The Prospector News

Premier Announces PEA Results on the Cove Project

You have opened a direct link to the current edition PDF

Open PDF Close
Uncategorized

Share this news article

Premier Announces PEA Results on the Cove Project

 

 

 

 

 

PREMIER GOLD MINES LIMITED (TSX: PG) is pleased to announce the Preliminary Economic Assessment of its 100% owned Cove Project located near Battle Mountain, Nevada. 

 

 

Highlights of the PEA results and life-of-mine plan include:

 

  • After-tax NPV5 of $143.0 million, and an after-tax internal rate of return (“IRR”) of 48%
  •  Average operating costs of $199/ton, Cash Cost of $788/oz Au and All-in Sustaining Cost (AISC)(i) of $897/oz Au
  • Indicated mineral resources of 1,045,000 tons at 0.327 oz/t Au and 0.861 oz/t Ag for 342,000 ounces of gold and 900,000 ounces of silver
  • Inferred mineral resources of 4,032,000 tons at 0.328 oz/t Au and 0.609 oz/t Ag for 1,322,000 ounces of gold and 2,457,000 ounces of silver
  • Metallurgical recoveries of 82.7% for gold and 21.6% for silver
  • LOM gold production of 740,000 ounces during 8 years of operations
  • Average LOM annual gold production of 92,400 ounces
  • LOM capital cost of $114.4 million after pre-development costs of $25.8 million
  • Mine construction capital of $46.6 million
  • After-tax payback period of 4 years

 

 

“This PEA sets the stage for the Company’s planned advanced-exploration initiative at Cove,” stated Ewan Downie, President and CEO of Premier Gold Mines.  “These results support our plan for the construction of an exploration ramp to further define and expand the deposits in advance of a future Feasibility Study.”

 

 

Project Economics

 

 

The Project will process 2.93 million tons at an average grade of 0.305 oz/t Au producing 0.74 million ounces of gold over an 8-year period. The cost profile includes an All-in-Sustaining Cost of $897 (net of by-product credits) per ounce of gold sold and an average Cash Cost (net of by-product credits) of $788 per ounce of gold sold. Gold production will average 92,400 ounces per year over the 8-year mine life.  

 

 

The PEA assumes mining of mineral resources in the Helen and Gap deposits only.  Potential exists to increase mineral resources as the deposits remain open for expansion, as well as adding potential mineral resources from the Cove South Deep and 2201 zones following underground exploration and delineation drilling.  These opportunities will be reviewed during underground development and exploration drilling program.

 

 

Project after-tax NPV5 is estimated to be $143.0 million.  After-tax cash flows result in a 4-year payback from the commencement of commercial production with an after-tax IRR of 48% as shown in Table 1.

 

 

Table 1: Summary of Economic Parameters and PEA Results
Gold price – base case (US$/oz) 1,250
Mine life (years) 8
Maximum mining rate (tons/day) 1,360
Average grade (oz/t Au) 0.305
Average gold recovery (roaster %) 79.2
Average gold recovery (autoclave %) 85.6
Average annual gold production (koz) 92.4
Total recovered gold (koz) 740
Pre-development costs ( M$) 25.8
Mine Construction Capital (M$) 46.6
Sustaining capital (M$) 67.7
Cash cost (US $/oz) 788
All-in sustaining cost ($/oz) 897
Project after-tax NPV5% (M$) 143.0
Project after-tax IRR (%) 48

 

 

 

Total undiscounted after-tax cash flow over the life of the Project is estimated to be $196 million as shown in Table 2. 

 

 

Table 2: Life-of-Mine Cash Flow
Year Revenue

($ M)

Operating

Cost

($ M)

Pre-
development

($ M)

Mine
Construction
Capital

($M)

Sustaining

Capital

($ M)

Other2

($ M)

Pre-tax

Cash Flow

($ M)

Taxes

($ M)

After-tax

Cash Flow

($ M)

-3 (12)
-2 (8)
-1 (6)
1 (0) (26) (27) (27)
2 50 (36) (20) (5) (11) (1) (12)
3 57 (37) (12) (1) 8 (1) 6
4 157 (90) (18) (8) 42 (5) 37
5 132 (86) (24) (1) 22 (2) 19
6 185 (101) (5) (4) 76 (5) 71
7 128 (87) (9) (0) 34 (2) 32
8 128 (88) (2) 39 (1) 38
9 89 (59) 2 30 (1) 29
10 7 4 4
11 (3) (3)
Total 926 (585) (26) (47) (68) (13) 215 (19) 196

 

   
1. Includes working capital and reclamation fund.
2. Numbers may not add due to rounding.

 

 

A total of $25.8 million in pre-development costs have been excluded from NPV and IRR calculations within the PEA.  These pre-development costs relate to advanced exploration, resource conversion, baseline studies and permitting activities to be completed prior to mine construction (estimated to occur in Q1-2021) and are considered sunk costs.

 

 

Sensitivities of the Project NPV to the gold price, discount rate and other Project variables are presented in Table 3 and Table 4.

 

 

Table 3: After-Tax NPV Sensitivity to Discount Rate
Discount Rate After-Tax
Project NPV

 (M $)

5% 143
8% 119

 

 

 

Table 4: After-Tax Sensitivity Analysis to NPV5% and After-Tax IRR
  NPV5% IRR
PEA Variable -15%

($ M)

PEA

($ M)

+15%

($ M)

-15%

(%)

PEA

(%)

+15%

(%)

Operating Costs 190 143 94 61 48 35
Capital Costs 156 143 130 58 48 41
Gold Price 50 143 232 22 48 70

 

 

 

The PEA is preliminary in nature, it 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.

 

 

Location

 

 

The Cove Project covers 700 acres and is in the center of the McCoy-Cove Exploration joint venture, 32 miles south of the Town of Battle Mountain, in the Fish Creek Mountains of Lander County, Nevada. It is centred approximately at 40°22′ N and 117°13′ W and lies within the McCoy Mining District. The Property hosts an historical open pit mine (Cove Pit), operated by Echo Bay Mines Ltd. (Echo Bay) between 1987 and 2001, which produced 2.6 million ounces of gold and 100 million ounces of silver.

 

 

The property benefits from significant historic geological datasets, local and regional networks that include its proximity to paved highways, electric power, and pre-existing mine infrastructure. Premier is proud of its relationships within local communities including the Town of Battle Mountain, which provides important manpower and services to the Property and serves as the location of its regional office.

 

 

Geology & Mineral Resources

 

 

The Cove Gold Project is in the central Nevada portion of the Basin and Range Province, which underwent regional extension during the Tertiary period that created the present pattern of alternating largely fault bounded ranges separated by alluvial filled valleys. Prior to this extension, central Nevada had been the site of numerous tectonic events, including at least two periods of regional compression. The property lies west of the central part of the Battle Mountain-Eureka Trend and hosts four distinct mineralization types Carlin-style, polymetallic sheeted veins, carbonate replacement (Manto), and skarn. The Helen, CSD Gap and CSD deposits are Carlin-style deposits while the 2201-VG zone is comprised of steeply dipping polymetallic sheeted veins.

 

 

Mineral resources were constrained using a cut-off grade of 0.149 oz/t Au.  The Project mineral resources are summarized in Table 5.

 

 

 

Table 5: Mineral Resource Estimate
  tons (000) Tonnes (t)
(000)
Au

(oz/ton)

Au

(g/t)

Ag

(oz/ton)

Ag

(g/t)

Au ozs

(000)

Ag ozs

(000)

Indicated                
Helen 577 524 0.369 12.7 0.103 3.5 213 60
Gap 167 151 0.357 12.2 0.431 14.8 60 72
CSD 301 273 0.229 7.9 2.556 87.6 69 768
2201      
Total Indicated 1,045 948 0.327 11.2 0.861 29.5 342 900
                 
Inferred                
Helen 1,493 1,355 0.335 11.5 0.118 4.1 500 177
Gap 1,731 1,570 0.317 10.9 0.457 15.7 549 791
CSD 503 456 0.204 7.0 2.266 77.7 103 1,140
2201 305 277 0.596 20.4 1.140 39.1 169 350
Total Inferred 4,032 3,658 0.328 11.2 0.609 20.9 1,322 2,457
   
1. The effective date of the estimate is March 31, 2018.
2. Underground Mineral Resources are reported at a cut-off grade of 0.149 opt Au (5.11 g/t Au).
3. Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, marketing, or other relevant issues.
4. Mineral resources were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council.
5. The quantity and grade of reported Inferred resources in this estimation are uncertain in nature and there has been insufficient exploration to define these inferred resources as an Indicated or Measured mineral resources.
6. Numbers may not add due to rounding.

 

 

Mining

 

 

The mine will be accessed by a single ramp extending from the surface (elevation 4625 ft) to the lowest extent of planned mining (elevation 3430). The access ramp will be large enough to accommodate 30 ton trucks. A series of raises will provide secondary egress and ventilation.  A mining contractor will extract the mineralization using drift and fill mining methods at an average rate of 1,270 tons per day.

 

 

Metallurgy & Processing

 

 

Metallurgical testing was completed by SGS Laboratories under the direction of Jacobs Engineering on behalf of Premier.  Composite samples from the Helen and Gap zones underwent whole ore cyanidation testing, roasting and calcine cyanidation tests, and pressure oxidation with cyanidation of the residues. Results indicate that in general the Gap mineralization performs better with pressure oxidation and the Helen mineralization performs better with roasting.  Recoveries were assigned to each mineralized lens from the associated composite test results. The recoveries stated herein represent a weighted average value for all mineralisation contained in the mine plan of 82.2% for gold and 21.5% for silver.

 

 

There are three roasting facilities and two pressure oxidation facilities located in northern Nevada which are amenable to processing the Cove mineralization. The PEA incorporates toll-milling arrangements with associated over-the-road trucking costs for both process methods.

 

 

Infrastructure

 

 

General infrastructure for the Project will include:

 

  • Site access and haul roads are in place; upgrades and general maintenance required
  • Electrical service is available from Nevada Energy; upgrades included for commercial production
  • Waste rock storage facility
  • Water settling pond
  • Rapid infiltration basins
  • Workshop is in place on surface; a smaller maintenance facility will be required near the portal
  • Shotcrete and backfill plants
  • Office and mine dry facilities for contractor mining
  • Explosives and detonator storage areas
  • Fuel storage and distribution
  • Potable water and sewage systems
  • Fire water systems
  • Site security and fencing

 

 

Pre-Development and Capital Costs

 

 

The breakdown of pre-development and capital costs is provided in Table 6.

 

 

Table 6: Pre-Development and Capital Cost
  Pre-Development

($M)

Mine
Construction

($M)

Sustaining

($ M)

Environmental and Permitting 2.9 1.5 1.0
Helen Dewatering 2.1 12.0 2.7
Gap Dewatering 2.1 0 28.7
Electrical Service and Powerline 1.0 3.1
Mine Development Helen 5.9 18.4 15.4
Mine Development Gap 0.3 13.6
Mine Facilities 1.3 5.8 1.3
Pre-Production Expense 4.2 1.9 0
Mobile Equipment
Resource Conversion Drilling 4.4
Contingency (15% Excluding Drilling and Development) 2.0 3.6 5.1
Total 25.8 46.6 67.7

 

 

 

Sustaining capital is required during operations for mine development, dewatering, and other underground infrastructure.

 

 

Operating Costs

 

 

The average operating cost is $788/oz Au or $198.81/t milled over the LOM.  The AISC, which includes royalties, closure, reclamation, and sustaining capital costs, averages $897/oz Au.  Table 7 presents the LOM operating costs.

 

 

Table 7: Life-of-Mine Operating Cost Summary
Category Total Costs
($ M)
Unit Cost

($/t milled)

Cost per Ounce

($/oz Au)

Mining 270 92.05 365
Transportation & Processing 221 75.24 298
G&A, Royalties and

Net Proceeds tax

94 32.19 128
By Product Credits (2) (0.66) (3)
Total Operating Cost 583 198.81 788
Closure & Reclamation 13 4.36 17
Sustaining Capital 68 23.10 92
All-in Sustaining Cost 664 226.27 897

 

 

A 1.5% net smelter royalty (“NSR”) is payable to Newmont Mining Corporation.

 

 

Permitting

 

 

The Cove Project is fully permitted under an Environmental Assessment (“EA”) to develop an exploration ramp, complete underground diamond drilling, and to test mine up to 120,000 tons of potentially economic mineralization.  The PEA assumes that a new EA will be required in order to dewater ahead of mining in the Helen Zone. The collection of baseline data, permitting, and bonding is predicted to be completed in Q1 2021.  It is expected that an Environmental Impact Statement (“EIS”) will be required in order to dewater ahead of mining in the Gap Zone.  Collection of baseline data, permitting, and bonding for the EIS is predicted to be completed in Q2 2024.  These timelines may be accelerated pending the interpretation and implementation of recent guidelines given to regulatory agencies by the federal government in the United States.

 

 

Next Steps   

 

 

The focus for the remainder of 2018 and 2019 includes refinement of the hydrological model and development of an exploration decline to support underground diamond drilling to upgrade and add to mineral resources.  Baseline studies, permitting, and a  feasibility study are planned for 2019-20. 

 

 

A technical report for the Cove Project will be prepared in accordance with National Instrument 43-101 and will be filed on SEDAR at www.sedar.com and on the Company’s websites within 45 days.

 

 

All abbreviations used in this press release are available by following this link (click here).

 

Qualified Person & QA/QC

 

 

Scientific and technical information in this press release has been reviewed and approved by Mark Odell, P.E. (NV Lic#13708) of Practical Mining LLC, an “independent qualified person” within the meaning of National Instrument 43-101.

 

Notes:

 

i. A cautionary note regarding Non-IFRS financial metrics is included in the “Non-IFRS Measures” section of the Q1-2018 Management Discussion and Analysis.

 

 

 

Premier Gold Mines Limited is a gold producer and respected exploration and development company with a high-quality pipeline of precious metal projects in proven, accessible and safe mining jurisdictions in Canada, the United States, and Mexico. Premier’s team is focused on creating a low-cost, mid-tier gold producer through its two producing gold mines; and two advanced multi-million ounce development projects where permitting and pre-construction initiatives are in progress.

 

Posted May 18, 2018

Share this news article

MORE or "UNCATEGORIZED"


Equity Reports Additional High-Grade Mineralization at the Camp and Sveinson Targets, Silver Queen Project, BC; Drilling Resumes

Equity Metals Corporation (TSX-V: EQTY) reports thick intercepts ... READ MORE

May 18, 2022

Freegold Intersects 2.49 g/t Au over 167.7m and 0.94g/t Au over 617 m at Golden Summit

Freegold Ventures Limited (TSX: FVL) (OTCQX: FGOVF) is pleased to... READ MORE

May 18, 2022

Sitka Intercepts 107.5 Metres of 1.44 g/t Gold From Surface Including 2.0 Metres of 35.60 g/t Gold at its RC Gold Project in Yukon

Sitka Gold Corp. (CSE: SIG) (FSE: 1RF) (OTCQB: SITKF) is pleased... READ MORE

May 18, 2022

Appia Announces Operational And Drilling Update With New Intersections Of 50+ Metres Of Anomalous Radioactivity At Alces Lake Rare Earth Property, Northern Saskatchewan

Appia Rare Earths & Uranium Corp. (CSE:API) (OTCQB:APAAF) (Ge... READ MORE

May 18, 2022

STARR PEAK REPORTS 5.03% ZINC-EQUIVALENT OVER 12.5 METERS, HIGH GRADE COPPER INTERCEPT, AND DISCOVERY OF NEW 1 KM LONG VMS HORIZON

Starr Peak Mining Ltd.  (TSX-V: STE) (OTCQX: STRPF) is pleased ... READ MORE

May 18, 2022

We acknowledge the [financial] support of the Government of Canada.

Government of Canada Supported
Copyright 2022 The Prospector News