Mr. Jeffrey Quartermaine reports
PERSEUS MINING LIMITED UPDATES MINERAL RESOURCE AND ORE RESERVE ESTIMATES FOR EDIKAN GOLD MINE
Perseus Mining Ltd. has recently completed a re-estimation of mineral resources and ore reserves for its Edikan gold mine in Ghana. Details follow.
Executive summary
Mineral resources:
-
Edikan's updated global measured and indicated mineral resource estimate, as at Dec. 31, 2016, is 155.8 million tonnes grading at 1.0 gram per tonne gold, containing 5,011,000 ounces of gold. A further 30.0 million tonnes of material grading at 0.9 g/t gold and containing a further 899,000 of gold are classified as inferred resources.
- Whereas all previous mineral resource estimates at Edikan have been prepared using the ordinary kriging (OK) estimation method, the updated open-pit mineral resource estimate (including the AFG, Fobinso, Fetish, Chirawewa, Bokitsi and Esuajah North deposits) is based on multiple indicator kriging (MIK) estimating techniques. Estimates of the Esuajah South deposit and of the heap-leach material use the OK estimation method, which is more appropriate for estimating underground mining projects and stockpiles.
- Comparisons of the updated Edikan mineral resource models against ore delineated by grade control during the last three months of calendar 2016 and in January, 2017, indicate that the updated resource estimates are likely to be more reliable predictors of ore tonnes and grades than were the previous resource models, and this should result in a closer correlation between forecasts and actual gold production going forward.
- When compared with a global open-pit mineral resource estimate calculated based on the same data using the OK method, the revised MIK-based mineral resource estimate includes:
- 15-per-cent-more tonnes;
- 8-per-cent-lower grade;
- 199,000 ounces or 5-per-cent-more contained gold;
- 35-per-cent-less material in the measured classification and 60-per-cent-more material in the indicated classification as a result of the adoption of more rigorous criteria for classification of mineral resources.
Ore reserves:
-
Edikan's updated proven and probable ore reserve estimate is based on the Edikan mineral resources as at Dec. 31, 2016, an updated pit optimization, design and scheduling of the open-pit resources, and a new Esuajah South ore reserve, based on underground mining methods. The total ore reserve is estimated at 56.5 million tonnes of ore, grading 1.14 grams per tonne gold and containing 2,078,000 ounces of gold.
- Allowing for ore depletion from mining since June 30, 2016, and for the addition of ore reserves contained in decommissioned heap-leach stockpiles not previously included in reserves, the updated ore reserve estimate contains 99,000 ounces or approximately 5-per-cent-less gold than Edikan's previous ore reserve estimated as at June 30, 2016, as shown herein.
- Based on Edikan's updated ore reserves, Perseus is preparing a revised life-of-mine plan for Edikan, which it intends to publish prior to the end of February, 2017.
Perseus's managing director and chief executive officer, Jeff Quartermaine, commented:
"The updated mineral resource and ore reserve estimates at Edikan have numerically changed very little from the previously published estimates, notwithstanding the fact that a different estimating technique that is considered to be more suited to the style of mineralization that we have been mining recently in the open pit has been adopted. Tonnes are slightly higher, grade is slightly lower and contained metal is slightly higher.
"Since applying multiple indicator kriging techniques to estimate mineral resources in favour of ordinary kriging techniques that have been traditionally used at Edikan, we have witnessed a material improvement in the reconciliation between our resource block model estimates and grade control data.
"It is therefore expected that our production forecasts, and in particular our revised life-of-mine plan for Edikan that is due to be published by the end of this month, will more closely reflect actual operating experience than has been the case during the last 12 months."
Mineral resource estimate
The global mineral resource estimate is prepared in accordance with the 2012 Australasian code for reporting of exploration results, mineral resources and ore reserves (the Joint Ore Reserves Committee code). The mineral resource estimate is summarized in the attached Edikan's measured and indicated mineral resources table that reports the mineral resources by category, deposit and deposit type. The classification categories of measured, indicated and inferred under the JORC code are equivalent to the CIM (Canadian institute of mining, metallurgy and petroleum) categories of the same name (CIM, 2010).
In summary, the updated global measured and indicated mineral resource for Edikan is now estimated as 155.8 million tonnes grading at 1.0 gram per tonne gold, containing 5,011,000 ounces of gold, as shown in
the attached Edikan's measured and indicated mineral resources table. A further 30.0 million tonnes of material grading at 0.9 g/t gold and containing a further 899,000 ounces of gold are classified as inferred resources. Details of these estimates are shown in the attached
Edikan's inferred mineral resources table.
EDIKAN'S MEASURED AND INDICATED MINERAL RESOURCES -- DECEMBER, 2016
(6, 7)
Deposit Deposit type Measured resources
Quantity Grade Gold
Mt g/t gold 000 oz
AF gap (1, 2) Open pit 11.0 0.97 342
Fobinso (1, 2) Open pit 2.7 1.08 93
Esuajah North (1, 2) Open pit 11.4 0.96 352
Fetish (1, 2, 5) Open pit 9.6 1.00 309
Chirawewa North (1, 2) Open pit 1.4 0.85 38
Chirawewa South (1, 2) Open pit 0.2 1.16 6
Bokitsi South (1, 2) Open pit 0.9 2.57 71
--------- ---- ---- -----
Subtotal Open pit 37.2 1.01 1,211
--------- ---- ---- -----
Esuajah South (3) U/ground 8.5 1.9 533
Heap leach (4) Stockpile
ROM stockpiles Stockpile 1.4 0.61 28
--------- ---- ---- -----
Total 47.1 1.17 1,772
---- ---- -----
Deposit Deposit type Indicated resources
Quantity Grade Gold
Mt g/t gold 000 oz
AF gap (1, 2) Open pit 35.6 0.84 963
Fobinso (1, 2) Open pit 11.8 0.94 357
Esuajah North (1, 2) Open pit 19.5 0.89 557
Fetish (1, 2, 5) Open pit 23.9 0.90 692
Chirawewa North (1, 2) Open pit 5.7 0.82 150
Chirawewa South (1, 2) Open pit 0.6 1.02 19
Bokitsi South (1, 2) Open pit 1.1 1.90 66
--------- ----- ---- ------
Subtotal Open pit 98.2 0.89 2,804
--------- ----- ---- ------
Esuajah South (3) U/ground 6.3 1.7 353
Heap leach (4) Stockpile 4.3 0.6 89
ROM stockpiles Stockpile - - -
--------- ----- ---- ------
Total 108.8 0.93 3,246
----- ---- ------
Deposit Deposit type Measured + indicated resources
Quantity Grade Gold
Mt g/t gold 000 oz
AF gap (1, 2) Open pit 46.6 0.87 1,305
Fobinso (1, 2) Open pit 14.5 0.97 450
Esuajah North (1, 2) Open pit 30.9 0.92 909
Fetish (1, 2, 5) Open pit 33.5 0.93 1,001
Chirawewa North (1, 2) Open pit 7.1 0.83 188
Chirawewa South (1, 2) Open pit 0.8 1.05 25
Bokitsi South (1, 2) Open pit 1.9 2.20 137
--------- ----- ---- -----
Subtotal Open pit 135.3 0.92 4,015
--------- ----- ---- -----
Esuajah South (3) U/ground 14.8 1.8 879
Heap leach (4) Stockpile 4.3 0.6 89
ROM stockpiles Stockpile 1.4 0.61 28
--------- ----- ---- -----
Total 155.8 1.00 5,011
----- ---- -----
Notes:
(1) Allows for mining depletion to Dec. 31, 2016.
(2) A 0.4-gram-per-tonne-gold cut-off was applied.
(3) A 0.7-gram-per-tonne-gold-cut-off grade was applied.
(4) At a zero cut-off grade.
(5) Includes Bokitsi North lode.
(6) Mineral resources are inclusive of any ore reserves.
(7) Numbers are rounded and may not add up correctly in the table.
(8) Note that the Dadieso and Mampong deposits have been removed from the
mineral resource on economic grounds.
Whereas all previous estimates of mineral resources at Edikan have been prepared using the OK estimation method, the updated mineral resource estimate is based on MIK estimating techniques for all deposits other than the Esuajah South deposit and the heap leach, where the OK estimation method has continued to be used.
EDIKAN'S INFERRED MINERAL RESOURCES -- DECEMBER, 2016
Deposit Deposit type Inferred resources
Quantity Grade Gold
Mt g/t gold 000 oz
AF gap (1, 2) Open pit 9.4 0.8 250
Fobinso (1, 2) Open pit 3.5 0.9 95
Esuajah North (1, 2) Open pit 2.9 0.9 88
Fetish (1, 2, 4) Open pit 6.3 1.0 191
Chirawewa North (1, 2) Open pit 1.5 0.8 39
Chirawewa South (1, 2) Open pit 0.04 1.1 1
Bokitsi South (1, 2) Open pit 1.3 1.1 43
Esuajah South (3) Underground 4.7 1.3 192
----- ---- ----
Total 30.0 0.9 899
----- ---- ----
Notes:
(1) Allows for mining depletion to Dec. 31, 2016.
(2) A 0.4-gram-per-tonne-gold cut-off was applied.
(3) A 0.7-gram-per-tonne-gold-cut-off grade was applied.
(4) Includes Bokitsi North lode.
(5) Numbers are rounded and may not add up correctly in the table.
Comparisons of the updated Edikan mineral resource models against ore delineated by grade control during the last three months of calendar 2016 and in January, 2017, indicate that the updated resource estimates are likely to be more reliable predictors of ore tonnes and grades than were the previous resource models, and this should result in a closer correlation between forecasts and actual gold production going forward.
When compared with an open-pit mineral resource estimate calculated at the same date, using the OK method (which has been traditionally used at Edikan), the revised MIK-based mineral resource estimate includes:
- 15-per-cent-more tonnes;
- 8-per-cent-lower grade;
- 5-per-cent-more contained gold;
- 35-per-cent-less material in the measured classification and 60-per-cent-more material in the indicated classification as a result of the adoption of a more rigorous set of criteria for classification of mineral resources.
A direct comparison of mineral resource estimates using the two alternative techniques is shown in
the attached Edikan's open-pit mineral resource estimates using MIK and OK estimation techniques table.
EDIKAN'S OPEN-PIT MINERAL RESOURCE ESTIMATES USING MIK AND OK ESTIMATION TECHNIQUES
Estimated using MIK techniques Estimated using OK techniques
Mineral resource Quantity (Mt) Grade (g/t gold) Gold (koz) Quantity (Mt) Grade (g/t gold) Gold (koz)
category
Measured 37.2 1.01 1,211 56.8 1.01 1,860
Indicated 98.2 0.89 2,804 61.2 0.99 1,956
Measured + indicated 135.3 0.92 4,015 118.0 1.00 3,816
Inferred 24.8 0.89 707 48.6 0.94 1,473
Edikan's mineral resources comprise four components:
- Remaining in situ mineralization in the Abnabna-AF gap, Fobinso, Esuajah North, Fetish, Chirawewa North, Chirawewa South and Bokitsi South deposits, each of which is exploitable by open-pit mining methods;
- In situ mineralization in the Esuajah South deposit, potentially exploitable by underground mining methods;
- Heap-leach material remaining from the treatment of oxide mineralization by previous mine operators;
- Material on mine stockpiles at Dec. 31, 2016.
Geology
The Edikan gold deposits occur near the western flank of the Ashanti greenstone belt in southwestern Ghana. Mineralization is hosted by Paleoproterozoic-aged rocks of the Birimian supergroup. Structurally controlled gold mineralization occurs in two principal modes: disseminated pyrite-arsenopyrite mineralization associated with quartz veining and sericite alteration hosted by granitoids and shear-zone-hosted mineralization associated with pyrite-arsenpoyrite mineralization in and adjacent to quartz veins in deformed, fine-grained metasedimentary rocks. The strike lengths of the individual deposits range from approximately 300 metres (Esuajah South) to more than two kilometres (Abnabna/AF gap/Fobinso). Granite-hosted mineralization is developed over widths of up to 150 metres, and shear-hosted mineralization in metasedimentary rocks is typically 10 to 30 metres wide. Resource definition drilling has defined mineralization to depths ranging from approximately 130 metres (Chirawewa South) to more than 550 metres (AF gap, Esuajah South).
Drilling techniques
Edikan mineral resources are delineated by reverse circulation and diamond core drill holes undertaken by previous operators Cluff Mining PLC and Ashanti Goldfields Corp. and by Perseus. Estimates of those portions of the in situ resources remaining at Dec. 31, 2016, are informed almost entirely by Perseus drilling, and the majority of data informing the estimates is derived from samples of half-NQ-diameter diamond core.
Drill hole collar locations have been surveyed by qualified surveyors. Perseus diamond core holes were downhole surveyed at nominal 30-metre intervals.
Orientation of drill holes at each of the deposits is approximately perpendicular to the strike of mineralization. With the exception of Esuajah South, the interpreted geometries and continuities of mineralization underpinning the resource estimates have been confirmed by grade-control drilling and mine exposures.
Sampling
RC drill samples were collected at drill sites at one-metre intervals and split using multistage riffle splitters. For the majority of Perseus's drilling, every two consecutive samples were composited into one sample for assaying. Sample weights were nominally 2.5 kilograms and five kilograms for one-metre and two-metre samples, respectively.
Diamond core was sawn in half using a diamond blade saw, with the right-hand half sent for assaying and the left-hand half stored in core trays for reference. Samples were normally taken at one-metre intervals.
Core recoveries from Perseus diamond drilling were measured and averaged in excess of 90 per cent with no significant issues noted. RC samples were logged visually for recovery, moisture and contamination. RC sample recoveries were not quantitatively measured. Considering that the bulk of estimated remaining resources at Edikan is informed by diamond core samples, sample recovery is not considered to be a significant risk to the reliability of the estimates.
Sample analytical methods
All sample preparation and assaying were carried out by commercial laboratories. No sample preparation was undertaken by Perseus.
Samples collected by Perseus were variously assayed by Transworld Laboratories, Tarkwa, Intertek Laboratories (Gh) Ltd. (formerly TWL), Tarkwa, and ALS, Kumasi. Approximately 5 per cent of samples was assayed by 24-hour cyanide bottle roll with atomic absorption spectroscopy (AAS) finish. All other RC samples and diamond half core samples were analyzed by 50-gram fire assay and AAS finish. Sample preparation typically comprised drying, crushing to minus two millimetres and pulverizing of a 200-gram subsample. Internal laboratory checks required at least 90 per cent of the pulp passing minus 75 microns.
Perseus's quality assurance and quality control procedures included submission of field duplicates (RC only) inserted at one in 25, certified blanks inserted at one in 20, certified standards at one in 20, internal laboratory standards, duplicates and repeats.
Open-pit mineral resources
Estimation methodology
Geological logging of lithology and weathering were considered in conjunction with gold grades of two-metre composited sample intervals to delineate mineralized domains at each of the deposits within which the tenor and spatial trends of mineralization are similar. Grade control sampling and exposures of, and host rocks within, the open pits currently being mined confirm the geometry of the mineralization.
MIK with block support adjustment was used to estimate gold resources into blocks with dimensions of 20 metres (east) by 20 metres (north) by five metres (elevation), and is considered appropriate given the spacing of data available to inform the estimates and the mining bench height currently used at Edikan. MIK of gold grades used indicator variography based on the two-metre resource composite sample grades. Gold grade continuity was characterized by indicator variograms at 14 indicator thresholds spanning the global range of grades in each of the mineralized domains.
The effect of extreme gold grades on the conditional statistics of data informing each of the estimation domains was considered. The effect of extreme grades on estimates was modified by composites being ignored during the generation of the indicator statistics and by the selection of the median instead of the mean for the highest indicator threshold.
Block support adjustments were derived from the variogram of gold grades in each of the mineralized domains. The selective mining unit was assumed to be in the general range, reflecting the scale of mining currently employed at Edikan. Additional adjustments for the information effect have been applied, based on high-quality grade control sampling consistent with current practices at Edikan, to arrive at the final mineral resource estimates.
The mineral resource estimates can be reasonably expected to provide appropriately reliable estimates of potential mining outcomes at the assumed selectivity without application of additional mining dilution or mining recovery factors.
Compositing and wire framing were performed using Micromine software. Exploratory data analysis, variogram calculation and modelling, and resource estimation were performed using FSSI Consultants (Australia) Pty. Ltd.'s GS3M software.
The mineral resource estimates for Abnabna/AF gap/Fobinso, Fetish, Chirawewa and Esuajah North were compared with recent mine site grade control outcomes. The grade control modelling undertaken for validation was performed using the MP3 grade control software. The mined tonnes and grade of ore for the four months to January, 2017, compared favourably.
Criteria for resource classification
Confidence categories have been applied to the estimates of mineral resource on a block-by-block basis based on the number and location of data used to estimate proportions and gold grade of each block. This is based on the principle that larger numbers of samples, which are more evenly distributed within the search neighbourhood, will provide a more reliable estimate. Generally, measured resources are informed by drilling at approximately 20-metre-by-20-metre spacing or closer, indicated resources are informed by drilling spaced at up to 40 metres by 40 metres, and inferred resources are on the peripheries of drilling to a maximum distance of approximately 40 metres.
The mineral resource classification also considered the quality of the data collected (geology, survey and assaying data), the density of data, the confidence in the geological models and mineralization model, and the grade estimation quality.
Cut-off grade
The cut-off grade of 0.4 g/t gold for the stated open-pit mineral resource estimates reflects economic limits deriving from current and anticipated mining practices at Edikan.
Esuajah South mineral resource
Estimation methodology
Wire frames were constructed using cross-sectional interpretations based on geological contacts and a nominal 0.2-gram-per-tonne-gold-cut-off grade. Samples within the wire frames were composited to even one-metre intervals. A 40-gram-per-tonne-gold top cut was applied to composite values in the granite mineralization. Top cuts of between 15 g/t gold to 30 g/t gold were applied to selected sediment lodes. Top cuts were based on statistical analysis of composite data.
A Surpac block model was used for the estimate with a parent block size of 10 metres (north) by 10 metres (east) by 10 metres vertical with subcells of 2.5 metres by 2.5 metres by 2.5 metres. OK grade interpolation was used for the granite mineralization with an oriented search ellipse based on interpreted controls on mineralization. A first-pass radius of 30 metres was used with a second-pass radius of 60 metres and a third-pass radius of 240 metres. Greater than 86 per cent of the blocks was filled in the first two passes. An ellipsoid search method was used.
Inverse-distance-squared grade interpolation was used for the sediment-hosted mineralization with an oriented search ellipse based on individual lode geometry. A first-pass radius of 30 metres was used with a second-pass radius of 60 metres and a third-pass radius of 180 metres. Greater than 92 per cent of the blocks was filled in the first pass. An ellipsoid search method was used.
Criteria for resource classification
The deposit was classified as a measured, indicated and inferred mineral resource based on data quality, drill hole spacing and continuity of mineralization. The portion of the granite where the drill spacing was 20 metres by 20 metres or less and demonstrated good lode and grade continuity, supported by high kriging efficiencies, was classified as measured mineral resource. The portion of the deposit where the drill spacing was generally greater than 20 metres by 20 metres but still demonstrated good lode and grade continuity was classified as indicated mineral resource. The portion of the deposit classified as inferred mineral resource includes areas where the drill spacing was greater than 40 metres by 40 metres and the zones of mineralization within the adjacent sediments that are defined by limited drilling.
Cut-off grade
The mineral resource estimate has been constrained by the wire-framed mineralization envelopes, is undiluted by external waste and reported above a 0.7-gram-per-tonne-gold-cut-off grade. The cut-off grade reflects economic limits deriving from anticipated underground mining practices, costs and recoveries from the feasibility study.
Heap-leach mineral resource
Geology
The heap-leach mineral resource quoted herein comprises only material contained in the Africa heap. The Africa heap comprises approximately 55 per cent of the total volume of heap-leach material remaining after processing of oxide ores by previous operators Cluff Mining and Ashanti Goldfields between 1994 and 2001 and is defined by geographic limits.
Drilling techniques
The Africa heap has been sampled by 338 vertical RC and air core drill holes at a nominal spacing of 20 metres by 20 metres. Hole depths varied from 18 metres to 45 metres. Drill hole collar locations were accurately surveyed by Perseus qualified mine surveyors.
Sampling
RC and AC samples were subsampled at the drill sites using a multitier riffle splitter. The mineral resource estimate is informed by 7,584 samples collected over one-metre intervals and 1,632 samples assayed as five-metre composite samples.
Sample analytical methods
Samples from the first 27 RC and first 27 AC holes were analyzed for gold only by 24-hour bottle roll cyanide leach with AAS finish at Intertek Minerals in Tarkwa, Ghana. For all subsequent RC and AC holes, gold was assayed by fire assay with AAS finish at either Intertek Minerals or at ALS Minerals in Kumasi, Ghana.
Certified reference materials and blanks were submitted at a rate of one standard or blank for every 15 samples. Field duplicate splits were taken at a nominal rate of one duplicate per drill hole.
Estimation methodology
Average gold grade of the Africa heap was estimated by a number of methods, including inverse-distance-squared weighting, OK, simple kriging and sequential Gaussian simulation. All methods resulted in essentially identical estimates of average grade.
The volume of the Africa heap has been estimated by generating two triangulated surfaces: a topographic surface based on approximately 2,300 surveyed spot heights and drill hole collar locations and a bottom surface based on depths at which drill holes penetrated the plastic liner at the base of the heap. The volume was adjusted for depletion by illegal mining carried out between the date of the topographic survey and November, 2015, the affected volume being estimated from aerial photography.
A dry in situ density estimate of 1.32 tonnes per cubic metre was assigned to the heap-leach pad material. Density values and moisture content were determined by independent consultants in August, 2015, from 30 test pits, and a mean value was applied to the mineral resource.
Criteria for resource classification
The mineral resource is classified as indicated, based on drill and sample density, accurate and detailed surface survey of the heaps, and the close match of average grades derived from the various estimation methods.
Cut-off grade
There has been no cut-off grade applied to derive the heap-leach mineral resource. It is assumed that it is not feasible to selectively mine higher-grade portions of the material.
Stockpiles
Mineral resources contained in stockpiles are based on volume estimates based on ground survey data and loose bulk densities derived over time by reconciliation of volumes mined (at in situ densities) to stockpile movements and volumes, as well as estimates of stockpile grades based on predicted grades of mined material transferred onto stockpiles and material depleted by processing.
Closing stockpiles at Dec. 31, 2016, were estimated as summarized in the attached closing stockpiles table.
CLOSING STOCKPILES
Material Quantity (Tonnes) Grade (g/t gold) Gold (ounces)
High-grade oxide 12,939 1.04 433
Low-grade oxide 540,128 0.55 9,567
Low-grade fresh 789,044 0.59 14,865
High-grade fresh 13,544 1.15 501
High-grade transition 90,631 1.04 3,042
--------- ---- ------
Total 1,446,286 0.61 28,408
Stockpile tonnes and grade estimates are considered sufficiently accurate to support classification as measured mineral resources.
Ore reserve estimate
The updated ore reserve is summarized in the attached Edikan's proven and probable ore reserves table
and is based on the Edikan mineral resources as at Dec. 31, 2016, updated pit optimization, design and scheduling of the open-pit resources, and a new Esuajah South ore reserve based on underground mining methods. All ore reserves are reported in accordance with the JORC code. The ore reserve estimate is summarized in the attached Edikan's proven and probable ore reserves table that reports the ore reserves by category, deposit and type, above variable cut-off grades. The classification categories of proven and probable under the JORC code are equivalent to the CIM categories of the same name (CIM, 2010).
EDIKAN'S PROVEN AND PROBABLE ORE RESERVES AS AT DEC. 31, 2016
Deposit Deposit type Proven
Quantity Grade Gold
Mt g/t gold koz
AF gap Open pit 5.5 1.09 191
Fobinso Open pit 1.1 1.19 44
Esuajah North Open pit 6.5 1.10 229
Fetish Open pit 4.6 1.21 179
Chirawewa North Open pit 0.5 1.05 17
Bokitsi Open pit 0.5 2.94 44
---------- ----- ----- ----
Subtotal Open pit 18.7 1.17 704
---------- ----- ----- ----
Esuajah South U/ground
Heap leach Stockpile
ROM stockpiles Stockpile 1.4 0.61 28
---------- ----- ----- ----
Total 20.1 1.13 733
----- ----- ----
Deposit Deposit type Probable
Quantity Grade Gold
Mt g/t gold koz
AF gap Open pit 6.0 1.07 208
Fobinso Open pit 3.3 1.11 119
Esuajah North Open pit 7.8 1.04 262
Fetish Open pit 7.9 1.11 281
Chirawewa North Open pit 2.0 0.99 63
Bokitsi Open pit 0.1 2.75 10
---------- ----- ----- ------
Subtotal Open pit 27.1 1.08 943
---------- ----- ----- ------
Esuajah South U/ground 4.9 2.0 314
Heap leach Stockpile 4.3 0.6 89
ROM stockpiles Stockpile
---------- ----- ----- ----
Total 36.3 1.13 1,346
----- ----- ------
Deposit Deposit type Proven + probable
Quantity Grade Gold
Mt g/t gold koz
AF gap Open pit 11.5 1.08 399
Fobinso Open pit 4.5 1.13 163
Esuajah North Open pit 14.3 1.07 491
Fetish Open pit 12.5 1.15 459
Chirawewa North Open pit 2.5 1.01 80
Bokitsi Open pit 0.6 2.91 55
---------- ----- ------ ------
Subtotal Open pit 45.8 1.12 1,647
---------- ----- ------ ------
Esuajah South U/ground 4.9 2.0 314
Heap leach Stockpile 4.3 0.6 89
ROM stockpiles Stockpile 1.4 0.61 28
---------- ----- ------ ------
Total 56.5 1.14 2,078
----- ------ ------
Notes:
(1) Numbers are rounded and may not add up correctly in the table.
(2) All the estimates are on a dry tonne basis.
(3) Based on December, 2016, mineral resource estimation.
(4) Variable gold cut-off grade based on material type and mining method.
(5) Inferred mineral resource is treated as mineralized waste.
(6) Allows for mining depletion up to and including Dec. 31, 2016.
(7) ROM denotes run of mine.
(8) Heap leach refers to decommissioned heap-leach pads established by
prior owners of Edikan.
Proven and probable ore reserves are found within the economic limits of six discrete open pits, an underground project, and stockpiles that have been designed based on measured and indicated mineral resources that incorporated all available resource infill drilling results, a gold price of $1,200 (U.S.) per ounce, and mining, processing, and general and administration costs derived from recent operating experience.
When compared with Edikan's most recently published ore reserve estimate as at June 30, 2016, and after taking into account ore depletion plus the addition of ore reserves contained in the decommissioned heap-leach stockpiles created by prior owners of the mine and not previously accounted for by Perseus, the gold contained in the updated ore reserve estimate has changed by less than 5 per cent or 99,000 ounces of gold. As shown in
the attached comparison of proven and probable ore reserves table, the following changes have occurred:
- All open-pit ore reserves are based on mineral resources estimated using MIK techniques.
- A new underground ore reserve has been calculated for the Esuajah South deposit that contains 77,000 ounces fewer gold than previously estimated for the Esuajah South open pit.
- Ore reserves contained in decommissioned heap-leach pads created by prior owners of the Edikan mining leases have been included in the revised ore reserve estimate.
- Small increases in the ore reserves of AF gap, Fobinso and Esuajah North have been estimated while small decreases in ore reserves have been estimated at Chirawewa and Bokitsi.
- The reclassification of significant quantities of ore from the proven classification to the probable classification is a function of the application of more stringent classification criteria in the mineral resource estimates related to drill hole and data density.
COMPARISON OF PROVEN AND PROBABLE ORE RESERVES
AS AT DEC. 31 AND JUNE 30, 2016
P&P reserves (December, 2016)
Deposit Quantity (Mt) Grade (g/t gold) Gold (koz)
AF gap -- Fobinso 16.0 1.1 562
Fetish 12.5 1.1 459
Esuajah North 14.3 1.1 491
Esuajah South 4.9 2.0 314
Chirawewa 2.5 1.0 80
Bokitsi 0.6 2.9 55
ROM stockpile 1.4 0.6 28
HL stockpile 4.3 0.6 89
------ ---- ------
56.5 1.1 2,078
P&P reserves (June, 2016)
Deposit Quantity (Mt) Grade (g/t gold) Gold (koz)
AF gap -- Fobinso 14.9 1.2 558
Fetish 12.7 1.2 497
Esuajah North 15.3 1.0 475
Esuajah South 6.7 1.8 391
Chirawewa 3.8 1.2 146
Bokitsi 0.8 3.2 79
ROM stockpile 1.6 0.6 32
HL stockpile - - -
----- ---- ------
55.8 1.2 2,177
Economic assumptions:
-
Gold metal price of $1,200 (U.S.) per ounce;
- Unescalated average costs used in optimizing pit designs are as shown in the attached assumed open-pit operating costs table;
- A discount rate of 10 per cent (real) has been assumed to calculate net present values of forecast cash flows.
ASSUMED OPEN-PIT OPERATING COSTS
(in U.S. dollars)
Mining Processing G&A Selling Royalties
$3.24 t/mined $9.25 t/milled $2.20 t/milled $1.02 t/oz sold 6.75%
Open-pit mining limits:
-
The chosen method for the open-pit reserves is conventional open-pit mining utilizing hydraulic excavators and trucks, mining bench heights of five metres, with 2.5-metre flitches to minimize ore loss and waste rock dilution.
- The economic pit shell was defined using Whittle four-time pit optimization software with inputs such as geotechnical limits, ore loss and dilution, metallurgical recovery, and mining costs.
- The pit optimization was run with revenue generated only by measured and indicated mineral resources. No value was allocated to inferred mineral resources.
- Whittle four-time input limits were generally based on Perseus's operating site experience and supporting technical studies.
- The pit slope design assumptions are based on a geotechnical study by George, Orr and Associates (Australia) Pty. Ltd. Overall pit slopes are 30 to 50 degrees inclusive of berms spaced at between five and 20 metres vertically and berm widths of five to 12 metres.
- Pit ramps have been designed for a 777-truck fleet and are set at a net 16 metres (single lane) to 26 metres (dual lane).
- The vertical mining advance has been capped based on Perseus's operating experience.
- The geological block models used in planning employed MIK estimation to assign block grades also represented the ore mining loss and dilution.
- Minimum mining width of 40 metres was generally applied to the pit designs.
- There are no physical constraints to mining within the lease area. No property, infrastructure or environmental issues are known to exist, which may limit the extent of mining within the mining lease.
- Ore cut-off grades are based on the gold price. Cost and mining limits are as shown in the attached cut-off grades table.
CUT-OFF GRADES
Cut-off grade by ore type (g/t gold)
Deposit Oxide Transition Fresh
AF gap 0.35 0.5 0.45
Fobinso 0.35 0.5 0.45
Esuajah North 0.4 0.6 0.5
Fetish 0.5 0.65 0.55
Chirawewa North 0.4 0.5 0.45
Bokitsi 0.35 0.5 0.45
Underground mining limits:
- The chosen method for the underground reserves is sublevel mining under rock fill (SURF). SURF is a bulk, semi-selective, underground mining method similar to sublevel caving (SLC) in layout, but with waste being introduced from surface instead of the hangingwall caving.
- The ore is broken through drilling and blasting of regularly spaced, fan-shaped uphole rings along each ore drive. As ore is extracted from the underground mine, waste fill will be introduced from surface to fill the resulting void. The orebody is accessed through regularly spaced draw points on multiple levels. Draw points are offset between levels to provide a regular, honeycomb layout to ensure maximum recovery of blasted ore.
- Parallel rings are designed along the length of each ore drive. The rings are typically blasted and loaded one at a time, in choke blast conditions (that is, blasting is against the previously mined ring instead of into a free void).
- In total, 79 per cent of the designed ring tonnes is extracted, with the remaining 21 per cent either left behind or replaced by the external dilution being mined. About 14 per cent on average is mined from waste introduced into the pit as part of the SURF method. Only swell is drawn in subeconomic rings, and this improves the remaining grade that is drawn and also the dilution grade for future rings. In total, the mined grade is 91 per cent of the in situ grade.
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Geotechnical assessment has been undertaken to assess:
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Requirements for development ground support;
- Sublevel intervals;
- Ore drive spacing;
- Standoff distances for infrastructure;
- Mine portal access.
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The Esuajah South underground development and stoping within fresh rocks will be carried out in generally fair to good quality rock mass conditions.
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Power, air, water and other consumables were estimated based on the calculated mine schedule.
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The operating and capital costs assume a contractor-operated mine with most capital equipment being supplied by the mining contractor.
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The underground project greatly benefits from sharing the process plant and general and administration overheads with the larger Edikan gold project. This reduces plant processing operating cost and G&A. It does, however, make the ESS underground project reliant on being completed in conjunction with the current larger Edikan gold project open-pit schedules.
Processing limits:
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The process metallurgical recovery for gold is fixed by material type in each deposit. Gold recovery rates range from 59.5 to 69 per cent for oxide ore and 86 to 94 per cent for primary ore. Recovery variation is a function of differing metallurgical properties of ores from different deposits, and recoveries by pit are as shown in the attached metallurgical recoveries by material type and pit table.
- No deleterious material has been identified.
- Average annual processing throughput rate of ore is nominally 7.0 million tonnes per annum, with throughput rates variable by material type and deposit. The processing circuit involves single-stage crushing, semi-autogenous grinding, gravity recovery, flotation, regrind and CIL.
METALLURGICAL RECOVERIES BY MATERIAL TYPE AND PIT
Recovery by ore type (%)
Deposit Oxide Transition Fresh
AF gap 61.0 73.4 88.0
Fobinso 61.0 73.4 88.0
Chirawewa 59.5 72.0 86.0
Bokitsi 69.0 78.0 87.01
Fetish 61.0 73.4 90.0
Esuajah North 61.0 73.4 93.0
Esuajah South - - 94.0
Heap leach 67.0 - -
(1) Average value and the recovery for Bokitsi are
variable based on the input grade.
Stockpile and heap-leach limits
It is assumed all the heap-leach material is mined and fed to the processing plant during the mine life, and all the material is rehandled on the ROM stockpile. The ROM stockpiles that existed at Dec. 31, 2016, are all fed to the processing plant over the mine life and associated rehandle costs for all material is allowed for.
Criteria for ore reserve classification
Ore reserves have been classified based on the underlying mineral resources classifications and the level of detail in the mine planning. The mineral resources were classified as measured, indicated and inferred. The ore reserves, based only on the measured and indicated resources, have been classified as proven and probable ore reserves, respectively.
The ore reserve is classified as proven and probable in accordance with the JORC code, corresponding to the mineral resource classifications of measured and indicated and taking into account other factors, where relevant. The deposit's geological model is well constrained. The ore reserve classification is considered appropriate given the nature of the deposit, the moderate grade variability, drilling density, structural complexity and mining history. Therefore, it was deemed appropriate to use measured mineral resources as a basis for proven reserves and indicated mineral resources as a basis for probable reserves.
No inferred mineral resources were included in the ore reserve estimate.
Competent person statement
Gary Brabham, FAusIMM, MAIG, has compiled and reviewed the consolidated information on the mineral resources in this report and compiled the information relating to the results of exploration and resource definition drilling for the open-pit mineral resources of the Edikan gold mine. The open-pit mineral resources have previously been reported by Perseus in National Instrument 43-101 technical reports filed with Canadian authorities and available on SEDAR. Mr. Brabham is the group geologist for Perseus Mining and has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity undertaken to qualify as a competent person as defined in the JORC code 2012 and a qualified person as defined in NI 43-101. Mr. Brabham consents to the inclusion in this report of the matters based on this information in the form and context in which it appears and has approved the inclusion of technical and scientific information in this report.
Nicolas Johnson, MAIG, who is an employee of MPR Geological Consultants Pty. Ltd., has compiled the information which relates to the open-pit mineral resources of the Edikan gold mine. Mr. Johnson has sufficient experience, which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he has undertaken to qualify as a competent person, as defined in the JORC code. Mr. Johnson has no economic, financial or pecuniary interest in the company and consents to the inclusion in this report of the matters based on this information in the form and context in which it appears and has approved the inclusion of technical and scientific information in this report.
Joe McDiarmid, who is a chartered professional member of the Australasian Institute of Mining and Metallurgy and is an employee of RungePincockMinarco Ltd., has compiled the information, which relates to the open-pit ore reserves of the Edikan gold mine. Mr. McDiarmid has sufficient experience, which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he has undertaken to qualify as a competent person, as defined in the JORC code 2012. Mr. McDiarmid has no economic, financial or pecuniary interest in the company and consents to the inclusion in this report of the matters based on this information in the form and context in which it appears and has approved the inclusion of technical and scientific information in this report.
Shaun Searle, who is a member of the Australasian Institute of Geoscientists and is an employee of RungePincockMinarco, has compiled the information which relates to the Esuajah South mineral resource of the Edikan gold mine. Mr. Searle has sufficient experience, which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he has undertaken to qualify as a competent person as defined in the JORC code. Mr. Searle has no economic, financial or pecuniary interest in the company and consents to the inclusion in this report of the matters based on this information in the form and context in which it appears and has approved the inclusion of technical and scientific information in this report.
Allan Earl, who is a member of the Australasian Institute of Mining and Metallurgy and is an employee of Snowden Mining Industry Consultants Pty. Ltd., has compiled the information which relates to the Esuajah South ore reserve of the Edikan gold mine. Mr. Earl has sufficient experience, which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he has undertaken to qualify as a competent person as defined in the JORC code 2012. Mr. Earle has no economic, financial or pecuniary interest in the company and consents to the inclusion in this report of the matters based on this information in the form and context in which it appears and has approved the inclusion of technical and scientific information in this report.
Steffen Brammer, who is a member of the Australasian Institute of Mining and Metallurgy and is an employee of Perseus Mining, has compiled the information which relates to the Esuajah South and heap-leach mineral resource of the Edikan gold mine, respectively. Mr. Brammer has sufficient experience, which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he has undertaken to qualify as a competent person as defined in the JORC code 2012 and consents to the inclusion in this report of the matters based on this information in the form and context in which it appears and has approved the inclusion of technical and scientific information in this report.
Paul Thompson, who is a fellow of the Australasian Institute of Mining and Metallurgy and is an employee of Perseus Mining, has compiled and reviewed the consolidated information on the ore reserves in this report. Mr. Thompson has sufficient experience, which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he has undertaken to qualify as a competent person as defined in the JORC code 2012 and a qualified person as defined in NI 43-101 and consents to the inclusion in this report of the matters based on this information in the form and context in which it appears and has approved the inclusion of technical and scientific information in this report.
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