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Premier Reports on Updated PEA for the McCoy-Cove Property

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Premier Reports on Updated PEA for the McCoy-Cove Property

 

 

 

 

 

Premier Gold Mines Limited (TSX: PG) (OTCPK: PIRGF) is pleased to announce the updated results of its Preliminary Economic Assessment on the Cove Project at its 100%-owned McCoy-Cove Property located near Battle Mountain, Nevada.

 

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

 

  • After-tax NPV5 of $178.0 million, and an after-tax internal rate of return of 36% based on a gold price of US$1,400/oz – increasing to NPV5 of $306 million and IRR of 53% at a gold price of US$1,680/oz
  • Average operating costs of $215/ton, cash cost of $859/oz Au and all-in sustaining cost of $948/oz Au
  • Indicated mineral resources of 1,110 ktons at 0.316 oz/t Au and 0.850 oz/t Ag for 351,000 ozs of gold and 943,000 ozs of silver (1,007 ktonnes at 10.8 g/t Au, 29.1 g/t Ag)1
  • Inferred mineral resources of 4,262 ktons at 0.317 oz/t Au and 0.602 oz/t Ag for 1,353 koz of gold and 2,565 koz of silver (3,866 ktonnes at 10.9 g/t Au, 20.6 g/t Ag)1
  • Metallurgical recoveries of 82.5% for gold and 67.1% for silver
  • Gold production of 743,000 ounces during 8-year life of mine (LOM)
  • Average annual full year gold production of 102,000 ounces
  • LOM capital cost of $107.2 million after pre-development costs of $23.9 million
  • Mine construction capital of $81.9 million
  • After-tax payback period of 4.5 years

 

“The PEA underscores the importance of McCoy-Cove as one of the cornerstone assets in our soon-to-be spun-out i–80 Gold Corp, whose focus will remain the exploration and development of quality gold projects in Nevada, USA”, stated Ewan Downie, President and CEO of Premier Gold Mines. “Our go-forward plans for the project includes an exploration ramp to allow an aggressive underground drill program to upgrade and expand mineral resources in advance of a future Feasibility Study and also provide a platform to increase recoverable gold resources and delineate the deposit still open down-plunge”.

 

Project Economics

 

The Project will process 2.97 million tons at an average grade of 0.303 oz/t Au producing 743,000 ounces of gold over an 8-year period. The cost profile includes an average cash cost (net of by-product credits) of $859 per ounce of gold sold and an AISC of $948 (net of by-product credits) per ounce of gold sold. Annual full year gold production will average 102,000 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. New mineral resources may also be found along the Cove South Deep and 2201 zones and this potential will be reviewed following underground exploration and delineation drilling.

 

Project after-tax NPV5 is estimated to be $178.0 million at a gold price of US$1,400/oz with a 4.5-year payback from a positive construction decision and an after-tax IRR of 36% as shown in Table 1.

______________________
1 Based on a gold equivalent cut-off grade of 0.141 oz/t or 4.83 g/t Au.

 

Table 1: Summary of Economic Parameters and PEA Results

 

Gold price – base case (US$/oz) 1,400
Mine life (years) 8
Maximum mining rate (tons/day) 1,222
Average grade (oz/t Au, g/t Au) 0.303 / 10.39
Average gold recovery (roaster %) 79.3
Average gold recovery (autoclave %) 85.2
Average full year annual gold production (koz) 102
Total recovered gold (koz) 743
Pre-development costs ( M$) 23.9
Mine Construction Capital (M$) 81.9
Sustaining capital (M$) 25.2
Cash cost ($/oz) 859
All-in sustaining cost ($/oz) 948
Project after-tax NPV5% (M$) 178.3
Project after-tax IRR (%) 36

 

Total undiscounted after-tax cash flow over the life of the Project is estimated to be $230 million. Some $23.9 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 the commencement of mine construction and are considered sunk costs.

 

Sensitivities of the Project NPV to the gold price and other Project variables are presented in Table 2.

 

Table 2: After-Tax Sensitivity Analysis to NPV5 and After-Tax IRR

 

NPV5% IRR
PEA Variable -20% PEA +20% -20% PEA +20%
($ M) ($ M) ($ M) (%) (%) (%)
Operating Costs 241 178 110 45 36 26
Capital Costs 196 178 160 45 36 30
Gold Price 42 178 306 14 36 53

 

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 results of the PEA will be realized.

 

Location

 

The McCoy-Cove Property is located immediately south of Nevada Gold Mines’ Phoenix Mine, 32 miles south of the Town of Battle Mountain, in Lander County, Nevada. The Property hosts the historic Cove mine, operated by Echo Bay Mines Ltd. (Echo Bay) between 1987 and 2001, that produced 2.6 million ounces of gold and 100 million ounces of silver and the historic McCoy mine that produced more than 600,000 ounces of gold.

 

The property benefits from significant historic geological datasets, local and regional infrastructure 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 McCoy-Cove Property 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. The property lies west of the central part of the Battle Mountain-Eureka Trend and hosts four distinct mineralization type 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.

 

The Cove (Gap) deposit remains open for expansion down-plunge and the 2201 zone remains open along strike and at depth.

 

Mineral resources were constrained using a gold equivalent cut-off grade of 0.141 oz/t Au. The Project mineral resources are summarized in Table 3.

 

 

Table 3: 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 614 557 0.356 12.2 0.100 3.4 219 62
Gap 176 160 0.345 11.8 0.431 14.8 61 76
CSD 319 289 0.224 7.7 2.528 86.7 71 806
2201
Total Indicated 1,110 1,007 0.316 10.9 0.850 29.1 351 943
Inferred
Helen 1,585 1,438 0.324 11.1 0.116 4.0 514 184
Gap 1,815 1,646 0.309 10.6 0.448 15.4 561 813
CSD 552 501 0.198 6.8 2.205 75.6 109 1,218
2201 310 282 0.546 18.7 1.127 38.7 169 350
Total Inferred 4,262 3,867 0.317 10.9 0.602 20.6 1,353 2,565
1.      The effective date of the estimate is January 1, 2021.

2.      Underground Mineral Resources are reported at a gold equivalent cut-off grade of 0.141 opt Au (4.83 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), 2014 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 4,625 ft) to the lowest extent of planned mining (elevation 3,430 ft). 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 1,180 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 Gap mineralization responds better with pressure oxidation while 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 mineralization contained in the mine plan of 82.5% for gold and 67.1% 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 4.

 

Table 4: Pre-Development and Capital Cost

 

 

Pre-Development
($M)
Mine Construction
($M)
Sustaining
($ M)
Environmental and Permitting 2.5 1.0 1.0
Helen Dewatering 0 14.8 0
Gap Dewatering 0 28.7 0
Electrical Service and Powerline 0.2 3.1
Mine Development Helen 8.3 17.9 13.9
Mine Development Gap 0.3 9.2
Mine Facilities 1.3 6.2 0.9
Pre-Production Expense 6.1 1.7 0
Mobile Equipment
Resource Conversion Drilling 4.4
Contingency (15% Excluding Drilling and Development) 1.2 8.4 0.3
Total *columns may not add due to rounding 23.9 81.9 25.2

 

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

 

Operating Costs

 

The average operating cost is $859/oz Au or $215/t milled over the LOM.  The AISC, which includes royalties, closure, reclamation, and sustaining capital costs, averages $948/oz Au.  Table 5 presents the LOM operating costs.

 

 

Table 5: Life-of-Mine Operating Cost Summary

 

Category Total Costs
($ M)
Unit Cost
($/t milled)
Cost per Ounce
($/oz Au)
Mining 296 99.53 398
Transportation & Processing 219 73.82 295
Electrical Power 41 13.76 55
G&A, Royalties and Net Proceeds tax 89 29.96 120
By Product Credits (6) (2.04) (8)
Total Operating Cost 639 215.01 859
Closure & Reclamation 15 5.15 21
Income Tax 25 8.50 34
Sustaining Capital 25 7.77 34
All-in Sustaining Cost 704 237.08 948

 

Permitting

 

The McCoy-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 to dewater ahead of mining in the Helen Zone. It is expected that an Environmental Impact Statement (“EIS”) will be required to dewater ahead of mining. Collection of baseline data, permitting, and bonding for the EIS is expected 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 2021 and 2022 includes laboratory and economic evaluations of alternative processing methods, optimizing the mine plan with the hydrological model, completion of baseline studies needed to kick off an EIS, and beginning development of an exploration decline to support underground diamond drilling to upgrade and increase mineral resources. Completion of these activities and a feasibility study will occur in 2023-24.

 

A technical report for the McCoy-Cove Project supporting the results of the PEA 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.

 

Qualified Person & QA/QC

 

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

 

Qualified Person

 

Practical Mining LLC., under the supervision of Dagny Odell, P.E., Laura Symmes, SME, and Robert Raponi, P. Eng. each being Qualified Persons within the meaning National Instrument 43-101, was the lead consultant for the updated PEA.

 

Posted January 18, 2021

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