Pershimco New Financial Model Boosts Cerro Quema Gold Project Value by 20%
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The new cash flow model included in this Chapter 22 will be available on the Company's website as well as filed on SEDAR and will update the PFS.
ITEMS | Updated financial model | Initial PFS | Improvement | ||||
NPV (5%) ($1,275 / Oz) | US $ 121.7M = (C$ 170.0 M | ) | US$ 110.0 M | 20 | % | ||
IRR | 41.4 | % | 33.7 | % | 7.7 | % | |
CAPEX | US$ 94.7 M | US$ 117.1 M | 19 | % | |||
AISC OPEX | US$ 652 / Oz | US$ 631 / Oz | - 3.3 | % |
Exchange rate used = 1.40 | ||
NPV = Net present value | ||
IRR = Internal rate of return | ||
Capex = Capital expenditures | ||
AISC OPEX = All-inclusive sustaining operating costs |
Pershimco maintains a long-term gold price of $1,275/ounce ("oz") in the financial model. The increase in the NPV and IRR result from various factors including lower costs of mining equipment and services, lower fuel price and review in the construction planning and mining strategy. The US $18.7M CAPEX reduction comes mainly from:
- Lowering total costs of mobile equipment mining fleet: US $10.1 M.
- Reengineering of the ore transport (fleet, roads & conveyors) for savings: US $8.6 M.
The 10,000 tons per day production scenario provides strong economics through an annual production of more than 100,000 oz gold for the first full year of production generating significant cash flow to facilitate a quick payback period of 22 months. The PFS outlines gold production from the initial extraction phase from the first two open pits of the Project. The operation will have a mine life of 5.3 years and a processing capacity of 3.6 million tonnes per annum ("Mtpa") through a conventional heap leach and CIL/ADR plant with no agglomeration required. Average life of mine production is 78,546 oz per annum.
Parameter | Unit | Value | |
Ore mined | Mt | 19.7 | |
Average head grade mined | g/t | 0.77 | |
Waste mined (including pre-strip) | Mt | 14.3 | |
Strip ratio | waste:ore | 0.72 | |
Contained gold | oz | 488,000 | |
Average gold recovery rate | % | 85.8 | % |
Pre-Production & Production Y1 | ounces | 100,744 | |
Annual production Y2-6 | ounces | 317,067 | |
Annual production over LOM | ounces | 78,546 | |
Open pit mine life | years | 5 | |
CAPEX upfront capital cost | US$ million | 94.7 | |
Capital payback period | years | 1.8 | |
Operating costs (AISC) | US$/oz | 652 |
Project Permitting:
The Ministry of Environment of Panama has completed the review of the Environmental and Social Impact Study ("ESIA") positioning the Cerro Quema project in the final steps of permitting. Construction is expected to be initiated this quarter.
The Cerro Quema project is the largest employer in the Azuero region with production at Cerro Quema scheduled to begin at the end of this year,will represent Panama's largest single export. In a few years, the mining industry will be one of the most important contributors to Panama's Gross Domestic Product.
Project Optimization
The PFS focused on estimating the potential of only the La Pava and Quemita oxide gold deposits. Further exploration work and studies will follow to unveil the potential of the Cerro Quema property:
- There is considerable potential to find additional zones of gold oxide mineralization along the alteration trend that hosts the La Pava, Quemita-Quema and La Mesita deposits.
- Sulphide resources have been estimated beneath the oxide zones in La Pava and Quema/Quemita. The sulphidic material represents a significant opportunity for a future gold-copper mining operation and a flotation concentrator.
- There is silver in La Pava and Quema/Quemita ore. Silver revenues have not been calculated in this financial model.
Sensitivity Table:
NPV (in USD 1,000's) | ||||||||
Variation | IRR | 0% | 5% | 10% | 15% | |||
Gold Price | ||||||||
$ | 1,275 | 41.4 | % | 163,640 | 121,692 | 89,912 | 65,473 | |
85% | $ | 1,084 | 28.4 | % | 105,630 | 73,871 | 49,901 | 31,554 |
90% | $ | 1,148 | 32.8 | % | 124,993 | 89,835 | 63,260 | 42,880 |
100% | $ | 1,275 | 41.4 | % | 163,640 | 121,692 | 89,912 | 65,473 |
110% | $ | 1,403 | 49.4 | % | 202,013 | 153,300 | 116,338 | 87,858 |
115% | $ | 1,466 | 53.2 | % | 221,200 | 169,104 | 129,551 | 99,051 |
Capital Cost | ||||||||
$ | 94,712 | 41.4 | % | 163,640 | 121,692 | 89,912 | 65,473 | |
85% | $ | 80,505 | 50.2 | % | 176,829 | 134,272 | 102,036 | 77,230 |
90% | $ | 85,241 | 47.0 | % | 172,432 | 130,079 | 97,995 | 73,311 |
100% | $ | 94,712 | 41.4 | % | 163,640 | 121,692 | 89,912 | 65,473 |
110% | $ | 104,183 | 36.6 | % | 154,796 | 113,258 | 81,787 | 57,596 |
115% | $ | 108,919 | 34.4 | % | 150,335 | 109,006 | 77,692 | 53,628 |
Operating Cost | ||||||||
$ | 179,989 | 41.4 | % | 163,640 | 121,692 | 89,912 | 65,473 | |
85% | $ | 164,515 | 44.1 | % | 176,690 | 132,426 | 98,874 | 73,056 |
90% | $ | 169,673 | 43.2 | % | 172,340 | 128,848 | 95,887 | 70,528 |
100% | $ | 179,989 | 41.4 | % | 163,640 | 121,692 | 89,912 | 65,473 |
110% | $ | 190,305 | 39.5 | % | 154,901 | 114,501 | 83,906 | 60,388 |
115% | $ | 195,464 | 38.5 | % | 150,492 | 110,870 | 80,870 | 57,816 |
The In-Pit Mineral Resources are summarized in the table 8.
Table 8 - Summary of the Cerro Quema In-Pit Mineral RESOURCES (1,2,3,4,5,6)
La Pava | |||||||||
Zone | Grade Group | Cutoff Au g/t | Tonnes | Au g/t | Cu % | AuEq g/t | Au Ounces | ||
Oxides | Measured | 0.18 | 7,052,600 | 0.82 | 0.04 | NA | 184,900 | ||
Indicated | 0.18 | 10,896,100 | 0.57 | 0.04 | NA | 201,100 | |||
Meas & Ind | 0.18 | 17,948,700 | 0.67 | 0.04 | NA | 386,000 | |||
Inferred | 0.18 | 331,700 | 0.36 | 0.03 | NA | 3,800 | |||
Zone | Grade Group | Cutoff AuEq g/t | Tonnes | Au g/t | Cu % | AuEq g/t | AuEq Ounces | ||
Sulphides | Measured | 0.31 | 802,000 | 0.44 | 0.22 | 0.80 | 20,600 | ||
Indicated | 0.31 | 7,664,900 | 0.39 | 0.38 | 1.00 | 246,100 | |||
Meas & Ind | 0.31 | 8,466,900 | 0.39 | 0.36 | 0.98 | 266,700 | |||
Inferred | 0.31 | 75,000 | 0.28 | 0.20 | 0.61 | 1,500 | |||
LA PAVA | Grade Group | Cutoff | Tonnes | Au g/t | Cu % | AuEq g/t | Au + AuEq Ounces | ||
Total | Measured | ---- | 7,854,600 | 0.78 | 0.06 | 0.81 | 205,500 | ||
Indicated | ---- | 18,561,000 | 0.50 | 0.18 | 0.75 | 447,200 | |||
Meas & Ind | ---- | 26,415,600 | 0.58 | 0.14 | 0.77 | 652,700 | |||
Inferred | ---- | 406,700 | 0.35 | 0.06 | 0.41 | 5,300 | |||
Quema / Quemita | |||||||||
Zone | Grade Group | Cutoff Au g/t | Tonnes | Au g/t | Cu % | AuEq g/t | Au Ounces | ||
Oxides | Measured | 0.18 | 0 | 0 | 0 | NA | 0 | ||
Indicated | 0.18 | 5,983,700 | 0.86 | 0.03 | NA | 166,400 | |||
Meas & Ind | 0.18 | 5,983,700 | 0.86 | 0.03 | NA | 166,400 | |||
Inferred | 0.18 | 335,300 | 0.38 | 0.03 | NA | 4,100 | |||
Zone | Grade Group | Cutoff AuEq g/t | Tonnes | Au g/t | Cu % | AuEq g/t | AuEq Ounces | ||
Sulphides | Measured | 0.31 | 0 | 0 | 0 | 0 | 0 | ||
Indicated | 0.31 | 2,539,000 | 0.49 | 0.15 | 0.73 | 59,600 | |||
Meas & Ind | 0.31 | 2,539,000 | 0.49 | 0.15 | 0.73 | 59,600 | |||
Inferred | 0.31 | 298,100 | 0.30 | 0.17 | 0.57 | 5,500 | |||
QQM | Grade Group | Cutoff | Tonnes | Au g/t | Cu % | AuEq g/t | Au + AuEq Ounces | ||
Total | Measured | ---- | 0 | 0 | 0 | 0 | 0 | ||
Indicated | ---- | 8,522,700 | 0.75 | 0.07 | 0.82 | 226,000 | |||
Meas & Ind | ---- | 8,522,700 | 0.75 | 0.07 | 0.82 | 226,000 | |||
Inferred | ---- | 633,400 | 0.34 | 0.10 | 0.47 | 9,600 |
1. | Mineral resources are reported inside an optimized pit shell. AuEq was calculated using Au + 1.6 * Cu. |
2. | Numbers may not add up due to rounding. |
3. | Mineral resources which are not mineral reserves do not have demonstrated economic viability. |
4. | The quantity and grade of reported Inferred resources in this estimation are uncertain in nature and there has been insufficient exploration to define these Inferred resources as an Indicated or Measured mineral resource and it is uncertain if further exploration will result in upgrading them to an Indicated or Measured mineral resource category. |
5. | The mineral resources were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council. |
6. | The mineral resource is based on economic parameters including US$1,500/oz gold, 86% oxide Au recovery, 90% sulphide Au recovery, US$2.20/tonne mining costs, US$6.13/tonne oxide processing cost, US$12.00/tonne sulphide processing cost and US$1.00/tonne G&A |
Mineral Reserve Estimate
The Cerro Quema mining operation will consist of open-pit mining only with no underground mining component planned, hence, all of the ore reserves are deemed to be open pit reserves. No Inferred mineral resources are used in the estimation of the mineral reserve. Only oxide resources are used in the estimation of the mineral reserve.
The mineral reserves for the Cerro Quema Project will be provided by two separate pits: La Pava pit and Quema pit. Two separate block models were developed; one for each pit.
The Proven and Probable mineral reserves for the Project are summarized in the Table 9. A cut-off grade of 0.21 g/t Au is used for reporting all reserves. The mineral reserve represents a diluted ore tonnage.
Table 9 - Cerro Quema Mineral Reserves
Ore (Mt) | Au (g/t) | Cu (%) | Gold Oz Contained | |
La Pava | ||||
Proven | 6.82 | 0.80 | 0.04 | 176,000 |
Probable | 7.40 | 0.67 | 0.04 | 159,000 |
Sub-total | 14.22 | 0.73 | 0.04 | 335,000 |
Quema | ||||
Proven | - | - | - | - |
Probable | 5.49 | 0.86 | 0.03 | 153,000 |
Sub-total | 5.49 | 0.86 | 0.03 | 153,000 |
Total | ||||
Proven | 6.82 | 0.80 | 0.04 | 176,000 |
Probable | 12.89 | 0.75 | 0.03 | 312,000 |
Total | 19.71 | 0.77 | 0.04 | 488,000 |
Notes
- Canadian Institute of Mining and Metallurgy and Petroleum ("CIM") definitions were used for Mineral Reserves
- The Mineral reserve Is based on US$1,275/oz gold
Kappes, Cassiday and Associates
Mr. Mark Gorman, PE
Mark holds a BS degree in Chemistry, an MS degree in Metallurgical Engineering and an MS degree in Civil Engineering. He is a registered Professional Engineer in the State of Nevada. He has 20 years of mineral processing experience working in copper and precious metals. He worked for The Mineral Park Mine as their Chief Metallurgist and Allied Nevada as their Corporate Metallurgist prior to joining KCA.
The technical geological information contained in this press release has been reviewed and approved by Mr. John Kapetas, B.Sc. Hons, MAusIMM, MAIG, a Qualified Person under NI 43-101 rules and standards.
About Pershimco Resources Inc.
Pershimco Resources Inc. (TSX VENTURE:PRO) (FRANKFURT:BIZ) is a mineral exploration and development company with a near-term gold oxide production scenario and a copper-gold porphyry target at its 100%-owned Cerro Quema Project in Panama. Cerro Quema's concession boasts paved road access, no indigenous groups and the most favorable climate in the country. Additionally, the Cerro Quema Project has proven to have significant exploration upside with resource expansion potential in over 12 oxide targets identified along a 17km trend as well as porphyry indicators along a 12km strike length that highlights the potential for a nearby copper-gold porphyry system. With strong shareholder support, Pershimco aims to achieve cash flowing status in the near term to continue uncovering the value of Cerro Quema. Please refer to the Cerro Quema Project - Pre-Feasibility Study on the La Pava and Quemita Oxide Gold Deposits, available on the Company's website, and filed on SEDAR on August 22, 2014 as well as to the press release of July 8, 2014.
The Company's documents are available on www.sedar.com.
Please visit the Company's website at www.pershimco.ca.
This press release contains forward-looking statements that reflect, as of the date of this press release, Pershimco's expectations, estimates and projections about its operations, the mining industry and the economic environment in which it operates. Statements in this press release that are not supported by historical fact are forward-looking statements, meaning they involve risk, uncertainty and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Although Pershimco believes that the assumptions inherent in the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which apply only at the time of writing of this press release. Pershimco disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except to the extent required by securities legislation.
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Contact
Alain Bureau, P. Eng., President and Chief Executive Officer
+1 (819) 797-2180
ressources@pershimco.ca
Elina Chow, Investor Relations
+1 (416) 845-8495
info@pershimco.ca