03/30/2020
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TORONTO--(BUSINESS WIRE)-- TMAC Resources Inc. (TSX: TMR) (“TMAC” or the “Company”) announces a summary of key results from the Preliminary Feasibility Study (“PFS”) for its 100%-owned Hope Bay Property (“Property”) located in the Kitikmeot region of Nunavut, Canada, as outlined in the technical report entitled NI 43-101 Technical Report on the Hope Bay Property, Nunavut, Canada (“Technical Report”).
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PFS HIGHLIGHTS
• Pre-tax net present value discounted at 5% (NPV5%) of Hope Bay of C$549 million, after-tax NPV5% of C$486 million, based on Proven and Probable Mineral Reserves
• Life of Mine (“LOM”) of 15 years
• Proven and Probable Mineral Reserve estimate at Hope Bay is 3.5 million ounces of gold
• Updated Measured and Indicated Mineral Resource estimate at Hope Bay:
- 5.2 million ounces of gold Measured and Indicated Resource, and
- 2.1 million ounces of gold Inferred Resource
• Processing plant throughput capacity:
- 2,000 tonnes per day (“tpd”) for years 2021 to 2023
- 4,000 tpd for 2024 onward
• LOM Cash Cost of US$841/oz and All-in Sustaining Cost of US$986/oz
• Expansion capital expenditures for 2020 to 2023 of C$683 million, including C$184 million for a new conventional processing plant
Jason Neal, President and CEO of TMAC commented, “The PFS we have announced today is an important milestone in defining the future of the Hope Bay belt. This scenario, which includes a new 4,000 tonne per day plant at Madrid, and developing the mining assets aggressively to be able to feed at this rate, demonstrates a more robust approach to operating at Hope Bay. It replaces the current processing plant by 2024 with a conventional design at a higher capacity. This strategy will also bring forward the tremendous value of exploration as we target to sustain mines and increase available grade. The after-tax NPV of Hope Bay is C$486 million at consensus gold prices, US$1,400/oz long-term and C$/US$ assumed at 1.34, which is significantly in excess of the current market value of our company. At US$1,625/oz gold price, the after-tax NPV is C$870 million. One of the most important perspectives is that this NPV would grow quickly with exploration success as infrastructure is leveraged. A good example is the high grade Doris North BTD Extension zone resource, which continues to grow with exploration success but based on reserves completed by the end of 2020.”
Mr. Neal continued, “We are not yet beginning our feasibility study. While we are filing an NI 43-101 Technical Report that outlines the results of the new PFS at this time to meet regulatory filing requirements, we have additional opportunities to analyze to further improve value. We have identified several areas where we would benefit from additional work and that work has already begun.”
Mr. Neal elaborated, “The detailed work of this PFS has demonstrated the value of established infrastructure versus the cost of building new infrastructure. We have been advancing initial concept work, which is not yet at the PFS level, on an alternative scenario which better utilizes established infrastructure. In this scenario, the new conventional plant would be built in the footprint of the existing processing plant, moving crushing circuits to a new smaller adjacent building, creating space in the current building for greater capacity, and supported by established power, tailings line, fuel storage, camp, industrial structures and other infrastructure, with add-on expansion as required. It would require shutting down processing operations, though not likely mining, in the future for several quarters while the rebuild takes place. It would also likely pull forward the timing on expansion, eliminating the need to build substantial surface infrastructure and using the current heated and serviced plant building. The goal of this analysis is to determine, if technically feasible, if the capital savings, acceleration of expansion and reduced build risk are a greater benefit than cost of turning off revenue that would otherwise be realized with the current Doris plant for a period as well as other adjustments.”
Mr. Neal concluded, “We continue to benefit from a high-grade resource located in a safe jurisdiction, established infrastructure and strong support from the host communities. Our challenges are short-term while our value is medium-term and beyond. We are progressing and targeting conclusion of our strategic process in the second quarter. Ultimately it is more likely that the feasibility study and eventual expansion at Hope Bay will be pursued either with a new partner or a new owner of Hope Bay than by TMAC as a standalone single-asset company.”
MINERAL RESOURCES
December 31, 2019 Measured and Indicated Mineral Resources (Table 1) resulted in a 21% increase in tonnes, 11% decrease in gold grade, and 8% increase in gold ounces versus the previous year’s estimate, and a 49% increase in tonnes, 12% decrease in grade and 31% increase in ounces of Inferred Resources. The increases in tonnage and ounces are primarily due to a decrease in the cut-off grade across the property as a result of higher gold prices and higher recovery associated with the 4,000 tpd processing plant. Mining depletion at Doris and Madrid North Naartok East is offset by additional drilling and sampling in 2019 and re-interpretation and re-modelling based on new information and experience gained through mining.
Table 1: Hope Bay Measured, Indicated and Inferred Resources as of December 31, 2019
Ore Tonnes
Gold Grade
Gold Ounces (000 t) (g/t) (000 oz)
Measured
Doris 240 11.0 85
Madrid North - - -
Suluk - - -
Madrid South - - -
Boston 1,330 9.3 397
Total 1,570 9.5 481
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