Paramount Gold Nevada Corp. today released the results of the Feasibility Study for its 100% owned Grassy Mountain Gold Project in eastern Oregon. The Study outlines an underground mining operation with exceptional economic viability yielding strong NPV and IRR results, low initial capital and low all-in sustaining costs that generate substantial cash-flows over the life of mine. The Study will be filed on SEDAR …
- LOW INITIAL CAPITAL REQUIREMENTS OF $98 MILLION INCLUDING $10 MILLION OF CONTINGENCIES
- LOW CASH COSTS OF $583 AND ALL-IN SUSTAINING COSTS OF $671 PER OUNCE OF GOLD
- PRE-TAX NPV5% OF $123 MILLION AT BASE CASE METAL PRICE OF $1472 GOLD AND $238 MILLION AT $1,900
- AFTER TAX IRR OF 26% AT $1,472 AND 41% AT $1,900
Paramount Gold Nevada Corp. (NYSE American: PZG) (“Paramount”)(the ”Company”) today released the results of the Feasibility Study (“FS”)(the ”Study”) for its 100% owned Grassy Mountain Gold Project (the “Project”) in eastern Oregon. The Study outlines an underground mining operation with exceptional economic viability yielding strong NPV and IRR results, low initial capital and low all-in sustaining costs (“AISC”) that generate substantial cash-flows over the life of mine. The Study will be filed on SEDAR within 45 days of this news release.
The base case was conducted using two-year trailing gold and silver prices per ounce of $1,472 and $16.96 respectively.
The highlights of the NI 43-101 Technical Report in the base case scenario are as follows:
- Pre-tax IRR of 27.9% and NPV5% of $123M which increase significantly to 44.7% and $238M at $1,900 gold;
- After-tax IRR of 26.0% and NPV5% of $105M which increase significantly to 40.9% and $195M at $1,900 gold;
- Life of mine cash costs of $5831 and AISC of $6712 per ounce of gold3;
- Initial CapEx of $97.5M includes $10.1M of estimated contingencies, $25.6M of sustaining CapEx and $6.3M closure costs for a 750 tpd mine and milling operation;
- Initial 8 year mine life producing 362,000 ounces of gold and 425,000 ounces silver;
- Annual production of 47,000 ounces of gold and 55,000 ounces of silver;
- Exceptional average gold and silver recoveries of 92.8% and 73.5 % respectively;
- After-tax payback of 3.1 years; and
- Total free cash flow of $165M (post-tax);
“This study is everything we had hoped for, including important improvements over the preliminary feasibility study we completed a little over two years ago. Paramount can now satisfy the remaining permitting requirements identified by the State of Oregon and the Bureau of Land Management in Paramount’s recently submitted Consolidated Permit Application and Plan of Operation. We are very close to realizing our goal of building Grassy Mountain into a modern and environmentally friendly mine, leveraging the industry’s best practices and technologies,” stated Glen Van Treek, the Company’s President and COO. ”Our focus now is to add resources to extend mine life and generate further economic returns for our shareholders,” he said.
The FS was completed by a group of industry leading consulting firms led by: Ausenco Engineering Canada Inc. (“Ausenco”) who managed the overall study and were responsible for processing and infrastructure design and oversaw metallurgical testing; Mine Development Associates (“MDA”) who updated the mineral resource estimate and completed the mine planning and reserves estimation; Golder Associates (“Golder”), who designed the tailings storage facility; and EM Strategies who oversaw all environmental aspects of the Feasibility Study.
Paramount’s CEO, Rachel Goldman added: “Since acquiring Grassy Mountain in 2016, the Company has been committed to building a profitable mine with a quick payback. The results of the Feasibility Study confirm our goal is achievable, validating the hard work that the team has dedicated towards advancing Grassy to become Oregon’s first gold mine, and giving us a first-mover advantage in the state.”
Mineralized material is reported under the Canadian Institute of Mining (“CIM”) standards for reporting mineralized material. Grassy Mountain’s “in-pit mineralization” was estimated using GEOVIA Whittle software to define all potentially economic mineralization that could be mined from surface in an open pit configuration. The primary parameters entered by MDA for the in-pit constrained resources, which comprise more than 99% of the total mineral resources, include $1,500/oz of gold and $20/oz of silver (typical of industry resource reporting), a 5,000 ton per day processing rate using a $2.00 per ton mining cost, $13 per ton processing cost, and average gold and silver recoveries of 80% and 60% respectively. Processing is assumed to consist of crushing and milling followed by Carbon in Leach (“CIL”) recovery resulting in the production of a DORE bar on site. In-pit and underground mineral resources are tabulated as follows:
|Measured + Indicated||30,902,000||0.034||0.107||1,060,000||3,299,000|
|Measured + Indicated||28,034,000||1.17||3.67||1,060,000||3,299,000|
- Mineral resources are comprised of all model blocks at a 0.012 oz AuEq/ton cutoff that lie within an optimized pit plus blocks at a 0.060 oz AuEq/ton cutoff that lie outside of the optimized pit;
- oz AuEq/ton (gold equivalent grade) = oz Au/ton + (oz Ag/ton ÷ 100);
- The mineral resources are inclusive of the mineral reserves;
- Mineral resources that are not mineral reserves do not have demonstrated economic viability;
- The Effective Date of the Grassy Mountain resource estimate is March 31, 2020; and
- Rounding may result in apparent discrepancies between tons/tonnes, grade, and contained metal content.
Proven and probable mineral reserves are reported using CIM standards and were based on all defined parameters in the FS using measured and indicated resources. Reserves are estimated for an underground mining operation with defined portal access and decline development to access the mineralized material. Initial economic material was defined using various stope sizes with an initial cut-off grade of 0.1 ounces of gold per ton.
Reserves are reported using measured and indicated resources inside the defined economically viable mining stopes, including ore lost and dilution from measured and indicated resources.
|Proven + Probable||1,911,448||0.20||0.29||380,023||553,943|
|Ore Loss & Dilution||158,640||0.06||0.15||9,910||24,336|
|Proven + Probable + Ore Loss & Dilution||2,070,088||0.19||0.28||389,933||578,279|
|Proven + Probable||1,734,036||6.82||9.94||380,023||553,943|
|Ore Loss & Dilution||143,916||2.14||5.26||9,910||24,336|
|Proven + Probable + Ore Loss & Dilution||1,877,952||6.46||9.58||389,933||578,279|
Mine Plan and Production
The mine plan was developed using a drift and fill underhand mining methodology. A cut-off grade of 0.1 opt Au was used to define economic stopes. Ore processing from the upper portion of the mine is expected to commence concurrently with the completion of the processing plant and infrastructure. Following ramp up, the mine is expected to produce an average of 1,300 to 1,400 tonnes per day, 4 days a week, which will provide enough material for the 750 ton per day mill and processing plant to operate at full capacity for 7 days a week.
Below is a summarized mine plan on a year by year basis over the life of the mine.
|Mined M&I Resource Above (COG)|
|Grade (oz Au/ton)||0.26||0.22||0.23||0.26||0.22||0.22||0.22||0.24||0.23|
|Ounces (oz Au)||41,670||44,190||46,132||52,931||44,597||51,345||44,655||30,111||355,631|
|Grade (oz Ag/ton)||0.35||0.28||0.29||0.33||0.32||0.30||0.32||0.34||0.31|
|Ounces (oz Ag)||55,827||57,405||56,793||66,262||65,763||71,156||65,157||43,109||481,473|
|Mined M&I Resource Subgrade|
|Grade (oz Au/ton)||0.06||0.06||0.06||0.06||0.07||0.07||0.07||0.07||0.06|
|Ounces (oz Au)||3,159||3,887||3,234||3,597||3,646||3,046||2,504||1,319||24,392|
|Grade (oz Ag/ton)||0.21||0.18||0.17||0.18||0.19||0.20||0.21||0.20||0.19|
|Ounces (oz Ag)||10,902||10,832||8,770||10,922||10,603||9,148||7,641||3,651||72,469|
|Total Mined to Stockpile|
|Grade (oz Au/ton)||0.21||0.18||0.20||0.22||0.19||0.19||0.19||0.22||0.20|
|Ounces (oz Au)||44,829||48,077||49,366||56,527||48,243||54,391||47,159||31,430||380,023|
|Grade (oz Ag/ton)||0.32||0.26||0.26||0.30||0.29||0.29||0.30||0.32||0.29|
|Ounces (oz Ag)||66,729||68,237||65,563||77,184||76,367||80,305||72,798||46,761||553,943|
|Total with Ore Loss & Dilution|
|Grade (oz Au/ton)||0.20||0.17||0.19||0.21||0.18||0.18||0.18||0.21||0.19|
|Ounces (oz Au)||45,921||49,568||50,575||57,830||49,528||55,845||48,498||32,167||389,933|
|Grade (oz Ag/ton)||0.30||0.25||0.26||0.29||0.29||0.28||0.29||0.31||0.28|
|Ounces (oz Ag)||69,602||71,419||68,220||80,221||79,660||84,131||76,294||48,731||578,279|
Metallurgy and Process
Ausenco’s metallurgists and process design engineers evaluated and reviewed extensively the previously completed metallurgical testing and conducted additional testing for recovery and grindability, leach time and cyanide concentration, amongst other parameters. The Grassy mountain processing facility will consist of a milling facility followed by a CIL circuit. Ausenco provided a recovery relationship between grade and recovery based on all tests conducted, which was used to estimate recovery on a monthly basis for the mine plan, the overall average gold and silver recoveries estimated are 92.8% for gold and 73.5 % for silver.
Grassy Mountain is located on both private and federal land. Existing road access will be upgraded to handle additional use from mine development and operation. As an alternative to on-site diesel power generation, renewable electricity will be provided by Idaho Power, from the Hope substation in Malheur County, through the construction of a power line that will bring power to site. Tailings disposal during the life of mine will be constructed in three stages, however a total of four stages have been designed to accommodate for potential mine life expansion whereby additional ore will be processed. The processing plant will consist of a crushing and mill facility, followed by CIL processing of the mill fines resulting in a mill processing design capacity of 750 tons per day. Capital costs were estimated using all new equipment. Substantial savings in capital could be achieved by sourcing used equipment which is plentiful in the western U.S.
The capital costs are highlighted in the following table:
(000’s of $US)
(000’s of $US)
(000’s of $US)
|Tailing Storage Facility||6,000||14,600||20,600|
*Rounding may cause discrepancies
The exceptional location of Grassy Mountain and the geometric nature of the deposit’s mineralization are major factors in the low processing cost as outlined in the Feasibility Study. Grassy is in close proximity to the towns of Vale and Ontario in Oregon which contributes to lower labour costs; it is just 60 miles south of the project’s cement source, Ash Grove’s cement plant in Durkee, Oregon; the mine is less than 20 miles from Idaho Power’s, hydroelectrical power substation, which will attribute a low power cost of 6 cents per kwh; the dissemination of the deposit allows for a very low waste to ore ratio; and a majority of the development was designed within the ore body or in slightly lower grade material that will be processed creating incremental revenue. These features will help Grassy deliver US gold-industry leading operating costs of $100 per ton of ore processed.
Processing cost over the life of mine are estimated at $57.5 million or $27.77 per ton of ore processed. These costs are outlined in detail as follows:
|Cost Item|| Total Costs
(000’s of $/year)
| Total Costs
| Mill Feed
|General Maintenance||1,060||13.9 %||3.9|
|Sub-total (Fixed Costs)||4,305||56.6 %||15.73|
|Reagents & Operating Consumables||1.945||25.6 %||7.1|
|Maintenance Consumables||210||2.8 %||0.8|
|Sub-total (Variable Costs)||3,297||43.4 %||12.04|
Note: Process cost only. Rounding may cause apparent discrepancies.
Total mining operating costs over the life of mine are estimated at $120.5 million. Total general and administration costs are estimated at $29.9 million ($3.73 M/Year), resulting in $72.65 per processed ton of mining cost.
|Operating Cost Item||Total Costs||Total cost||Mill feed|
|(000’s of $/Year)||%||$/t|
|Dual (Drill & Bolt) Operating||436||2.3%||$||1.68|
|Dual (Drill & Bolt) Product Operating||1,112||5.9%||$||4.30|
|Trucking CRF (Backfill)||199||1.1%||$||0.77|
|Subtotal Mining Operating Cost||7,735||41.1%||$||29.90|
|Total General Operating Cost||7,332||39.0%||$||28.33|
|TOTAL OPERATING (Mining + General)||15,067||80.1%||$||58.23|
|General and Administration||3,732||19.9%||$||14.42|
|Total Mine and G&A||18,799||100%||$||72.65|
A base case for the economic analysis was performed at gold and silver prices per ounce of $1,472 and $16.96 respectively. The base case scenario provides a post-tax IRR of 26.0 % and a NPV5% of $105 million. The break-even gold price for this mining operation is approximately $1,000 per ounce of gold.
The following table illustrates the sensitivities that a variety of gold price environments have on both the NPV and IRR:
|Base Case||Upside Case||Lower Case|
|Gold Price ($/oz)||1,472||1,900||1,300|
|Silver Price ($/oz)||16.96||16.96||16.96|
|Cash Operating Cost Per Au Ounce 1||$583||$590||$581|
|Total Cost Per Ounce Au (AISC )1||$671||$678||$669|
|After-tax Internal Rate of Return||26.0%||40.9%||19.2%|
|After-tax Net Present Value (5%) (000’s of USD’s)||$105||$195||$69|
|After-tax Net Present Value (8%) (000’s of USD’s)||$79||$156||$48|
|After-tax Net Present Value (10%) (000’s of USD’s)||$65||$134||$36|
|Payback from start of production (years)||3.1||2.0||3.7|
1After silver credits
Methods and Parameters Relevant to the Resource Estimation
The gold and silver mineral resources at Grassy Mountain were modeled and estimated using the following criteria:
- statistically evaluating the drill data;
- separately interpreting gold and silver mineral domains on a set of 070°-looking cross sections spaced at 50-foot intervals;
- rectifying the cross-sectional mineral-domain interpretations on level plans spaced at 10-foot vertical intervals and using these plans to code a block model;
- analyzing the modeled mineralization spatially and statistically to aid in the establishment of estimation and classification parameters; and
- interpolating grades into the block model using the coding of the level-plan gold and silver mineral domains to constrain the estimation.
Resources with a reasonable expectation of potential extraction by open-pit methods are constrained to lie within an optimized pit. Additional parameters used in the optimization to those provided above include a general administrative (“G&A”) cost of $2.22 per ton processed and a refining cost of $5.00 per ounce produced. The in-pit resources were then tabulated by the application of a gold-equivalent cut-off of 0.012 opt. The gold-equivalent grades were determined using a gold to silver ratio of a 100 to 1.
The effective date of the mineral resources and mineral reserves is March 31, 2020.
NI 43-101 Disclosure
The metallurgical analysis, process design development of the process plant capital and operating cost estimates and financial modeling were supervised and reviewed by Tommaso Roberto Raponi of Ausenco, a Qualified Person (as defined under National Instrument 43-101) and is independent of Paramount Gold Nevada Corp.
The mineral reserve estimate was estimated by Joseph Seamons PE, from MDA, a Division of RESPEC, a Qualified Person (as defined under National Instrument 43-101) and is independent of Paramount Gold Nevada Corp.
The mineral resource estimate was completed and reviewed by Michael Gustin of MDA, a Division of RESPEC, a Qualified Person (as defined under National Instrument 43-101) and is independent of Paramount Gold Nevada Corp.
All the above-named Qualified Persons have reviewed and approved this news release.
Paramount will file the completed NI 43-101 Feasibility Technical Report on SEDAR (www.sedar.com) within 45 days of this press release.
About Paramount Gold Nevada Corp.
Paramount Gold Nevada Corp. is a U.S. based precious metals exploration and development company. Paramount’s strategy is to create shareholder value through exploring and developing its mineral properties and to realize this value for its shareholders in three ways: by selling its assets to established producers; entering into joint ventures with producers for construction and operation; or constructing and operating mines for its own account.
Paramount owns 100% of the Grassy Mountain Gold Project which consists of approximately 11,000 acres located on private and BLM land in Malheur County, Oregon. The Grassy Mountain Gold Project contains a gold-silver deposit (100% located on private land) for which results of a positive Pre-Feasibility Study have been released and key permitting milestones accomplished.
Paramount owns a 100% interest in the Sleeper Gold Project located in Northern Nevada, the world’s premier mining jurisdiction. The Sleeper Gold Project, which includes the former producing Sleeper mine, totals 2,322 unpatented mining claims (approximately 60 square miles or 15,500 hectares). The Sleeper gold project is host to a large gold deposit (over 4 million ounces of mineralized material) and the Company has completed and released a positive Preliminary Economic Assessment.
Ausenco is a global diversified engineering, construction and project management company providing consulting, project delivery and asset management solutions to the resources, energy and infrastructure sectors. Ausenco’s experience in gold and silver projects ranges from conceptual, pre-feasibility and feasibility studies for new project developments to project execution with EPCM and EPC delivery. Ausenco is currently engaged on a number of global projects with similar characteristics and opportunities to the Grassy Mountain Gold Project.
Cautionary Note to U.S. Investors Concerning Estimates of Indicated, Inferred Resources and Reserves
This news release uses the terms “measured and indicated resources”, “inferred resources” and “proven and probable reserves”. We advise U.S. investors that while these terms are defined in, and permitted by, Canadian regulations, these terms are not defined terms under SEC Industry Guide 7 and not normally permitted to be used in reports and registration statements filed with the SEC. “Inferred resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of a feasibility study or prefeasibility studies, except in rare cases. The SEC normally only permits issuers to report mineralization that does not constitute SEC Industry Guide 7 compliant “reserves”, as in-place tonnage and grade without reference to unit measures. U.S. investors are cautioned not to assume that any part or all of mineral deposits in this category will ever be converted into reserves. U.S. investors are cautioned not to assume that any part or all of an inferred resource exists or is economically or legally minable. Under SEC Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.
Safe Harbor for Forward-Looking Statements
This release and related documents may include “forward-looking statements” and “forward-looking information” (collectively, “forward-looking statements”) pursuant to applicable United States and Canadian securities laws. Paramount’s future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and other applicable securities laws. Words such as “believes,” “plans,” “anticipates,” “expects,” “estimates” and similar expressions are intended to identify forward-looking statements, although these words may not be present in all forward-looking statements. Forward-looking statements included in this news release include, without limitation, statements with respect to the use of proceeds from the Offerings. Forward-looking statements are based on the reasonable assumptions, estimates, analyses and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. Management believes that the assumptions and expectations reflected in such forward-looking statements are reasonable. Assumptions have been made regarding, among other things: the conclusions made in the preliminary feasibility study for the Grassy Mountain Gold Project (the “PFS”); the quantity and grade of resources included in resource estimates; the accuracy and achievability of projections included in the PFS; Paramount’s ability to carry on exploration and development activities, including construction; the timely receipt of required approvals and permits; the price of silver, gold and other metals; prices for key mining supplies, including labor costs and consumables, remaining consistent with current expectations; work meeting expectations and being consistent with estimates and plant, equipment and processes operating as anticipated. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including, but not limited to: uncertainties involving interpretation of drilling results; environmental matters; the ability to obtain required permitting; equipment breakdown or disruptions; additional financing requirements; the completion of a definitive feasibility study for the Grassy Mountain Gold Project; discrepancies between actual and estimated mineral reserves and mineral resources, between actual and estimated development and operating costs and between estimated and actual production; the global epidemics, pandemics, or other public health crises, including the novel coronavirus (COVID-19) global health pandemic, and the spread of other viruses or pathogens and the other factors described in Paramount’s disclosures as filed with the SEC and the Ontario, British Columbia and Alberta Securities Commissions.
Except as required by applicable law, Paramount disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this document.
Paramount Gold Nevada Corp.
Rachel Goldman, Chief Executive Officer
Christos Theodossiou, Director of Corporate Communications
1 Cash costs consist of mining costs, processing costs, mine-level G&A and refining charges and royalties
2 AISC includes cash costs plus sustaining capital and closure costs
3 After silver credits
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