July 31, 2017 – Vancouver, British Columbia – Trek Mining Inc. (TSX-V: TREK) (“Trek Mining” or the “Company”) is pleased to announce the results of the feasibility study (“FS”) for its 100% owned Aurizona Gold Mine (“Aurizona” or the “Project”) located in northeastern Brazil. All amounts are in US dollars, unless otherwise indicated.
CONFERENCE CALL / WEBCAST
The Company will host a webcast and conference call on August 1, 2017 to present the FS results and provide an opportunity for investors and analysts to ask questions about next steps at Aurizona. The webcast and presentation slides will also be archived and accessible on Trek Mining’s website. Please register five to 10 minutes before the scheduled start time and ask to join the Trek Mining conference call.
Tuesday, August 1, 2017 at 10 am EST (7 am PST)
Toll-free in U.S. and Canada: 1-800-319-4610
•After-tax NPV5%of $197.1 million and IRR of 34% at $1,250/oz gold
•Low initial capital cost of $130.8 million, with LOM sustaining capital cost of $51.3 million
•LOM gold production of approximately 886,000 ounces at an average gold recovery of 91%
•Average annual gold production of approximately 136,000 ounces
•Average LOM AISC of $754/oz, placing Aurizona in the lowest quartile of the industry average
•Proven and Probable Mineral Reserves of 19.8 million tonnes at 1.52 g/t gold for 971,000 ounces of gold
•FS supports the viability of a mine restart plan with an upgraded 8,000 tonnes per day crushing and grinding circuit to treat all ore types
•First gold pour targeted for year-end 2018
The FS is based on a new mine plan and updated Mineral Reserve estimate and outlines the design of an open-pit gold mine producing on average approximately 136,000 ounces of gold per year, with an initial 6.5-year mine life and significant exploration upside, as demonstrated with recent drill results. Initial capital to fund construction and commissioning is estimated at a modest $130.8 million due to the Company’s ability to leverage significant existing infrastructure in place at the brownfields mine site. Life-of-mine (“LOM”) sustaining capital is estimated at $51.3 million, including closure costs. All-in-sustaining costs (“AISC”) are estimated at $754 per ounce (“$/oz”) over the life of the Project, which is in the lowest quartile of the industry average. The Project demonstrates strong returns in the current gold price environment, with an after-tax internal rate of return (“IRR”) of 34% and an after-tax net present value using a 5% discount rate (“NPV5%) of $197.1 million using a base case gold price of $1,250 per ounce ($254.3 million and 42% at $1,350/oz gold price).
The FS was prepared by Lycopodium Minerals Canada Limited with the support of three other globally recognized engineering firms: AGP Mining Consultants Inc. (“AGP”), SRK Consulting (Canada) Inc. (“SRK”) and BVP Engenharia in partnership with Walm Engenharia e Tecnologia Ambiental. The FS is being summarized into a technical report that will be filed on SEDAR within 45 days, in accordance with National Instrument 43-101 (“NI 43-101”).
Christian Milau, CEO, stated, “The feasibility study outlines a robust, construction-ready, open-pit gold mine that we can rapidly advance to production. This new mine plan supports the original conviction of Trek Mining’s executive team that we are developing a low-cost, high-margin operation that will provide substantial cash generation for the Company, producing on average 136,000 ounces of gold per year at respectably low all-in sustaining costs. Further, based on recent drill results we are confident that we can extend the mine life with exploration success, bringing additional value to both our shareholders and community partners.”
David Laing, COO, added, “This feasibility study reflects extensive engineering and technical work conducted over the last two years. With much of the necessary infrastructure already in place, initial capital to restart Aurizona is significantly less than other similar-size projects, resulting in quick project payback. With the feasibility study complete, we will turn our attention to engineering, procurement and construction activities to get Aurizona back into production.”
BASE CASE HIGHLIGHTS
The 100%-owned Project, located in Maranhão State in northeastern Brazil, is a 223,000-hectare property containing a past-producing open-pit mine and gold processing plant, the Piaba and Boa Esperança gold deposits and numerous exploration targets. The FS provides a compilation of the engineering and geological studies performed in 2016 and 2017, which incorporated the results from drilling conducted in 2015 and additional geotechnical and geochemical site characterization work carried out in 2016 and 2017. FS highlights are summarized in the table below.
Feasibility Study Highlights
Gold price (base case) $1,250/oz
Exchange rate (Brazilian Real to US Dollar) 3.3:1
Average annual gold production (LOM) 136,000 ounces
Total gold production (LOM) 885,700 ounces
Average gold grade 1.52 grams per tonne (“g/t”)
Strip ratio 5.7:1 (waste:ore, tonnes)
Average gold recovery 91%
Throughput 8,000 tonnes per day (“tpd”)
Initial mine life 6.5 years
Cash costs (LOM) $691/oz
Direct operating costs (LOM)
Mining - $2.44/tonne mined; Processing - $8.43/tonne milled; G&A - $2.88/tonne milled; Non-recoverable taxes - $0.89/tonne milled
AISC (LOM) $754/oz
Cash flow (after tax) (LOM) * $286 M
Initial capital $130.8 M ($148/oz)
Sustaining capital, including closure costs $51.3 M ($54/oz)
NPV5% (after tax) $197.1 M (base case), $254.3 M ($1,350/oz gold)
IRR (after tax) 33.8% (base case), 41.6% ($1,350/oz gold)
Payback (after tax)
* Net of initial capital cost.
Using the base case gold price of $1,250/oz and incorporating only Proven and Probable Mineral Reserves of 971,000 ounces of gold, the Project has an after-tax NPV5% of $197.1 million and an after-tax IRR of 33.8%. The Project’s economics are most sensitive to fluctuations in the gold price and foreign exchange rate, as summarized in the tables below.
Aurizona Mine Sensitivity to Gold Price
Gold price ($/oz) $1,000 $1,150 $1,250 $1,350 $1,500
NPV5% (after tax) $49.2 M $139.6 M $197.1 M $254.3 M $339.8 M
IRR (after tax) 12.3% 25.6% 33.8% 41.6% 52.9%
Payback period (years) 5.2 3.4 2.8 2.3 1.8
Aurizona Sensitivity to Brazilian Real:US Dollar Exchange Rate
Foreign exchange (BRL/US$) 3.1:1 3.2:1 3.3:1 3.4:1 3.5:1
NPV5% (after tax) $165.9 M $182.0 M $197.1 M $211.2 M $224.6 M
IRR (after tax) 28.1% 31.0% 33.8% 36.5% 39.2%
CAPITAL & OPERATING COSTS
Initial capital to fund construction and commissioning is estimated at a modest $130.8 million due to the Company’s ability to leverage significant existing infrastructure in place at the brownfields mine site. Most major mine and processing elements are already in place, including a tailings storage facility (“TSF”) and waste dumps, a dedicated power line, camp offices and accommodations, water, roads and communications.
The re-engineered plant includes an entirely new 8,000 tpd crushing and grinding circuit that will allow all known types of mineral bearing rock at Aurizona to be processed through the gold recovery plant. Procurement and construction of the new components and equipment for the mine restart are expected to take up to 18 months, with first gold pour targeted for year-end 2018.
Initial and sustaining capital costs reflect the use of contractor mining, eliminating the need to purchase a new mining fleet.
Aurizona Capital Cost Estimate (including duties and taxes)
Initial Capital $M Sustaining Capital $M
Mining 22.5 Mining 10.6
Treatment plant & repairs 49.3 Tailings dam 35.8
Reagents & plant services 12.0 Owner’s costs 1.2
Tailings dam 3.1 Closure costs (net of salvage value) 3.7
Owner’s costs * 29.0
Management costs 6.7
Construction indirects 7.7
Waste storage facilities 0.5
Total Initial Capital $130.8 Total Sustaining Capital $51.3
* Includes pre-production costs, working capital and power substation upgrade activities.
Aurizona Operating Cost Estimate (including non-recoverable taxes and excluding recoverable taxes)
Onsite Operating Costs Cost Per Ounce Cost Per Tonne Milled Cost Per Tonne Mined
Mining $355 $15.83 $2.44
Processing $189 $8.43 -
G&A $64 $2.88 -
Non-recoverable taxes $20 $0.89 -
Total Direct Operating Costs $628 $28.03 -
Refining & transport $14 - -
Total Operating Costs $642 - -
Royalties $49 - -
Total Cash Costs * $691 - -
* For IFRS accounting purposes, some stripping costs may be capitalized and included in sustaining capital instead of in operating costs.
Mineral Reserves and Resources
Proven and Probable Mineral Reserves are estimated at 971,000 ounces of gold contained in 19.8 million tonnes of ore at a diluted grade of 1.52 g/t of gold. These Mineral Reserves support an initial 6.5-year mine life with excellent potential to expand the reserve base and extend the mine life with exploration success.
see and read ore on
Trek Mining Today Vol. 239.200
Time X Price Chg Vol Buyer Seller Markers
10:59:29 V 1.15 +0.01 100 62 Haywood 1 Anonymous
10:59:29 V 1.15 +0.01 12,000 62 Haywood 1 Anonymous
10:59:29 V 1.15 +0.01 5,000 62 Haywood 7 TD Sec