Mr. Rodrigo Barbosa reports
AURA MINERALS COMPLETES FEASIBILITY STUDY FOR THE BORBOREMA PROJECT AND INCREASES OWNERSHIP STAKE IN BORBOREMA INC. TO 100%
Aura Minerals Inc. has released the results of the feasibility study for the Borborema project located in Rio Grande do Norte, Brazil. Borborema will be an open-pit gold mine with anticipated production of 748,000 ounces (oz) of gold over an initial 11.3-year mine life, with additional production upside. The technical report titled "Feasibility Study for the Borborema Project, Currais Novos Municipality, Rio Grande do Norte, Brazil," prepared by Aura will be filed by Aura on SEDAR+ and CVM within 45 days of this press release.
Following the completion of this positive feasibility study, Aura anticipates the commencement of full construction with an estimated construction budget of $188-million (U.S.). Additionally, the company is reporting that Dundee Resources Ltd., a wholly owned subsidiary of Dundee Corp., has elected to convert its 20-per-cent equity interest in Borborema Inc. into a net smelter royalty (the royalty) of 1.50 per cent on the first 1.5 million ounces (oz) of gold sold, and 1.00 per cent on the next 500,000 oz of gold. Once the production threshold of two million oz of gold has been reached, the royalty will be terminated. Aura is now the sole shareholder of Borborema, controlling 100 per cent of its shares.
Highlights of the feasibility study and the project:
Robust project economics: Net present value (NPV) of $182-million (U.S.) and after-tax IRR (internal rate of return) of 21.9 per cent when using the weighted average consensus gold prices for the projected period of $1,712 (U.S.) per ounce. At a $1,900 (U.S.) gold price and considering $100-million (U.S.) debt, the IRR is 51.9 per cent and NPV of $262-million (U.S.).
- Competitive costs: Life of mine (LOM) all-in-sustaining costs (AISC) on average of $949 oz, including the royalty paid to Dundee; if excluded, the AISC would be $923 oz, making it a solid first quartile project among the industry AISC curve. In the first three years of complete production, average AISC is $875 per ounce, including the new Dundee Royalties. Excluding such royalties, the average AISC would be $831 oz for such period.
Capital expenditure: Total investment of approximately $188-million (U.S.) with payback in 3.2 years.
Initial operating life of 11.3 years: Weighted average annual gold production is estimated at 65,000 oz, with an estimated LOM of 11.3 years, based on mineral reserves estimated in accordance with National Instrument 43-101 -- Standards for Disclosure for Mineral Projects. In the first three years of production, weighted average annual production is 83,000 oz.
Strong reserve base: The feasibility study includes updated mineral resource and reserve estimates under CIM and National Instrument 43-101 guidelines for the comprising probable reserves of 812,000 oz gold.
Substantial resource profile with upside for future conversion: Borborema's mineral resources consists of 2,077,000 oz of indicated and 393,000 oz of inferred. Initial measures have already been undertaken to start obtaining the permits to move the road, and upon its successful relocation, Borborema has potential to convert in mineral reserves 1,265,000 oz of indicated mineral resources (exclusive of the current mineral reserves), depending on future set of modifying factors, such as gold price, exchange rate and others.
Exploration potential remains: The orebody of the Borborema deposit remains open along strike and down dip. Aura believes the project will benefit from additional drilling both to extend the mineral resource's footprint and also to add more contained ounces within the current envelope of mineralization.
Rodrigo Barbosa, president and chief executive officer of Aura, comments: "Borborema is expected to contribute significantly to our overall production profile, and we are delighted to announce this highly accretive feasibility study. Our optimism extends beyond the current findings, as a potential additional of 1.265 million ounces are expected to be converted to reserves following the completion of a 5.3 km road relocation besides new resources that should be added in the future once orebody remains opened along strike and down dip. Furthermore, Borborema is poised to set new benchmarks with its important contributions to ESG standards by using treated greywater from the local community, utilizing renewable energy sources and relying on a robust local labor force."
Mr. Barbosa continues: "We are grateful for Dundee's technical insights in getting us to this stage. Both of our teams worked hard together and both companies will benefit as we advance this project to construction and production by early 2025."
Borborema project overview
The Borborema project, located in the southern portion of the state of Rio Grande do Norte in northeastern Brazil, is situated 26 km east of the well-established town of Currais Novos and 35 km west of the town of Santa Cruz. The town of Currais Novos has good infrastructure and a population of approximately 45,000 people. The project site is strategically located to benefit from direct access to the BR-226 federal highway linking it to the state capital Natal which lies 172 km east and has a population of approximately 880,000 inhabitants.
The project area was owned variously by several companies, including Xapetuba which recovered approximately 3,000 kilograms of gold using Brazil's second heap leach processing operation. Aura acquired the project in September, 2022.
Open-pit stripping is expected to begin in Q2 2024, and construction expected to be concluded by Q1 2025, with first gold pour targeted for Q2 2025 and commercial production for Q3 2025.
Financial key performance indicators (KPIs) expected for the project
Gold price: $1,712 (U.S.)/oz (weighted average -- 11.3 years);
- Exchange average rate: 5.08 Brazilian reals:$1.00 (U.S.);
- Discount rate: 5 per cent.
Results above are shown assuming that the project is financed with 100-per-cent equity, in compliance with NI 43-101. However, the company has established a target to leverage the project, aiming for at least 50-per-cent debt/total capex.
Sensitivity analyses were conducted in order to simulate project financial performance according to different scenarios of gold price, as well as capital structure with debt on total capital. The attached table indicates expected results considering an upfront debt of $100-million (U.S.) to partially finance the construction capex.
Geology, mineralization and drilling
The deposit at the Borborema project is considered to be a classic mesothermal/orogenic gold deposit type in a sheared and deformed Archaean to Proterozoic greenstone belt sequence comprising metamorphosed volcanic-sedimentary rocks units intruded by slightly younger post-tectonic igneous bodies.
The Borborema deposit is hosted within a sequence of banded arkosic metapelitic schists, subjected to upper-amphibolite facies regional metamorphism.
The mineralization types are strongly controlled by regional structure with secondary structures providing the preferred host for gold mineralization. In addition to the main mineralized zone, several thinner subparallel zones with gold mineralization are identified. Two distinct gold mineralization types are identified in drill cores: 1) disseminated free gold, and 2) gold in association with sulphide mineralization represented by pyrrhotite, chalcopyrite, pyrite, sphalerite and galena. Additionally, the sulphide mineralization was observed in the outer contact between chert boudins and schist along with or associated with schist foliation.
The main Borborema orebody has overall dimensions of approximately 600 metres in the down-dip direction, 3,500 metres along the strike, and averages of 50 metres in thickness in the central and 30 metres in thickness in the southern and northern portions. The Borborema deposit is located within a NE-SW (northeast-southwest) trending shear zone and displays a penetrative NNE (north-northeast) trending fabric, dipping southeast at around 40 degrees. The orebody is open down dip beyond current inferred mineral resources.
The Borborema deposit has been drilled out at nominal drill spacing of approximately 50 m by 50 m. A total of 303 diamond drill holes and 921 reverse circulation (RC) holes totalling 109,090 m were drilled between 1979 and 2022. The property drilling database contains 74,038 sample intervals within the drilling database used in support of mineral resources.
Historical drilling at Borborema has been completed in various campaigns since 1979 by several companies including Itaperiba, Xapetuba, JICA, Santa Elina and Caraiba. Crusader began drilling at the project in August, 2010, and drilled consistently until the end of 2012. Big River drilled 13 holes to extend known mineralization at depth and increase inferred mineral resources. Aura Minerals has not conducted any drilling on the Borborema property.
SRK Consulting (U.S.) Inc. performed data verification and validation procedures on the drilling database prior to modelling and estimation. SRK reviewed the geological, drilling and Au analytical data which were used to support mineral resources. Additionally, QP of resources conducted a site visit to the project reviewing pit geology, drill core, sample storage and security, as well conducting interviews with site personnel. It is the QP's opinion that the raw drilling data used for estimating mineral resources have been adequately reviewed and any identified potential risks are accounted for in resource classified, in line with CIM guidelines.
Mineral resource and mineral reserve estimates
The updated resource block model gold grade was modelled by SRK using ordinary kriging (OK) methodology constrained within nested grade shells at 0.2 g/t, 0.5 g/t and 1.0 g/t indicatory grade shells.
SRK used a nested, soft-boundary grade shell technique with shells at 0.2, 0.5 and 1.0 g/t Au to limit the influence of variable Au grades in the broader mineralized volume which displays general lower grade attributes. Raw drilling data was composted to two m lengths with upper capping applied at 20 g/t Au. Kriging neighbourhoods and variography were determined for each nested grade shell. The feasibility study block model showed acceptable validation against composited and raw data with acceptable smoothing and is considered suitable for use in reporting of mineral resources.
SRK utilized an oxidation boundary surface constructed in 2012 by Crusader (Cascar) to discriminate oxide from sulfide mineralization as the logging data were considered too variable and of lower confidence to construct this surface. The oxidation model is utilized to code bulk density as well.
Mineral resources are classified in accordance with NI 43-101 and CIM definitions into indicated and inferred categories based on identified uncertainly and risks.
In order to establish reasonable prospects for eventual economic extraction (RPEEE) as per NI 43-101 definitions of mineral resources, SRK applied an economic cut-off grade (CoG) to blocks constrained within an economic pit shell on the Borborema property. This shell utilizes a 1.0 revenue factor, 37-degree slope on the west and 60-degree slope on the east, two million tonnes per annum (Mtpa) mining rate, and 5-per-cent discount rate.
The feasibility study includes mineral resource and reserve estimates for the Borborema deposit under CIM guidelines. Only indicated mineral resources was considered for purpose of the feasibility study. A summary of the Borborema mineral resources estimates which are used in the feasibility study and expected to be included in the feasibility study are shown in the attached table.
Mineral reserves amenable to open pit mining methods were estimated through an open pit optimization exercise using the indicated mineral resources in the block model provided by SRK. Mineral reserves were reported within detailed engineered pit designs and life-of-mine (LOM) plans based on this pit shell. A high voltage transmission line (HVTL) constraints the pit to the north and a highway paved road (BR-226) constraints the pit to the south.
A summary of the Borborema mineral reserves estimates which is expected to be included in the feasibility study are shown in the attached table.
At Borborema, the ore is near surface and continues at depth. The initial 11 years and four months are planned for open pit mining, with operations based on the use of hydraulic excavators and a haul truck fleet engaged in conventional open pit mining techniques. The open pit mining activities were assumed to be primarily undertaken by a contractor-operated fleet.
The stripping ratio is 3.8:1 waste to ore, and 7.2 Mt of prestripping is proposed. The mine production schedule delivers 22.5 Mt of ore grading 1.12 g/t gold to the mill over the LOM. Waste tonnage totalling 84.5 Mt will be placed in the waste rock dumps.
Mining costs, including the mining contractor charges, stockpile rehandling and grade control, are estimated to average $2.78 (U.S.)/t mined over the LOM.
Two low-grade stockpiles are envisaged for the project to improve grades for the initial years and control the rate of oxide ore on the plant feed. Low grade ore will be stockpiled during the operation and reclaimed at the end of the LOM or when required. The oxide stockpile is also planned to control the maximum rate of oxide material that can be fed to the plant.
The LOM plan shows recoveries of 92.1 per cent with a weighted average production of 83 koz of gold per year for the first three years (2025 to 2027) with a weighted average AISC of $875 (U.S.)/oz. LOM weighted average production of 65,000 oz of gold per year with LOM weighted average AISC of $949 (U.S.)/oz.
The project includes a process plant capable of treating two Mtpa of ore through single-stage primary crushing, grinding semi-autogenous grinding mill in a closed circuit with hydrocyclones, gravimetry and intensive leaching, carbon-in-leach tanks, elution, thickening unit, detox, and final thickening unit for tailings filtering.
Processing costs are estimated to average $12.31 (U.S.)/t of ore processed over the LOM. The three largest cost components are power, grinding media and cyanide. Other significant costs are work force, carbon and maintenance materials.
The process considers the average G&A (general and administrative) costs of $5.01 (U.S.)/t over the LOM. This work force mainly includes management, health, safety and environmental, administration, human resources, IT, law enforcement, procurement, royalties, insurance, et cetera.
Taxes and royalties
The financial model incorporates assumptions about the income tax reduction benefit made available under a government regulation. The income tax rate is calculated at 17.58 per cent. The project will pay royalties of 1.5 per cent of gross revenue to the federal, state and local governments (CFEM).
The project will also pay royalties equivalent to 1.50 per cent on the sale of any product containing economically recoverable minerals obtained from ore mined and removed from the mine to Dundee Resources. The 1.50-per-cent net smelter return applies to the first 1.5 million ounces of gold sold, then is reduced to 1.00 per cent on the next 500,000 ounces of gold. Once the production threshold of two million ounces of gold from the Borborema gold project has been reached, the royalty will terminate in accordance with its terms.
Engineering, procurement and construction management
Basic engineering and detailed engineering for earthmoving are completed, and engineering design for the mine is completed. Plant detailed engineering is set to begin. Aura commenced early works construction for Borborema in Q2 2023 and vegetation suppression 48 per cent complete, plant site is almost cleared and levelled, and the longest lead-time equipment (mill) has been ordered. Of the $188-million (U.S.) construction budget, $1.1-million (U.S.) has been spent as of Q2 2023 and $11.4-million (U.S.) is planned for the second half of 2023.
Feasibility study preparation
Aura retained Promon Engenharia Ltda., SRK Consulting (U.S.) Inc. Denver, United States, and MCB Servicos e Mineracao Ltda. (Deswik Brazil) to jointly prepare with the Aura Technical Services group a feasibility study on the Borborema project. The technical report provides the open-pit feasibility study. The feasibility study also provides an update on the ownership status of the project, mineral resources (reported inclusive of mineral reserves), mineral reserves and project economics.
The qualified persons (QPs) are Homero Delboni Jr., PhD, MAusIMM -- CP metallurgy (independent consultant), Erik Ronald, PGeo, principal consultant with SRK (U.S.), Farshid Ghazanfari, PGeo, geology and mineral resources director for Aura Minerals, and Bruno Yoshida Tomaselli, FAusIMM, consulting manager with Deswik Brazil. The mineral resources were prepared by Erik Ronald. The mineral reserves, mine plan and mining sections of the study were prepared by or under the supervision of Bruno Yoshida Tomaselli. The metallurgical testwork, process design and process plant information were prepared by or under the supervision of Mr. Delboni Jr. The study is being summarized into a technical report that will be filed within 45 days on SEDAR+, in accordance with National Instrument 43-101.
The technical content of this press release has been reviewed and approved by the QPs who were involved with preparation of the Borborema study: Mr. Delboni Jr., Mr. Ronald, Mr. Ghazanfari and Mr. Yoshida Tomaselli.
The QPs are not aware of any known political, legal, environmental or other risks that could materially affect the project development.
Quality assurance and quality control
Analytical work was carried out by two certified Brazilian laboratories were contracted by Crusader for sample analyses: Bureau Veritas Laboratory (BV) and ALS Laboratory. In addition, check sampling was undertaken at Acme Analytical Laboratories Ltd (Acme) in Santiago, Chile, and by Bureau Veritas' Ultratrace Laboratory in Perth, Western Australia. Big River used SGS GEOSOL Laboratorios Ltda. for 2021 to 2022 drilling campaign.
Crusader QA/QC program comprised submitting sample blanks, standard reference samples, sample duplicates and interlaboratory check samples. The rate of sample submissions for blanks and reference materials was one in 20 samples, duplicates one in 25 samples (only for RC holes) and interlaboratory check assays one in 10 samples.
The Big River QA/QC program included submittal of both blind and non-blind control samples into the sample stream being analyzed by the SGS laboratory. Big River maintained internal quality control by inserting minimum of one blank sample in each batch and mainly after each mineralized zone, two standards (one high grade and one low grade in each analytical batch of 40 samples (5 per cent) and a minimum of two core duplicates in each analytical batch of 40 samples (5 per cent); (duplicate samples analysis were requested to the lab after received the original results -- average of five samples per hole).
The control sample assay results of the internal QA/QC program were monitored, including the CRMs, blanks and coarse duplicates. Additionally, systematic checks of the digital database were conducted against the original signed certificates of analysis from the laboratory.
Mr. Ghazanfari has reviewed the sampling and QA/QC procedures and results thereof as verification of the sampling data disclosed herein and approved the information contained in this news release.
About Aura Minerals Inc.
Aura is focused on mining in complete terms -- thinking holistically about how its business impacts and benefits every one of its stakeholders: the company, its shareholders, its employees, and the countries and communities it serves. The company calls this 360-degree mining.
Aura is a mid-tier gold and copper production company focused on the development and operation of gold and base metal projects in the Americas. The company's producing assets include: the San Andres gold mine in Honduras; the EPP gold mine in Brazil; and the Aranzazu copper-gold-silver mine in Mexico. In addition, the company has the Tolda Fria gold project in Colombia and five projects in Brazil, of which four gold projects: Almas, which is under final phase of construction; Borborema and Matupa, which are in development; and Sao Francisco, which is on care and maintenance. The company also owns the Serra da Estrela copper project in Brazil, Carajas region, which is at the exploration stage.
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