Mr. Renaud Hinse reports
POSITIVE FEASIBILITY STUDY FOR SLEEPING GIANT MINE MODEST INVESTMENT OF ONLY $5M HIGH YEILD RATE
Abcourt Mines Inc. had a National Instrument 43-101 technical report, entitled Feasibility Study on the Sleeping Giant Project, prepared by PRB Mining Services Inc. of Val d'Or, Que., Canada.
Here is a summary of this technical report.
General and history
The Sleeping Giant mine is located 80 kilometres (km) north of Amos in northwestern Quebec, Canada. It is accessible through Road 109 that connects Amos to Matagami. This is a paved road and it passes less than one km from the mine site. Material and services are available at competitive prices.
The mine was exploited from 1988 to 2014. It has been maintained dry since its temporary closing in 2014 and no infrastructure has been taken out or added. Currently, the Sleeping Giant mill treats ore from the Elder mine owned by Abcourt Mines and occasionally some custom ore. The mill capacity is 700 to 750 tonnes per day. The activated carbon process is used to recover gold. Historically, the gold recovery on the Sleeping Giant ore at that mill is 97.5 per cent.
The tailings pond complies with all governmental regulations and the dikes and the quality of water are checked every year by an external expert. The tailings pond has enough capacity to receive the tailings from Elder and those from the Sleeping Giant mine as indicated in section 16 of the technical report. The setting pond at the discharge of the tailings pond is used to treat the discharged water according to the rules and to control the quality of the water.
Geology and mineralization
The Sleeping Giant property is located in the central part of the north volcanic zone affected by major east-west and northwest-southeast corridors of deformation. The geological units in the mine area comprise basalt, andesite and volcano-sedimentary rocks. Mineralization is in disseminated sulphides, in veinlets or in small massive bands parallel to bedding. The best veins contain four types of sulphides: pyrite, pyrrhotite, chalcopyrite and sphalerite, which make up from 5 per cent to 60 per cent of the vein fillings. Besides gold, the veins contain silver and small amounts of copper and zinc.
The mineral resources used in the feasibility study are extracted from a technical report prepared by Valere Larouche, entitled "Estimation des ressources minerales de la propriete Geant Dormant," dated May, 2019. The Sleeping Giant orebody contains 10,900 tonnes of measured resources, grading 12.20 grams per tonne (g/t) of gold (4,300 ounces of gold), and 475,625 tonnes of indicated resources, with a grade of 11,20 g/t of gold (171,275 ounces of gold), and 93,100 tonnes of inferred resources grading 11.85 g/t of gold (35,400 ounces of gold). Abcourt Mines has identified some substantial exploration targets on existing levels of the mine, ignored in the past. The company is planning an important exploration program and hopes to increase considerably its resources and reserves.
The mineral reserves are estimated at 339,221 tonnes grading 7.9 g/t of gold (85,690 ounces). These mineral reserves are probable.
A mining plan has been prepared to extract 325,000 tonnes of reserves over a four-year period, including one year of preproduction (25,000 tonnes), followed by the three years with an annual production of 100,000 tonnes per year. The remaining 14,221 tonnes of reserves, not extracted by this mining plan, will be extracted later in subsequent operations following additional exploration and development work. There are good possibilities of extending the production period by doing additional exploration work on the indicated resources excluded from the mining plan and on the inferred resources and converting the latter into measured or indicated resources and eventually into reserves.
The mineralization is typically in narrow veins. The dip varies between 30
degrees. The mining methods will be shrinkage and room and pillars. The long-hole method is not favoured but will be used where the other methods are not adequate.
The access to the Sleeping Giant is facilitated by Road 109 that passes through the property at less than one km from the mine site. All surface installation necessary for the opening of the mine are available on the site. The mill and tailings pond are functional. Electricity is provided by Hydro-Quebec. Mine water is used for the mine and mill. Water from a well is used in lunch rooms, toilets and showers. Telephone and Internet services are provided by Telebec.
The process used in the mill to treat the gold ore is carbon in pulp. The mill capacity is 700 to 750 tonnes per day. This capacity is sufficient to treat the Elder and the Sleeping Giant ores. Historically, the gold recovery in this mill has been 97,5 per cent.
Environment, permits, social impacts and closing plan
Mining leases and certificates of authorization are valid. Studies are done regularly to comply with exigencies of the provincial and federal environmental laws and regulations. The waste rock is not acid generating and do not leach heavy metals. The restart of the Sleeping Giant mine will have a positive economic impact on the region by creating about 100 jobs and by the local purchase of material and services.
A closing plan was updated and filed with the ministry of Energie et Richesses Naturelles du Quebec in October, 2018. The estimated cost of restoration and closing by Abcourt is $3.6-million. An amount of $4-million has already been deposited in trust with the ministry of Energie et Richesses Naturelles du Quebec. Hence, no additional amount is needed and it is not necessary to include this amount in the financial analysis.
Capital and operating costs
The capital cost for the preproduction of the Sleeping Giant mine is estimated at $4.6-million, including operating costs of $8.5-million, royalties for $125,000, capital expenditures of $3.4-million, a working capital of $1.3-million and revenues of $8.7-million. The preproduction period is 12 months. During the production period, the sustaining costs are $2.7-million, including continuing capital expenditures of $4-million and a refund of $1.3-million in working capital.
Total operating costs during the production period are $52.4-million for an average of $174.84 per tonne treated. Royalty payments of $1,375,000 are not included in this amount.
The economic analysis of this report is based on the engineering work done by PRB Mining Services and on the information provided by Abcourt Mines. The economic analysis is based on a gold price of $1,200 (U.S.) per ounce and a rate of exchange of $1.25 (Canadian) to $1 (U.S.). The mining plan is for 325,000 tonnes of mineral reserves. Before taxes, a cash flow of $48.1-million, a net present value (NPV) at 8 per cent of $39.4-million and an internal rate of return (IRR) of 240 per cent are indicated. The payback period before taxes is 0.6 year. The project is more sensitive to revenues than operating and capital costs.
After taxes, a cash flow of $30-million, a net present value at 8 per cent of $24.6-million and an IRR of 184 per cent are indicated. The payback period is then 0.7 year. At the current prices of gold of $1.397 (U.S.) per ounce of gold and a rate of exchange of $1.31 (Canadian) to $1 (U.S.), the net revenue would be $144.2-million and the net present value would be $62-million.
As with all other mining projects, there are technical risks that may affect the economical feasibility of the project. Risks for the Sleeping Giant mine are considered manageable for the next phases of the project. These risks are usual to most mining projects and many may be mitigated by adequate engineering, planning and by a pro-active management.
External risks escape somehow from the control of the project manager and are much more difficult to attenuate, although, in certain cases, a reduction of risks may be realized. The external risks are, for example, the political situation in the project region, metal prices, the rate of exchange of the Canadian dollar to United States dollar and governmental legislation. These external risks are generally applicable to all mining projects. A negative impact of these elements on the hypotheses used in the economic model would reduce the profitability of the mine and the estimate of mineral reserves. The potential risks factors are discussed in article 25.2 of the technical report.
The Sleeping Giant project has mineral reserves and a positive economic analysis with a realist price for gold. It is therefore recommended to proceed with the repair of the emergency escape way, to proceed with a detailed planning and to start production. Abcourt Mines has identified additional potential resources. It is recommended to proceed with an update of the resources once the mine geologist has completed his review of the available information.
About Abcourt Mines Inc.
Abcourt Mines is a gold producer and a Canadian exploration company with strategically located properties in northwestern Quebec, Canada. The Elder property has gold resources (2018) and a positive preliminary economic assessment study (2012). Abcourt is focusing on the exploitation of the Elder mine.
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