All amounts are in Canadian Dollars (or
"C$") unless otherwise noted
TSXV: ARTG
- INDUSTRY LEADING AFTER-TAX NPV5% OF
C$2.15 BILLION
- COMPELLING AFTER-TAX BASE CASE IRR OF 32% FOR A WORLD
CLASS, LARGE SCALE, ADVANCED DEVELOPMENT ASSET IN A TIER-ONE MINING
JURISDICTION
- LEVERED AFTER-TAX IRR OF 43%
- YEARS 1-5: AVERAGE ANNUAL GOLD PRODUCTION UP 29% FROM THE
2020 PFS TO 321,000 OUNCES AT AISC OF US$578/oz, AVERAGE GRADE OF 1.62 g/t Au AND STRIP
RATIO OF 1.7:1
- YEARS 1-10: AVERAGE ANNUAL GOLD PRODUCTION OF 351,000
OUNCES AT AISC OF US$643/oz
- LOM: AVERAGE ANNUAL GOLD PRODUCTION OF 339,000 OUNCES AT
AISC OF US$672/oz
- AFTER-TAX PAYBACK PERIOD OF 2 YEARS
- DE-RISKS CAPEX AND OPEX ESTIMATES & UPDATES FOR
CURRENT PRICES
- A 9% INCREASE IN INITIAL DEVELOPMENT CAPITAL TO
C$645 MILLION ACHIEVES A 9% INCREASE
IN INITIAL ANNUAL THROUGHPUT, COSTING UPDATED REFLECTS LARGER
CRUSHING CIRCUIT AND INVESTMENTS IN ESG
VANCOUVER, BC, Sept. 13, 2021 /CNW/ - Artemis Gold Inc.
("Artemis" or the "Company") is pleased to announce
the results of its 2021 Feasibility Study ("FS" or the
"Study") for the staged development of the 100% owned
Blackwater Gold Project in central British Columbia ("Blackwater" or the
"Project").
The results of the Study supersede the 2020 Prefeasibility Study
("2020 PFS") dated August 26,
2020 entitled "Blackwater Gold Project British Columbia NI
43-101 Technical Report on Pre-Feasibility Study" filed on SEDAR by
Artemis on September 18, 2020. The
results of the FS reflect several positive changes in the approach
to the planned development of the Blackwater Project compared with
the 2020 PFS. The scope changes incorporated in the Study
include:
- Higher initial throughput: Phase 1 throughput has been
expanded 9% to 6 million tonnes per annum ("Mtpa") with a
larger crushing circuit, providing greater operational throughput
upside potential in the early years, up from 5.5Mtpa in the 2020
PFS.
- Streamlined Phase 2 & 3 Expansions: a greatly
reduced footprint of the FS Stage 1 facility, and the installation
of a higher-capacity gyratory crusher in the proposed Stage 1
development. Importantly this allows for a streamlined and
construction-ready approach to the Phase 2 Expansion throughput of
12Mtpa. The increase in up-front investment of C$53 million reduces expansion capital
to:
-
- C$347 million (a reduction of
C$79 million from C$426 million in the 2020 PFS) for the Phase 2
expansion to 12Mtpa
- C$374 million (a reduction of
C$24 million from C$398 million in the 2020 PFS) for the Phase 3
expansion to 20Mtpa
- Net impact is a slight increase in total life of mine
("LOM") capital to fund the 3 Phases of development to
C$1,417 million, up from C$1,415 million in the 2020 PFS.
- Accelerated Phase 2 & Phase 3 expansions: Phase 2
expansion begins with an expansion to 9Mtpa in year 5 (up from
5.5Mtpa in year 5 in the 2020 PFS), ramping up to 12Mtpa in year 6.
Phase 3 expansion begins with an expansion to 15Mtpa in year 10 (up
from 12Mtpa in year 10 in the 2020 PFS), ramping up to 20Mtpa in
year 11;
- An Environment, Social Governance ("ESG") commitment in the
Stage 1 development phase: an initial investment to replace
diesel and propane-powered components within the process plant
facility reduces the carbon footprint of the Project;
- Phase 3 throughput of 20Mtpa is supported by two mineral
processing trains, reduced from three in the 2020 PFS: results
in lower overall maintenance and labour costs, with improved
economies of scale at higher throughput rates;
- Estimate accuracy increased with reduced risk: the FS
costing accuracy has improved to +15% /-10% (from +25%/-10% in the
2020 PFS). Engineering undertaken in connection with the guaranteed
maximum price ("GMP") memorandum of understanding
("MOU") on each of the process plant and the power
transmission line have de-risked these components since the 2020
PFS. The achievement of negotiated fixed-price EPC contracts for
these components of capital cost (targeted for Q4 2021/Q1 2022)
will also mitigate the potential for capital cost and schedule
overruns on up to approximately 50% of the initial development
capital estimate;
- Compelling economics even after reflecting current
inflationary pressures, timelines and additional management driven
environmental investments: the initial development capital has
increased 9% to C$645 million, up
from C$592 million, which provides a
9% increase in Phase 1 annual throughput, with current pricing, and
environmental investments. The net result is an after-tax net
present value at a 5% discount rate ("NPV5%") of
C$2.15 billion, an after-tax Internal
rate of return ("IRR") of 32%, and an after-tax payback
period of 2.3 years, essentially in line with the 2020 PFS.
Key Economic Outputs of the Study
- Base case after-tax NPV5% of C$2.15 billion reflecting current market
consensus long term forecast gold price of US$1,600/oz and 0.79
USD/CAD exchange rate (C$2,025/oz, effectively the same C$ gold price as
the 2020 PFS of C$2,028/oz)
increasing to C$2.76 billion at a
US$1,800/oz gold price;
- Base case after-tax IRR of 32%, approximating the 2020 PFS
after-tax IRR of 35% after incorporating higher initial development
capital and ESG investments. Levered1 after-tax IRR of
43%;
- Initial development capital cost of C$645 million to develop a 6Mtpa Phase 1 open pit
mining and processing operation (up from a 5.5Mtpa operation in the
2020 PFS);
- Exceptional after-tax payback period on initial capital cost of
2.3 years;
- Optimized mine plan increases average grade to 1.62 g/t Au over
the first five years of production, up from 1.57 g/t Au in the 2020
PFS, combined with average throughput of 6.6Mtpa increases average
annual gold production by 29% (compared with the 2020 PFS) to
321,000 ounces of gold at an all-in sustaining cash cost
("AISC2") of C$732/oz generating annual free cash flow
("FCF3") of C$301
million.
Annual Gold production and AISC over the LOM is presented in
Table 1.
A summary of the technical and financial metrics of the Study in
comparison with the 2020 PFS is provided in the Table 2.
Table 1: Average Annual Gold Production, AISC and FCF For the
Blackwater Gold Project
1
|
Levered case
assumptions and parameters are disclosed under "Economic
Results". The levered case reflects the impact of
debt. Financing of the Project is not a measure of the
economic viability and technical feasibility of the Project, but a
measure of the Company's ability to secure debt financing for the
Project.
|
2
|
Please refer to
Non-IFRS measures notice at the end of this news release for
definition of AISC.
|
3
|
Free cash flow is
calculated as project operating cash flow minus sustaining/closure
capital and taxes
|
Table 2 – Key Results of the FS (including the New Gold Inc.
Stream, defined below)
*
|
Operational strip
ratio is calculated as total waste mined divided by ore
mined
|
**
|
Please refer to
non-IFRS measures notice at the end of this news release for
definition of AISC.
|
***
|
Free cash flow is
calculated as project operating cash flow minus sustaining/closure
capital and taxes
|
~
|
Levered case
assumptions and parameters are disclosed below under "Economic
Results". The Leveraged Case reflects the impact of
debt. Financing of the Project is not a measure of the
economic viability and technical feasibility of the Project, but a
measure of the Company's ability to secure debt financing for the
Project.
|
The estimate of life of mine sustaining capital in the FS has
increased by C$194 million to
C$831 million compared with the
C$637 million estimate of sustaining
capital in the 2020 PFS. The increase in sustaining capital is a
reflection of more accurate cost estimates related predominantly to
the continuous expansion of the tailings storage facility
("TSF") and water management systems as well as the cost of
the replacement mining fleet over the LOM. The increase in
sustaining capital over the life of mine is the larger factor that
contributed to an increase in the AISC to C$850/oz in the FS, up from C$811/oz in the 2020 PFS.
The base case economics are calculated on an unlevered basis,
based on a market consensus long term gold price of US$1,600/oz, a silver price of US$21.33/oz and a foreign exchange rate of
CAD$1 = USD$0.79. The economics include the effect
of the Blackwater gold stream (the "Stream"), which was
issued to finance part of the acquisition cost of Blackwater by
Artemis from New Gold Inc. ("New Gold") (refer to news
release dated August 24, 2020).
Under the terms of the Stream, New Gold will purchase 8.0% of the
refined gold produced from the Project. Once 279,908 ounces of
refined gold have been delivered to New Gold, the gold stream will
reduce to 4.0%. New Gold will make payments for the gold purchased
equal to 35% of the US dollar gold price quoted by the London
Bullion Market Association two days prior to delivery.
The figures and tables below show the sensitivity of after-tax
NPV and IRR to changes in the US dollar gold price and the CAD/USD
exchange rate.
Steven Dean, Chairman and CEO of
Artemis commented: "Since the release of the 2020 PFS, Artemis
has been focused on optimizing and de-risking the Blackwater
project, which has culminated in the compelling economics outlined
in the FS. Expanded Phase 1 throughput and an acceleration of the
Phase 2 expansion supports a 29% increase in gold production over
the first five years of operations and a 5% increase in gold
production over the first 10 years. By installing a larger capacity
crushing circuit with a primary gyratory crusher up front, the
Phase 2 expansion has been streamlined with the addition of major
items such as an upgradable conveyor, an additional ball mill and
additional tanks, which supports the ultimate expansion to 20Mtpa
in two mineral processing trains, down from three in the 2020 PFS,
improving economies of scale. The FS has a more constrained cost
estimate accuracy, better mitigates Project risk, reflects current
costs, and reflects an investment in electrification of the process
plant in phase 1 to reduce the Project's carbon footprint."
"After applying this approach to the development of the
Blackwater Project, the initial development capital has increased
to C$645 million, a 9% increase in
line with the 9% increase in the initial throughput rate. The FS
base case economics demonstrate a payback period of two years, an
after-tax IRR of 32% and an NPV5% of C$2.15 billion based on a US$1,600/oz gold price, increasing to
C$2.8 billion at a US$1,800/oz gold price. We look forward to
continuing to work with our partners, including the Lhoosk'uz Dené
Nation, Ulkatcho First Nation, the Carrier Sekani First Nations and
Nazko First Nation and with the support of the BC and Federal
Governments, to further advance the Blackwater Project. With the FS
now completed, Blackwater continues to target a start of
construction in Q2 2022, which puts the Project on track to develop
into a new tier 1 gold operation in Q1 2024."
The Study
The Study was led by Ausenco Engineering Canada Inc.
("Ausenco"), together with the support of Knight Piésold
Ltd. ("KP"), Moose Mountain Technical Services
("MMTS"), Allnorth Consultants Ltd. ("Allnorth"),
Lorax Environmental Services Ltd. ("Lorax"), ERM Consultants
Canada Ltd. ("ERM") and JAT MetConsult Ltd., all of which
are independent of the Company.
The Company presented two cases as part of the FS: a base case
which is unlevered, and an alternate levered case which assumes
C$360 million (plus up to
C$25 million of capitalized interest)
is funded through project debt.
The Company set out to meet or exceed the economics of the
Blackwater Project and improve the accuracy and financeability of
the Project against the 2020 PFS. Artemis' methodology and
approach to development of the Project includes the following:
- Phase 1: increasing throughput to 6.0Mtpa, up from
5.5Mtpa in the 2020 PFS, increasing gold production while
maintaining an average grade of 1.62 g/t Au over the first five
years of operations;
- Phase 2: acceleration of the Phase 2 expansion to 12Mtpa
ramping up to 9Mtpa in year five with full Phase 2 throughput
expansion achieved in year six;
- Increased production Years 1-5: the higher initial
throughput and accelerated expansion supports a 29% increase in
average annual gold production over the first five years of
operation to 321,000 ounces;
- Phase 3: acceleration of the Phase 3 expansion to 20Mtpa
ramping up to 15Mtpa in year 10 with full Phase 3 expansion
achieved in year 11;
- Increased production Years 1-10: higher throughput and
accelerated expansion results in a 5% increase in the average
annual gold production to 351,000 ounces of gold over the first 10
years of operations;
- Phase 4: Mining operations are assumed to cease in year
17 with stockpiled ore rehandled and processed through the process
plant in years 18-22. The decrease in mine life to 22 years from 23
years in the 2020 PFS is a direct result of the increased
throughput rate and production during the first 10 years of the
mine life in the FS; Table 5 outlines the throughput rates by
phase;
- Higher capacity up front crushing circuit optimizes Stage 2
expansion constructability: the crushing circuit was
re-designed to incorporate a primary gyratory crusher within the
three-stage crushing circuit, provides greater operational
throughput upside potential in the early years, which allows for an
optimized expansion case for Phase 2 throughput of 12Mtpa.
- Infrastructure: reduced overall process footprint and
laydown area requirements, resulting in a net reduction in the
length of the conveyor belts and reduced mine haulage
distances;
- Electrification of process plant: the 2020 PFS included
diesel and propane-fueled process plant components, which have been
converted to electrical components as an ESG investment to reduce
the carbon footprint of the process plant.
Mineral Resource Estimate
The Mineral Resource Estimate for the Blackwater Project is
effectively unchanged from the estimate incorporated into the 2020
PFS. The Mineral Resource is estimated from a drill hole database
containing 1,002 drill holes and 288,738 assay intervals. Three
domains were generated based on the major north-south fault and
changes in orientation of the mineralization. The block model
has a 10 x 10 x 10 m selective mining
unit, with interpolation of gold done by multiple indicator kriging
("MIK") and interpolation of silver using ordinary kriging
("OK"). The interpolations were limited by domain
boundaries and were clipped to the overburden surface. Blocks were
assigned a preliminary classification based on variography and
drill hole spacing by domain, with Measured and Indicated
confidence classifications then adjusted for block continuity.
The base case cut-off grade, within the "reasonable prospects of
eventual economic extraction" pit shell is 0.20 g/t gold equivalent
("AuEq"), where the AuEq is calculated as AuEq = Au g/t +
(Ag g/t x 0.006). At the base case prices, exchange rate and
smelter terms a 0.20g/t AuEq cut-off covers the processing costs of
C$9.00/t processed. At a 0.20 g/t
AuEq cut-off, the total Measured and Indicated Mineral Resource is
estimated at 597 Mt at 0.65 g/t AuEq, 0.61 g/t Au, and 6.4 g/t Ag
for a total of 12.4 million AuEq ounces. Of the total Measured and
Indicated Mineral Resources, 75% are in the Measured category.
Table 6 summarizes the Mineral Resource estimate and includes
sensitivity cases to show the estimate sensitivity to changes in
cut-off grade.
Table 6 – Mineral Resource Table Showing Sensitivity to Cut-off
Grades (base case highlighted)
Notes:
|
|
1.
|
The Mineral
Resource estimate was prepared by Sue Bird, P.Eng., the Qualified
Person for the estimate and an employee of MMTS. The estimate has
an effective date of May 5, 2020.
|
2.
|
Mineral Resources
are reported using the 2014 CIM Definition Standards and are
estimated in accordance with the 2019 CIM Best Practices
Guidelines.
|
3.
|
Mineral Resources
are reported inclusive of Mineral Reserves.
|
4.
|
Mineral Resources
that are not Mineral Reserves do not have demonstrated economic
viability.
|
5.
|
The Mineral
Resource has been confined by a conceptual pit shell to meet
"reasonable prospects of eventual economic extraction" using the
following assumptions: the 143% price case with a base case of
US$1,400/oz. Au and US$15/oz Ag at a currency exchange rate of 0.75
US$ per C$; 99.9% payable Au; 95.0% payable Ag; US$8.50/oz Au and
US$0.25/oz Ag offsite costs (refining, transport and insurance); a
1.5% NSR royalty; and uses a 93% metallurgical recovery for gold
and 55% recovery for silver.
|
6.
|
The AuEq
values were calculated using US$1,400/oz Au, US$15/oz Ag, a gold
metallurgical recovery of 93%, silver metallurgical recovery of
55%, and mining smelter terms for the following equation: AuEq = Au
g/t + (Ag g/t x 0.006).
|
7.
|
The specific
gravity of the deposit has been determined by lithology as being
between 2.6 and 2.74.
|
8.
|
Numbers may not
add due to rounding.
|
There are no other known factors or issues that materially
affect the Mineral Resource estimate other than normal risks faced
by mining projects in the province in terms of environmental,
permitting, taxation, socio-economic, marketing, and political
factors. Additional risk factors are listed in the "Cautionary Note
Regarding Forward-Looking Information" section at the end of this
news release.
Mineral Reserve Estimate
The Mineral Reserve Estimate for the Blackwater Project is
effectively unchanged from the estimate incorporated into the 2020
PFS. The Mineral Reserves for Blackwater are a subset of the
Measured and Indicated Mineral Resources, described above.
Proven and Probable Mineral Reserves are modified from Measured and
Indicated Mineral Resources and are summarized in Table 7.
Inferred Mineral Resources are set to waste.
Table 7 – Mineral Reserve Estimate
Notes:
|
|
1.
|
The Mineral
Reserve estimates were prepared by Marc Schulte, P.Eng., an MMTS
employee, and have an effective date of September 10,
2021.
|
2.
|
Mineral Reserves
are reported using the 2014 CIM Definition Standards and are
estimated in accordance with the 2019 CIM Best Practices
Guidelines
|
3.
|
Mineral Reserves
are based on the FS LOM plan.
|
4.
|
Mineral Reserves
are mined tonnes and grade; the reference point is the mill feed at
the primary crusher and includes consideration for operational
modifying factors such as loss and dilution.
|
5.
|
Mineral Reserves
are reported at an NSR cut-off of C$13.00/t. The cut-off
grade covers processing costs of C$9.00/t, general and
administrative ("G&A") costs of C$2.50/t and stockpile
rehandle costs of C$1.50/t.
|
6.
|
Cut-off grade
assumes US$1,400/oz. Au and US$15/oz Ag at a currency exchange rate
of 0.75 US$ per C$; 99.9% payable gold; 95.0% payable silver;
US$8.50/oz Au and US$0.25/oz Ag offsite costs (refining, transport
and insurance); a 1.5% NSR royalty; and uses a 93% metallurgical
recovery for gold and 55% recovery for silver.
|
7.
|
The AuEq values
were calculated using commodity prices of US$1,400/oz Au, US$15/oz
Ag, a gold metallurgical recovery of 93% silver metallurgical
recovery of 55%, and mining smelter terms for the following
equation: AuEq = Au g/t + (Ag g/t x 0.006).
|
8.
|
Numbers have been
rounded as required by reporting guidelines.
|
Mineral Reserves are based on the Feasibility Study engineering
and economic analysis for the Blackwater Project. Specific
risk to the Mineral Reserves include changes to the following
factors: Metal Prices, Foreign Exchange Rates, Interpretations of
mineralization geometry and continuity of mineralization zones,
geotechnical and hydrogeological assumptions, ability of the mining
operation to meet the annual production rate, operating cost
assumptions, mining and process plant recoveries, the ability to
meet and maintain permitting and environmental license conditions
and the ability to maintain the social licence to operate.
There are no other known factors or issues that materially
affect the Mineral Reserve estimate other than which is disclosed
above and normal risks faced by mining projects in the province in
terms of environmental, permitting, taxation, socio-economic,
marketing, and political factors and additional risk factors as
listed in the "Cautionary Note Regarding Forward-Looking
Information" section below.
Project Description
Location
The Project is located in central British Columbia, approximately 160 km
southwest of Prince George and 446
km northeast of Vancouver. The
Project is accessible by major highway and access/service
roads.
Artemis has a 100% recorded interest in 329 mineral claims
covering an area of 148,902 ha distributed among the Property and
the Capoose, Auro, Key, Parlane and RJK claim blocks. Surface
rights over the Project area are controlled by the Crown. A project
location map is provided in Figure 4:
Project Development Plan
The Blackwater Project will comprise the construction,
operation, and closure of an open pit gold and silver mine and ore
processing facilities commencing with a nominal milling rate of
~16,500 t/d (6.0Mtpa). The ore processing facilities will be
expanded to ~24,700 tonnes per day ("tpd") (9.0Mtpa) in year
5 with full Phase 2 expansion to ~33,000 tpd (12Mtpa) in year 6
with an expansion to 41,100 tpd (15Mtpa) in year 10 and a final
expansion to achieve 55,000 t/d (20 Mtpa) starting in year 11 of
operation. A combined gravity circuit and whole ore leach will
be used for recovering gold and silver.
The proposed mine plan involves mining 334 Mt of ore, 586 Mt of waste rock and 87 Mt of
overburden. Conventional open pit mining methods will be used,
initially targeting high-grade, near-surface ore for processing,
with lower-grade material being stockpiled for processing at the
end of the mine life.
Most of the waste material sourced from the pit will be used for
construction of TSF or placed in the TSF itself. Overburden
and non potentially acid generating waste rock not required for
construction will be placed in stockpiles between the open pit and
the TSF. Potentially acid generating waste rock, together with
tailings, will be deposited into the TSF that will be located to
the north-northwest of the open pit.
In addition to the site infrastructure, it is assumed that a 135
km, 230 kV transmission line will be constructed from the BC Hydro
Glenannan substation near Endako, B.C. to the site to supply power
to the Project.
At closure, all buildings will be removed, disturbed lands
rehabilitated, and the property returned to otherwise functional
use according to future approved reclamation plans and accepted
practices at the time of closure. The estimated closure costs of
C$175 million (discounted to year 22)
represents management's investment in environmental stewardship and
increased ownership of its various ESG initiatives.
Mining
Mining will be based on conventional open pit methods
(drill-blast-load-haul), which are suited to the Project location
and local site requirements. Open pit operations are
anticipated to run for 17 years, excluding 15–18 months of
pre-production mining. Following mining operations, stockpiled
low-grade material will be processed for an additional five years,
resulting in a total LOM of 22 years. The open pit will be
developed with a series of pushbacks. The first stage will
target suitable overburden and waste rock for construction whilst
exposing near-surface, high-grade material. The second phase will
target higher-grade, lower-strip-ratio ore providing mill feed over
the initial years of the Project. The remaining stages expand
the pit to the north targeting progressively deeper ore. LOM
activities are summarized in Appendix A.
Owner-managed mining and fleet maintenance operations are
planned for 365 days/year, with two 12-hour shifts planned per
day. Initially, mining will be undertaken using 400 t class
hydraulic shovels and 190 t payload class haul trucks. As
production requirements increase, the load-and-haul fleet will be
expanded with 600 t class hydraulic shovels and 230 t payload class
haul trucks. The initial drill and loading fleet is planned to
be diesel drive, with expansion fleet requirements being electric
drive. The mine equipment fleet is planned to be purchased via
various lease arrangements.
Metallurgy & Process
The process flowsheet was designed based on historical test work
and more recent test work carried out in 2019 for New Gold. Some
additional test work was completed to support carbon loading,
rheological parameters and cyanide destruction assumptions.
The 2019 test program included three larger composites for
optimization test work and 48 samples covering the deposit to
establish the variability of the ore to the chosen flow sheet.
The mineralogy indicated that the sulphur content is mainly
associated with pyrite, pyrrhotite and sphalerite. The
comminution test work included semi-autogenous grind mill
comminution on the new drill core, Bond rod mill work index, Bond
ball mill work index and abrasion index tests. The results indicate
the material is hard with results ranging from 11.8 -24.6 kWh/t and
the 75th percentile of the samples tested was 21.1 kWh/t
for the variability samples. A correlation between gold
extraction and head grade was not observed. The variability
composite results averaged 93.7% total gold extraction with gravity
gold recovery of 34.2%.
Based on the test results, a gold doré can be produced with a
primary grind size of 80% passing 150 μm followed by gravity
concentration, two-hour pre-oxidation, a 24 hour cyanide leach at
an initial cyanide concentration of 500 ppm and a pH of 10.5, and a
carbon-in-leach ("CIL") adsorption, desorption and refining
process. The recovery of gold and silver is expected to be 93% and
65% respectively.
The initial design daily throughput is ~16,500 tonnes per day,
with an availability of 70% used in designing the crushing circuit
and 92% for the design of the rest of the plant.
Phase 1 Development:
The process for Phase 1 will consist of:
- Three-stage crushing, consisting of a primary gyratory crusher,
a secondary cone crusher and two tertiary cone crushers, each of
which will each be housed in steel-framed structures, with
conveyors transporting material between each stage. Crushed product
will be stored in a coarse ore conical stockpile;
- Crushed ore will be conveyed from the stockpile to a single,
7.3 m x 12.5
m, 14 MW ball mill for grinding, with the circuit being
closed by cyclones. Gravity concentration will be incorporated into
the grinding circuit using centrifugal concentrators and an
intensive cyanide leach unit will be used for recovering gold from
the gravity concentrate;
- The leach and adsorption circuits will consist of one
pre-oxidation tank, three leach tanks and seven CIL tanks fitted
with mechanical agitators, with cyanide being added to the second
and subsequent tanks. The leach and adsorption circuit residence
time will be 24 hours;
- CIL adsorption of gold and silver will be carried out in seven
tanks, with "pumping screens" moving leached slurry between the
tank units. The carbon will advance counter current to the main
slurry flow during periodic transfers of slurry and carbon using
carbon advance/transfer pumps from a downstream to upstream
tank;
- The loaded carbon will be treated in an Anglo American Research
Laboratory elution and electrowinning circuit consisting of an acid
wash column and an elution column operating at 120° C. An electric
heating system will provide the necessary temperature, and two
additional heat exchangers will control the temperature around the
circuit. A rotary kiln operating at 750° Celsius will be used to
maintain carbon activity. Electrowinning will be carried out to
recover gold and silver from the elution solution and the resulting
metallic values will be dried and smelted to doré bullion;
- Cyanide destruction using an SO2 oxygen system will be carried
out in the final tailings slurry, with the sulfur dioxide produced
by the combustion of elemental sulfur.
A schematic showing the proposed flowsheet for Phase 1 is
provided in Figure 5.
Phase 2 Expansion:
The Phase 2 expansion to 12Mtpa has been simplified to be
achieved with only minor modifications needed to the existing phase
1 crushing, stockpile and ball mill feed system. The second ball
mill will operate in series with the Phase 1 mill. The rest of the
plant circuits will be duplicated (gravity concentration, leaching,
adsorption, elution and cyanide destruction) or expanded. Minor
upgrades will be carried out on some infrastructure to accommodate
the increased throughput.
Phase 3 Expansion:
Phase 3 expansion to 20Mtpa will require a new process line,
from primary crushing through to cyanide destruction, although a
carbon elution circuit will not be needed as the Phase 1 and 2
units will have sufficient capacity with the lower ore grades in
Phase 3.
Economic Results
Capital Cost Estimate
The Study outlines an initial capital cost estimate of
C$645 million for Phase 1 (6Mtpa),
expansion capital of C$347 million
for the Phase 2 expansion to 12Mtpa, and expansion capital of
C$374 million for the Phase 3
expansion to 20Mtpa. Sustaining capital over the LOM is
estimated at C$831 million while
closure costs are estimated at C$175
million (discounted to year 22)
Table 8 summarizes the initial capital cost estimate for the
Project.
Mining capital costs cover site development for the pits, haul
roads and stockpiles, open pit mining to provide construction
material to the project and expose ore for milling, mobile mining
fleet costs and mine operations support infrastructure. The mobile
mining fleet is planned to be purchased via various lease
arrangements, with quoted commercial terms from the equipment
suppliers. The leased mining fleet is paid off over several years,
so costs are mostly captured as sustaining capital.
The biggest drivers associated with the estimated expansion
capital costs are onsite infrastructure (C$43 million), modular expansion of the process
plant (C$456 million), mining costs
(C$63 million) and tailings
management (C$137
million). Sustaining capital is estimated to average
C$57 million per year for years 1-5,
C$50 million per year in phase 2 and
C$37 million per year in phase
3. Mobile fleet lease payments and mining support activities
(C$430 million) and tailings
management (C$271 million) are the
primary drivers of sustaining capital costs.
Operating Costs
Operating costs by phase for the LOM are provided in Table
9.
Table 9 - Operating Cost Estimate
*
|
Mining costs includes
stockpile re-handle, LOM mining costs exclude
pre-stripping
|
The operating cost estimates for the Project in Phase 1 is
C$29.18/t, with economies of scale
driving down costs to C$25.09/t
milled in Phase 2, C$17.45/t milled
in Phase 3 and C$10.36/t milled in
Phase 4. Over the LOM, the Project has estimated average operating
costs of C$17.96/t milled.
AISC
The Study outlines robust economics for the Blackwater Project
during all four proposed stages with:
- Average annual production of 321,000 ounces of gold at an AISC
of C$732/oz in Stage 1;
- increasing to 381,000 ounces of gold per year at an AISC of
C$884/oz in stage 2;
- increasing to 438,000 ounces of gold per year at AISC of
C$824/oz in stage 3; and
- reducing to 176,000 ounces of gold per year at an AISC of
C$1,069/oz in stage 4, when mining
operations cease and lower-grade stockpiles are processed.
In the calculation of AISC, the cost of mining low-grade ore in
Phase 1, Phase 2 and Phase 3 of operations are included in AISC in
the year that they are mined with a rehandling charge applied to
the AISC when low-grade stockpiles are processed in Phase 4. The
AISC in Phase 4 is also impacted by the inclusion of LOM
closure. Over the LOM, the Study estimates an AISC of
C$850/oz (or US$672/oz) on production of 7.45 million ounces
of gold, which places the Project in the bottom quartile of the
global cost curve for gold project (source: World Gold
Council).
Selling Costs, Royalties and Taxes
Selling Costs
- Payable factor (Au) of 99.9%
- Payable factor (Ag) of 95.0%
- Refining, treatment, transport, and insurance charges of
$3/oz applied to AuEq ounces.
Royalties
The Study economics consider two private royalties at 1.0% and
1.5% payable over portions of the Mineral Reserve, and these have
been applied to the economic cash flow model using life-of-mine
average royalty rates. Estimated payments to First Nations are
also included in the economic cash flow model for the Project.
Taxes
Key provincial and federal tax considerations for Blackwater
include:
- British Columbia mining tax:
2% provincial minimum tax payable on net current proceeds which is
creditable against the 13% effective mining tax rate which is
calculated based on operating profit less applicable capital cost
deductions. The mining tax is deductible in computing provincial
and federal income tax;
- British Columbia provincial
income tax: 12.0%, payable after applicable deductions are
made;
- Canadian federal income tax: 15.0%, payable after applicable
deductions are made.
Levered Case Assumptions
In the economic results for the Project, the Company presents a
base case economic analysis, being unlevered, plus an alternate
levered case. The levered case is based on the following
assumptions, which are supported by the credit approved term sheet
executed with Macquarie Bank Limited and National Bank of
Canada in April 2021 for a C$360
million project debt facility:
- C$360 million (plus up to
C$25 million in capitalized interest)
in project debt financing;
- Annual interest rate of Canadian Dollar Offered Rate (assumed
at 0.5% in the Study) plus a margin of 4.25% up to the date of
completion, with the margin reducing to 3.75% once the Project is
effectively in commercial production;
- Customary upfront and standby financing fees;
- Six-year term post commencement of commercial production with
Principal and capitalized interest repayable in quarterly
installments over six years, commencing one year following
achievement of commercial production, with a repayment holiday
during years 4 and 5 of production while the company expects to
undertake its Phase 2 expansion;
- Expansion capital is assumed to be funded through operating
cashflow.
Next Steps
Over the next 12 to 24 months, the Company will be focused on
the following activities:
- Completing an NI 43-101 Technical Report in respect of the
Study, which will be filed on SEDAR and on the Company's website
within 45 days of this news release;
- Finalizing a C$360 million
project loan facility;
- Progressing and achieving final permitting required to commence
Project construction;
- Continuing engagement and negotiations with First Nations who
may be impacted by the Project;
- Planning for an exploration core drilling program to test for
potential extensions of the known mineralization;
- Finalizing fixed-price EPC contracts based on the GMP MOU
awarded to Ausenco for the process plant and the GMP awarded to the
consortium led by Carisbrooke Consulting Inc. for the power
facilities for the Project;
- Commencement of Early Works activities onsite in H1 2022
- Commencement of Major Construction Activities in H1 2022
Qualified Persons
The Qualified Persons that will prepare the Technical Report on
the Study include: Marc Schulte,
P.Eng., (MMTS), George Dermer,
P.Eng. (MMTS), Sue Bird, P.Eng.
(MMTS), Daniel Fontaine, P.Eng.
(KP), John A. Thomas, P. Eng. (JAT
MetConsult Ltd.), Robin Kalanchey,
P. Eng. (Ausenco), Philip Lee, RP.
Bio. (ERM), James Garner, P. Eng.
(Allnorth) and John Dockery, P. Geo.
(Lorax). Each of the Qualified Persons has reviewed and
approved the technical information contained in the Study and in
this press release in their area of expertise and are independent
of the Company.
Technical Disclosure
Data verification programs have included review of QA/QC data,
re-sampling and sample analysis programs, and database
verification. Validation checks were performed on data, and
comprise checks on surveys, collar co-ordinates and assay data.
In the opinion of MMTS, sufficient verification checks were
undertaken on the database to provide confidence that the database
is virtually error free and appropriate to support Mineral Resource
and Reserve estimation.
Conference Call Details
The Company is hosting a live Q&A conference call on
September 13 at 10:00 a.m. Eastern time (7:00 a.m. Pacific time) with the Artemis
executive team. Participants may join the call by dialing:
Participant Dial-in
Numbers:
|
International
Toll:
|
+1 (604)
638-5340
|
Toll Free –
Canada/USA:
|
+1 (800)
319-4610
|
Please provide the company name (Artemis Gold Inc.) to the
operator. A recorded playback of the call will be available
shortly after the call's completion for 30 days by dialing:
International
Toll:
|
+1 (604)
638-9010
|
Toll Free –
Canada/USA:
|
+1 (800)
319-6413
|
Enter the replay passcode: 7729, an MP3 recording will also be
available on the Artemis website.
Updates will be provided in due course.
ARTEMIS GOLD INC.
On behalf of the Board of Directors
"Steven Dean"
Chairman and Chief Executive Officer
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Cautionary Note Regarding Forward-Looking
Information
This news release contains certain "forward looking
statements" and certain "forward-looking information" as defined
under applicable Canadian and U.S. securities laws (together,
"forward-looking statements"). Forward-looking statements
can generally be identified by the use of forward-looking
terminology such as "may", "will", "expect", "intend", "estimate",
"anticipate", "believe", "continue", "plans", "potential" or
similar terminology. Forward-looking statements in this news
release include, but are not limited to, statements and information
related to the results of the FS, including the forecasted
economics of the Blackwater Project, expected gold production (and
the grade of such gold production) from the Blackwater Project and
projected operating, all-in sustaining and capital costs associated
with the Company's planned operations at the Blackwater Project;
the FS providing higher accuracy and reduced risk with respect to
the Company's plans and estimates with respect to the Blackwater
Project, including with respect to costing accuracy and scheduling
improvements; planned increases in throughput; the filing of a
technical report reflecting the results of the FS by the Company;
the estimated mine life of the Blackwater Project; estimates of
mineral reserves and mineral resources, including the assumptions
and estimates used to generate such mineral reserve and mineral
resource estimates; the Project development and mining plans,
including the planned reduced footprint of the FS Stage 1 facility,
planned installation of a gyratory crusher, upgraded conveyor,
additional ball mill, four additional leach tanks and a
transmission line to supply power to the Blackwater Project,
planned mining and operational methods and specifications and
expected ore, waste and overburden to be mined, strip ratios and
gold and silver recovery; gold price, silver price and exchange
rate assumptions; sensitivity analysis in respect of the Blackwater
Project; the potential for resource conversion, project extension
and exploration to increase expected mine life and expand expected
gold production; planned improvements to the environmental impact
of the Blackwater Project; the projected construction and operating
timelines for the Blackwater Project, including the Blackwater
Project being fully permitted for a start of construction in 2022
and to enter gold operation in 2024; the Company's closure and
reclamation plans, including the costs associated therewith; plans
regarding the drill, load and haul fleet; planned metallurgy and
production processes; assumptions with respect to the levered case
economics for the Blackwater Project; the finalization of a
C$360 million project loan facility;
engagement and negotiations with Indigenous Nations; completing
supplemental geotechnical and hydrogeological site investigation
work; progressing and achieving final permitting; commencement of
drilling and exploration programs; finalizing fixed-price EPC
contracts for the construction of the Project; the merits of the
Project; the Company's plans and objectives with respect to the
Project and the timing related thereto, including with respect to
permitting, construction, improved economics and financeability,
and de-risking development risks; and other statements regarding
future plans, expectations, guidance, projections, objectives,
estimates and forecasts, as well as statements as to management's
expectations with respect to such matters.
Forward-looking statements and information are not historical
facts and are made as of the date of this news release. These
forward-looking statements involve numerous risks and uncertainties
and actual results may vary. Important factors that may cause
actual results to vary include without limitation, risks related to
the ability of the Company to accomplish its plans and objectives
with respect to the FS and the Project within the expected timing
or at all, including the ability of the Company to improve the
economics and financeability and de-risk the Project; the timing
and receipt of certain approvals and the risk that certain
necessary approvals may never be received; changes in commodity and
power prices; changes in interest and currency exchange rates; that
the sensitivity analysis presented in the FS may not accurately
predict the economic sensitivity of the Blackwater Project to
changes in input and other prices; that the cost estimates
presented in the FS may not be representatives of the actual
development, construction, operational and closure costs associated
with the Blackwater Project; risks inherent in exploration
estimates and results; the timing and success of the development of
the Blackwater Project is not guaranteed and the Company may not
construct and operate the Blackwater Project on the timelines or in
the manner presented in the FS, or at all; that the Company may be
unable to conclude the C$360 million
project loan facility and may be required to pursue other methods
of financing the Blackwater Project, or may be unsuccessful in
financing the Blackwater Project; inaccurate geological, mining,
and metallurgical assumptions (including with respect to size,
grade and recoverability estimates, estimates of mineral
reserves and resources and mine life estimates); changes in
development or mining plans due to changes in logistical, technical
or other factors; unanticipated operational difficulties (including
failure of plant, equipment or processes to operate in accordance
with specifications, cost escalation, unavailability of materials,
equipment and third party contractors, delays in the receipt of
government approvals, industrial disturbances or other job action,
and unanticipated events related to health, safety and
environmental matters); that the Company may not be able to
increase expected mine life or expected gold production through
resource conversion, project extension and
exploration; political risk; social unrest; changes in
general economic conditions or conditions in the financial markets;
and that the Company not file a technical report in respect of the
FS on the timeline required by applicable law, or at all. In making
the forward-looking statements in this news release, the Company
has applied several material assumptions, including without
limitation, the assumptions that: (1) the Company will be able to
accomplish its plans and objectives with respect to the FS and the
Project on the expected timeline; (2) market fundamentals will
accord with the estimates and assumptions contained in the FS; (3)
the receipt of any necessary approvals and consents in connection
with the development of the Blackwater Project in a timely manner;
(4) that the cost estimates presented in the FS are representative
of the actual costs associated with the development, operation and
closure of the Blackwater Project; (4) that the Company will be
able to conclude the C$360 million
project loan facility on the expected terms; (5) sustained
commodity prices such that the Project remains economically viable;
and (6) that the geology of the Blackwater Project accords with the
expectations and projections presented in the FS and that the
Company will be able to mine at the Blackwater Project in
accordance with the specifications set out in the FS. The actual
results or performance by the Company could differ materially from
those expressed in, or implied by, any forward-looking statements
relating to those matters. Accordingly, no assurances can be given
that any of the events anticipated by the forward-looking
statements will transpire or occur, or if any of them do so, what
impact they will have on the PFS, results of operations or
financial condition of the Company. Except as required by law, the
Company is under no obligation, and expressly disclaim any
obligation, to update, alter or otherwise revise any
forward-looking statement, whether written or oral, that may be
made from time to time, whether as a result of new information,
future events or otherwise, except as may be required under
applicable securities laws.
Non-IFRS Performance Measures
The Company has included certain non-IFRS measures in this
news release. The company believes that these measures, in addition
to conventional measures prepared in accordance with IFRS, provide
investors an improved ability to evaluate the underlying
performance of the Project. The non-IFRS measures are intended to
provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS. These measures do not have any
standardized meaning prescribed under IFRS and therefore may not be
comparable with other issuers.
Cash Costs
Cash costs are a common financial performance measure in the
gold mining industry but with no standard meaning under
IFRS. Artemis considers and discloses cash costs on a sales
basis. The Company believes that, in addition to conventional
measures prepared in accordance with IFRS, such as sales, certain
investors use this information to evaluate the Project's
performance and ability to generate operating earnings and cash
flow from its mining operations. Management uses this metric as an
important tool to monitor cost performance.
Cash costs in the Study include production costs such as
mining, processing, refining and site administration, less gross
revenue generated from silver sales, divided by gold ounces sold to
arrive at cash costs per gold ounce sold. Costs include royalty
payments, permitting costs, and payments that are expected to be
made to Indigenous Nations. Other companies may calculate this
measure differently.
All-in Sustaining Costs
The Company believes that AISC more fully defines the total
costs associated with producing gold. The Company calculated AISC
for the purpose of the Study as the sum of cash costs (as described
above), reclamation and sustaining capital, all divided by the gold
ounces sold to arrive at a per ounce figure. Other companies may
calculate this measure differently as a result of differences in
underlying principles and policies applied. Differences may also
arise due to a different definition of sustaining versus growth
capital.
Note that in respect of AISC metrics within the Study, as
such economics are disclosed at the project level, corporate
general and administrative expenses were not included in the AISC
calculations.
SOURCE Artemis Gold Inc.