Element79 Gold Corp secures loi for
launching tailings reprocessing business in Arequipa, Peru
Vancouver, BC
– September 26th, 2024 – InvestorsHub NewsWire -- Element79
Gold Corp (CSE: ELEM, OTC: ELMGF, FSE: 7YS0, Hereinafter "Element79
Gold"), a mining company
focused on gold and silver committed to maximizing shareholder
value through responsible mining practices and sustainable
development of its projects is pleased to announce the signing of a
Letter of Intent (LOI) with S.M.R.L. PALAZA 16 ("Palaza"), marking
a significant milestone in the Company's strategic efforts to
restart the Lucero mine and concentrate its focus in the Arequipa,
Peru region. This agreement represents a unique and substantial
economic opportunity for both parties involved, with multiple
additional social and environmental benefits for the local region
and community.
Under the terms of the LOI,
Element79 Gold will have the exclusive right to purchase and
process approximately 1.3 million tons of tailings currently
controlled by Palaza. These tailings, a byproduct of previous
mining activities at the Shila and Paola Mines (now known as the
Lucero Mine), present a valuable resource for reprocessing for
commercial benefit, to cooperatively strengthen regional and
community ties via Palaza's long-term relationships in the region,
as well as the tailings project stands to become a stronger
foothold for the Company's mining operations in the region
immediately surrounding the Lucero mine.
Image 1:
Element79's core mineral rights holdings of the Lucero
past-producing mine, outlining the tailings facilities facilities
(Relaveras) and former Staging Area (Desmontera)
Key
Highlights of the LOI Agreement:
Strategic
Acquisition: Element79
Gold will purchase the tailings from Palaza for a competitive price
of USD $10 per ton, plus VAT (18%), with a base case (optional
total batch purchase) of $10 per metric ton at USD 2,200 per Oz,
subject to increases based on the market value of gold at the time
that batches are purchase. This acquisition aligns with Element79
Gold 's strategic objective to enhance its resource
base.
The 43-101 and PEA Studies to be
completed on the tailings piles during the Due Diligence period and
through 2024 will feed further institutional funding of the
Company's growth.
Construction
of Processing Plant: Palaza has authorized Element79 Gold to
construct a processing plant on its property. This facility will
not only process the acquired tailings but also become a foothold
to accommodate other mineral ore inputs, from Lucero's production
and regional Artisanal Small-scale Miners (ASMs), with an eye to
maximize operational efficiency and output.
Initial
Deposit and Due Diligence: Element79 Gold will make an initial
non-refundable deposit of USD $25,000, followed by a comprehensive
due diligence period of 75 days. This thorough evaluation will
ensure the viability and profitability of the reprocessing
project.
Upon completion of Due Diligence,
an additional USD $50,000 deposit will be required to proceed, in
conjunction with the completion of the Definitive
Agreement.
All deposits paid will be
credited as prepayments for tailings.
Royalties and
Economic Impact: In
addition to the purchase price, for all tailings processed,
Element79 Gold will pay Palaza a 1% royalty based on the London
Metals Exchange (LME) spot price of gold, reflecting the dynamic
and lucrative nature of this venture. This agreement is poised to
generate significant economic benefits for both Element79 Gold and
Palaza, as well as contribute positively to the local economy in
Chachas, and other neighbouring communities in Arequipa.
New
Technologies Being Tested to Implement: Element79 Gold has been reviewing a number of
ways to increase the safety and minimize the environmental impact
of the proposed tailings processing plant, and through its due
diligence period, will be testing milling and processing with and
without chemicals, milled ore beneficiation, efficiencies, and soil
impermeability to prevent soil leaching.
Community and
Environmental Considerations: The project will be executed with full
compliance with local regulations and in close collaboration with
Chachas Community and other surface landholders. Element79 Gold is
committed to ensuring that all activities meet stringent
environmental and community standards.
PROJECT DATA
AND ECONOMIC PROJECTIONS
Total
Tailings Volume: Approximately 1.3 million tons of tailings
available for reprocessing, located on the same ingress/egress road
to the Lucero mine.
Processing
Plant Capacity: The new
plant will have the capability to handle up to 350 tons per day
(tpd) of mineral.
Economic
Impact: The agreement is
expected to generate substantial revenue streams for both parties,
with significant contributions to the local economy through job
creation and community investments.
Potential
Revenue Generation from Tailings:
NOTE: *all
estimates subject to change via data collected via the Due
Diligence period, to be reaffirmed via third-party Pre-Economic
Analysis report*
Estimated
Recovery: Based on 2011
and 2012 Plenge Lab tests, AuEq found in the tailings at that time
was approximately 1.5g/t. Gold solubility/recovery from the tailings is
projected at 85% and silver at 75%. Palaza's estimates are that
there is approximately 50,000oz of gold equivalent recoverable
through the life of the project.
Projected
Revenue: Potential
estimated gross AuEq of $100 million (assuming $2,000 gold price)
with 80% recoverable resources ($80 million), minus $16 million
input (tailings) cost and scalable $6-20 million plant cost,
resulting in $44-58 million gross over a 15-year project life
($2.9-5.3 million annual gross).
SOCIAL AND
ENVIRONMENTAL BENEFITS:
Social:
This venture has been a
long-standing issue for the local population by completing the
final remediation of the with the four piles of dry-stacked
tailings that have been left inert and covered by "bio-membranes"
and limestone rock for approximately 19 years without
remediation.
In reprocessing these tailings,
they will be put in their final resting place along with additional
tailings created by production from Lucero and other regional
ASMs.
Environmental:
Cleans up a benign environmental
issue that has been outstanding for the past 20 years.
Economic:
Creates a revenue-positive
project that serves as a catalyst for building a production plant
on-site and becoming a regional hub for local
ASMs.
A common thread of conversation
with the Chachas community and the Lomas Doradas artisanal mining
association has been the desire to have a plant more regionally
proximate to the community, as they are currently shipping mined
ores approximately 600km away to have it processed today. Helping
to eliminate logistical costs, risks and time are all beneficial
factors to local miners.
NEXT
STEPS:
Due
Diligence: Upon paying
the deposit, the Company will have 75 days to complete due
diligence, which data will feed a 43-101 Mineral Resource Estimate
report and Preliminary Economic Assessment (PEA). A Go/No Go
decision will follow these reports, with a USD $50,000 payment due
upon the completion of the Definitive Agreement.
All deposits paid will be credited as
prepayments for tailings.
The Company will pull augur
samples from all four piles and, provided that lab tests meet
required internal decision-making standards, the Company will have
a 43-101 compliant Mineral Resource Estimate of the tailings
generated as well as a third-party PEA completed, which will
encompass the project economics, work flow through the life of the
project and the final resting place for up to 2.5M tons of tailings
generated from processing the tailings and other throughput.
The Company anticipates that
these reports will form the foundation of what it will require to
obtain institutional funding for the development of the
mill/tailings processing facility as well restart commercial
production at the Lucero mine.
Permitting,
Community Consultation: Securing permits for working with the
tailings and building a plant will be process undertaken with the
Chachas community and state authorities through Fall 2024/Winter
2025, aiming for a 90-day plant construction start in estimated end
of Q1 to start of Q2 2025 after the rainy season ends.
"We are thrilled to enter into this strategic
partnership with Palaza, which underscores our ongoing commitment
to strengthening our presence and operational capacity with
innovative and sustainable mining practices," said James Tworek,
CEO and Director of Element79 Gold Corp. "The Palaza team have
worked in the region for decades, have solid local relationships
and have valuable experience of having explored and worked at the
Shila mine in the past. The end point of this agreement not only
enhances Element79's accessible resource base but also positions us
for long-term growth and profitability, while helping remediate the
tailings piles to stable closure as well as provide a solution to
many of the local logistical obstacles to increasing production
from the Lucero mine and other mines in the region. We are
confident that the reprocessing of these tailings will yield
significant economic benefits for both Parties and the Communities
involved as well as strengthen our presence in the Peruvian mining
sector."
Qualified
Person
The technical information in
this release has been reviewed and verified by Kim Kirkland, Fellow
of AusIMM #309585, Chief Operating Officer of Element79 Gold Corp,
and a "qualified person" as defined by National Instrument
43-101.
About
S.M.R.L. PALAZA 16
S.M.R.L. PALAZA 16 is a Peruvian
mining company with extensive experience in the management of
Andean mining projects, including reprocessing of mining tailings.
Located in the Arequipa region, PALAZA is dedicated to leveraging
its decades of experience in the region and resources for
sustainable and profitable operations.
About
Element79 Gold Corp
Element79 Gold is a mining
company with a focus on exploring and developing its
past-producing, high-grade gold and silver mine, the Lucero project
located in Arequipa, Peru, with the intent to restart production in
the near term.
The Company holds a portfolio
of four properties along the Battle Mountain trend in Nevada, and
the projects are believed to have significant potential for
near-term resource development. The Company has retained the Clover
project for resource development purposes and signed a binding
agreement to sell three projects with a closing date on or before
November 30, 2024.
The Company also holds an
option to acquire a 100% interest in the Dale Property, 90
unpatented mining claims located approximately 100 km southwest of
Timmins, Ontario, and has recently announced that it has
transferred this project to its wholly owned subsidiary, Synergy
Metals Corp, and is advancing through the Plan of Arrangement
spin-out process.
For more information about the Company,
please visit www.element79.gold
Contact Information For corporate matters,
please contact:
James C. Tworek, Chief Executive Officer and
Director
E-mail: jt@element79.gold
For investor relations inquiries, please
contact:
Investor Relations Department
Phone: +1.403.850.8050
E-mail: investors@element79.gold
Cautionary Note Regarding Forward-Looking
Statements This press contains "forward-looking information" and
"forward-looking statements" under applicable securities laws
(collectively, "forward-looking statements"). These statements
relate to future events or the Company's future performance,
business prospects or opportunities that are based on forecasts of
future results, estimates of amounts not yet determinable and
assumptions of management made considering management's experience
and perception of historical trends, current conditions and
expected future developments. Forward-looking statements include,
but are not limited to, statements with respect to: the Company's
business strategy; future planning processes; exploration
activities; the timing and result of exploration activities;
capital projects and exploration activities and the possible
results thereof; acquisition opportunities; and the impact of
acquisitions, if any, on the Company. Assumptions may prove to be
incorrect and actual results may differ materially from those
anticipated. Consequently, forward-looking statements cannot be
guaranteed. As such, investors are cautioned not to place undue
reliance upon forward-looking statements as there can be no
assurance that the plans, assumptions or expectations upon which
they are placed will occur. All statements other than statements of
historical fact may be forward-looking statements. Any statements
that express or involve discussions with respect to predictions,
expectations, beliefs, plans, projections, objectives or future
events or performance (often, but not always, using words or
phrases such as "seek", "anticipate", "plan", "continue",
"estimate", "expect", "may", "will", "project", "predict",
"forecast", "potential", "target", 4 of 4 "intend", "could",
"might", "should", "believe" and similar expressions) are not
statements of historical fact and may be "forward-looking
statements". Actual results may vary from forward-looking
statements. Forward-looking statements are subject to known and
unknown risks, uncertainties and other factors that may cause
actual results to materially differ from those expressed or implied
by such forward-looking statements, including but not limited to:
the duration and effects of the coronavirus and COVID-19; risks
related to the integration of acquisitions; actual results of
exploration activities; conclusions of economic evaluations;
changes in project parameters as plans continue to be refined;
commodity prices; variations in ore reserves, grade or recovery
rates; actual performance of plant, equipment or processes relative
to specifications and expectations; accidents; labour relations;
relations with local communities; changes in national or local
governments; changes in applicable legislation or application
thereof; delays in obtaining approvals or financing or in the
completion of development or construction activities; exchange rate
fluctuations; requirements for additional capital; government
regulation; environmental risks; reclamation expenses; outcomes of
pending litigation; limitations on insurance coverage as well as
those factors discussed in the Company's other public disclosure
documents, available on www.sedarplus.ca. Although the Company has
attempted to identify important factors that could cause actual
results to differ materially from those contained in
forward-looking statements, there may be other factors that cause
results not to be as anticipated, estimated or intended. The
Company believes that the expectations reflected in these
forward-looking statements are reasonable, but no assurance can be
given that these expectations will prove to be correct and such
forward-looking statements included herein should not be unduly
relied upon. These statements speak only as of the date hereof. The
Company does not intend, and does not assume any obligation, to
update these forward-looking statements, except as required by
applicable laws. Neither the Canadian Securities Exchange nor
the Market Regulator (as that term is defined in the policies of
the Canadian Securities Exchange) accepts responsibility for the
adequacy or accuracy of this release.
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