Eastmain Resources Inc. (“Eastmain” or the
“Company”) (TSX:ER) (OTCQX:EANRF) is pleased to announce positive
and robust results of a Preliminary Economic Assessment (“PEA”) on
its 100%-owned Eau Claire Gold Project (“Eau Claire” or “Project”)
located in James Bay, Québec. All figures are in Canadian dollars,
unless stated.
The Company will hold an investor conference
call to discuss the PEA at 10:00 a.m. EST on Wednesday, May 23,
2018. Conference dial-in numbers are Canada/USA toll free:
1-800-319-4610, International: 1-604-638-5340. Further conference
details are provided at the end of this Press Release.
The PEA demonstrates robust economics for a combined open pit
and underground mining operation with a mine life of 12 years.
PEA Highlights
- Pre-tax Net Present Value at 5% discount rate (“NPV5%”):
$381 million
- After-tax NPV5%: $260 million
- Pre-tax Internal Rate of Return (“IRR”): 32%
- After-tax IRR: 27%
- After-tax Payback: 3.1 years
- Pre-production Capital Cost, including contingency: $175
million
- Life of mine (“LOM”) Sustaining Capital Cost: $108
million
- Average LOM Total Cash Cost: $632 Au per ounce (oz)
(US$486/oz)
- Average LOM All-In Sustaining Costs (“AISC”): $746/oz Au
(US$574/oz)
PEA Key Assumptions and Inputs
- Assumed gold price: US$1,250/oz
- Exchange Rate: US$/C$ 0.77
- Life of Mine: 12-year mine life (3 years open pit, 10
years underground)
- Years of Full production: 10
- Open Pit Strip Ratio: 9.4:1
- Total Open Pit Dilution: 26%
- Main Underground Mining Method: Captive Longhole
- Total Underground Dilution: 40%
- Average Mining and Processing throughput: 1,500 tonnes
per day (“tpd”)
- Process Plant Recoveries: 95%
- Average Annual Production (LOM): 79,200 oz gold
- Average Annual Production (yrs 1-10): 86,100 oz gold
- LOM recovered gold production: 951,000 oz;
- Several upside opportunities identified to further improve
project economics
Claude Lemasson, President and CEO, states, “The
Eau Claire PEA is our biggest accomplishment and represents a
critical milestone in Eastmain’s history. These results fully
support the advancement of this key Project through further
pre-development activities on what could become James Bay’s next
gold mine. The PEA displays robust economics, outlining a stable
operating profile of 86,100 ounces of gold per annum at attractive
cash costs. We intend to move Eau Claire along a development track
and to aggressively pursue nearby exploration targets with
potential to provide additional process plant feed and further
improve project economics.”
PEA Key Recommendations
Technical - Initiate basic and detailed
engineering for open pit and underground ramp design to improve
mining options with a view to minimize capital requirements and to
control and minimize dilution. Gathering additional information
regarding engineering and mining of the Eau Claire deposit to
inform advanced technical studies. A detailed geotechnical study is
recommended as part of this exercise.
Develop options to improve advanced technical
study outcomes by conducting advanced underground exploration and
bulk sampling.
Permitting - Initiate baseline
studies in support of an Environmental Assessment of the Project
with consideration for advanced exploration and full mine
development options.
Community Engagement - With the
PEA as a basis for engagement, proceed to consult with the Eastmain
Cree Community and the Grand Council of the Crees (Eeyou Istchee)
as the Project’s scope, impacts and benefits become better
understood at the Advanced Exploration and Feasibility stages.
PEA Summary
The PEA was prepared by P&E Mining Consultants Inc. and is
summarized as follows:
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Table 1. PEA Summary Parameters |
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|
|
Input |
Unit |
|
Physical Parameters |
|
|
Total Tonnes Processed (LOM) |
T |
6,403,000 |
Average Annual Throughput (LOM) |
tpa |
534,000 |
Open Pit Head Grade (diluted) |
Au g/t |
3.78 |
Underground Head Grade (diluted) |
Au g/t |
5.24 |
Blended Head Grade (diluted) |
Au g/t |
4.87 |
Gold Recovery |
% |
95% |
Mine Life |
years |
12 |
Total Ounces Recovered |
oz |
951,000 |
Average Annual Production (LOM) |
oz |
79,200 |
Average Annual Production (yrs 1-10) |
oz |
86,100 |
Cost Parameters |
|
|
Mining Costs (blended) |
C$/t |
58.71 |
Processing Costs |
C$/t |
22.59 |
Site G&A |
C$/t |
12.53 |
Total Costs |
C$/t |
93.83 |
Pre-Production Capital Costs |
|
|
Open Pit Development |
C$M |
21.8 |
Equipment & Infrastructure |
C$M |
42.9 |
Tailings |
C$M |
4.6 |
Process Plant Construction |
C$M |
67.1 |
Owner Costs |
C$M |
11.1 |
Contingency (20%) |
C$M |
27.3 |
Total Pre-Production Capital |
C$M |
174.7 |
Sustaining Capital (LOM) |
C$M |
108.2 |
Cost Summary |
|
|
LOM Average Cost |
C$/oz |
632 |
|
US$/oz |
486 |
LOM AISC |
C$/oz |
746 |
|
US$/oz |
574 |
|
|
|
Mineral Resource Estimate
An updated NI 43-101 Mineral Resource Estimate, effective
February 4th, 2018, is included within the PEA and will be filed on
SEDAR within 45 days of this press release. The Updated Mineral
Resource Estimate reflects the inclusion of an additional 19 drill
holes (14,884 m) which were completed from September to November,
2017 which increased Eau Claire’s Mineral Resource Estimates by
62,000 oz at a grade of 6.9 g/t Au (Tables 2 & 3).
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Table 2. Mineral Resource Estimate (effective
February 4th,
2018)(1)(2)(3)(4)(5) |
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|
|
|
Category |
Tonnes |
(g/t Au) |
Contained Au (oz) |
Measured |
906,000 |
6.63 |
193,000 |
Indicated |
3,388,000 |
6.06 |
660,000 |
Total M&I |
4,294,000 |
6.18 |
853,000 |
Inferred |
2,382,000 |
6.53 |
500,000 |
|
|
|
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Table 3. Open Pit and Underground Mineral
Resources (effective February
4th,
2018)(1)(2)(3)(4)(5) |
|
|
|
|
Open Pit (surface to 150
m) |
Underground(150 m – 860
m) |
Category |
Tonnes |
Grade(g/t Au) |
ContainedAu (oz) |
Tonnes |
Grade(g/t Au) |
ContainedAu (oz) |
Measured |
574,000 |
6.66 |
123,000 |
332,000 |
6.56 |
70,000 |
Indicated |
636,000 |
5.13 |
105,000 |
2,752,000 |
6.27 |
555,000 |
Measured & Indicated |
1,210,000 |
5.86 |
228,000 |
3,084,000 |
6.30 |
625,000 |
Inferred |
43,000 |
5.06 |
7,000 |
2,339,000 |
6.56 |
493,000 |
- Mineral resources which are not mineral reserves do not have
demonstrated economic viability. All figures are rounded to reflect
the relative accuracy of the estimate. Composites have been capped
where appropriate.
- The Mineral Resources in this press release 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.
- Open pit mineral resources are reported at a cut-off grade of
0.5 g/t gold and underground mineral resources are reported at a
cut-off grade of 2.5 g/t gold. Cut-off grades are based on a gold
price of US$1,250 per ounce, a foreign exchange rate of US$0.80,
and a gold recovery of 95%.
- The results from the pit optimization are used solely for the
purpose of testing the “reasonable prospects for economic
extraction” by an open pit and do not represent an attempt to
estimate mineral reserves. There are no mineral reserves on the
Property. The results are used as a guide to assist in the
preparation of a mineral resource statement and to select an
appropriate resource reporting cut-off grade.
- The estimate of Mineral Resources may be materially affected by
environmental, permitting, legal, title, socio‐political,
marketing, or other relevant issues.
Potentially Extractable Portion of Mineralization for
Mine Planning Purposes
The PEA demonstrates that approximately 71% of
the 2018 updated Mineral Resources are potentially extracted under
the mine plan supported by the PEA. For purposes of mine planning,
the Potentially Extractable Portion of Mineralization is comprised
of 6.4 million tonnes at a diluted grade of 4.9 g/t Au, containing
just over 1 million ounces of gold. The mineralized material
modeled to be mined in the PEA contains Mineral Resources
classified in the Inferred category (30%) which cannot be
considered Mineral Reserves. These Inferred resources will require
further exploration and definition to meet the criteria to be
classified as Indicated or Measured resources before being
considered for conversion to Mineral Reserves at the next level of
detailed economic study.
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Table 4. Potentially Extractable Portion of the Mineral
Resource Estimate (diluted and
extracted)(1)(2)(3) |
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|
|
|
|
Tonnes |
Grade (g/t Au) |
Contained Au(Oz) |
Pit Production |
1,641,000 |
3.78 |
199,000 |
UG Production |
4,762,000 |
5.24 |
802,000 |
Total Production |
6,403,000 |
4.87 |
1,001,000 |
- Mineral resources, which are not mineral reserves, do not have
demonstrated economic viability. Environmental, permitting, legal,
title, taxation, sociopolitical, marketing, or other relevant
issues may materially affect the estimate of mineral resources. 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 resource and it is uncertain if further
exploration will result in upgrading them to an Indicated or
Measured mineral resource category.
- The potentially extractable portion of the Mineral Resource
Estimate was prepared by Eugene Puritch, P. Eng. and Andrew
Bradfield P.Eng. of P&E Mining Consultants Inc. Mineral
Resource Estimate reported in this press release was estimated
using the Canadian Institute of Mining, Metallurgy and Petroleum
(CIM), Standards on Mineral Resources and Reserves, Definitions and
Guidelines prepared by the CIM Standing Committee on Reserve
Definitions.
- The potentially extractable portion of the Open pit Mineral
Resources are reported at a cut-off grade of 0.66 g/t gold and the
potentially extractable portion of the Open pit Mineral Resources
underground mineral resources are reported at a cut-off grade of
2.7 g/t gold. Cut-off grades are based on a gold price of US$1,250
per ounce, a foreign exchange rate of US$0.80, and a gold recovery
of 95%. Table entries are rounded
Mine Plan
Proposed mining would commence with open pit mining followed by
underground mining.
The PEA proposes a conventional truck and shovel
open pit operation, followed by ramp access and captive long-hole
open stoping in the underground portion of the mine. The mine plan
is to extract the upper portions of the Mineral Resources (top 100
metres) using open pit mining methods. While the open-pit is
producing, an underground portal will be established outside of the
pit and an underground ramp will be extended below the proposed
crown pillar.
The PEA schedule assumes mining of 1,641,000
tonnes of mineralized material at 3.78 g/t Au for 199,000 oz Au
contained over three years from the two open pits. The open pit
operations consist of production from the Main Pit (650 m x 275 m x
100 m depth) and the smaller West Pit (260 m x 120 m x 40 m depth),
to be mined at a bench height of five metres. The open pits have an
average strip ratio of 9.4:1.
Underground mining will progress by captive
longhole methods in a top-down fashion with major sublevels every
24 metres. The underground operation assumes mining of 4,762,000
tonnes of mineralized material grading 5.24 g/t Au for 801,500 oz
over 11 years. The average planned dilution factor was
conservatively applied at 40% at zero dilution grade.
The PEA schedule assumes a combined open pit and underground
operations of 6,403,000 tonnes of mineralized material at blended
grade of 4.87 g/t Au for 1,001,000 contained oz Au over 12
years.
Processing and Recovery
Gold mineralization will be processed in a 1,500
tpd process plant using conventional crushing, grinding,
cyanidation and Carbon In Pulp (“CIP”) processes. The conventional
cyanidation circuit includes a gravity concentration within the
grinding circuit followed by direct cyanidation of gravity tails.
The PEA recovery factor relies on metallurgical test work conducted
by SGS Lakefield Research Limited which indicates gold recovery of
95% is attainable with gravity and cyanidation processes. A bond
ball mill index of 11.0 kWh/t indicates material will not require
high energy to be processed.
Infrastructure & Tailings
Power to the Project will be sourced through an
18 km power line from a substation at the Hydro Québec Eastmain
power dam to the project site. Site overall power consumption will
average 7 MW.
Tailings will be dewatered in the process plant
and transported by truck to a geomembrane-lined Tailings Management
Facility (TMF), reducing risk for potential surface and groundwater
contamination. The TMF design will incorporate engineered features
to manage the chemical and physical stability of the deposited
tailings in accordance with current best-in-class practices. This
mitigation strategy is similar to those at other operations in the
region.
Major surface facilities to support the Eau
Claire Project will include an administration and engineering
building, security, warehouse, fuel and explosive storage, fire
protection, maintenance shops and a mine camp that can accommodate
200 people.
Capital Costs and Sensitivity
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Table 5. Capital Cost Summary |
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|
|
|
Input(all C$M) |
Pre-Production |
Sustaining |
LOM |
Development |
21.8 |
84.3 |
106.1 |
Equipment & Infrastructure |
42.9 |
- |
42.9 |
Tailings |
4.6 |
5.5 |
10.1 |
Process Plant |
67.1 |
0.5 |
67.6 |
Owner Costs |
11.0 |
- |
11.0 |
Contingency (20%) |
27.3 |
18.0 |
45.3 |
Total Capital Costs |
174.7 |
108.2 |
282.9 |
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Table 6. NPV, IRR and Payback
Summary |
|
|
|
|
|
Gold Price
Sensitivities |
Unit |
US$1,150/oz |
US$1,250/ozBase Case |
US$1,350/oz |
Macro Parameters |
|
|
|
|
Gold Price |
US$/oz |
1,150 |
1,250 |
1,350 |
Exchange Rate |
C$/US$ |
0.77 |
0.77 |
0.77 |
Pre-Tax |
|
|
|
|
NPV5% |
C$M |
297.4 |
380.9 |
464.4 |
IRR |
% |
27 |
32 |
36 |
After-Tax |
|
|
|
|
NPV5% |
C$M |
205.4 |
260.2 |
315.1 |
IRR |
% |
23 |
27 |
31 |
Payback |
years |
3.7 |
3.1 |
2.6 |
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Opportunities to Enhance Project Value
Exploration - Deposit Expansion and Property-Scale
Satellite Mineral Resource Development
Opportunities exist to expand and build Mineral
Resources proximal to the proposed underground mine infrastructure
at Eau Claire. In particular, exploration on the 450W zone has
indicated that gold mineralization may extend at depth to the
southeast.
Gold mineralization has been historically
identified and recently confirmed at numerous surface prospects
within several kilometres of Eau Claire. Additional Mineral
Resources which may be defined at these prospects could support
larger scale production and extend mine life.
Advanced Exploration Ahead of Advanced
Technical and Feasibility Studies
Underground exploration via a ramp, combined with underground
bulk sampling, will provide enhanced understanding of the
high-grade vein systems and detailed geotechnical information which
could optimize the mining and financial considerations used in
future advanced technical studies for Eau Claire.
About the Eau Claire Deposit
The Eau Claire Deposit is located in the
province of Québec, approximately 800 kilometres north of Montreal
and 350 kilometres north of Chibougamau. The Deposit is readily
accessible by road along the Route du Nord extending from
Chibougamau onto the village of Nemiscau and via Hydro Québec’s
Eastmain-1 road network. The centre of the Property is located at
approximately 75.69 degrees longitude west and 52.23 degrees
latitude north.
The Project is located north of the 52nd
parallel (52ºN) and as such is subject to the provisions of the
James Bay and Northern Québec Agreement (1975) (“JBNQA”), and the
Paix des Braves Agreement (2002). The Project falls within the
Eeyou Istchee Territory of the Eastmain Cree First Nation,
including the trap lines held by Dr. Ted Moses (tallyman), and on
Category II and III lands, as established under the JBNQA.
The Eau Claire Deposit is a
structurally-controlled gold deposit. Mineralization occurs
primarily in a series of sheeted en-echelon quartz-tourmaline
veins; subordinate mineralization occurs as dissemination in the
host rock. The en-echelon pattern is hosted within a structural
corridor and trends from northwest to the southeast. Individual
veins range from less than a metre to several metres thick and
extend for at least 100 metres along strike.
Gold mineralization at the Eau Claire Gold
Deposit is generally located within approximately EW trending
structurally-controlled, high-grade en-echelon quartz-tourmaline QT
veins (formerly named HGV) and adjacent altered wall rocks, as well
as variable width ESE trending sheared and foliated schist zones,
HGS veins, of altered gold-bearing rock. HGS zones are aligned
parallel to the host rock foliation and interpreted to parallel to
the southern, or hanging wall, side of the Deposit. The vein
systems are predominantly hosted within a thick sequence of massive
and locally pillowed mafic volcanic flows, interbedded with narrow
intervals of volcaniclastic meta-sedimentary rocks. Both flows and
sediments have been intruded by multiple phases of felsic and
porphyry dykes. Host rocks have been folded and deformed (sheared)
through several deformation events. Both gold bearing vein sets may
occur with as narrow intervals with tourmaline and develop into
thick quartz-tourmaline veins with zoned
tourmaline+/-actinolite+/-biotite+/-carbonate alteration halos
which can measure up to several metres in thickness. Carbonate
occurs to varying degrees in the vein mineralization.
The two major QT vein areas discovered to date
(the 450 West and 850 West zones) form a crescent-shaped,
mineralized body 1.8 kilometres long by more than 100 metres wide,
which has been traced to date to a vertical depth of 900 metres.
Veins within the 450 West zone typically strike 85 degrees and dip
45 to 60 degrees to the south. Mineralization within the veins
plunges steeply to the southeast, sub-parallel to an F2 fold axis.
Veins within the 850 West zone typically strike 60 degrees and dip
sub vertically. Mineralization within this vein set plunges gently
to the southwest.
QA/QC Statement
Eastmain conducts quality control under the
supervision of Qualified Persons at all its exploration projects to
ensure best practices from sample preparation to data collection
and analysis. Drill core is logged and split with half-core samples
packaged and delivered to ALS Minerals laboratories. Samples are
dried and subsequently crushed to 70% passing a 2 mm mesh screen. A
1,000 gram sub-sample is pulverized to a nominal 85% passing 75
micron mesh screen. The remaining core and selected crushed
sample (reject) and pulverized sample (pulp) are retained for
further analysis and quality control. All samples are analyzed for
gold by Fire Assay with an Atomic Absorption (AA) finish using a 50
gram aliquot of pulverized material. Assays exceeding 5 g/t Au are
re-assayed by Fire Assay with a Gravimetric Finish. Eastmain
regularly inserts 3rd party reference control samples and blank
samples in the sample stream to monitor assay performance and
performs duplicate sampling of pulps and rejects at a second
certified laboratory. For recent programs at Eau Claire
approximately 10% of samples submitted are part of the Company’s
laboratory sample control protocols.
Qualified Persons and NI 43-101 Disclosure – Preliminary
Economic Assessment (“PEA”)
This PEA is preliminary in nature and includes
Inferred Mineral Resources that are too speculative geologically to
have economic considerations applied to them that would enable them
to be categorized as Mineral Reserves. There is no certainty that
PEA results will be realized. Mineral Resources are not Mineral
Reserves and do not have demonstrated economic viability.
The PEA was prepared under the supervision of
Mr. Eugene J. Puritch, P. Eng. FEC, CET, President of P&E. Mr.
Puritch is an independent Qualified Person as defined by NI 43‐101
and has reviewed and approved the contents of this news release
related to the Preliminary Economic Assessment. A NI 43‐101
Technical Report is currently being prepared by P&E and will be
filed on SEDAR within 45 days of this news release.
Qualified Persons and NI 43-101 Disclosure – 2018
updated Mineral Resource Estimate
The updated Mineral Resource Estimate for the
Eau Claire Gold Deposit described herein was prepared by SGS Canada
Inc. (“SGS”) and complies with all current disclosure requirements
for Mineral Resources set out in the NI 43-101 Standards of
Disclosure for Mineral Projects. The classifications described in
the 2018 updated Mineral Resource Estimate are consistent with
current CIM Definition Standards - For Mineral Resources and
Mineral Reserves. The 2018 updated Mineral Resource Estimate was
prepared by Allan Armitage, Ph.D., P. Geo, (“Armitage”) of SGS. Mr.
Armitage is an independent Qualified Person as defined by NI
43-101.
The 2018 updated Mineral Resource Estimate and
supporting information will be included within the technical report
for the Eau Claire Preliminary Economic Assessment
Conference Call
The Company will hold an investor conference call to discuss the
PEA.
DETAILSDATE: Wednesday, May 23, 2018 TIME:
10:00 am Eastern time Kindly call in 5 – 10 min ahead of
scheduled start time. PHONE NUMBERS Canada/USA
toll free: 1-800-319-4610 International: 1-604-638-5340
CONFERENCE CALL REPLAY Canada/USA toll free:
1-855-669-9658 International: 1-604-638-9010 Access Code: 2342
A replay of the call will be available on May 23 until June 6,
2018.
A live webcast of the conference call, along with supporting
presentation slides, will be available via the following link:
http://www.eastmain.com/investors/events/. A replay of the webcast
will be available from May 23 until August 23, 2018.
About Eastmain Resources Inc. (TSX:ER)
(OTCQX:EANRF)
Eastmain is a Canadian exploration company
advancing three high-grade gold assets in the emerging James Bay
gold camp in Québec. The company holds a 100% interest in the Eau
Claire and Eastmain Mine gold deposits where the Company has
prepared NI 43-101 Mineral Resource Estimates in 2018. Eastmain is
also a partner in the Éléonore South joint venture located
immediately south of Goldcorp Inc.'s Éléonore Mine which hosts a
new high-grade gold discovery found in 2017. In addition, the
company has a pipeline of exploration projects in this favourable
mining jurisdiction with nearby infrastructure.
For more
information:
Claude Lemasson, President and CEO+1
647-347-3765lemasson@eastmain.com
Laurenn Russell, Investor Relations Consultant+1
647-347-3735lrussell@eastmain.com
Forward- Looking Statements – Certain
information set forth in this news release may contain
forward-looking statements that involve substantial known and
unknown risks and uncertainties. Forward-looking statements consist
of statements that are not purely historical, including statements
regarding beliefs, plans, expectations or timing of future plans,
and include, but not limited to, statements with respect to the
potential success of the Company’s future exploration and
development strategies. These forward-looking statements are
subject to numerous risks and uncertainties, certain of which are
beyond the control of Eastmain, including, but not limited to the
impact of general economic conditions, industry conditions,
dependence upon regulatory approvals, the availability of
financing, timely completion of proposed studies and technical
reports, and risks associated with the exploration, development and
mining industry generally such as economic factors as they affect
exploration, future commodity prices, changes in interest rates,
safety and security, political, social or economic developments,
environmental risks, insurance risks, capital expenditures,
operating or technical difficulties in connection with development
activities, personnel relations, the speculative nature of gold
exploration and development, including the risks of diminishing
quantities of grades of Mineral Resources, contests over property
title, and changes in project parameters as plans continue to be
refined. Readers are cautioned that the assumptions used in the
preparation of such information, although considered reasonable at
the time of preparation, may prove to be imprecise and, as such,
undue reliance should not be placed on forward-looking statements.
The Company assumes no obligation to update such information,
except as may be required by law.