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First Mining Gold Corp
Symbol FF
Shares Issued 693,541,453
Close 2021-01-19 C$ 0.39
Recent Sedar Documents

First Mining's Springpole after-tax NPV at $995M (U.S.)

2021-01-20 09:42 ET - News Release

Mr. Daniel Wilton reports

FIRST MINING ANNOUNCES POSITIVE PRE-FEASIBILITY STUDY FOR THE SPRINGPOLE GOLD PROJECT, ONTARIO, CANADA

First Mining Gold Corp. has released positive results for a prefeasibility study completed for its 100-per-cent-owned Springpole gold project located in Northwestern Ontario, Canada. The PFS results support a 30,000-tonne-per-day open-pit mining operation over an 11.3-year mine life.

PFS highlights

  • A $1.5-billion (U.S.) pretax net present value at a 5-per-cent discount rate at $1,600 (U.S.) per ounce gold, increasing to $1.9-billion (U.S.) at $1,800 (U.S.) per ounce gold;
  • A $995-million (U.S.) after-tax net present value at a 5-per-cent discount rate at $1,600 (U.S.) per ounce gold, increasing to $1.3-billion (U.S.) at $1,800 (U.S.) per ounce gold;
  • A 36.4-per-cent pretax internal rate of return; 29.4-per-cent after-tax IRR at $1,600 (U.S.) per ounce gold;
  • Life of mine of 11.3 years, with primary mining and processing during the first nine years and processing lower-grade stockpiles for the balance of the mine life;
  • After-tax payback of 2.4 years;
  • Declaration of mineral reserves: proven and probable reserves of 3.8 million ounces gold, 20.5 million ounces silver (121.6 million tonnes at 0.97 g/t Au, 5.23 g/t Ag);
  • Initial capital costs estimated at $718-million (U.S.), sustaining capital costs estimated at $55-million (U.S.), plus $29-million (U.S.) in closure costs;
  • Average annual payable gold production of 335,000 ounces (years one to nine); 287,000 ounces (LOM);
  • Total cash costs of $558 (U.S.) per ounce (years one to nine) and $618 (U.S.) per ounce (LOM); and
  • All-in sustaining costs of $577 (U.S.) per ounce (years one to nine), and AISC $645 (U.S.).

"This PFS is an important milestone for the company as we continue to advance and de-risk the Springpole gold project," stated Dan Wilton, chief executive officer of First Mining. "First Mining is declaring mineral reserves for the first time ever on the Springpole gold project, reflecting the culmination of a year of detailed data collection, trade-off studies, and engineering and technical de-risking work done by First Mining and our partners on our project team. The results of the PFS confirm that Springpole has the potential to become a strategically significant, highly profitable gold mine in one of the most attractive mining jurisdictions in North America. The work we have undertaken to date to reduce the potential environmental impact from the project demonstrates the potential for Springpole to be developed in a responsible manner and to mitigate long-term impacts. We look forward to the project's continual improvement through collaboration with our local and indigenous communities of interest as we advance Springpole through the federal and provincial environmental assessment processes. We are very excited to have added Steve Lines and his team to lead this effort for First Mining. The team's recent and significant experience successfully permitting the Hardrock project in Ontario and other similar open-pit mining projects in Canada requiring in-lake cofferdams and associated dewatering will serve us well as we continue to advance Springpole."

This PFS for the Springpole gold project was prepared by AGP Mining Consultants Inc. of Toronto, Canada, and a technical report summarizing the PFS will be filed by the company on SEDAR within 45 days of this news release.

PFS overview

The Springpole gold project, located in Northwestern Ontario, Canada, is one of the largest undeveloped open-pit gold projects in North America. The project is located approximately 110 kilometres northeast of Red Lake. Springpole currently hosts 4.6 million ounces of gold in the indicated mineral resource category and 300,000 ounces of gold in the inferred mineral resource category, as set out in the relevant attached table.

The PFS evaluates recovery of gold and silver from a 30,000-tonne-per-day open-pit operation, with a process plant that will include crushing, grinding and flotation, with fine grinding of the flotation concentrate and agitated leaching of both the flotation concentrate and the flotation tails followed by a carbon-in-pulp recovery process to produce dore bars.

Important parameters of the PFS are presented in the attached table.

Economic sensitivities

The project economics and cash flows are highly sensitive to changes to the gold price.

Mineral processing and metallurgical testing

The PFS reflects recoveries for both gold and silver that resulted from updated metallurgical test work completed in 2020. The test work focused on understanding the variability in gold and silver recoveries as well as optimizing the process flow sheet.

Based on the test work carried out, a flow sheet that includes flotation followed by leaching of reground concentrate and flotation tails presents as the most beneficial processing route for the project. The processing plant also features a filtered tailings plant. This flow sheet is based on a primary grind size of P80 150 micrometres ahead of flotation, with a cleaner flotation concentrate being reground to approximately 17 microm ahead of agitated leaching. The overall recoveries expected and used for the economics presented in the PFS are 85.7 per cent for gold and 89.5 per cent for silver. The reduction in recoveries in the PFS stems primarily from a better understanding of the lower recoveries associated with processing lower-grade ores. First Mining plans to undertake follow-up metallurgical test work to investigate additional opportunities to further increase recoveries and believes that this remains an important focus area for further improving the economics of the project.

Mineral resource and mineral reserve estimates

The mineral resource model prepared by SRK Consulting (Canada) Inc. is based on 662 core boreholes drilled by previous property owners during the period 2003 to 2013, and seven core holes drilled by First Mining in 2016 and 2020. The mineral resources at the Springpole gold project are shown in the attached table.

Notes

  • The qualified person for the mineral resource estimate is Dr. Gilles Arseneau, PhD, PGeo, an SRK employee. The mineral resource estimate has an effective date of July 30, 2020;
  • Mineral resources are reported in accordance with the May, 2014, edition of the Canadian Institute of Mining, Metallurgy and Petroleum Definition Standards for mineral resources and mineral reserves;
  • Mineral resources are reported inclusive of the mineral resources that have been converted to mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability;
  • All figures are rounded to reflect the relative accuracy of the estimate. All composites have been capped where appropriate;
  • Mineral resources potentially amenable to open-pit mining are reported within an optimized constraining shell using the following parameters:
    • Metal prices of $1,550 (U.S.) per ounce gold, $20 (U.S.) per ounce silver, exchange rate of 77 U.S. cents to $1 (Canadian);
    • Mining cost of $1.62 per tonne, processing cost of $15.38 per tonne milled, general and administrative cost of $1 per tonne milled;
    • Pit slopes varying between 35 degrees to 50 degrees depending on domain; and
    • Gold recovery of 88 per cent and silver recovery of 93 per cent.
  • Mineral resources are reported at a cut-off grade of 0.3 g/t Au.

The mineral reserves for the Springpole gold project are based on the conversion of indicated mineral resources within the current pit design. The Springpole gold project mineral reserves are shown in the attached table.

Notes

  • The mineral reserve estimate has an effective date of Dec. 30, 2020, and is based on the mineral resource estimate that has an effective date of July 30, 2020;
  • The mineral reserve estimate was completed under the supervision of Gordon Zurowski, PEng, of AGP, a qualified person as defined under National Instrument 43-101;
  • Mineral reserves are stated within the final design pit based on a $878 (U.S.) per ounce Au pit shell with a $1,350 (U.S.) per ounce Au price for revenue;
  • The equivalent cut-off grade was 0.34 g/t Au for all pit phases;
  • The mining cost averaged $1.94 per tonne mined, processing cost averaged $14.50 per tonne milled, and the general and administrative cost averaged $1.06 per tonne milled. The process recovery for gold averaged 88 per cent and the silver recovery was 93 per cent;
  • The exchange rate assumption applied was $1.30 equal to $1 (U.S.).

The mineral resources defined in the PFS do not reflect the significant opportunities that are available for resource expansion or discovery of additional ore bodies in the Springpole district. First Mining believes that Springpole has several avenues for resource expansion, both within the existing property footprint and regionally in the underexplored Birch Uchi greenstone belt. In 2021, First Mining is planning to undertake a further 10,000 metres of diamond drilling at the Springpole gold project for metallurgy, exploration, condemnation and geotechnical purposes, and continues to review other exploration opportunities in the area.

Capital costs

The capital cost estimate for the proposed open-pit operation in the PFS is based on the scheduled plant throughput rates, as well as a review of similar-sized open-pit gold operations.

The attached table provides a summary of the capital cost estimate.

Mining capital costs

The open-pit mining activities for the project were assumed to be undertaken by a leased fleet. Mining capital costs were estimated based on a detailed equipment schedule matched to the mining production schedule. Total initial mining capital was estimated at $144-million (U.S.), inclusive of capitalized stripping, waste management facility construction and equipment.

Processing capital costs

The process plant was designed using conventional processing unit operations. It will treat 30,000 tpd or 1,250 tonnes per hour based on an availability of 8,059 hours per annum or 92 per cent. The crusher plant section design is set at 75-per-cent availability and the gold room availability is set at 52 weeks per year, including two operating days and one smelting day per week. The plant will operate with two shifts per day, 365 days per year, and will produce dore bars.

Initial capital costs for the processing facility were estimated to be $415-million (U.S.), inclusive of a $54-million (U.S.) contingency allocation. No major plant rebuild or expansion were considered during the LOM, with sustaining capital set to maintain the equipment in operating condition. No allowance for salvage value was made.

Operating costs

Overall operating costs for the LOM, and the unit costs, are summarized in the attached table.

Operating cost estimate details

Mining costs

The PFS contemplates open-pit mining undertaken by a leased fleet. An average unit mining cost of $1.96/t of material mined was used in the economics. The cost estimate was built from first principles with detailed haulage profiles, vendor quotations for equipment and consumables, and is based on experience of similar-sized open-pit operations and local conditions. The open-pit mining costs consider variations in haulage profiles by month and by year and variable equipment requirements necessary to meet the plant production.

Processing costs

An average cost of $10.87 (U.S.) per tonne of processed material was used in the PFS, based on the updated process flow sheet. This includes tailings handling, labour, consumables, maintenance and supplies. A power cost of eight cents per kilowatt-hour was assumed.

Production schedule and mine plan

Mining would occur as a series of phases within the ultimate pit with a maximum depth of approximately 350 metres. The deposit is planned to produce a total of 121.6 million tonnes of plant process feed and 287.5 million tonnes of waste (2.36 to one overall strip ratio) over an 11.3-year mine operating life. The current LOM plan focuses on achieving consistent processing feed production rates, mining of higher-grade material early in the schedule, and balancing grade and strip ratios.

Site infrastructure

Springpole Lake dewatering

The deposit sits underneath a small portion of the northern bay of Springpole Lake. Two dewatering dikes (coffer dams), with a total length of approximately 940 metres, will need to be constructed to allow this small portion of the bay to be dewatered. The coffer dams will have a maximum height of 17 metres. The area proposed to be dammed and dewatered totals approximately 150 hectares and represents approximately 6 per cent of the entire surface area of Springpole Lake (and approximately 3 per cent of the volume).

Waste management facility

The WMF was re-envisioned in the PFS as a co-mingled waste rock and filtered tailings facility to reduce the overall footprint and to spread the required costs over the LOM. The WMF will be located immediately west of the pit, and in the initial stages it will occupy a smaller footprint to reduce the construction period and to minimize the initial capital requirement. The surface of the filtered tailings and waste rock within the WMF will be graded to minimize infiltration and encourage water flow to defined sumps/pumping points. A synthetic liner has been included in the PFS design to limit exfiltration of contact water, and will be further considered through continuing environmental assessment work, including additional geochemical testing and WMF design optimizations. The collected surface water will be directed to a contact water management pond that will be located southeast of the WMF. The water stored in the CWMP will be used to supplement mineral processing and/or will be treated and released to Springpole Lake.

Access roads

The company believes that the project can play a meaningful role in encouraging the development of the road network in the area, with potential to connect the communities to the north with an all-season road that will provide access to the municipality of Sioux Lookout, a major services hub for Northern Ontario. The PFS considers that the access road may be completed prior to commencement of construction and is not part of the study.

Power infrastructure

Approximately 55 megawatts of electrical demand will be supplied via a new 230-kilovolt overhead transmission line, built to connect to the provincial grid's 230 kV line approximately 75 km to the southeast.

Project enhancement opportunities

The PFS identified several opportunities to enhance the economics of the Springpole gold project, and they will be investigated as First Mining continues to advance the project. These opportunities include:

  • Existing resource upgrades. Inferred mineral resources are contained within the existing pit design and, with additional infill drilling, these resources may potentially support conversion of some or all of this material into indicated mineral resources that could be converted to probable mineral reserves and evaluated in a feasibility study.
  • Mine plan optimization. Refined pit optimization parameters could result in better-optimized open-pit limits, which could reduce the overall strip ratio;
  • Process optimization. Continued efforts to investigate opportunities to improve the metal recoveries through further metallurgical testing and refining milling processes, as well as other process optimizations;
  • Further geotechnical studies. A better hydrogeological and geotechnical understanding may increase pit slope angles, potentially reducing costs associated with mining waste material; and
  • Additional mineralization. There are geophysical targets in the area around the current resource, where additional drilling has the potential to identify additional mineralization that could support mineral resource estimation with upside potential for the LOM.

Permitting and environmental baseline data

First Mining has made key strategic additions to its environment and community relations team over the past couple of months to ensure that it has properly resourced the permitting and community relations work at Springpole. Mr. Lines joined First Mining as vice-president, environment and community relations, on Dec. 1, 2020, and has already built an expert team with extensive experience in Ontario's environmental assessment process. The team brings across significant experience from Greenstone Gold Mines' Hardrock project, which was subject to the same environmental assessment process that Springpole requires, and brings further permitting and regulatory experience from similar in-lake open-pit mines in Canada, including the Meadowbank gold mine and Gahcho Kue diamond mine. Mr. Lines and his team's experience, expertise and relationships will contribute significantly to the continuing de-risking of Springpole.

First Mining has been actively collecting environmental baseline data necessary to support an environmental assessment for the Springpole gold project since 2010. The studies, both completed and continuing, are focused on characterizing all relevant biological and physical components of the aquatic and terrestrial environments that may be impacted by, and may interact with, the project.

First Mining continues to advance the Springpole gold project through the provincial and federal EA processes. The company's goal is to prepare a co-ordinated EA document that meets the federal and provincial requirements. Community consultation and engagement with local indigenous communities and other stakeholders is important to First Mining and will continue through the EA process.

First Mining plans to advance the development of the co-ordinated EA document in 2021 in accordance with the federal environmental impact statement guidelines and the provincial EA terms of reference.

Qualified persons and National Instrument 43-101 technical report

The updated PFS for the Springpole gold project summarized in this news release was completed by AGP and will be incorporated in an NI 43-101 technical report that will be available under the company's SEDAR profile and on the company's website, within 45 days of this news release. The affiliation and areas of responsibility for each of the independent qualified persons (as defined under NI 43-101) involved in preparing the PFS, upon which the technical report will be based, are as follows: Dr. Arseneau, PhD, PGeo -- qualified person for mineral resource evaluation; Mr. Zurowski, PEng -- qualified person for open-pit mine engineering and costing, infrastructure and financial modelling; Roland Tosney, PEng -- qualified person for open-pit geotechnical aspects; Cameron McCarthy, PEng, PGeo -- qualified person for environmental and social aspects; Duke Reimer, PEng -- qualified person for tailings and coffer dams; and Dr. Adrian Dance, PhD, PEng -- qualified person for mineral processing and recovery methods.

Data verification

The qualified persons responsible for the preparation of the PFS and the technical report in respect thereof have verified the data disclosed in this news release, including sampling, analytical and test data underlying the information contained in this news release. Geological, mine engineering and metallurgical reviews included, among other things, reviewing drill data and core logs, review of geotechnical and hydrological studies, environmental and community factors, the development of the life of mine plan, capital and operating costs, transportation, taxation and royalties, and review of existing metallurgical test work. In the opinion of the qualified persons, the data, assumptions and parameters used to estimate mineral resources and mineral reserves, the metallurgical model, the economic analysis and the PFS, are sufficiently reliable for those purposes. The technical report in respect of the PFS, when filed, will contain more detailed information concerning individual responsibilities, associated quality assurance and quality control, and other data verification matters, and the key assumptions, parameters and methods used by the company.

First Mining review

Hazel Mullin, PGeo, director, data management and technical services of First Mining, a qualified person as defined under NI 43-101, has reviewed and approved the scientific and technical disclosure contained in this news release on behalf of First Mining.

About First Mining Gold Corp.

First Mining is a Canadian gold developer focused on the development and permitting of the Springpole gold project in Northwestern Ontario. Springpole is one of the largest undeveloped gold projects in Canada. A prefeasibility study was recently completed on the project and permitting is continuing with submission of the EIS targeted for 2021. The company also holds a large equity position in Treasury Metals Inc., which is advancing the Goliath-Goldlund gold projects toward construction. First Mining's portfolio of gold projects in Eastern Canada also includes the Pickle Crow (being advanced in partnership with Auteco minerals Ltd.), Cameron, Hope Brook, Duparquet, Duquesne and Pitt gold projects.

First Mining was created in 2015 by Keith Neumeyer, founding president and chief executive officer of First Majestic Silver Corp.

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