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Revival Gold PEA pegs Beartrack NPV at $88M (U.S.)

2020-11-17 08:26 ET - News Release

Mr. Hugh Agro reports

REVIVAL GOLD DELIVERS SOLID PHASE ONE PRELIMINARY ECONOMIC ASSESSMENT

Revival Gold Inc. has provided positive results from a preliminary economic assessment (PEA) on the company's Beartrack-Arnett phase one heap leach gold project located in Idaho, United States. All amounts shown are in United States dollars and metric units of measurement unless otherwise stated.

Beartrack-Arnett phase one heap leach gold project -- PEA highlights

  • Production of 72,000 ounces of gold per year for a total of 506,000 ounces of gold over an initial seven-year mine life;
  • Preproduction capital of $100-million and life-of-mine (LOM) sustaining capital of $61-million;
  • Total cash cost of $809 per ounce and all-in sustaining cost of $1,057 per ounce of gold;
  • After-tax NPV (net present value) at a 5-per-cent discount rate of $88-million and after-tax IRR (internal rate of return) of 25 per cent at $1,550 per ounce gold increasing to a $211-million NPV 5 per cent and 49-per-cent IRR at $1,950 per ounce gold;
  • After-tax payback period of 3.0 years;
  • Lower technical and execution risk of a brownfields project with existing infrastructure and recent history as the largest past-producing gold mine in Idaho;
  • Excellent additional exploration potential as demonstrated by this season's drill results and with over 10 kilometres of favourable geological structure to explore.

This PEA is preliminary in nature; it 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 preliminary economic assessment will be realized. Mineral resources are not mineral reserves and do not have demonstrated economic viability.

For the purposes of this phase one PEA, only oxide and partially oxidized mineralization amenable to gold recovery using standard cyanide heap leach processing was evaluated representing less than a third of available mineralized material. Beartrack-Arnett also hosts a significant sulphide resource, much of which was not included in this PEA.

"This PEA supports Revival Gold's plans to resume meaningful heap leach gold production from Beartrack-Arnett with low restart capital and robust economics," commented Hugh Agro, president and chief executive officer. "Beartrack-Arnett ranks as one of the largest independently owned undeveloped gold deposits in the United States. As a brownfield site, Beartrack-Arnett offers significant existing baseline environmental data, infrastructure and operating history for Revival Gold to utilize. This should translate into shorter permitting timelines and lower technical and execution risk. Over the course of the next two years Revival Gold will continue with its exploration strategy to expand the resource base at Beartrack-Arnett while progressing the first phase heap leach project towards a production decision. We also intend to evaluate the potential for a second phase sulphide milling project so that we might fully realize the inherent value of all the gold resources identified at Beartrack-Arnett to date."

The PEA was prepared in accordance with National Instrument 43-101 by Wood PLC of Oakville, Canada, and Boise, Idaho, with an effective date of Nov. 17, 2020. The company will file a technical report summarizing the PEA on the company's website and on SEDAR in accordance with NI 43-101 within 45 days.

Conference call

Management will host a conference call later today to discuss the results of the PEA. Call-in information below:

Scheduled start:  Nov. 17, 2020, 10 a.m. EST

Call-in number:  416-764-8658

Toll-free in North America:  888-886-7786

A replay of the conference call will be available for one week at 416-764-8691 or toll-free in North America at 877-674-6060. Playback passcode 347502 (pound sign).

Further details

 
                   TECHNICAL INPUTS AND FINANCIAL ASSUMPTIONS
  
Economics                                             Units    Pretax    Posttax

Net present value (NPV5%)                             US$ M      $103        $88   
Internal rate of return (IRR)                             %        28%        25%   
Payback period (undiscounted)                         years       2.9        3.0   
LOM average annual cash flow                          US$ M       $22        $19   
LOM cumulative cash flow (undiscounted)               US$ M      $153       $134  
LOM average cash costs                        US$ per ounce           $809      
LOM average AISC -- all-in sustaining costs   US$ per ounce         $1,057     
LOM average AIC -- all-in costs               US$ per ounce         $1,254     
Preproduction capital costs                           US$ M           $100      
Sustaining capital costs (LOM)                        US$ M            $62      
Peak investment                                       US$ M           $112      
Gold price assumption                         US$ per ounce         $1,550     
Royalty                                           per ounce            $19      
Mine life                                             years              7       
Head grade (diluted)                                 g/t Au           0.87      
Average recovery                                      % (FA)            60%      
Average annual mining rate                       tonnes/day         12,000     
Average annual gold production                  ounces/year         72,288     
Total LOM recovered gold                             ounces        506,016    
                                                                      


Mineral resource estimate

The mineral resource estimate has been reported in accordance with National Instrument 43-101 and was prepared by RPA Inc., a subsidiary of SLR Consulting Ltd., with an effective date of Dec. 10, 2019 (see Revival Gold press release dated Feb. 3, 2020, and the technical report on the Beartrack-Arnett gold project, Lemhi county, Idaho, United States, dated Feb. 21, 2020).

Following the Feb. 21, 2020, technical report, a follow-up review of the Arnett resources and a sensitivity analysis conducted by RPA resulted in a fine-tuning and reclassification of 3,000 ounces from the inferred to the indicated category. For this PEA, the resource estimate at Arnett has been restated to reflect this change and is not considered material to the economics of the property as the total indicated plus inferred remains unchanged. Results from Revival Gold's 2020 exploration drilling program are not included in this estimate.

                    MINERAL RESOURCE ESTIMATE
 
                            Tonnes    Gold grade    Contained gold
Resource category          (000s t)      (g/t Au)          (000 oz)
Indicated leach                                                                
Beartrack -- open pit       11,900         0.56                215          
Arnett -- open pit           2,500         0.65                 52          
Indicated mill               
Beartrack -- open pit       22,216         1.52              1,089         
Beartrack -- underground        NA           NA                 NA          
Total indicated             36,616         1.15              1,356         
Inferred leach              
Beartrack -- open pit        9,961         0.53                169          
Arnett -- open pit           8,200         0.55                144          
Inferred mill                
Beartrack -- open pit       22,228         1.19                850          
Beartrack -- underground     6,700         2.19                471          
Total inferred              47,089         1.08              1,638         

1.  Effective date of Dec. 10, 2019. CIM (2014) definitions were 
    used for mineral resource classification.

2.  Qualified persons: Mark B. Mathisen, CPG, Ryan Rodney, CPG, 
    Kathleen A. Altman, PhD, PE. Mineral resources were tabulated for 
    model blocks with positive net value located within an optimized 
    conceptual pit.

3.  The price, recovery and cost data translate to a break-even gold 
    cut-off grade of approximately 0.52 g/t Au for mineral resources 
    amenable to the mill option and open-pit mining; and 0.17 g/t Au 
    for the mineral resources amenable to the leach option and open-pit 
    mining at Beartrack; a break-even gold cut-off grade of approximately 
    1.26 g/t Au for the incremental underground mill option at Beartrack, 
    and approximately 0.19 g/t Au for the leach option and open-pit mining 
    at Arnett. The cut-off grades include considerations of metal price, 
    process plant recovery, mining, processing, and general and 
    administrative costs. A gold price of $1,400 (U.S.) per ounce was 
    used in the estimation. Additional details below.

4.  Tonnes are based on bulk density of each lithologic unit ranging at 
    Beartrack from 2.0 tonnes per cubic metre to 2.75 t/cubic m. An average 
    bulk density of 2.35 t/cubic m was used at Arnett.

5.  Leachability is yet to be determined and further metallurgical studies 
    are required to fully understand the behaviour of transitional and 
    sulphide ores when mixed with readily leachable oxide materials. Leach 
    material defined by cyanide soluble grade leach characteristics.

6.  Mineral resources that are not mineral reserves do not have demonstrated 
    economic viability.

7.  Rounding may result in apparent discrepancies between tonnes, grade and 
    contained metal content. The geological model supporting the mineral 
    resource model is based on interpretations based on drilling and mapping 
    which may change with more data. The metallurgical sampling data may not be 
    representative of the material as a whole, or may have significant variations 
    locally in the metallurgical characteristics that could affect cost or 
    recoveries.

8.  The cut-off grade for the open-pit mill resource assumes a 20,000-tonne-per-day 
    flotation mill with pressure oxidation of flotation concentrate followed by 
    cyanidation of the concentrate and the flotation tailings, with gold recovery 
    of 94 per cent, pit slopes of 37 per cent to 50 per cent, mining costs of 
    $2.25 per tonne, rehandle costs of 10 cents per tonne, general and administration
    costs of 50 cents to $1 per tonne and a mill processing cost of $18.46 per tonne.

9.  The cut-off grade for the mineral resources amenable to underground mining and 
    mill processing assumes a 3,000 tpd, ramp-access, mechanized mine with a bulk 
    mining method and mining cost of $35 per tonne.

10. The cut-off grade for the mineral resources amenable to open-pit mining and heap 
    leach processing assumes recoveries of 85 per cent of cyanide soluble gold at 
    Beartrack and 75 per cent of contained gold at Arnett. Pit slopes of 37 per cent to
    50 per cent. Mining costs were assumed to be $2.25 per tonne, G&A costs of 50 cents 
    to $1 per tonne and heap leach processing costs of $3.25 per tonne processed.

 
  
                                            MINE PRODUCTION SCHEDULE
  
Item/year                                                       PP1         Y1        Y2      Y3      Y4      Y5

Mined processed material                    Tonnes/day           NA     12,003    12,003  12,003  12,003  12,003
Mined processed material                   Tonnes 000s            0      4,381     4,381   4,381   4,381   4,381
Mined waste                                Tonnes 000s        5,573     11,953    11,953  11,953  11,953  11,953
Mined total                                Tonnes 000s        5,573     16,334    16,334  16,334  16,334  16,334
Stripping ratio            Waste to processed material           NA        2.7       2.7     2.7     2.7     2.7
Head grade                                      g/t Au         0.00       1.13      0.82    0.77    1.20    0.87
Contained gold                                  Ounces            0    159,475   116,084 107,786 169,045 122,459
Recovery                                         % (FA)           0%       47%       63%     65%     46%     60%
Recovered gold                                  Ounces            0     75,177    73,263  70,084  77,462  73,620

Item/year                                                     Y6      Y7   Life of mine

Mined processed material                    Tonnes/day    12,004  10,737         11,822
Mined processed material                   Tonnes 000s     4,382   3,919         30,206
Mined waste                                Tonnes 000s    11,952   8,290         85,579
Mined total                                Tonnes 000s    16,334  12,209        115,786
Stripping ratio            Waste to processed material       2.7     2.1            2.8
Head grade                                      g/t Au      0.77    0.52           0.87
Contained gold                                  Ounces   107,922  65,234        848,005
Recovery                                         % (FA)      73%     89%            60%
Recovered gold                                  Ounces    78,494  57,916        506,016

  
   

Infrastructure

Existing infrastructure incorporated into the PEA includes the main access road, the main power line, the ADR plant, solution ponds, water treatment plant, the core warehouse and portions of the existing road from Beartrack to Arnett.

Capital costs

Preproduction capital costs include a 22-per-cent contingency on direct and indirect costs. The preproduction capital costs also include owner's costs, EPCM (engineering, procurement and construction management) costs, operating inventories, insurance and indirect costs. Major mining equipment is included in the financial analysis under an operating lease arrangement.

Trade-off studies were evaluated including developing crushing and leach pad facilities at the Arnett deposit (together with a power line from Beartrack), mobile compared with stationary crushing facilities, contractor mining compared to owner operation in the first two years, and a higher early cash flow mining plan alternative.

The "Capital cost summary" table summarizes estimated capital costs. The estimating cost accuracy for the study is plus or minus 35 per cent (AACE Class 5). Rows and columns may not add precisely due to rounding.

                              CAPITAL COST SUMMARY
 
                               Preproduction        Sustaining      Life of mine
Item                          capital (US $M)   capital (US $M)   capital (US $M)

Open-pit mine                            $16                $5               $21            
Heap leach facilities                    $12               $40               $52            
Process facilities                       $19                $2               $21            
Infrastructure                           $15                $3               $18            
Indirect costs                           $10                $2               $12            
Owner's costs                             $8                $0                $8             
Contingency                              $20               $10               $30            
Subtotal                                $100               $62              $162           
Mine equipment lease                     $21                $8               $29            
Working capital                           $7               -$7                $0             
Reclamation/closure                       $4               $13               $17            
Grand total                             $132               $75              $207           


  
   

Operating costs

Owner operating costs were developed from first principles and are summarized in the "Operating cost summary" table.

                    OPERATING COST SUMMARY
  
Costs                      Units                           US$

Mining                     Per tonne                     $2.05 
Stripping ratio            Waste to processed material     2.8  
                                                         
Mining                     Per tonne processed           $7.49 
Processing                 Per tonne processed           $4.65 
G&A                        Per tonne processed           $1.10 
Operating costs            Per tonne processed          $13.24
                                                         
Total cash costs           Per ounce gold sold            $809 
All-in sustaining costs    Per ounce gold sold          $1,057
All-in capital costs       Per ounce gold sold          $1,254


  
   

Metallurgy

The estimated average recovery of gold from the heap leach pad in the PEA is estimated to be 60 per cent. The estimated average recovery reflects recoveries of 87 per cent for oxide material, 55 per cent for transition material and 28 per cent for sulphide material. A breakdown of the type of mineralization processed and estimated heap leach recoveries by category of mineralization is summarized in the "Heap leach recoveries by category" table.

              HEAP LEACH RECOVERIES BY CATEGORY
  
PEA classification                 Material       Heap leach    
of material processed   processed (M tonnes)   gold recovery

Oxide                                    19              87%      
Transition                                5              55%      
Sulphide                                  6              28%      
Heap leach PEA total                     30              60%     


  
   

Gold price sensitivities

The "Gold price sensitivity" table demonstrates the posttax sensitivities of the NPV and IRR to the price of gold per ounce. The base case, highlighted in the table, assumes $1,550 (U.S.) per ounce of gold.

       GOLD PRICE SENSITIVITY
 
    Economic sensitivities to gold 
         prices (posttax)

    Gold price     NPV 5% 
($US per ounce)   ($US M)    IRR (%)

        $1,350       $22         11   
        $1,450       $55         18   
        $1,550       $88         25   
        $1,650      $119         32   
        $1,750      $150         38   
        $1,850      $180         43   
        $1,950      $211         49   


Project economic results are most sensitive to revenue drivers (gold price, gold grade and recovery). Results are less sensitive to input operating and capital costs.

Key opportunities

The PEA outlined several initiatives that may enhance the potential of Beartrack-Arnett including:

  • Exploration drilling to expand the heap leach mineral resources in the Haidee area at Arnett;
  • Exploration drilling to identify additional mineral resources to process by heap leach or mill at Beartrack;
  • Further technical work on the segregation of transition and sulphide heap leach pads for potential further future processing and gold recovery in a milling scenario to reduce the final closure and reclamation requirement;
  • Potential to increase the production rate for a heap leach operation beyond 12,000 tonnes per day with the discovery of additional mineral resources amenable to heap leach recovery;
  • Potential to incorporate a mill operation in conjunction with the heap leach operation to fully realize all potential value from the mineral resources identified.

Next steps

The recommended follow-up program in the PEA includes two phases of exploration and infill drilling, and the completion of a prefeasibility study for the phase one heap leach project. The program supports the required studies and public consultation for completion of the National Environmental Policy Act (or NEPA) process, with the U.S. Forest Service as the lead agency, as well as for securing required state and local permits.

In addition, the recommended program provides for the completion of a preliminary economic assessment on a phase two milling scenario at Beartrack.

                                   RECOMMENDED BUDGET
 
Area                                  Total cost ($US M)   Description              

Phase 1 Beartrack diamond drilling                 $2.0    Infill and exploration         
Phase 1 Arnett diamond drilling                    $1.0    Infill and exploration         
Phase 2 diamond drilling                           $6.0    Infill and exploration         
Mineral resource estimate                          $0.3    Update after drilling         
Engineering field program drilling                 $1.3    Geotechnical, metallurgy, hydrology  
Engineering field programs                         $0.8    Geotechnical, metallurgy, hydrology  
Technical/economic studies                         $2.0    Heap leach PFS, milling PEA      
Environmental management planning                  $0.4    Baseline environmental, ARD study   
Environmental studies, permits                     $2.5    Heap leach project, post-PFS      
Project management and administration              $1.5    Indirect costs, management, contingency
Total work recommendation                         $17.7                                             


Independent qualified persons

The preliminary economic assessment was prepared for Revival Gold by independent qualified persons (QPs) under NI 43-101 from Wood from Oakville, Canada, and Boise, USA, RPA/SLC from Toronto, Canada, and Denver, Colo., and KC Harvey Environmental LLC from Bozeman, Mont. The independent QPs have reviewed and approved the economic and technical information of this press release derived from sections of the PEA that they are responsible for preparing, and are named below:

  • Kirk Hanson, PE, technical director, mining and financial model, site visit -- Wood;
  • Ben Bissonnette, PEng, director, metallurgy and process engineering -- Wood;
  • Paul Baluch, PEng, PE, technical director, civil structural architectural -- Wood;
  • Mark B. Mathisen, CPG -- mineral resource estimate, site visit -- SLR/RPA;
  • David Cameron, PE -- environmental, reclamation and closure plan, site visit -- KC Harvey.

Other technical information included in this press release has been reviewed and approved by Steven T. Priesmeyer, CPG, a QP and vice-president of exploration for the company, and Rodney A. Cooper, PEng, a QP and a consultant to the company. Both have conducted site visits.

Further details on the PEA and the complete PEA study document can be found on the company's website or on SEDAR within 45 days of this news release.

About Revival Gold Inc.

Revival Gold is a growth-focused gold exploration and development company. The company has the right to acquire a 100-per-cent interest in Meridian Beartrack Co., owner of the former producing Beartrack gold project located in Lemhi county, Idaho. Revival Gold also owns rights to a 100-per-cent interest in the neighbouring Arnett gold project.

Beartrack-Arnett is the largest past-producing gold mine in Idaho and hosts the second-largest known deposit of gold in the state. A preliminary economic assessment is under way on the potential restart of a phase one open-pit heap leach operation and exploration continues focused on expanding the current indicated mineral resource of 36.6 million tonnes at 1.15 g/t gold containing 1.36 million ounces of gold and inferred mineral resource of 47.1 million tonnes at 1.08 g/t gold containing 1.64 million ounces of gold. The mineralized trend at Beartrack extends for over five km and is open on strike and at depth. Mineralization at Arnett is open in all directions.

For further details, including key assumptions, parameters and methods used to estimate the mineral resources, and data verification, please see the company's NI 43-101-compliant technical report titled "Technical Report on the Beartrack-Arnett Gold Project, Lemhi County, Idaho, USA" dated Feb. 21, 2020.

Revival Gold has approximately 71.2 million shares outstanding and had a cash balance of approximately $12.7-million (Canadian) on Sept. 30, 2020.

We seek Safe Harbor.

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