Mr. Claude Lemasson reports
EASTMAIN ANNOUNCES ROBUST PRELIMINARY ECONOMIC ASSESSMENT AND UPDATED RESOURCE ESTIMATE AT THE EAU CLAIRE PROJECT
Eastmain Resources Inc. has released positive and robust results of a preliminary economic assessment (PEA) on its 100-per-cent-owned Eau Claire gold project located in James Bay, Quebec.
The company will hold an investor conference call to discuss the PEA at 10 a.m. Eastern Standard Time on Wednesday, May 23, 2018. Conference dial-in numbers are Canada/U.S. toll-free: 1-800-319-4610; international: 1-604-638-5340.
Further conference details are provided at the end of this press release.
The PEA demonstrates robust economics for a combined open-pit and underground mining operation with a mine life of 12 years.
PEA highlights:
-
Pretax net present value at 5-per-cent discount rate (NPV5): $381-million;
- After-tax NPV5: $260-million;
- Pretax internal rate of return (IRR): 32 per cent;
- After-tax IRR: 27 per cent;
- After-tax payback: 3.1 years;
- Preproduction capital cost, including contingency: $175-million
life of mine (LOM);
- Sustaining capital cost: $108-million;
- Average LOM total cash cost: $632 Au per ounce ($486 (U.S.)/ounce);
- Average LOM all-in sustaining costs (AISC): $746/ounce Au ($574 (U.S.)/ounce).
PEA key assumptions and inputs:
- Assumed gold price: $1,250 (U.S.)/ounce;
-
Exchange rate: U.S./Canadian 0.77;
-
Life of mine: 12-year mine life (three years for open pit, 10 years for underground);
-
Years of full production: 10;
-
Open-pit strip ratio: 9.4:1;
-
Total open-pit dilution: 26 per cent;
-
Main underground mining method: captive long hole;
-
Total underground dilution: 40 per cent;
-
Average mining and processing throughput: 1,500 tonnes per day (tpd);
-
Process plant recoveries: 95 per cent;
-
Average annual production (LOM): 79,200 ounces gold;
-
Average annual production (year one to 10): 86,100 ounces gold;
-
LOM recovered gold production: 951,000 ounces;
- Several upside opportunities identified to further improve project economics.
Claude Lemasson, president and chief executive officer, stated: "The Eau Claire PEA is our biggest accomplishment and represents a critical milestone in Eastmain's history. These results fully support the advancement of this key project through further predevelopment activities on what could become James Bay's next gold mine. The PEA displays robust economics, outlining a stable operating profile of 86,100 ounces of gold per annum at attractive cash costs. We intend to move Eau Claire along a development track and to aggressively pursue nearby exploration targets with potential to provide additional process plant feed and further improve project economics."
PEA key recommendations
Technical:
- Initiate basic and detailed engineering for open-pit and underground ramp design to improve mining options with a view to minimize capital requirements and to control and minimize dilution; gathering additional information regarding engineering and mining of the Eau Claire deposit to inform advanced technical studies; detailed geotechnical study recommended as part of this exercise;
-
Develop options to improve advanced technical study outcomes by conducting advanced underground exploration and bulk sampling.
Permitting:
- Initiate baseline studies in support of an environmental assessment of the project with consideration for advanced exploration and full mine development options.
Community engagement:
- With the PEA as a basis for engagement, proceed to consult with the Eastmain Cree community and the Grand Council of the Crees (Eeyou Istchee) as the project's scope, impacts and benefits become better understood at the advanced exploration and feasibility stages.
PEA summary
The PEA was prepared by P&E Mining Consultants Inc. and is summarized in the associated table.
PEA SUMMARY PARAMETERS
Input Unit
Physical parameters
Total tonnes processed (LOM) T 6,403,000
Average annual throughput (LOM) tpa 534,000
Open-pit head grade (diluted) Au g/t 3.78
Underground head grade (diluted) Au g/t 5.24
Blended head grade (diluted) Au g/t 4.87
Gold recovery % 95%
Mine life years 12
Total ounces recovered oz 951,000
Average annual production (LOM) oz 79,200
Average annual production (yrs 1-10) oz 86,100
Cost parameters
Mining costs (blended) C$/t $58.71
Processing costs C$/t 22.59
Site G&A C$/t 12.53
Total costs C$/t 93.83
Preproduction capital costs
Open-pit development C$M 21.8
Equipment and infrastructure C$M 42.9
Tailings C$M 4.6
Process plant construction C$M 67.1
Owner costs C$M 11.1
Contingency (20%) C$M 27.3
Total preproduction capital C$M 174.7
Sustaining capital (LOM) C$M 108.2
Cost summary
LOM average cost C$/oz 632
US$/oz 486
LOM AISC C$/oz 746
US$/oz 574
Mineral resource estimate
An updated National Instrument 43-101 mineral resource estimate, effective Feb. 4, 2018, is included within the PEA and will be filed on SEDAR within 45 days of this press release. The updated mineral resource estimate reflects the inclusion of an additional 19 drill holes (14,884 m) which were completed from September to November, 2017, which increased Eau Claire's mineral resource estimates by 62,000 ounces at a grade of 6.9 g/t Au.
MINERAL RESOURCE ESTIMATE
(effective Feb. 4, 2018) (1) (2) (3) (4) (5)
Category Tonnes Grade Contained Au
(g/t Au) (oz)
Measured 906,000 6.63 193,000
Indicated 3,388,000 6.06 660,000
Total M&I 4,294,000 6.18 853,000
Inferred 2,382,000 6.53 500,000
OPEN-PIT AND UNDERGROUND MINERAL RESOURCES
(effective Feb. 4, 2018) (1) (2) (3) (4) (5)
Open pit (surface to 150 m) Underground (150 m to 860 m)
Category Tonnes Grade Contained Au Tonnes Grade Contained Au
(g/t Au) (oz) (g/t Au) (oz)
Measured 574,000 6.66 123,000 332,000 6.56 70,000
Indicated 636,000 5.13 105,000 2,752,000 6.27 555,000
Measured and
indicated 1,210,000 5.86 228,000 3,084,000 6.30 625,000
Inferred 43,000 5.06 7,000 2,339,000 6.56 493,000
(1) Mineral resources which are not mineral reserves do not have demonstrated economic
viability. All figures are rounded to reflect the relative accuracy of the estimate.
Composites have been capped where appropriate.
(2) The mineral resources in this press release were estimated using the Canadian Institute
of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves,
Definitions and Guidelines prepared by the CIM standing committee on reserve definitions.
(3) Open-pit mineral resources are reported at a cut-off grade of 0.5 g/t gold and
underground mineral resources are reported at a cut-off grade of 2.5 g/t gold. Cut-off
grades are based on a gold price of $1,250 (U.S.) per ounce, a foreign exchange rate of
80 U.S. cents and a gold recovery of 95 per cent.
(4) The results from the pit optimization are used solely for the purpose of testing the
"reasonable prospects for economic extraction" by an open pit and do not represent an
attempt to estimate mineral reserves. There are no mineral reserves on the property.
The results are used as a guide to assist in the preparation of a mineral resource
statement and to select an appropriate resource reporting cut-off grade.
(5) The estimate of mineral resources may be materially affected by environmental,
permitting, legal, title, socio-political, marketing or other relevant issues.
(6) The inferred mineral resource in this estimate has a lower level of confidence
that applied to an indicated mineral resource and must not be converted to a mineral
reserve. It is reasonably expected that the majority of the inferred mineral resource
could be upgraded to an indicated mineral resource with continued exploration.
Potentially extractable portion of mineralization for mine planning purposes
The PEA demonstrates that approximately 71 per cent of the 2018 updated mineral resources are potentially extracted under the mine plan supported by the PEA. For purposes of mine planning, the potentially extractable portion of mineralization comprises 6.4 million tonnes at a diluted grade of 4.9 g/t Au, containing just over one million ounces of gold. The mineralized material modelled to be mined in the PEA contains mineral resources classified in the inferred category (30 per cent) which cannot be considered mineral reserves. These inferred resources will require further exploration and definition to meet the criteria to be classified as indicated or measured resources before being considered for conversion to mineral reserves at the next level of detailed economic study.
POTENTIALLY EXTRACTABLE PORTION OF THE MINERAL RESOURCE ESTIMATE
(diluted and extracted) (1) (2) (3)
Tonnes Grade Contained Au
(g/t Au) (oz)
Pit production 1,641,000 3.78 199,000
UG production 4,762,000 5.24 802,000
Total production 6,403,000 4.87 1,001,000
(1) Mineral resources, which are not mineral reserves, do not
have demonstrated economic viability. Environmental, permitting,
legal, title, taxation, socio-political, marketing or other
relevant issues may materially affect the estimate of mineral
resources.
(2) The inferred mineral resource in this estimate has a lower
level of confidence than that applied to an indicated mineral
resource and must not be converted to a mineral reserve. It is
reasonably expected that the majority of the inferred mineral
resource could be upgraded to an indicated mineral resource
with continued exploration.
(3) The potentially extractable portion of the mineral resource
estimate was prepared by Eugene Puritch, PEng, FEC, CET, and
Andrew Bradfield, PEng, of P&E Mining Consultants Inc. The
mineral resource estimate reported in this press release was
estimated using the Canadian Institute of Mining, Metallurgy and
Petroleum (CIM), Standards on Mineral Resources and Reserves,
Definitions and Guidelines prepared by the CIM standing
committee on reserve definitions.
(4) The potentially extractable portion of the open-pit mineral
resources is reported at a cut-off grade of 0.66 g/t gold and
the potentially extractable portion of the open-pit mineral
resources underground mineral resources are reported at a
cut-off grade of 2.7 g/t gold. Cut-off grades are based on a
gold price of $1,250 (U.S.) per ounce, a foreign exchange rate
of 80 U.S. cents, and a gold recovery of 95 per cent. Table
entries are rounded.
Mine plan
Proposed mining would commence with open-pit mining followed by underground mining.
The PEA proposes a conventional truck-and-shovel open-pit operation, followed by ramp access and captive long-hole open stoping in the underground portion of the mine. The mine plan is to extract the upper portions of the mineral resources (top 100 metres) using open-pit mining methods. While the open pit is producing, an underground portal will be established outside of the pit and an underground ramp will be extended below the proposed crown pillar.
The PEA schedule assumes mining of 1,641,000 tonnes of mineralized material at 3.78 g/t Au for 199,000 ounces Au contained over three years from the two open pits. The open-pit operations consist of production from the main pit (650 m by 275 m by 100 m depth) and the smaller west pit (260 m by 120 m by 40 m depth), to be mined at a bench height of five metres. The open pits have an average strip ratio of 9.4:1.
Underground mining will progress by captive long-hole methods in a top-down fashion with major sublevels every 24 metres. The underground operation assumes mining of 4,762,000 tonnes of mineralized material grading 5.24 g/t Au for 801,500 ounces over 11 years. The average planned dilution factor was conservatively applied at 40 per cent at zero dilution grade.
The PEA schedule assumes combined open-pit and underground operations of 6,403,000 tonnes of mineralized material at blended grade of 4.87 g/t Au for 1,001,000 contained ounces Au over 12 years.
Processing and recovery
Gold mineralization will be processed in a 1,500 tpd process plant using conventional crushing, grinding, cyanidation and carbon in pulp (CIP) processes. The conventional cyanidation circuit includes a gravity concentration within the grinding circuit followed by direct cyanidation of gravity tails. The PEA recovery factor relies on metallurgical testwork conducted by SGS Lakefield Research Ltd. which indicates gold recovery of 95 per cent is attainable with gravity and cyanidation processes. A bond ball mill index of 11.0 kilowatt-hours per tonne indicates material will not require high energy to be processed.
Infrastructure and tailings
Power to the project will be sourced through an 18 km power line from a substation at the Hydro Quebec Eastmain power dam to the project site. Site overall power consumption will average seven megawatts.
Tailings will be dewatered in the process plant and transported by truck to a geomembrane-lined tailings management facility (TMF), reducing risk for potential surface and groundwater contamination. The TMF design will incorporate engineered features to manage the chemical and physical stability of the deposited tailings in accordance with current best-in-class practices. This mitigation strategy is similar to those at other operations in the region.
Major surface facilities to support the Eau Claire project will include an administration and engineering building, security, warehouse, fuel and explosive storage, fire protection, maintenance shops, and a mine camp that can accommodate 200 people.
CAPITAL COSTS AND SENSITIVITY
Input (all $M) Preproduction Sustaining LOM
Development 21.8 84.3 106.1
Equipment and
infrastructure 42.9 - 42.9
Tailings 4.6 5.5 10.1
Process plant 67.1 0.5 67.6
Owner costs 11.0 - 11.0
Contingency (20%) 27.3 18.0 45.3
Total capital costs 174.7 108.2 282.9
NPV, IRR AND PAYBACK SUMMARY
Gold price sensitivities
Unit US$1,150/oz US$1,250/oz base case US$1,350/oz
Macro parameters
Gold price US$/oz 1,150 1,250 1,350
Exchange rate C$/US$ 0.77 0.77 0.77
Pretax
NPV5% C$M 297.4 380.9 464.4
IRR % 27 32 36
After tax
NPV5% C$M 205.4 260.2 315.1
IRR % 23 27 31
Payback years 3.7 3.1 2.6
Opportunities to enhance project value
Exploration -- deposit expansion and property-scale satellite mineral resource development
Opportunities exist to expand and build mineral resources proximal to the proposed underground mine infrastructure at Eau Claire. In particular, exploration on the 450W zone has indicated that gold mineralization may extend at depth to the southeast.
Gold mineralization has been historically identified and recently confirmed at numerous surface prospects within several kilometres of Eau Claire. Additional mineral resources which may be defined at these prospects could support larger-scale production and extend mine life.
Advanced exploration ahead of advanced technical and feasibility studies
Underground exploration via a ramp, combined with underground bulk sampling, will provide enhanced understanding of the high-grade vein systems and detailed geotechnical information which could optimize the mining and financial considerations used in future advanced technical studies for Eau Claire.
About the Eau Claire deposit
The Eau Claire deposit is located in the province of Quebec, approximately 800 kilometres north of Montreal and 350 kilometres north of Chibougamau. The deposit is readily accessible by road along the Route du Nord extending from Chibougamau onto the village of Nemiscau and via Hydro Quebec's Eastmain-1 road network. The centre of the property is located at approximately 75.69 degrees longitude west and 52.23 degrees latitude north.
The project is located north of the 52nd parallel (52 degrees north) and as such is subject to the provisions of the James Bay and Northern Quebec agreement (1975) (JBNQA), and the Paix des Braves agreement (2002). The project falls within the Eeyou Istchee territory of the Eastmain Cree First Nation, including the trap lines held by Dr. Ted Moses (tallyman), and on category 1 and 3 lands, as established under the JBNQA.
The Eau Claire deposit is a structurally controlled gold deposit. Mineralization occurs primarily in a series of sheeted en echelon quartz-tourmaline veins; subordinate mineralization occurs as dissemination in the host rock. The en echelon pattern is hosted within a structural corridor and trends from northwest to the southeast. Individual veins range from less than a metre to several metres thick and extend for at least 100 metres along strike.
Gold mineralization at the Eau Claire gold deposit is generally located within approximately east-west-trending structurally controlled, high-grade en echelon quartz-tourmaline (QT) veins (formerly named HGV) and adjacent altered wall rocks, as well as variable width east-southeast-trending sheared and foliated schist zones, HGS veins, of altered gold-bearing rock. HGS zones are aligned parallel to the host rock foliation and interpreted to parallel to the southern, or hangingwall, side of the deposit. The vein systems are predominantly hosted within a thick sequence of massive and locally pillowed mafic volcanic flows, interbedded with narrow intervals of volcaniclastic metasedimentary rocks. Both flows and sediments have been intruded by multiple phases of felsic and porphyry dikes. Host rocks have been folded and deformed (sheared) through several deformation events. Both gold-bearing vein sets may occur with as narrow intervals with tourmaline and develop into thick quartz-tourmaline veins with zoned tourmaline-plus/minus-actinolite-plus/minus-biotite-plus/minus-carbonate alteration halos which can measure up to several metres in thickness. Carbonate occurs to varying degrees in the vein mineralization.
The two major QT vein areas discovered to date (the 450 West and 850 West zones) form a crescent-shaped, mineralized body 1.8 kilometres long by more than 100 metres wide, which has been traced to date to a vertical depth of 900 metres. Veins within the 450 West zone typically strike 85 degrees and dip 45 to 60 degrees to the south. Mineralization within the veins plunges steeply to the southeast, subparallel to an F2 fold axis. Veins within the 850 West zone typically strike 60 degrees and dip subvertically. Mineralization within this vein set plunges gently to the southwest.
Quality assurance/quality control statement
Eastmain conducts quality control under the supervision of qualified persons at all its exploration projects to ensure best practices from sample preparation to data collection and analysis. Drill core is logged and split with half-core samples packaged and delivered to ALS Minerals laboratories. Samples are dried and subsequently crushed to 70 per cent passing a two-millimetre mesh screen. A 1,000-gram subsample is pulverized to a nominal 85 per cent passing 75-micron mesh screen. The remaining core and selected crushed sample (reject) and pulverized sample (pulp) are retained for further analysis and quality control. All samples are analyzed for gold by fire assay with an atomic absorption (AA) finish using a 50-gram aliquot of pulverized material. Assays exceeding five g/t Au are reassayed by fire assay with a gravimetric finish. Eastmain regularly inserts third party reference control samples and blank samples in the sample stream to monitor assay performance and performs duplicate sampling of pulps and rejects at a second certified laboratory. For recent programs at Eau Claire approximately 10 per cent of samples submitted are part of the company's laboratory sample control protocols.
Qualified persons and NI 43-101 disclosure -- preliminary economic assessment (PEA)
This PEA is preliminary in nature and includes inferred mineral resources that are too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that PEA results will be realized. Mineral resources are not mineral reserves and do not have demonstrated economic viability.
The PEA was prepared under the supervision of Mr. Puritch. Mr. Puritch is an independent qualified person as defined by NI 43-101 and has reviewed and approved the contents of this news release related to the preliminary economic assessment. An NI 43-101 technical report is currently being prepared by P&E and will be filed on SEDAR within 45 days of this news release.
Qualified persons and NI 43-101 disclosure -- 2018 updated mineral resource estimate
The updated mineral resource estimate for the Eau Claire gold deposit described herein was prepared by SGS Canada Inc. and complies with all current disclosure requirements for mineral resources set out in the NI 43-101 Standards of Disclosure for Mineral Projects. The classifications described in the 2018 updated mineral resource estimate are consistent with current CIM Definition Standards For Mineral Resources and Mineral Reserves. The 2018 updated mineral resource estimate was prepared by Dr. Allan Armitage, PhD, PGeo, of SGS. Mr. Armitage is an independent qualified person as defined by NI 43-101.
The 2018 updated mineral resource estimate and supporting information will be included within the technical report for the Eau Claire preliminary economic assessment.
Conference call
The company will hold an investor conference call to discuss the PEA.
Details:
Date: Wednesday, May 23, 2018
Time: 10 a.m. Eastern Time
Kindly call in five to 10 minutes ahead of scheduled start time.
Phone numbers:
Canada/U.S. toll-free: 1-800-319-4610
International:
1-604-638-5340
Conference call replay:
Canada/U.S. toll-free: 1-855-669-9658
International: 1-604-638-9010
Access code: 2342
A replay of the call will be available on May 23 until June 6, 2018.
A live webcast of the conference call, along with supporting presentation slides, will be available on the company's website. A replay of the webcast will be available from May 23 until Aug. 23, 2018.
About Eastmain Resources Inc.
Eastmain is a Canadian exploration company advancing three high-grade gold assets in the emerging James Bay gold camp in Quebec. The company holds a 100-per-cent interest in the Eau Claire and Eastmain mine gold deposits, each with new National Instrument 43-101 resource estimates. Eastmain is also a partner in the Eleonore South joint venture, located immediately south of Goldcorp Inc.'s Eleonore mine and the host of a new high-grade gold discovery. In addition, the company has a pipeline of exploration projects in this favourable mining jurisdiction with nearby infrastructure.
We seek Safe Harbor.
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