Mr.
Marz Kord reports
WALLBRIDGE REPORTS POSITIVE PREFEASIBILITY RESULTS AT FENELON
Wallbridge Mining Company Ltd. has released positive results of a prefeasibility study (prepared in accordance with National Instrument 43-101, standards of disclosure for mineral projects) for the development of its Fenelon gold mine in Quebec, Canada. The prefeasibility study estimates a pretax net cash flow of $6.62-million and a project pretax internal rate of return of 92 per cent for the initial approximate 18-month mine life for the known reserves located above a 100-metre depth and in close proximity to the existing ramp.
Marz Kord, chief executive officer of Wallbridge, commented: "With a high-margin pretax return of 92 per cent, the prefeasibility study supports that Fenelon is well placed to become one of the high-margin, low-cost producers in the camp. The next key step in the development of Fenelon is the continuation of the permitting process, as well as exploration around the existing deposit to add potential ounces and extend mine life.
"In tandem with the permitting and exploration, we will be seeking required funding for the preproduction costs through a variety of options, including off-take partners. With recent exploration results at Fenelon, we are optimistic that we can add additional ounces with very limited drilling by initially pursuing high-quality targets around the existing deposit. This exploration effort will continue from underground when in production in order to expand the deposit to depth and along strike."
Following the results of the prefeasibility study, the company will continue with the required studies and permitting of the project as Wallbridge looks to bringing the project to a production decision and into production.
The prefeasibility study demonstrates the attractive economics of Fenelon within the top 100 metres of the deposit, and key findings are shown in the attached table.
KEY RESULTS
(in Canadian dollars)
Prefeasibility study key indicators Value
Pretax net cash flow $6.62M
Pretax net present value
(at 5-per-cent discount) $5.84M
Pretax internal rate of return (%) 92%
Initial construction capital cost $5.24M
Average operating costs ($ per ounce Au) $1,056
Posttax net present value
(at 5-per-cent discount) $2.8M
Posttax internal rate of return (%) 60%
Peak production capacity (tonnes per day) 400
- The project has an estimated pretax internal rate of return of 92 per cent; a net present value of $5.84-million (U.S.) (at a 5-per-cent discount rate); and a simple payback of 12 months, based on a six-month trailing average gold price in Canadian dollars of $1,689 per ounce gold.
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Most cost estimates are based on firm quotations from mining and transportation contractors. Mining contractors have shown interest to supply the working capital (part of capital expenses) until mill payments are received.
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The milling cost is based on an indicative quote from a gold toll milling facility where the previous two bulk samples were processed (295 kilometres distance from Fenelon).
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Wallbridge intends to continue the permitting and the required studies with the intent to make a production decision in the second quarter of 2017.
Project introduction
The Fenelon project covers 1,052 hectares and is located in west-central Quebec, about 75 kilometres northwest of the town of Matagami. Geologically, it is situated proximal to the Sunday Lake deformation zone, which hosts the Detour gold mine in Ontario, as well as the Martiniere gold project being explored by Balmoral Resources Ltd.
A total of over 50,000 metres of drilling have been completed on the project and, very significantly, two bulk samples have been mined and processed from the discovery zone deposit. In 2001, a 13,713-tonne bulk sample mined from a small open pit at the discovery zone was test milled at the Camflo mill in Malartic and returned 132,039 grams (4,213 ounces) of gold, giving a reconciled grade of 9.84 grams per tonne gold using a calculated recovery of 97 per cent. A second bulk sample, mined from underground and also milled at Camflo, comprised 8,073 tonnes and returned 80,731 grams (2,596 ounces) of gold, giving a reconciled grade of 10.7 grams per tonne gold at a calculated gold recovery of 93.5 per cent. Without operational problems occurring during the ore processing of this second bulk sample, the gold recovery should normally be in the range of 97 per cent.
Mineral resources
The 2016 resource area measures 500 metres along strike, 210 metres wide and 280 metres deep. The resource estimate is based on a compilation of historical and recent diamond drill holes, as well as wireframed mineralized zones largely inspired by previous work and Wallbridge's interpretation. The final model was constructed by InnovExplo Inc.
In order to conduct accurate resource modelling of the deposit, InnovExplo based its mineralized zone wireframe model on the drill hole database and its knowledge of the Fenelon mine and similar deposits. A total of nine mineralized solids (coded 102 to 110) that honour the drill hole database were created.
The attached table displays the results of the in situ mineral resource estimate for the Fenelon project at the official five-gram-per-tonne-gold cut-off grade.
FENELON PROJECT MINERAL RESOURCE ESTIMATE
AT A FIVE-GRAM-PER-TONNE-GOLD CUT-OFF GRADE
Over five grams per tonne gold Tonnes Au Contained Au
(t) (g/t) (oz)
Measured (M) Measured (in situ) 27,000 13.94 12,100
and indicated (I) Measured (broken) 3,100 6.14 600
Indicated 61,000 12.89 25,300
Total M+I 91,100 12.97 38,000
Inferred In situ 6,500 9.15 1,900
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The independent and qualified persons for the mineral resource estimate, as defined by NI 43-101, are Pierre-Luc Richard, PGeo, MSc, and Catherine Jalbert, PGeo, BSc, of InnovExplo, and the effective date of the estimate is July 5, 2016.
- Mineral resources are not mineral reserves and do not have demonstrated economic viability.
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The model includes nine gold-bearing zones, eight of which include resources at the official cut-off grade.
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Results are presented in situ and undiluted.
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Sensitivity was assessed using cut-off grades from two grams per tonne gold to 10 grams per tonne gold with one-gram-per-tonne-gold increments. The official resource is reported at a cut-off of five grams per tonne gold. Cut-off grades must be re-evaluated in light of prevailing market conditions (gold price, exchange rate and mining cost).
- A fixed density of 2.8 grams per cubic centimetre was used for all zones supported by limited information.
- A minimum true thickness of two metres was applied, using the grade of the adjacent material when assayed or a value of zero when not assayed.
- High-grade capping of gold was done on raw assay data and varies from 30 grams per tonne to 140 grams per tonne based on statistical analysis of individual mineralized zones. Restricted search ellipsoids were used during interpolation using 1X variography ranges and a threshold of 30 grams per tonne gold.
- Compositing was done on drill hole intercepts falling within the mineralized zones (composite lengths vary from one metre to three metres in order to distribute the tails adequately).
- Resources were evaluated from drill holes using a two-pass ID3 interpolation method in a block model (block size equal to five metres by five metres by five metres).
- The inferred category is only defined within the areas where blocks were interpolated during pass 1 or pass 2, where continuity is sufficient to avoid isolated blocks being interpolated by only one drill hole. The indicated category is only defined by blocks interpolated by a minimum of two drill holes in areas where the maximum distance to the closest drill hole composite is less than 20 metres for blocks interpolated in pass 1. The measured category is only defined by blocks interpolated by a minimum of two drill holes in areas where the maximum distance to the closest drill hole composite is less than 20 metres for blocks interpolated in pass 1 and in close proximity with sampled drifts (under 10 metres).
- Troy ounces are equal to metric tonnes multiplied by grade divided by 31.10348. Calculations used metric units (metres, tonnes and grams per tonne).
- The number of metric tonnes was rounded to the nearest hundred. Any discrepancies in the totals are due to rounding effects. Rounding followed the recommendations in NI 43-101.
- InnovExplo is not aware of any known environmental, permitting, legal, title-related, taxation, socio-political, marketing or other relevant issue that could materially affect the mineral resource estimate.
Mineral reserves
Mineral reserves were estimated from the resource block model, using manually generated wireframes (stopes), which were designed based on the established five-gram-per-tonne-gold cut-off grade.
At a prefeasibility level, long-hole open stoping, uppers open stoping, and drift and fill are the three methods selected for Fenelon as they satisfy the following design criteria:
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Maintain maximum productivities by incorporating bulk-mining methods and operational flexibility, which should result in lower operating costs;
- Maintain high overall recovery rates.
The attached tables illustrate the estimated reserve by stope type, as well as reserve statement by category.
RESERVE STATEMENT
Stope Mined Grade Mined External Mined Grams of Total
type tonnes grams dilution diluted dilution grams
(1.0 g/t) tonnes
Uppers 24,652 9.93 244,792 15% 28,350 3,698 248,490
Long hole 46,521 11.23 522,364 15% 53,499 6,978 529,343
Top sill surface 10,101 10.13 102,357 15% 11,617 1,515 103,872
Pit bench 2,222 9.73 21,614 15% 2,555 333 21,947
Drift and fill 2,232 8.76 19,548 5% 2,344 112 19,660
Dev ore 1,467 8.03 11,783 5% 1,540 73 11,856
Broken ore 3,100 6.14 19,034 0% 3,100 0 19,034
Total 90,295 10.43 941,492 14% 103,004 12,709 954,201
Stope Diluted Recovery Recovered Grams New
type grade tonnes recovered ounces
Uppers 8.77 88% 25,018 219,594 7,060
Long hole 9.89 96% 51,265 509,319 16,375
Top sill surface 8.94 96% 11,186 100,336 3,226
Pit bench 8.59 97% 2,478 21,289 684
Drift and fill 8.39 97% 2,274 19,070 613
Dev ore 7.7 97% 1,494 11,501 370
Broken ore 6.14 97% 3,007 18,463 594
Total 9.3 94% 96,721 899,570 28,922
RESERVE STATEMENT BY CATEGORY
Category Mined Recovered Grams New
tonnes tonnes recovered ounces
Proven 6,321 6,770 62,970 2,025
Probable 83,974 89,951 836,600 26,897
Total 90,295 96,721 899,570 28,922
Metallurgy
The Fenelon ore responds well to conventional gold leaching with gold recoveries up to 98 per cent to 99 per cent in the limited laboratory test work done to date. The two bulk samples tested in the past returned gold recoveries of 97 per cent and 93.5 per cent, but with operational problems reported on both occasions. The problems were associated with liquid losses at the gold precipitation stage and not with gold dissolution. This situation could normally be avoided by process adjustments. Taking into account the excess gold liquid losses that occurred during the second bulk processing, both campaigns returned similar gold recoveries with extraction close to 97 per cent.
The additional test work done in 2016 on historical core samples failed to confirm by direct cyanidation the gold recoveries on the discovery zone and deposit. However, intensive leaching on the leach tails from those tests returned similar high gold recoveries up to 98 per cent to 99 per cent at the target grind size.
Considering the bulk sample and laboratory results to date, the 97-per-cent gold recovery appears appropriate at this stage. Test work will continue when new samples become available.
Capital and operating costs
For the purpose of the prefeasibility study, all mining activities on site should be completed by contractors. No processing activities, other than crushing, are planned on site, so the ore should be trucked to a toll mill facility for processing. A very small owner's team is envisioned to manage the contractors on site and oversee the geology aspect of the project. Thus, capital and operating costs have been widely derived from contractor quotes local to the area and have been validated based on the estimator experience with similar projects.
The estimated pretax capital and operating expenditures are summarized in the attached table based on the information available at the time of the release.
FENELON COST EXPENDITURE SUMMARY
(in thousands of Canadian dollars)
Cost item Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Total
Total 329 941 4,140 6,292 11,968 8,131 6,825 2,152 40,777
The estimated global contingency included in the cost estimate represents 9.9 per cent of the total cost before contingency at P50. This percentage was determined by evaluating the quantity and cost precision of each system element of the cost estimate. As a result, contingency by item varies between 5.6 per cent and 50 per cent. In other words, each system element was assigned a precision level on quantity development and a precision level on cost origin.
Cash flow analysis
The project is currently estimated to have a payback period of 12 months. Cash flows are based on a 100-per-cent equity financing basis and the economic analysis indicates a pretax net present value, discounted at 5 per cent, of $5.84-million and internal rate of return of 92 per cent. After tax, the net present value is approximately $2.8-million and internal rate of return is 60 per cent.
The economic evaluation was performed using the internal rate of return and the net present value methods using estimates of capital and operating costs, a construction schedule, a production schedule, and estimates of future gold ore prices provided. Since the financial analysis is based on a cash flow estimate, it should be expected that actual financial results should vary from these predictions.
A six-month trailing average for commodity prices and exchange rates as of September, 2016, were used for the purpose of this study. The six-month trailing average at the time of the report (July to December, 2016) was calculated at $1,686 per ounce, which is consistent with the September, 2016, value of $1,689 per ounce used in the financial analysis. All costs are in 2016 fourth quarter Canadian dollars with no allowance for inflation or escalation.
The pretax project net present value sensitivity was calculated for various gold prices and discount rates. This sensitivity is illustrated in the attached table.
PRETAX NET PRESENT VALUE FOR VARYING GOLD PRICES AND DISCOUNT RATES
(in thousands of dollars)
Gold price (Cdn$/oz) $1,689 $1,400 $1,500 $1,600 $1,700 $1,800
(base case)
Discount rate
Pretax net present
value at 0 per cent $6,618 -$1,330 $1,416 $4,163 $6,909 $9,655
Pretax net present
value at 5 per cent (base case) $5,842 -$1,633 $ 950 $3,532 $6,115 $8,698
Pretax net present
value at 10 per cent $5,155 -$1,895 $ 541 $2,977 $5,413 $7,849
Community and environment
Wallbridge has been working on a consultation plan to assess the perceptions of the Fenelon project by the Cree, Algonquin and Jamesian communities within which the project is located.
None of the environmental data to date have identified any critical elements that could seriously impact the future development of the Fenelon project. Additional studies will have to be conducted in order to complete an environmental baseline. The project will have to undergo the Northern Quebec environmental and social impact assessment and review procedure. An environmental baseline study was completed in 2004, which will require additional studies, and Wallbridge will have to submit an environmental impact assessment statement.
Project timetable
The attached table shows the project milestones in months, with the projected start date to be when permits are received (month 0). The project duration is approximately 18 months from the receipt of production permits. The start date is dependent on the receipt of production permits from various regulatory agencies.
FENELON MAIN MILESTONES
Milestone ID Month
Engineering start -6
Permits are received 0
Mobilization complete 1
Dewatering complete 4
Mine development complete 11
End of mining 17
Projected finish 18
Report filing
A technical report on this prefeasibility study (prepared in accordance with NI 43-101) will be filed on SEDAR and on Wallbridge Mining's website within 45 days of the date of this news release.
Qualified persons
Each of the qualified persons as follows has reviewed and approved the technical information for his or her specific items contained in this press release and is independent of Wallbridge. The qualified persons are:
- Catherine Jalbert, PGeo, BSc, and Pierre-Luc Richard, PGeo, MSc (InnovExplo), who prepared the mineral resource estimate in this press release;
- George Darling, PEng, (SNC-Lavalin Inc., at the time of preparation of the report), who prepared the mineral reserve estimate, mine plan infrastructure, cost estimate and financial evaluation;
- Marie-Claude Dion St-Pierre (WSP Canada Inc.), who prepared the community and environment item;
- Pierre Pelletier, Ing (InnovExplo), who prepared the metallurgical item;
- Marz Kord, PEng, is the qualified person on behalf of Wallbridge and has approved the scientific and technical disclosures in this press release.
About Wallbridge Mining Company Ltd.
Wallbridge is currently exploring and completing a prefeasibility study on its recently purchased 100-per-cent-owned high-grade-gold Fenelon project in Quebec with a production decision targeted for 2017.
Wallbridge is also continuing active partner-financed exploration on its large portfolio of nickel, copper and platinum group metal projects in Sudbury, Ont. Currently, Wallbridge is completing a 20,000-metre, fully partner-financed drilling program on its Parkin project designed to follow up on wide high-grade intersections in 2016.
Wallbridge also has exposure to active exploration for copper and gold in Jamaica and British Columbia through its 15.5-per-cent ownership of Carube Copper Corp.
We seek Safe Harbor.
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