Bonterra Resources Announces Positive Preliminary Economic Assessment on the Barry Open Pit Project
Val-d'Or, June 13, 2022 - Bonterra Resources Inc. (TSXV: BTR) (OTCQX: BONXF) (FSE: 9BR2) ("Bonterra" or the "Company") is pleased to announce positive results from the independent preliminary economic assessment ("PEA") on the Barry open pit project in the Urban-Barry Camp in northern Quebec. The PEA has been prepared by SLR Consulting (Canada) Ltd. ("SLR") in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"). AMC Mining Consultants (Canada) Limited ("AMC") has reviewed and endorsed the mine engineering and cost estimates as used in the Barry open pit component of the PEA. The Company notes that mineral resources are not mineral reserves as they do not have demonstrated economic viability. The Company further notes that a PEA is preliminary in nature and may include inferred mineral resources that are considered too speculative geologically to have economic consideration applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. All figures are stated in Canadian dollars unless otherwise stated.
PEA Highlights
- Long-term gold price per ounce ("oz"): US$1,600
- Exchange rate: C$1.00 = US$0.75
- After-tax net present value ("NPV") at a 5% discount rate: $48.3 million
- After-tax internal rate of return ("IRR"): 43%
- Initial capital costs: $22.1 million
- Sustaining life of mine ("LOM") capital costs: $21.3 million
- Total mill feed: 2.0 million tonnes ("Mt") at 2.36 grams-per-tonne gold ("g/t Au")
- LOM average annual gold production: 30,000 oz
- LOM strip ratio (waste : mined resource): 5.4:1
- LOM total production: 145,050 oz (95.0% mill recovery)
- LOM cash costs: C$1,252/oz (US$939/oz)
- LOM all-in sustaining costs ("AISC"): C$1,420/oz (US$1,065/oz)
Marc-Andre Pelletier, President, CEO and Director of Bonterra commented: "The PEA on the Barry open pit project represents an important step towards a restart of production at the Barry open pit project by Bonterra. The PEA highlights a project that requires a modest upfront investment and is expected to generate average annual net pre-tax cash flow of over $20 million once in commercial production. The Company intends to use the cash flow from the Barry open pit to continue developing the underground portion of the deposit, which contains 0.5 million ounces of Measured and Indicated Mineral resources and 0.7 million ounces of Inferred Mineral resources, as stated in the 2021 mineral resource estimate ("2021 MRE"). It is also important to highlight that approximately $30 million of the total LOM capital is shared infrastructure and is expected to also benefit the development of the Barry and Gladiator underground deposits. Specifically, the upgrades to the Bachelor mill and tailings are expected to increase the throughput of the mill to 1,200 tonnes per day and establish a solid foundation for future expansion up to eight million tonnes of tailing storage capacity."
The Company is also pleased to announce that it has started to undertake infill and definition drilling on the underground portion of the Barry deposit to better understand the potential of an underground mining scenario. A total of 41,500 metres ("m") of drilling is planned for the Barry deposits this year.
Upon reviewing the results of the PEA, Bonterra's board of directors has approved the commencement of a pre-feasibility study ("PFS") on the Barry open pit project, which is expected to be completed by year end. In the meantime, the permitting process for the Bachelor mill and tailings expansion is ongoing. The Company expects to provide additional information on the permitting process in June with a COMEX permit expected by end of 2022 and provincial permits thereafter.
Overview
The Barry project is located 110 kilometers ("km") east of Lebel-sur-Quévillon, which is 150 km to the city of Val d'Or, in the mining-friendly province of Quebec, within the Abitibi Greenstone Belt. Past production occurred in 2006-2008 at Barry where over 600,000 tonnes were processed at the Bachelor mill, producing over 43,000 ounces of gold.
The Barry gold deposit is characterized by three dominant sets of structures, all dipping to the southeast. The sub-vertical shear zones and the H-Series shear zones dipping 25 to 40 degrees are hosted within intermediate to mafic volcanics and tuffs with local felsic intrusions. Contact zones dip at 50 to 65 degrees along the lower and upper contacts of the D1, D2 and D3 felsic intrusions with mafic volcanics. Gold mineralization is associated with disseminated sulfides within shear zones and veins with local visible gold. The Barry deposit has been delineated over 1.4 km along strike and 700 m vertical and remains open for expansion.
Mineral Resources
The 2021 MRE was updated in June 2021 (see press release dated June 23, 2021) and a NI 43-101 technical report was produced by SLR. Combined Measured and Indicated Resources for the open pit portion of the deposit represents a total of 1.9 million tonnes at a grade of 2.68 g/t Au or 165,000 ounces of gold and 15,000 tonnes at a grade of 2.36 g/t Au or 1,000 ounces in the Inferred category.
Only the in-pit resource was considered in the PEA due to the higher quality of the resource. Most of the in-pit mineral resources are in the Measured category and require no additional diamond drilling information for conversion to mineral reserves.
Mining and Milling
Open pit mine design consists of 5.0 m high benches with final pit wall slope of 45 degrees. Proposed production totals 2.0 Mt, along with 10.8 Mt of overburden and waste rock, leading to a LOM strip ratio of 5.4. Production will be hauled to the mill via a 110 km forestry road using 40-tonne trucks. The mill upgrade includes the replacement of two ball mills by a tricone. Mill feed will then increase by 50% to 1,200 tonnes per day. The existing mill process with carbon-in-pulp extraction is suitable for the Barry material. No metallurgical testing was done during the PEA because the Barry material has been processed in the past with no issues. A 95% mill recovery was used in the PEA. The tailings material will be stored in the tailings management area ("TMA") with spigot disposal. Initial raise of the TMA dams will provide a 2.9 Mt capacity. Subsequent raises can add up to 5.1 Mt of additional capacity (8 Mt of total capacity).
Base Case
The economic analysis was performed with a 5% discount rate. On a pre-tax basis, the NPV 5% is $57.3 million, the IRR is 49% and the payback period is 3.2 years. On an after-tax basis, the NPV 5% is $48.3 million, the IRR is 43% and the payback period is 3.4 years. The cash cost and AISC over the LOM are US$939/oz and US$1,065/oz, respectively. A summary of the project economics is listed below:
PEA Summary
| Description | Unit | Value |
| Total Tonnes Mined | Mt | 2.0 |
| Average Diluted Gold Grade | g/t | 2.36 |
| Total Gold Contained | oz | 152,684 |
| Overall Gold Recovery | % | 95 |
| Total Gold Payable | oz | 145,050 |
| Strip Ratio (waste:mined resource) | w:mr | 5.4 |
| Mine Life | years | 4.8 |
| Average Annual Gold Produced | Au oz per year | 30,000 |
| Long Term Gold Price | US$/oz | 1,600 |
| Exchange Rate | CAD:USD | 0.75 |
| Discount Rate | % | 5 |
| Total LOM NSR Revenue | $M | 306 |
| Total Royalty Costs | $M | 15 |
| Total LOM Operating Costs | $M | 165 |
| Total LOM Capital Costs | $M | 50 |
| Total LOM Pre-tax Cash Flow* | $M | 77 |
| Average Annual Pre-tax Cash Flow* | $M | 17 |
| Total LOM After-tax Free Cash Flow* | $M | 65 |
| Average Annual After-tax Free Cash Flow* | $M | 14 |
| Pre-tax Summary | ||
| Pre-tax NPV5% | $M | 57 |
| Pre-tax IRR | % | 49 |
| Pre-tax Payback | year | 3.2 |
| After-tax Summary | ||
| After-tax NPV5% | $M | 48 |
| After-tax IRR | % | 43 |
| After-tax Payback | year | 3.4 |
* Calculated over the entire LOM of the project, including pre-commercial production.
Capital and Operating Costs
The initial capital cost for the Barry open pit project is estimated to be $22.1 million, which includes a contingency of $1.7 million. Infrastructure costs represent $11.1 million of the initial capital cost and includes: $4.5 million for haulage road enhancement; $2.6 million for surface garages, $1.9 million for an emulsion plant and $2.1 million for other surface utilities. Mill and TMA upgrades are $3.5 million and $2.4 million, respectively. The $3.4 million remaining is composed of surface equipment and tools, owners, and indirect costs.
The sustaining capital cost is estimated at $27.8 million and includes site closure cost that total
$6.5 million. TMA construction costs of $18.1 million will provide additional storage capacity of 2.9 Mt and will establish the foundation for future expansion at lower cost. Indirect cost represents $2.7 million of the other $3.2 million of sustaining capital.
The total capital cost for the project is estimated at $49.9 million as summarized in the table below.
Barry Open Pit Capital Cost Summary
| Capital Cost Description | Initial $M | Sustaining $M | Total $M |
| Tailings Management Area | 2.4 | 18.1 | 20.5 |
| Surface Equipment & Tools | 0.7 | 0.1 | 0.9 |
| Infrastructures | 11.1 | 0.3 | 11.5 |
| Indirects Costs | 1.7 | 2.7 | 4.4 |
| Mill Upgrades | 3.5 | 0.0 | 3.5 |
| Owners | 0.9 | 0.0 | 0.9 |
| Contingency | 1.7 | 0.0 | 1.7 |
| Sub-total | 22.1 | 21.3 | 43.4 |
| Site Closure Costs | 0.0 | 6.5 | 6.5 |
| Total | 22.1 | 27.8 | 49.9 |
The average operating cost is estimated at $81.27/tonne.
Barry Open Pit Operating Cost Summary
| Operating Cost Description | Unit | Cost |
| Mining | $/t milled | $33.87 |
| Processing | $/t milled | $19.07 |
| G&A | $/t milled | $12.33 |
| Trucking to Mill | $/t milled | $16.00 |
| Total | $/t milled | $81.27 |
| Cash Cost | C$/oz | $1,252 |
| AISC | C$/oz | $1,420 |
| Cash Cost | US$/oz | $939 |
| AISC | US$/oz | $1,065 |
Sensitivity Analysis
A financial sensitivity analysis was conducted on the PEA, after-tax NPV and IRR of the project, using the following variables: capital costs, CAD:USD exchange rate and the price of gold. The after-tax results for the project IRR and NPV5% based on the sensitivity analysis are summarized below:
NPV Sensitivity Results (After-tax) for Gold Price and Exchange Rate Variations ($M)
| After-Tax NPV 5% (C$M) | Gold Price (USD/ounce) | ||||||||
| CAD:USD | $1,200 | $1,300 | $1,400 | $1,500 | $1,600 | $1,700 | $1,800 | $1,900 | $2,000 |
| 0.60 | $33 | $52 | $71 | $90 | $109 | $128 | $147 | $166 | $185 |
| 0.65 | $15 | $33 | $50 | $68 | $85 | $103 | $121 | $138 | $156 |
| 0.70 | $0 | $16 | $33 | $49 | $65 | $82 | $98 | $114 | $131 |
| 0.75 | -$13 | $3 | $18 | $33 | $48 | $64 | $79 | $94 | $109 |
| 0.80 | -$24 | -$10 | $4 | $19 | $33 | $47 | $62 | $76 | $90 |
| 0.85 | -$34 | -$21 | -$7 | $6 | $20 | $33 | $46 | $60 | $73 |
| 0.90 | -$43 | -$30 | -$18 | -$5 | $8 | $20 | $33 | $46 | $58 |
NPV Sensitivity Results (After-tax) for Capital and Operating Costs Variations ($M)
| After-Tax NPV 5% (C$M) | CAPEX | ||||||||
| OPEX | -40% | -30% | -20% | -10% | 0% | 10% | 20% | 30% | 40% |
| -30% | $108 | $103 | $99 | $94 | $90 | $85 | $81 | $76 | $72 |
| -20% | $94 | $90 | $85 | $80 | $76 | $71 | $67 | $62 | $58 |
| -10% | $80 | $76 | $71 | $67 | $62 | $58 | $53 | $49 | $44 |
| 0% | $66 | $62 | $57 | $53 | $48 | $44 | $39 | $35 | $30 |
| 10% | $53 | $48 | $43 | $39 | $34 | $30 | $25 | $21 | $16 |
| 20% | $39 | $34 | $30 | $25 | $21 | $16 | $12 | $7 | $2 |
| 30% | $25 | $20 | $16 | $11 | $7 | $2 | -$2 | -$7 | -$11 |
The sensitivity analysis reveals that the price of gold has the most significant influence on both NPV and IRR. After the price of gold, the NPV and IRR were most impacted by the exchange rate (CAD:USD) and to a lesser extent by variation in operating and capital costs.
QUALIFIED PERSONS
The PEA production scenario is based on the Measured, Indicated and Inferred mineral resources from the 2021 MRE issued on June 23, 2021, and prepared by Ms. Valerie Wilson, M.Sc., P.Geo., Consultant Geologist at SLR, based in Toronto, Ontario, Canada. Ms. Wilson is an Independent Qualified Person as defined by NI 43-101. Ms. Wilson has read and approved the contents of this news release as it relates to the disclosed MREs.
The full technical report, which is being prepared in accordance with NI 43-101 - Standards of Disclosure for Mineral Projects will be available on SEDAR (www.sedar.com) under the Company's issuer profile within 45 days from this news release. The effective date of the PEA is June 1, 2022.
The PEA was prepared by the following Qualified Persons under NI 43-101, each of whom is independent of the Company under NI 43-101, who have reviewed, verified, and approved the scientific and technical data for which they have responsibility contained in this news release pertaining to the PEA.
| Qualified Person | Company | Responsibility |
| Normand Lecuyer, P.Eng., Ing. | SLR | Mining, cost estimation, Financial model, NI 43-101 integration |
| Valerie Wilson, M.Sc., P.Geo. | SLR | Geology and mineral resource estimation |
| Guy Saucier, Ing. | ASDR | Surface infrastructure |
| Pierre Roy, M.Sc., Ing., P. Eng. | Soutex | Processing |
| Luciano Piciacchia, Ph D., Ing. | BBA | Environment, water treatment and tailings management |
About Bonterra Resources Inc.
Bonterra is a Canadian gold exploration company with a large portfolio of advanced exploration assets anchored by a central milling facility in Quebec, Canada. The Company has a portfolio of deposits, including, Barry, Gladiator, Moroy, and Bachelor that collectively have a total of 1.24 million ounces in Measured and Indicated categories, and 1.78 million ounces in Inferred category. Importantly, the Company owns the only permitted and operational gold mill in the region. Bonterra is focused on graduating from advanced exploration to a development company to deliver shareholder value.
FOR ADDITIONAL INFORMATION
Marc-Andre Pelletier, President & CEO
ir@btrgold.com
2872 Sullivan Road, Suite 2, Val d'Or, Quebec J9P 0B9
819-825-8678 | Website: www.btrgold.com
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary and Forward-Looking Statements
The reader is advised that the PEA summarized in this press release is intended to provide only an initial, high-level review of the project potential and design options. The PEA mine plan and economic model include numerous assumptions and the use of Inferred resources. Inferred resources are considered to be too speculative to be used in an economic analysis except as allowed for by Canadian Securities Administrators' National Instrument 43-101 in PEA studies. There is no guarantee that Inferred resources can be converted to Indicated or Measured resources, and as such, there is no guarantee the project economics described herein will be achieved.
This news release contains "forward-looking information" within the meaning of the applicable Canadian securities legislation that is based on expectations, estimates, projections and interpretations as at the date of this news release. Any statement that implies predictions, expectations, interpretations, opinions, plans, projections, objectives, assumptions, future events or performance (often using words such as "expects" or "does not expect", "is expected", "interpreted", "in management's opinion", "anticipates", or "plans", "budget", "schedule", "intends", "forecasts", "estimates", "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved) is not a statement of historical fact and may constitute forward-looking information and is intended to identify forward-looking information. This news release may contain forward-looking information relating to, among other things, the outlook for the Barry, Gladiator, Moroy and Bachelor projects; updated mineral resources, Barry Open Pit PEA; the deposit remaining open laterally and at depth; and future drilling. These factors include, but are not limited to, risks associated with the ability of exploration activities (including drilling results) to accurately predict mineralization; the Company's ability to obtain required approvals; the results of exploration activities; risks associated with mining operations; global economic conditions; metal prices; dilution; environmental risks; and community and non-governmental actions. Although the forward-looking information contained in this news release is based on assumptions that management believes are reasonable at the time of release, Bonterra cannot assure shareholders and prospective purchasers of the Company's securities that actual results will be consistent with the forward-looking information, as there may be other factors that cause results not to be as anticipated, estimated or intended, and neither Bonterra nor any other person assumes responsibility for the accuracy or completeness of forward-looking information. All statements made, other than statements of historical fact, that address the Company's intentions and the events and developments that the Company anticipates, are considered forward-looking statements. Although the Company believes that the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance, and actual results or developments may differ from those in the forward-looking statements.
