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Corvus looks to lower Nevada capex with bio-oxidation

2019-09-05 10:28 ET - News Release

Mr. Jeffrey Pontius reports


Corvus Gold Inc. has provided a project update on mining optimization work for its district-wide production plan previously announced in its November, 2018, preliminary economic analysis (news release dated Nov. 1, 2018). The initial PEA results outlined robust economics at lower gold prices and strong leverage for higher gold prices with a $1.47-billion (U.S.) pretax cash flow at $1,450 gold price and a 5-per-cent posttax net present value of $914-million (U.S.) and a 53-per-cent internal rate of return for the combined North Bullfrog and Mother Lode project.

The PEA is preliminary in nature, includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Continuing studies have focused on three main areas of optimization:

  • Lower cost and near-term production: improving the start-up plan to lower initial capital expenditures, accelerate production timeline, improve financial performance and reduce project risk;
  • Improved sulphide processing: expanding the metallurgical options for processing the high-grade Mother Lode sulphide mineralization with lower capex and operational expenditures while maintaining high gold recoveries;
  • Increase mineral resource base: expanding the mineral resource base at both the North Bullfrog and Mother Lode projects, and evaluating their ability to operate as stand-alone mines that have potential to provide production and financial performance.

Lower cost and near-term production

North Bullfrog project

Initial deposit modelling work has shown potential for the North Bullfrog deposits to be developed as a multiphase, low-strip, open-pit heap leach project. Corvus is working on a phase I project plan that it believes would have lower capex and a rapid start-up development phase with a smaller footprint, near-term, open-pit mining project focused on the YellowJacket and north Sierra Blanca area where baseline environmental permitting is well advanced and key infrastructure is in hand (power and water). The company believes the lower capital commitment and the build-as-you-go approach has the potential to reduce risk and broaden the appeal of the project to a greater number of developers with production cash flow that could finance the development of a larger operation within the district. The phase I project would be able to dovetail into the larger phase II run-of-mine (ROM) low-grade heap leach project that has the potential to perform well in the over $1,300 per ounce gold price environment.

Mother Lode project

Corvus is in the process of modelling a phase I starter pit of ROM oxide-only heap leach material that it believes has the potential to generate positive cash flow while the new bio-oxidation sulphide recovery system is tested with a large-scale pilot facility (high-grade sulphide material excavated in the phase I pit). The company anticipates that the Mother Lode phase II project would focus on expanding sulphide processing to commercial scale in the years following phase I.

Improved sulphide process optimization

To date, various processing alternatives of Mother Lode sulphide mineralization have been evaluated. The most promising processing technique that could significantly lower capex and opex costs and improve financial performance is bio-oxidation. Extensive bio-oxidation test work was conducted by the previous owner of the Mother Lode project which included both sulphide concentrate (tank oxidation and leaching) and crushed rock column testing (heap oxidation and leaching) both of which produced positive results that have been validated by recent bio-oxidation results obtained by Corvus on concentrate. The new and past test work for bio-oxidation followed by standard cyanide leaching achieved gold recoveries of approximately 90 per cent for concentrate and approximately 80 per cent for three-fourths crush heap leaching. Bio-oxidation treatment has been in commercial use at a number of sites for decades with the most notable being AngloGold Ashanti's Obuasi mine in Ghana and the Kirkland Lake's Fosterville mine in Australia.

The primary advantages of utilizing bio-oxidation versus pressure oxidation of the sulphide concentrate is that it could result in a simplified mine and facility plan that includes lower capital requirements and reduced operating costs which could improve the overall financial performance. Initial project scoping work utilizing bio-oxidation processing at Mother Lode appears to suggest the project has the potential to generate results that the company believes are similar to the North Bullfrog project, with stand-alone production and financial metrics.

Expanding mineral resource base -- Deep Mother Lode potential

With the successful completion of the phase 3 drill program at Mother Lode, the expanded deposit is currently being remodelled. Highlights of significant results from phase 3 are provided in the included table.

Hole ID                      Interval          Date reported*   
ML18-079       19.8 m at 3.52 g/t Au    NR18-16, Oct. 2, 2018 
ML18-080   129.54 m at 1.12 g/t Au**                               
ML18-083       65.5 m at 1.53 g/t Au   NR18-17, Oct. 17, 2018
ML18-093     115.82 m at 1.83 g/t Au   NR19-01, Jan. 10, 2019
ML18-087      47.25 m at 2.15 g/t Au   NR19-02, Jan. 22, 2019
ML18-090      38.10 m at 2.58 g/t Au   NR19-03, Feb. 21, 2019
ML19-104     126.59 m at 1.85 g/t Au  NR19-05, March 19, 2019
ML19-109      41.14 m at 2.83 g/t Au   NR19-06, April 3, 2019 
ML19-116  36.57 m at 2.03 g/t Au and    NR19-08, June 3, 2019 
              25.91 m at 2.43 g/t Au

* The table represents select intervals from drilling 
campaigns previously announced by Corvus. Complete 
drilling results are available for review on the company's 
profile on SEDAR. Reported intercepts are not true widths 
as there is currently insufficient data to calculate true 
orientation in space. Mineralized intervals are calculated 
using a 0.3 gram per tonne cut-off unless otherwise 
** 0.1 g/t Au cut-off

Phase 3 drilling highlighted continued potential for expansion at depth and to the north that includes a new higher-grade deep zone best characterized by the deep high-sulphide intercept in hole ML19-104 (126.5 metres at 1.85 g/t gold with the bottom 9.2 m at 6.7 g/t gold and 70 g/t silver). Preliminary conceptual models suggest that if the deposit extends to the full length of the property, it is possible that it could still be within open-pit mining depth with this deep zone target area hosting sulphide tonnage that Corvus believes to be comparable with that of the current known mineral resource area. Corvus has developed an exploration plan to test this deposit extension and to follow up with a mineral resource conversion drilling program.

Continuing mineral resource expansion drilling at the Sierra Blanca deposit in the North Bullfrog project area is extending mineralization to the west as well as testing for new, YellowJacket-type, high-grade vein systems in the surrounding area. In addition, exploration work is also evaluating the extension of the regional scale low-grade gold systems, which, in the current gold price environment, is a very attractive target given the large size potential. Corvus has also expanded its district-wide exploration to the south of North Bullfrog along the major north-south trending structural systems that control most of the known gold mineralization in the western part of the greater Bullfrog mining district. The company has developed several new early-stage targets in this area known as the Gap zone, some of which are associated with adjoining ground controlled by AngloGold Ashanti and Kinross Gold.

Going forward

Corvus will continue to advance its mineral resource expansion drilling, mining optimization studies and sulphide metallurgical test work with the goal of updating the PEA study in the first half of 2020. In addition, the company will continue with the North Bullfrog new discovery drill program, as well as precollar drilling of initial deep-core drilling of the YellowJacket vein system, Spicerite target (similar to AngloGold's Silicon target) and Deep Mother Lode. Corvus is currently planning the next phase of work on the Mother Lode deep zone, which would involve extensive core drilling.

Ron Largent, chairman of Corvus Gold (former chief operating officer, AngloGold Ashanti), said: "The ongoing technical and mining configuration advancements Corvus Gold is making is outlining an exciting and unique Nevada mining project. The new Mother Lode BiOx sulphide processing information is encouraging particularly in the context of my history with the AngloGold Ashanti's Obuasi project in Ghana. The Corvus team is diligently pursuing a number of key optimization development options that could have potential positive impact on the existing base-case PEA study for this encouraging new Nevada mining opportunity."

Jeff Pontius, president and chief executive officer of Corvus, said: "The optimization work has yielded several project improvements that have the potential to lower capex and opex, simplify the process circuit, and accelerate the development timeline. Our modelling work has also highlighted the potential for these projects to operate as stand-alone operations that generate meaningful production and strong base-case financial returns as we proceed into what we anticipate being the next gold bull market. This work linked with encouraging mineral resource expansion results at both Mother Lode and North Bullfrog, paints an attractive picture for a fast-track project potential that we believe can deliver a Nevada-scale operation with strong exploration potential."

Qualified person and quality control/quality assurance

Mr. Pontius (CPG 11044), a qualified person as defined by National Instrument 43-101 -- Standards of Disclosure for Mineral Projects, has supervised the preparation of the scientific and technical information that forms the basis for this news release, and has reviewed and approved the disclosure herein. Mr. Pontius is not independent of Corvus, as he is the CEO and president, and holds common shares and incentive stock options.

Carl E. Brechtel (Nevada PE 008744 and registered member 353000 of SME), a qualified person as defined by NI 43-101, has co-ordinated execution of the work outlined in this news release, and has reviewed and approved the disclosure herein. Mr. Brechtel is not independent of Corvus, as he is the COO, and holds common shares and incentive stock options.

The work program at Mother Lode was designed and supervised by Mark Reischman, Corvus's Nevada exploration manager, who is responsible for all aspects of the work, including the quality control/quality assurance program. On-site personnel at the project log and track all samples prior to sealing and shipping. Quality control is monitored by the insertion of blind certified standard reference materials and blanks into each sample shipment. All mineral resource sample shipments are sealed and shipped to American Assay Laboratories (AAL) in Reno, Nev., for preparation and assaying. AAL is independent of the company. AAL's quality system complies with the requirements for the International Standards ISO 9001:2000 and ISO 17025:1999. Analytical accuracy and precision are monitored by the analysis of reagent blanks, reference material and replicate samples. Finally, representative blind duplicate samples are forwarded to AAL and an ISO-compliant third party laboratory for additional quality control. Mr. Pontius, a qualified person, has verified the data underlying the information disclosed herein, including sampling, analytical and test data underlying the information by reviewing the reports of AAL, methodologies, results and all procedures undertaken for quality assurance and quality control in a manner consistent with industry practice, and all matters were consistent and accurate according to his professional judgement. There were no limitations on the verification process.

Scott E. Wilson, CPG (10965), registered member of SME (4025107) and president of Resource Development Associates Inc., is an independent consulting geologist specializing in mineral reserve and mineral resource calculation reporting, mining project analysis, and due diligence evaluations. He is the qualified person, as defined in NI 43-101, and is the primary author of the technical report for the mineral resource estimate, and has reviewed and approved the mineral resource estimate and the PEA described in this news release. Mr. Wilson has over 29 years of experience in surface mining, mineral resource estimation and strategic mine planning. Mr. Wilson is independent of the company under NI 43-101.

Mr. Wilson, a qualified person, has verified the data underlying the information disclosed herein, including sampling, analytical and test data underlying the information by reviewing the reports of AAL, methodologies, results and all procedures undertaken for quality assurance and quality control in a manner consistent with industry practice, and all matters were consistent and accurate according to his professional judgement. There were no limitations on the verification process.

Metallurgical testing on North Bullfrog and Mother Lode samples has been performed by McClelland Analytical Services Laboratories Inc. of Sparks, Nev. McClelland is an ISO 17025 accredited facility that supplies quantitative chemical analysis in support of metallurgical, exploration and environmental testing using classic methods and modern analytical instrumentation. McClelland has met the requirements of the IAS accreditations criteria for testing laboratories (AC89), has demonstrated compliance with ANS/ISO/IEC standard 17025:2005, general requirements for the competence of testing and calibration laboratories, and has been accredited, since Nov. 12, 2012. Hazen Research Inc., an independent laboratory, has performed flotation, AAO testing and cyanide leach testing on samples of sulphide mineralization from the YellowJacket zone and Swale area of Sierra Blanca, and roasting tests on Mother Lode flotation concentrate. Hazen holds analytical certificates from state regulatory agencies and the U.S. Environmental Protection Agency. Hazen participates in performance evaluation studies to demonstrate competence and maintains a large stock of standard reference materials from the National Institute of Standards and Technology, the Canadian Centre for Mineral and Energy Technology, the EPA and other sources. Hazen's QA program has been developed for conformance to the applicable requirements and standards referenced in 10 CFR 830.120, Subpart A, quality assurance requirements, Jan. 1, 2002. Pressure oxidation test work on Mother Lode concentrate samples was performed by Resource Development Inc. of Wheatridge, Colo.

For additional details, see the technical report entitled "Technical Report and Preliminary Economic Assessment for the Integrated Mother Lode and North Bullfrog Projects, Bullfrog Mining District, Nye County, Nevada," dated Nov. 1, 2018, and amended on Nov. 8, 2018, with an effective date of Sept. 18, 2018, on the company's profile on SEDAR.

About the North Bullfrog and Mother Lode projects, Nevada

Corvus controls 100 per cent of its North Bullfrog project, which covers approximately 90.5 square kilometres in southern Nevada. The property package is made up of a number of private mineral leases of patented federal mining claims and 1,134 federal unpatented mining claims. The project has excellent infrastructure, being adjacent to a major highway and power corridor as well as a large water right. The company also controls 445 federal unpatented mining claims on the Mother Lode project which totals approximately 36.5 square kilometres which it owns 100 per cent. The total Corvus 100-per-cent land ownership now covers over 127 square kilometres, hosting two major new Nevada gold discoveries.

The combined Mother Lode and North Bullfrog projects contains a measured mineral resource for the mill of 9.3 megatonnes at an average grade of 1.59 g/t gold, containing 475,000 ounces of gold and indicated mineral resources for the mill of 18.2 megatonnes at an average grade of 1.68 g/t gold containing 988,000 ounces of gold and an inferred mineral resource for the mill of 2.3 megatonnes at an average grade of 1.61 g/t gold containing 118,000 ounces of gold. In addition, the project contains a measured mineral resource for oxide, ROM, heap leach of 34.6 megatonnes at an average grade of 0.27 g/t gold containing 305,000 ounces of gold and an indicated mineral resource for, oxide, ROM, heap leach of 149.4 megatonnes at an average grade of 0.24 g/t gold containing 1.15 million ounces of gold and an inferred, oxide, ROM, heap leach mineral resource of 78.7 megatonnes at an average grade of 0.26 g/t gold containing 549,000 ounces of gold.

About Corvus Gold Inc.

Corvus is a North American gold exploration and development company focused on its near-term gold-silver mining project at the North Bullfrog and Mother Lode districts in Nevada. Corvus is committed to building shareholder value through new discoveries and the expansion of its projects to maximize share-price leverage in an advancing gold and silver market.

We seek Safe Harbor.

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