KORE Mining Ltd. (TSX-V: KORE) (OTCQB: KOREF) is pleased to announce a positive Preliminary Economic Assessment for the Company’s 100% owned Imperial Oxide Gold Deposit, located in California, USA. The PEA demonstrates Imperial’s potential to be a robust mid-tier gold mine with compelling project economics. In addition to the gold price, Imperial has upside potential from deposit extensions and exploration on the 100% owned Mesquite-Imperial-Picacho District which captures 28 kilometers of strike from the operating Mesquite mine (TSX:EQX) to the historic Picacho heap leach mine.  

Watch a video (40 seconds) of Scott Trebilcock summarizing the highlights of the PEA – click here. Refer to the PEA Summary infographic in Figure 1.

The PEA is preliminary in nature, 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, and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

KORE’s CEO Scott Trebilcock stated: “Imperial is a technically simple, high-return gold project in a safe, politically stable jurisdiction with a long tradition of gold mining. The PEA delivers robust project economics based on very reasonable capital expenditures. This low capital intensity derives from the simplicity of the project which will utilize conventional open pit mining techniques, proven processing and existing infrastructure.”

Mr. Trebilcock added: “We see the potential to increase value at Imperial through regional exploration and resource expansion drilling which are planned for later in 2020. The Imperial PEA generates strong returns at US$1,450 per ounce, but at near today’s spot price of US$1,600 per ounce, the project has potential to deliver exceptional returns with an NPV5% of US$ 450 million.”

Marc Leduc, KORE’s COO commented: “The mine plan at Imperial complies with California’s stringent reclamation and environmental laws while delivering skilled jobs and long-term regional economic development. We are excited to engage with local stakeholders and move the project into permitting later this year.”

Mr. Leduc added: “KORE considered several alternative options at this PEA stage, which have potential to deliver even higher NPVs by utilizing crushing and additional pre-stripping. A strategic decision was made  to proceed with a lower pre-production capital plan while still delivering strong economic returns. As we advance Imperial, we will consider trade-offs and optimization opportunities to further maximize the project NPV.”

PEA SUMMARY

The PEA was prepared in accordance with National Instrument 43-101 by Global Resource Engineering (Denver) – Terre Lane, RMSME MMSAQP, Todd Harvey, PhD, RMSME and supported by Geo-Logic Associates – Monte Christie, GE PE. The team was led by Marc Leduc, P.Eng. the COO of KORE Mining. The Company plans to file the PEA on SEDAR at www.sedar.com within 45 days in accordance with NI 43-101.

This news release contains information from a preliminary economic assessment, which is a conceptual study, and other forward-looking information about potential future results and events. Please refer to the cautionary statements in the footnotes below and the Cautionary Statements located at the end of this news release, which include associated assumptions, risks, uncertainties and other factors.

Unless otherwise stated, all dollar figures are in United States dollars (“$”) and masses are in short tons.

Life-of-mine calculation and “Mine Life” is defined as the duration of mining operations, 8 years.  There are additional years of site work for residual leaching, washing, back-filling and reclamation modelled.

GOLD PRICE SENSITIVITIES

The following table demonstrates the post-tax sensitivities of NPV and IRR to gold price per ounce. The base case, highlighted in the table below, assumes US$1,450 per ounce of gold:

OPPORTUNITIES

The PEA outlined a number of initiatives that may enhance the Project including:

• Complete on-strike step-out drilling to potentially expand resources;
• Investigate targets along the Mesquite-Imperial-Picacho trend for new discoveries;
• Infill drill inferred areas with a goal of enhancing resource categorization;
• Consider moving directly to feasibility based on robust available data and simple trade-offs; a pre-feasibility not necessarily required;
• Examine potential for recoveries as high as 83% under crushing scenario; complete formal trade-off study;
• Complete additional run-of-mine (“ROM”) metallurgical test work; and
• Perform additional aggregate tests and marketing studies on the clean alluvial sand and gravels.

NEXT STEPS

The engineering work completed for the PEA will also be used to complete an update to the Plan of Operations which is a key document to re-start the permitting process. KORE plans to submit an updated Plan of Operations to the Bureau of Land Management in mid-2020 to re-start the permitting process for Imperial. The Company aims to be in a position to make a construction decision in three years from submission of the Plan of Operations.

In 2020 the Company will also press forward with enhancing the Project through exploration and further drilling. KORE will be applying for permits to drill high-priority Mesquite-Imperial-Picacho District exploration targets, resource expansion targets, and several infill holes to improve confidence in geo-tech, metallurgy and resource estimate data. The Company will also continue to explore the Mesquite-Picacho District claims to generate additional drill targets.

IMPERIAL PEA DETAILS

GRE notes that the Imperial Project has an abundant collection of data as a result of the exploration, engineering and environmental studies completed in the 1980s and 1990s. During that period, the Project had geotechnical drilling and modelling, heap leach designs, plant designs, surface water management designs, and hydrogeological modelling, to name just a few, that provided a credible data set to the project team. The Project also has metallurgical sampling and testing completed both by previous owners and an independent lab, reviewed by GRE, to support the initial engineering design. This data will act as an important background and aid in the design of future work on the project.

MINING & PROCESSING

The PEA presents an open-pit ROM heap leach scenario where oxide ore is stacked on the leach pads directly from the mine and is not crushed. In the design process, the engineering team also looked at several other scenarios:

• Higher NPV mine plan with earlier higher grades processed with additional pre-stripping;
• Contractor mining with lower pre-production capital and higher LOM operating costs; and
• Crushing higher grade ore from pit to increase recovery at expense of additional capital.

KORE management ultimately selected the scenario with the lowest pre-production capital. A more capital-intensive approach could yield a mine and processing plan with higher project NPV and gold production.

A detailed mine plan by year is included in Table 1 at the end of this news release.

OPERATING COSTS

Mining costs for owner operated mining, processing and other costs were developed from a mix of first-principle engineering and benchmarked to the many ROM heap leach operations in California and nearby Nevada. The Imperial Project is located near a large skilled labour pool and on the same road and power infrastructure as the operating Mesquite mine, located nine miles away providing further confidence in the cost estimates.

The assumed truck diesel fuel price in the PEA is $2.38 per US gallon.  About 19% of the mining cost is fuel so lower fuel prices would decrease mining costs moderately.

INITIAL PRE-PRODUCTION AND SUSTAINING CAPITAL COSTS

Initial capital costs in the PEA are US$142 million including a 25% contingency of US$23.6 million. The initial mine fleet will be expanded in Year 1 of operations. Infrastructure costs are low due to the proximity of road, water and power infrastructure. Initial capital also assumes KORE is the owner-operator of all equipment. Further enhancements may be possible with contract mining or processing of the gold from the carbon columns at an off-site treatment plant. Sustaining capital is mainly for heap leach pad expansion and additional mining equipment.

ALL-IN-SUSTAINING-COST*

All-in-sustaining costs are competitive with peer projects and in the second quartile when compared to the World Gold Council AISC cost metric. Imperial’s AISC* is built up as follows:

MINERAL RESOURCE ESTIMATE

Imperial is well drilled with 349 boreholes drilled by various operators during the period of 1987-1996.

The mineral resource estimate remains unchanged from December 30, 2019 and was prepared by SRK Consulting (Canada) Inc. – Glen Cole, PGeo., Anoush Ebrahimi, PEng., and Mark Willow, PEng.  The resource block model derived by SRK was used in the development of this PEA.

The following table shows the Imperial Project mineral resource estimate as of December 30, 2019:

Further details on the mineral resource estimate are available in the technical report dated December 30, 2019 entitled “Amended Technical Report for the Imperial Gold Project, California, USA” available at www.koremining.com and filed on January 20, 2020 at www.sedar.com.

QUALIFIED PERSONS/QUALITY ASSURANCE

The Preliminary Economic Assessment was prepared by GRE with Terre Lane, PE being the Qualified Person in charge of its preparation.    The resource portion of the PEA is the same as the previous technical report dated December 30, 2019 and was prepared by SRK Consulting (Canada) Inc. – Glen Cole, PGeo., Anoush Ebrahimi, PEng., and Mark Willow, PEng.  With regards to technical matters in this press release Marc Leduc, P.Eng. is the Qualified Person within the meaning of NI 43-101 and has reviewed and validated that the information in this press release is consistent with that provided by the Qualified Persons responsible for the PEA.

Further information about the PEA referenced in this news release, including information in respect of data verification, key assumptions, parameters, risks and other factors, can be found in the NI 43-101 technical report for the Imperial Oxide Gold Deposit that the Company intends to file on SEDAR (www.sedar.com) under KORE’s profile and on the Company’s website (www.koremining.com) within the next 45 days from the date of this news release.

ALTERNATIVE PERFORMANCE MEASURES (NON-IFRS MEASURES)

Items marked with a * in this news release are alternative performance measures. Alternative performance measures are furnished to provide additional information. These non-IFRS performance measures are included in this news release because the Company believes these statistics are key performance measures that provide investors, analysts and other stakeholders with additional information to understand the costs associated with the Project. These performance measures do not have a standard meaning within IFRS and, therefore, amounts presented may not be comparable to similar data presented by other mining companies. These performance measures should not be considered in isolation as a substitute for measures of performance in accordance with IFRS.

“Cash Costs ” and “Cash Costs (LOM)” are a non-IFRS measure reported by KORE on an ounces of gold sold basis.  Cash costs include mining, processing, refining, general and administration costs and royalties but excludes depreciation, reclamation, income taxes, capital and exploration costs for the life of the mine, defined above as 8 years.

“All-In-Sustaining-Costs” is a non-IFRS measure reported by KORE on a per ounce of gold sold basis that includes all cash costs noted above (mining, processing refining, general and administration and royalties), as well as sustaining capital and closure costs, but excludes depreciation, capital costs and income taxes.

ABOUT IMPERIAL OXIDE GOLD DEPOSIT

Imperial is a structurally controlled intermediate epithermal gold deposit. The oxide gold deposit is currently 2.44 kilometers long, up to 0.75 kilometers wide and is open both along strike and downdip.  KORE controls the 28 km long Mesquite-Imperial-Picacho exploration district, including 1,005 claims staked in September 2019, between Mesquite and Picacho that runs through Imperial.  This trend remains underexplored and open to new oxide discoveries.  More details on the deposit geology and exploration potential can be found in KORE’s January 7, 2020 and September 12, 2019 news releases. 

ABOUT KORE

KORE is 100% owner of a portfolio of advanced gold exploration and development assets in California and British Columbia.  KORE is supported by strategic investors Eric Sprott and Macquarie Bank who, together with the management and Board own 66% of the basic shares outstanding.