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Anaconda Mining Inc (2)
Symbol ANX
Shares Issued 146,381,019
Close 2020-09-21 C$ 0.51
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Anaconda releases Point Rousse NI 43-101 reserves

2020-09-21 17:41 ET - News Release

Mr. Kevin Bullock reports

ANACONDA MINING FILES UPDATED MINERAL RESOURCE ESTIMATE AND MINERAL RESERVES FOR THE POINT ROUSSE GOLD PROJECT

Anaconda Mining Inc. has filed a technical report prepared in accordance with National Instrument 43-101 (NI 43-101) reporting on updated mineral resource and mineral reserves estimates (MRMR) for its 100-per-cent-owned Point Rousse gold project in Newfoundland and Labrador, Canada. The technical report follows the previous announcement on Aug. 4, 2020, outlining the updated MRMR for the Argyle deposit at Point Rousse (all dollar amounts are in Canadian dollars unless otherwise stated).

Highlights of the mineral resource and mineral reserves at Point Rousse include:

  • Point Rousse probable mineral reserve includes material from Argyle, the Pine Cove mine and the Pine Cove run-of-mine (ROM) stockpile, and includes 706,443 tonnes at an average diluted grade of 1.9 grams per tonne (g/t) gold containing 43,183 ounces, based on a gold price of $1,900 ($1,425 (U.S.));
  • Point Rousse combined indicated mineral resource of 1.47 million tonnes at an average grade of 2.34 g/t gold containing 110,800 ounces and a combined inferred mineral resource of 515,000 tonnes at an average grade of 3.33 g/t gold containing 55,100 ounces;
  • Mineral reserves from the Pine Cove mine pit and ROM stockpile include 170,851 tonnes at an average diluted grade of 1.40 g/t gold, which will provide mill throughput into late fourth quarter 2020;
  • Mineral reserves from the Argyle deposit include 535,592 tonnes at an average diluted grade of 2.06 g/t gold containing 35,477 ounces;
  • At Argyle a pretax net present value at a 5-per-cent discount rate (NPV 5 per cent) of $13.1-million and an internal rate of return (IRR) of 262 per cent, and an after-tax NPV 5 per cent of $11.4-million with an IRR of 245 per cent, all based on a $1,900 ($1,425 (U.S.)) gold price.

"The Point Rousse technical report demonstrates strong economics of continued mining at Anaconda's Point Rousse operation. While we continue to profitably process ore from the final benches of the Pine Cove mine, we have commenced the development of the Argyle gold mine, which, at a conservative gold price of $1,900, will generate after-tax cumulative free cash flow of over $12.6-million. At current Canadian gold prices, Argyle could generate an after-tax net present value of over $20-million over the next 22 months. Meanwhile we are conducting a 4,000-metre drill program to extend mineralization at Stog'er Tight, where we recently announced a drill discovery of broad, high-grade mineralization, that has not yet been incorporated into the mineral resource for Stog'er Tight outlined in the technical report. Leveraging our established infrastructure and strong operating team, we continue to demonstrate our ability to fast-track successful exploration to production in the Baie Vert Peninsula," said Kevin Bullock, president and chief executive officer, Anaconda Mining.

Point Rousse mineral reserve estimate

The total probable mineral reserves for the Point Rousse project are as shown in the attached table.

                        TABLE 1: PROBABLE MINERAL RESERVES -- POINT ROUSSE PROJECT 
                                     (see notes for effective dates)

Deposit                           Reserve   Cut-off      Tonnes (t)  Average grade     Contained ounces 
                                 category     grade                        of gold              of gold
                                               (g/t)                          (g/t)

Argyle                           Probable      0.56        535,592            2.06               35,477
Pine Cove -- mine + ROM          Probable      0.50        170,851            1.40                7,706
Pine Cove -- marginal stockpile  Probable      0.50        252,560            0.55                4,466
Total combined                   Probable                  959,003                               47,649

Point Rousse mineral reserve notes
(1) Mineral Reserves were prepared in accordance with NI 43-101, the Canadian Institute of Mining,
    Metallurgy and Petroleum (CIM) definition standards for MRMR (2014) and 2019 CIM MRMR best practice
    guidelines.
(2) Mineral resources are inclusive of mineral reserves. Mineral resources that are not mineral reserves
    do not have demonstrated economic viability.
(3) The Argyle mineral reserve is based on the mineral resource estimate prepared by Mercator Geological
    Services Ltd. with an effective date Aug. 4, 2020.
(4) The Argyle mineral reserve estimate has an effective date of Aug. 4, 2020.
(5) The Argyle mineral reserve estimate is reported from indicated resource blocks at a 0.56 g/t cut-off
    within the optimized pit shell design developed by Dassault Systemes Canada Inc.; base-case optimization
    parameters include: mining at $4 per tonne; combined processing, and general and administration at $29
    per tonne; average pit slope angles of 48 degrees (north) and 35 degrees (south); daily mill throughput
    of 1,200 tonnes per day; and average process recovery of 87 per cent; and a gold price of $1,900 per
    ounce ($1,425 (U.S.) per oz).
(6) The Pine Cove mineral reserve estimate is based on the mineral resource estimate prepared by Adiuvare
    Geology and Engineering Ltd. with effective date Aug. 8, 2020, and internal reconciliation of stockpiled
    marginal and ROM with an effective date of Aug. 31, 2020.
(7) The Pine Cove mineral reserve has an effective date of Aug. 31, 2020.
(8) The Pine Cove mineral reserve estimate is reported from indicated resource blocks at a 0.50 g/t cut-off
    as determined by continuing mining at the Pine Cove mine, including mining costs of $3.50 per tonne mined;
    combined processing and G&A costs of $28.60 per tonne milled; daily mill throughput of 1,200 tonnes per
    day; an average process recovery of 87 per cent; and a gold price of $1,900 per oz ($1,425 (U.S.) per oz).

Argyle mineral reserves economics

As previously reported, total gold ounces scheduled for mining at Argyle over the 22-month life of mine is expected to be 35,477 ounces at an average grade of 2.06 g/t gold from 535,592 tonnes of ore mined (see associated table). It is expected that Argyle ore will be mined using conventional open-pit mining methods, with waste rock being stored locally at site and ore being transported by truck to the Pine Cove mill. It is expected that Argyle ore will be batch processed at approximately 1,200 tonnes per day with additional material from Pine Cove stockpiles supplementing the mill capacity of 1,300 tonnes per day. This will be accomplished with stockpile management techniques and circuit inventory methods in the mill to account for different mill feeds.

Anaconda has received material permits to initiate development at Argyle, including a release from the environmental assessment and receipt of a certificate of approval (department of municipal affairs and environment), and the acceptance of the development, rehabilitation and closure plan (department of natural resources). Initial development activities have commenced, including cutting, land clearing and access construction, with mining of ore expected to commence in Q4 2020.

Argyle has robust economics with a pretax discounted NPV 5 per cent of $13.05-million with an IRR of 262 per cent, and an after-tax NPV 5 per cent of $11.4-million with an IRR of 245 per cent. Total initial capital requirements of $2.98-million are required, mainly for prestripping of waste and site preparation.

TABLE 2: KEY ASSUMPTIONS AND COSTS USED IN THE ARGYLE MINERAL RESERVE
              (all prices shown are in Canadian dollars)

Production profile                                                  
Gold price -- base case                                  $1,900/ounce                  
Total tonnes milled                                    535,592 tonnes                   
Diluted head grade                                      2.06 g/t gold                    
Total gold ounces mined                                 35,477 ounces                    
Reserve cut-off grade                                   0.56 g/t gold                    
Mine life (LOM)                                             22 months                        
Total waste tonnes                                   4,346,119 tonnes                 
Strip ratio                                                     8.1:1                            
Daily mill throughput                            1,200 tonnes per day             
Gold recovery                                                      87%                              
Total gold production                                   30,865 ounces                    
Capital requirements                                                
Preproduction capital cost                                     $2.98M                           
LOM sustaining capital cost                                    $2.69M                           
Unit operating costs                                                
Mining costs                                      $42.32/tonne milled              
Processing costs                                  $23.26/tonne milled              
G&A                                                $4.90/tonne milled               
LOM operating cash costs (1)         $1,219 per ounce sold ($914 (U.S.))
LOM all-in sustaining cash costs(1)  $1,306 per ounce sold ($980 (U.S.))
Project economics                                                   
Royalties (2)                                   3% net smelter return            
Income tax/mining tax rates                                    30%/15%                          
Pretax                                                             
NPV (5% discount rate)                                        $13.05M                          
Internal rate of return                                           262%                             
Payback period (months)                                            12                               
Cumulative cash flows                                         $14.34M                          
After tax                                                           
NPV (5% discount rate)                                        $11.44M                          
Internal rate of return                                           245%                             
Payback period (months)                                            12                               
Cumulative cash flows                                         $12.57M

(1) Cash cost includes mining cost, mine-level G&A, mill and refining
    cost. This is a non-generally accepted accounting principles
    performance measure. Please see non-international financial
    reporting standards measures.
(2) A portion of the project is also subject to a 7.5-per-cent net
    profits interest (NPI) with Royal Gold Inc. Depending on the price
    of gold in the future, operating and capital costs, and the
    production profile of Argyle, the NPI could become payable at a
    future date. 

Argyle gold price sensitivity

An analysis of the Argyle economics was completed at a variety of gold selling prices and on the base-case $1,900 optimized pit and probable mineral reserves as outlined in table 3. The analysis demonstrates robust economics for Argyle at $1,900, with strong leverage to rising gold prices which have exceeded $2,600 per ounce at times. At a gold price of $2,600 per ounce ($1,950 (U.S.)) which is in line with recent market pricing, Argyle could produce a pretax NPV 5 per cent of $32.7-million and an IRR of 1,336 per cent, and an after-tax NPV 5 per cent of $24.5-million and an IRR of 1,273 per cent.

           TABLE 3: GOLD SELLING PRICE SENSITIVITY ANALYSIS

Gold price       $1,500  $1,700  Base case   $2,100   $2,300    $2,600
                                    $1,900

Pretax NPV 5%     $1.8M   $7.4M     $13.1M   $18.7M   $24.3M    $32.7M 
Pretax IRR           28%    124%       262%     459%   1,732%    1,336%
After-tax NPV 5%   $1.2   $6.5M     $11.4M   $15.9M   $19.3M$    24.5M
After-tax IRR       21%     114%       245%     443%     687%    1,273%

Point Rousse mineral resources

The total mineral resources, inclusive of mineral reserves, for the Point Rousse project are as shown in the associated table.

  TABLE 4. TOTAL MINERAL RESOURCE ESTIMATE -- POINT ROUSSE PROJECT
                  (see notes for effective dates)

Point Rousse mineral resources                                      
Open pit (OP) constrained              
Deposit           Cut-off        Indicated      Gold (g/t)   Ounces 
                     (g/t)       tonnes (t)
Argyle                0.5          488,000           3.14    49,300 
Pine Cove             0.5          722,000           1.64    38,100 
Stog'er Tight         0.5          102,000           2.39     7,800  
Combined indicated    0.5        1,311,000           2.26    95,100 

Deposit           Cut-off        Indicated      Gold (g/t)   Ounces 
                     (g/t)       tonnes (t)

Argyle                0.5            9,000           3.80     1,100  
Pine Cove             0.5           13,000           1.56       700    
Stog'er Tight         0.5          134,000           3.06    13,200 
Combined inferred     0.5          156,000           2.98    14,900 
                                                                    
Point Rousse mineral resources                                      
Out of pit (OoP)                               
Deposit           Cut-off        Indicated      Gold (g/t)   Ounces 
                     (g/t)       tonnes (t)

Argyle                2.0           62,000           2.86     5,700  
Pine Cove             2.0           83,000           3.01     8,000  
Stog'er Tight         2.0           14,000           4.27     1,900  
Combined indicated    2.0          159,000           3.06    15,700 

Deposit           Cut-off        Indicated      Gold (g/t)   Ounces 
                     (g/t)       tonnes (t)

Argyle                2.0           56,000           3.89     7,000  
Pine Cove             2.0           93,000           2.93     8,800  
Stog'er Tight         2.0          210,000           3.62    24,400 
Combined inferred     2.0          359,000           3.48    40,200 
                                                                    
Combined Point Rousse mineral resources                             
Category           Cut-off       Indicated      Gold (g/t)   Ounces 
                     (g/t)       tonnes (t)
Indicated         0.5/2.0        1,470,000           2.34   110,800
Inferred          0.5/2.0          515,000           3.33    55,100 

Mineral resource estimate notes
(1)  Mineral resources were prepared in accordance with NI 43-101,
     the CIM definition standards for MRMR (2014) and 2019 CIM MRMR
     best practice guidelines.
(2)  Mineral resources are inclusive of mineral reserves. Mineral
     resources that are not mineral reserves do not have demonstrated
     economic viability.
(3)  Open-pit mineral resources occur within an optimized pit shell
     developed by Dassault Systemes Canada; base-case optimization
     parameters include: mining at $4 per tonne, combined processing
     and G&A at $29 per tonne and a gold price of $1,900 per oz ($1,425
     (U.S.) per oz).
(4)  Open-pit mineral resources are reported at a cut-off grade of 0.50
     g/t gold within the optimized pit shell and are considered to have
     reasonable prospects for eventual economic extraction by open-pit
     mining methods.
(5)  Out-of-pit mineral resources are external to the optimized pit
     shell and are reported at a cut-off grade of two g/t gold. They
     are considered to have reasonable prospects for eventual economic
     extraction using conventional underground mining methods based on
     a mining cost of $91 per tonne, processing and G&A cost of $29 per
     tonne, and a gold price of $1,900 per oz.
(6)  Combined mineral resources are the tonnage-weighted average
     summation of open-pit and out-of-pit mineral resources.
(7)  Mineral resources were interpolated using ordinary kriging methods
     applied to one-metre downhole assay composites capped at 15 g/t and
     30 g/t gold (Pine Cove and Stoger Tight), and 20 g/t gold (Argyle).
(8)  An average bulk density value of 2.77 grams per cubic centimetre was
     applied to all mineral resources.
(9)  Mineral resources may be materially affected by environmental,
     permitting, legal, title, taxation, sociopolitical, marketing or
     other relevant issues.
(10) Mineral resource tonnages and troy ounces have been rounded to the
     nearest 1,000 and 100, respectively; totals may vary due to rounding.
(11) The following mineral resource estimate effective dates apply:
     Argyle -- Aug. 4, 2020, Pine Cove -- Aug. 8, 2020, and Stoger Tight
     -- April 22, 2020.

Technical report filings and qualified person statements

The technical report is available under the company's profile on SEDAR and on the company's website. For readers to fully understand the information in this news release, they should read the technical report in its entirety, including all qualifications, assumptions and exclusions that relate to the mineral resources and mineral reserves. The technical report is intended to be read as a whole, and sections should not be read or relied upon out of context.

The technical report, entitled "NI 43-101 Technical Report, Mineral Resource and Mineral Reserve Update on the Point Rousse Project, Baie Verte, Newfoundland and Labrador, Canada," with a report date of Sept. 18, 2020, was authored by independent qualified persons Cath Pitman (PGeo) of Adiuvare Geology and Engineering, Michael Cullen (PGeo) and Matthew Harrington (PGeo) both of Mercator Geological Services, and qualified persons Kevin Bullock (PEng), Jordan Cramm (PEng), Chris Budgell (PEng), Paul McNeill (PGeo) and David Copeland (PGeo) of Anaconda Mining.

This news release has been prepared and approved by Kevin Bullock, PEng, president and CEO, and Paul McNeill, PGeo, vice-president, exploration, with Anaconda Mining, and Michael Cullen, PGeo, and Matthew Harrington, PGeo, of Mercator Geological Services, and Cath Pitman, PGeo, of Adiuvare Geology and Engineering, all qualified persons as defined under NI 43-101.

Matthew Harrington, PGeo, is responsible for disclosure regarding the Argyle mineral resource estimate. Cath Pitman, PGeo, is responsible for disclosure regarding the Pine Cove and Stog'er Tight mineral resource estimate. Kevin Bullock, PEng, is responsible for disclosure regarding the Point Rousse mineral reserve statement and related project economics. Paul McNeill is responsible for all other scientific and technical information disclosed in this news release.

About Anaconda Mining Inc.

Anaconda is a Toronto Stock Exchange- and OTCQX-listed gold mining, development and exploration company, focused in Atlantic Canada. The company operates mining and milling operations in the prolific Baie Verte mining district of Newfoundland, which includes the fully permitted Pine Cove mill, tailings facility and deepwater port, as well as approximately 11,000 hectares of highly prospective mineral lands including those adjacent to the past-producing, high-grade Nugget Pond mine at its Tilt Cove gold project. Anaconda is also developing the Goldboro gold project in Nova Scotia, a high-grade resource and the subject of a continuing feasibility study.

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