later in Q4 2017. This PEA is further encouragement of both the exceptionally strong initial years as well as the potential longevity of the Moss Gold Mine. Eliminating the patented boundary constraints and increasing production to a peak of 60,000 gold equivalent ounces in year four, the PEA indicates the Moss mine project has the potential to measurably improve the economics stated in the Company’s Phase II Feasibility Study published in June, 2015. The backbone of our PEA is our strong resource, only 10% of the gold equivalent ounces in the PEA are currently defined as Inferred resources. To further expand our existing resources, management intends to conduct an aggressive exploration and resource expansion program during the first two years of Phase II production. This district wide exploration program will be initiated within six weeks and is expected to further enhance the size and scope of the Moss Mine Project.
Click to view construction progress at Moss Mine: https://northernvertex.com/projects/photo-gallery/
The PEA highlights:
|Years 1-4||Years 5-10||Life of Mine|
|Annual Production||1.9 million tonnes||1.9 million tonnes|
|Mineralized Material to Leach||7.1 million tonnes||10.0 million tonnes||17.1 million tonnes|
|Average Gold grade – gpt||0.95||0.52||0.70|
|Average Silver grade – gpt||10.5||6.78||8.33|
|Average “AuEq” grade* – gpt||1.12||0.62||0.83|
|Recoveries to Doré||Au – 82%, Ag – 65%||Au – 82%, Ag – 65%||Au – 82%, Ag – 65%|
|Contained Gold – troy oz||216,750||165,150||381,900|
|Contained AuEq – troy oz||255,209||199,916||455,125|
|Gold Production – troy oz||167,170||145,980||313,150|
|AuEq Metal – troy oz||190,740||170,010||360,750|
|Capital Costs (incl indirects)**||US$61.6 million|
|Operating Costs||US$76.6 million||US$113.5 million||US$190.021 million|
|AuEq Cash Cost per troy oz.||US$401||US$667||US$527|
|Cash Cost net of Ag credits||US$283||US$573||US$418|
|AISC per troy oz AuEq.||US$472||US$753||US$603|
|Life of Mine||10 years|
|IRR (before/after tax)***||73.1% / 52.5%|
|NPV 5% (before/after tax)***||US$133M / US$93M|
|Payback Period (before/after tax)||20 mo. / 27 mo.|
|* Gold equivalent ounces of silver calculated by multiplying by 20 and dividing by 1250.|
|** Includes US$37.5 million of previously funded Phase II committed costs.|
|*** After tax numbers are prior to the application of the Company’s significant existing tax pools.|
Dr. David Stone, PE, Project Manager for the Moss Mine, stated: “The PEA’s success would not have been possible without the contributions of M3 Engineering and Technology Corp. of Tucson, AZ (process facility and site infrastructure design and costing), Golder Associates of Tucson, AZ (heap leach pad and waste dump), Mine Development Associates of Reno, NV (mine planning and production scheduling) and CDM Smith of Phoenix, AZ (project permitting).”
The Company cautions that the PEA is preliminary in nature in that it is 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.
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 Moss project is most sensitive to metal prices, followed by operating costs, and initial capital costs.
Table 1 – Project Economics
|NPV @ 0%||NPV @ 5%||NPV @ 10%||IRR||Payback (Yr)|
Table 2 – Metal Price Sensitivity – After Tax
|Gold Price||Silver Price||NPV @ 0%||NPV @ 5%||NPV @ 10%||IRR||Payback (Yr)|
Table 3 – Operating Cost Sensitivity – After Tax
|NPV @ 0%||NPV @ 5%||NPV @ 10%||IRR||Payback (Yr)|
Table 4 – Capital Cost Sensitivity – After Tax
|NPV @ 0%||NPV @ 5%||NPV @ 10%||IRR||Payback (Yr)|
PEA Utilizes Key Metrics of Phase II Feasibility Report
The PEA for the mine life extension utilized the same key metrics as those outlined in the Company’s “Moss Gold-Silver Project” NI 43-101 Technical Report Feasibility Study, Mohave County, Arizona, dated effective June 8, 2015 and filed on SEDAR on June 22, 2015 (the “Phase II FS”), and available at www.northernvertex.com. The Phase II mine plan in the Phase II FS was intentionally constrained to restrict all the surface disturbance and the mine facilities to the private property owned by the Company (the Moss Mine patented claims). The Phase II open pit design was constrained by property boundaries and not by economics. The result was that the Phase II pit design only recovered 50% of the Measured and Indicated mineral resources.
The Phase II Moss mine, currently under construction, encompasses crushing, agglomeration and stacking of ore onto a conventional heap leach pad. Gold and silver recovery will be achieved by a Merrill Crowe process to produce doré bars at the project site. The Phase II mine was designed to have a 5-year mine life at a projected mining rate of 5,000 tonnes per day. The Phase II project is expected to be in production in late Q4 2017.
The PEA mine design removes the patented claims boundary constraint by assuming the pit limits can be extended onto the adjacent Federal lands controlled by the BLM. This allows the PEA mine plan to access the mineral resources not available in the Phase II mine plan. Concurrent with expansion of the pit, the mine facilities would also need to be expanded onto the BLM lands. This would include an expanded heap leach pad to accommodate the additional mineralized material, and an expanded waste rock facility to accommodate the additional waste rock.
The PEA mine expansion plan and economic models are presented as an improved alternative to the Phase II mine plan. Specifically, the PEA does not assume that the Phase II mine is depleted first, but rather the PEA assumes that the required permits can be achieved in a reasonable time frame, after which the project development will no longer be constrained to the patented lands. This is expected to occur well before the Phase II pit is depleted, and hence would allow mining to follow a more efficient extraction plan with a more favorable production schedule.
The PEA was prepared by a team of independent consultants that included M3 Engineering and Technology Corp. of Tucson, AZ (process facility and site infrastructure design and costing), Golder Associates of Tucson, AZ (heap leach pad and waste dump), Mine Development Associates of Reno, NV (mine planning and production scheduling), and CDM Smith of Phoenix, AZ (project permitting). The PEA study team was managed by Dr. David Stone, PE, Project Manager for the Moss Mine Project.
A detailed summary report for the PEA, in the form of a Technical Report, prepared and certified in accordance with NI 43-101, will be filed on SEDAR within the next 45 days.
The Moss Gold-Silver Project encompasses 15 patented lode claims covering 102.8 hectares and 468 unpatented lode claims for a total of 4,030.8 hectares. The focus of the Moss Mine is gold-silver mineralization associated with the Moss Vein, the Ruth Vein, the West Extension and adjacent stockworks.
The PEA is based on the previously reported Mineral Resource Estimate (MRE) prepared by David Thomas, P.Geo. with an effective date of October 31, 2014. This estimate encompasses the Moss and Ruth Veins, the West Extension to the Moss Vein, and associated stockworks. The mineral resources, as reported in the December 30, 2014 Technical Report filed on SEDAR, include 15.48 million tonnes in the Measured and Indicated categories, grading 0.76 gpt Au and 9.3 gpt Ag above a cutoff of 0.25 gpt Au. The MRE includes another 2.18 million tonnes in the Inferred category grading 0.55 gpt Au and 5.6 gpt Ag above the same cutoff.
PEA Mine Planning
The PEA mine plan was prepared by Mine Development Associates of Reno, NV using SURPAC software. As has been noted, the principal assumption in the PEA mine plan is that the patented land boundary constraint is eliminated. Hence the pit optimizations for the PEA allow the pit shell to expand onto the adjacent BLM lands thereby capturing the majority of the 2014 MRE Measured and Indicated resources. The PEA pit shell also captures Inferred resources as allowed under Paragraph 2.3(3) of Canadian National Instrument 43-101.i
The PEA mine plan is based on the same operating criteria as the Phase II FS, including a marginal cut-off grade of 0.20 gpt Au. The pit will be developed in 6 m mining benches with conventional drill and blast equipment. The final pit shell assumes variable 50 to 60 degree pit walls with triple benches, 6 m wide berms, and 11 m wide haul roads.
The PEA pit optimizations are based on the same operating cost assumptions as the Phase II FS except for some updated costs (noted below). Other updated assumptions compared to the Phase II FS, include:
Material Processed in the PEA are shown as follows:
Table 5 – PEA Potential Mineable Material
|Greater or Equal to 0.25 g Au/t||K Tonnes||g Au/t||K Ozs Au||g Ag/t||K Ozs Ag|
|Measured & Indicated||14,111||0.77||348||9.11||4,134|
|Less than 0.25 g Au/t & Greater than 0.20 g Au/t|
|Measured & Indicated||1,187||0.23||9||3.50||134|
|Total PEA Potential Mineable Material|
|Measured & Indicated||15,299||0.72||357||8.68||4,268|
The PEA mineralized material in Table 6 is inclusive of the following reserves which were reported in the Phase II FS (Table 6).
Table 6 – Mineral Reserves included in the PEA potentially mineable resource.
|ktonnes||g/t Au||kOz Au||g/t Ag||kOz Ag|
|Proven & Probable||8,035||0.82||213||9.28||2,397|
As in the Phase II FS, the PEA assumes contract mining for the life-of-mine using a conventional truck and shovel fleet. The mining Contractor proposes to use DM45 production drills, CAT 390 excavators, and 70 ton rigid frame trucks. The Contractor will work 12 hour shifts, 5 days a week.
The PEA mine plan assumes a series of push-backs, in the hanging wall, to achieve a balanced production of waste rock and mineralized material over the life of the mine. The mine production schedule is shown in Table 7 below.
Table 7 – Life-of-Mine Production Schedule
|Units||YR 1||YR 2||YR 3||YR 4||YR 5||YR 6||YR 7||YR 8||YR 9||Total|
|Pit to||k Tonnes||1,398||1,602||1,581||1,814||1,491||1,598||1,591||1,687||1,345||14,107|
|Pit to||k Tonnes||72||254||470||245||175||310||525||352||573||2,976|
|Total Mined||k Tonnes||1,470||1,856||2,051||2,059||1,666||1,907||2,116||2,039||1,919||17,083|
|Pit to Dump||k Tonnes||2,702||5,170||4,810||821||1,109||2,473||5,204||3,430||5,883||31,601|
|Total Mined||k Tonnes||4,172||7,025||6,861||2,880||2,775||4,380||7,320||5,469||7,801||48,684|
Mining will produce approximately 17.1 million tonnes of mineralized material and 31.6 million tonnes of waste during the life-of-mine for an overall strip ratio of 1.85. This compares to 8.0 million tonnes of ore above a cut-off of 0.20 gpt Au at a strip ratio of 1.3 in the Phase II FS.
Waste Rock Dump
The PEA mine will generate over 30 million tonnes of waste rock over the life of mine. This tonnage exceeds the capacity that can be stored on the patented lands, hence the revised waste rock dump has been designed to accommodate up to 35 million tonnes. This was accomplished by expanding the dump footprint to the east and south onto the BLM lands.
As in Phase II FS, the waste rock dump will be developed in 10m to 15m high lifts, with benches, placed at angle of repose.
Ore grade material from the open pit will be crushed to 6.35 mm and then agglomerated with cement prior to loading on the heap leach pad in 10m lifts. The crushing circuit will employ three stages of crushing consisting of a primary jaw crusher, a secondary cone crusher, and two tertiary cone crushers. After agglomeration, the fine ore will be conveyed to the leach pad with a series of grasshopper conveyors feeding a radial stacker.
he PEA assumes that the Phase II crushing and agglomeration plant will be suitable for the life-of-mine operation. Furthermore, the Phase II project has been redesigned to avoid the need to relocate the crushing plant in month 30, as was assumed in the Phase II FS. The PEA mine plan will not require a crusher move.
Construction of the Phase II crushing and agglomeration plant is well advanced and all the plant components have been delivered to the project site.
Golder Associates of Tucson, AZ have provided a preliminary layout for a 9 million tonne leach pad located west of, and adjacent to, the current 8.5 million tonne Phase II pad, the construction of which is well advanced. While the Phase II leach pad is located on the patented lands, the PEA leach pad expansion will almost entirely be founded on BLM lands.
The expanded leach pad is based on the same operating parameters as the Phase II leach pad in terms of tonnes stacked daily, solution application rates, and lift heights. The expanded leach pad geotechnical design will be in accordance with Arizona BADCT protocols, and stacking will be accomplished via grasshopper conveyors and a radial stacker. During peak operations, some 45,000 m2 of leach pad area will be under leach.
The expanded leach pad will share some of the Phase II facilities for solution collection and circulation since the solution application rates will be the same. The solutions collected from the PEA leach pad expansion will be pumped over to the Phase II PLS pond.
The PEA leach pad expansion is intended to operate in parallel with the Phase II leach pad so as to allow an increase in leach time for the upper lifts of the Phase II pad. As such the intention is to construct the PEA pad expansion well before the Phase II pad is fully loaded, likely as soon as the required permits are approved. This should allow material to be stacked on the PEA leach pad as soon as the end of Year 3.
As documented in the Phase II FS, pregnant solution will be fed to the Merrill Crowe plant over the life-of-mine at a rate of about 450 m3/hr. The precious metals will be precipitated with zinc for filtration and subsequent melting in a furnace. The doré bars will be shipped by armored car service to a precious metals refiner.
Infrastructure and Services
The PEA assumes grid power at a bulk industrial rate of $0.065 per kW-hr. The grid power replaces the diesel powered gensets that were assumed in the Phase II FS.
The primary make-up water source for the heap leaching operations will be groundwater wells and dewatering of the open-pit. Since the Phase II FS was completed in July 2015, significant progress has been made in identifying and quantifying the available groundwater resources at the Moss mine site. At present the Company projects a surplus of available water based on production from the six existing groundwater wells, and estimates of inflow into the open pit.
In preparation for Phase II operations the Company has already executed supply contracts for most of the mine and processing consumables and reagents. This includes the supply of diesel fuel, liquid sodium cyanide, zinc dust, diatomaceous earth filter media, anti-scalants, and cement for agglomeration. The Company is in receipt of several proposals for the refining of the dore metal products from the Phase II mine.
The mine life extension outlined in the PEA will require the amendment of some of the Phase II permits, as outlined below, and submission of a Mine Plan of Operations (MPO) to the BLM for approval. The required permits are as follows:
All of the other design, construction and operating permits associated with the Phase II mine will remain valid for the PEA mine expansion.
An economic analysis for the PEA was carried out using standard discounted cash flow modelling techniques. The production and cost estimates were estimated on a monthly basis for all pre-production costs and for the first twelve months of production. Quarterly estimates were used for the remaining months of production.
The PEA economic model timeline extends the full life of mine including what was previously reported as Phase II. This is because the PEA mine plan has been prepared as an alternative to the Phase II mine plan. As such, the PEA capital is inclusive of the capital costs reported in the Phase II FS.
The base assumptions assume a gold price of US$1,250/oz and a silver price of US$20/oz for the life of the project. Consumable prices for process reagents, cement, cyanide and fuel are based on recent Phase II quotes or contracts with local vendors.
The PEA capital cost is estimated at $61.6 million inclusive of $37.5 million in sunk costs for the construction of the Phase II mine. The life-of-mine capital costs are shown in Table 8 below.
Table 8 – Life-of-Mine Capital Costs
|Phase II Committed Costs|
|Phase III Expansion Costs|
The capital estimate includes $33 million for construction of the Phase II facilities per the FS, and an additional $4.5 million in committed costs for improvements in the Phase II FS designs. These costs include concrete foundations for a permanent crusher installation, installation of overhead power distribution at the mine site, and equipment upgrades. The estimate in Table 8 includes direct and indirect costs, including EPCM costs, well as a 25% contingency on Phase III expansion direct costs. The estimate does not include the cost of delivering utility power to the mine site.
Operating costs were assumed to be the same as the Phase II FS costs except where more recent data was available. The mining costs were derived from the mining contract with N.A. Degerstrom which closely mirrors the costs in the Phase II FS. Process and general/administrative (G&A) operating costs were likewise matched to the Phase II FS numbers except for the cost of electric power ($0.065 based on bulk industrial rates from Mohave Electric) and updated reagent costs.
The life of mine operating cost estimate is shown in Table 9 below.
Table 9 – Life-of-Mine Operating Costs
per Tonne Leached
|Total Operating Cost||US$11.70|
The apparent reduction in mining costs compared to the Phase II FS is a result of the lower strip ratio in the PEA pit. The mining costs are stated in terms of “per tonne leached” based on a contractor quotation of $2.04 per tonne mined. The reduction in the process costs compared to the Phase II FS is the result of lower cost utility power compared to diesel generators as assumed in the Phase II FS. The G&A costs are the same as in the Phase II FS.
The cashflow model includes royalty payments for existing agreements outlined in the Phase II FS, namely: the BHL royalty, the Greenwood royalty and the MinQuest royalty. Subsequent to the Phase II FS, the Company acquired the remaining 30% of the Moss Project from Patriot Gold for an additional 3% NSR royalty.
The cashflows include current Federal and Arizona State taxes. A “units of production” depreciation method was used to calculate net taxable income. The economic analysis was carried out on a project basis and does not take into account any potential tax savings available to Golden Vertex through the application of significant existing tax pools. Given the location and relatively uncomplicated nature of the project, the model uses a 5% discount factor in arriving at the project Net Present Value (“NPV”). Standard payback calculation methodologies were utilized.
Impact on Existing 2015 Feasibility Study
The technical and economic viability of the Moss Project was previously assessed in a 2015 Feasibility Study which focused on the Phase II mine development. The Phase II FS converted a portion of the 2014 MRE to a reserve classification based on estimated capital and operating costs.
The PEA mine plan documented herein encompasses all of the reserves previously reported in the Phase II FS, plus additional mineral resources not previously accessible due to property boundary constraints. The PEA mine plan and financial models are based on substantially the same technical, operating and economic parameters as that documented in the Phase II FS. The PEA variances from the FS are limited to updated pricing, and a 10% increase in crushing capacity, however these variances are considered insignificant.
The PEA mine plan is not intended as an update or replacement to the Phase II FS but rather is presented as an alternative plan. It is important to note that the Company is fully permitted for the construction, commissioning and operation of the Phase II project, and the mining of the Phase II reserves. The Phase II construction schedule is almost complete and mining in the
Phase II pit has commenced. The PEA provides guidance as to the potential optimization of operations at the Moss Mine to achieve maximum utilization of the resources identified in the 2014 Technical Report, subject to the additional permits being acquired in a timely manner. In the meantime, the Company is proceeding to production and the mining and recovery of the precious metals in the Feasibility reserves as originally detailed in the FS. As such the Company is of the view that the PEA does not supercede the Phase II FS and the Feasibility reserves are considered current.
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 the Company by Joe Bardswich, PE and Director for Northern Vertex, a Qualified Person.
About Northern Vertex
Northern Vertex Mining Corp. is an exploration and mining company focused on the reactivation of its 100% owned Moss Mine Gold/Silver Project located in NW Arizona, USA. The Company’s management comprises an experienced management team with a strong background in all aspects of acquisition, exploration, development, operations and financing of mining projects worldwide. The Company is focused on working effectively and respectfully with our stakeholders in the vicinity of the historical Moss Mine and enhancing the capacity of the local communities in the area.
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