Gold Mountain Mining Corp. (TSX:GMTN)(OTCQB:GMTNF)(FRA:5XFA) is pleased to announce that it has completed its first delivery of ore to New Gold Inc.'s (TSX: NGD) New Afton Mine ("New Afton") in Kamloops, BC located 133 km from the Elk Gold Mine.
- Following the extended provincial review and approval of New Gold's custom milling permit, the Company is now positioned to deliver high-grade ore to accommodate its Year 1 production profile.
- The material was mined from the 1300 vein near historic Pit 2, which was last mined from 2012 to 2014 at an average grade of 16.7 g/t.
- This initial delivery marks the Company's transition into cash-flow and revenue generation.
- Under the terms of the Ore Purchase Agreement with New Gold, the Company will be paid on a monthly basis for all ore delivered.
- Ownership of ore transfers to New Gold upon delivery, eliminating all risks of recovery for Gold Mountain.
"Since purchasing the project from Equinox, our primary focus has always been putting the mine back into production. When going public in December of 2020, we had a goal to restart the Elk and develop a million-ounce producer. We are very pleased to deliver this update to our loyal shareholders. The Elk project has always been an execution story and I'd like to thank all those involved in bringing the Elk Gold mine back to life. Looking forward, we plan to ramp up high-grade ore delivery to New Gold, continue aggressively drilling out our highly prospective land package, and kick off the technical work necessary for our proposed Phase ll production expansion." commented Director and CEO Kevin Smith.
While the Provincial review and the corresponding Mine Review Committee process have come to a close, Gold Mountain is aware and acknowledges each respective Indigenous Nation's decision-making process will continue independently from the Province of British Columbia.
Over the past 21 months, the Company has made a concerted effort to build strong relationships with communities that are affected by the development of the Elk Gold Project. Gold Mountain looks forward to continued collaboration with all Indigenous Nations that have interests in the Elk Gold mine. The Company also wishes to communicate that there is no time limit on direct engagement and consultation between the Company and each respective Indigenous Nation.
First Delivery and Payment Terms
Following the extended provincial review and approval of New Gold's custom milling permit, Gold Mountain completed its first delivery of ore to New Afton. The material was mined from the Elk's 1300 vein, located at the footwall of historic Pit 2 and marks the beginning of cash-flow and revenue generation for the Company.
Pursuant to the terms of the Ore Purchase Agreement ("OPA"), each truck leaving the Elk Gold Mine is weighed on-site to determine the weight of the ore being delivered. An assay is taken representing each day's gold and silver grades for delivered ore which, along with the truck scale tickets, combine to create a total metals value that are reconciled on a monthly basis. Gold and silver prices are determined based on the monthly average of the official AM/PM London Bullion Market Association for gold and London Metals Exchange for silver. The OPA differs from a traditional "toll milling" arrangement in that Gold Mountain is paid based on the value of the ore delivered to New Gold and bears no risk of processing recovery.
A complete copy of the OPA was filed on the Company's SEDAR profile on February 3, 2021.
By selling high-grade ore directly to New Gold, the Company avoids the need for an on-site mill and tailings storage facility. This arrangement drastically reduces the Elk Gold Mine's environmental impact and minimizes the effects it has on surrounding ecosystems and habitats. As a result, the Company reduces its carbon emissions by 11,500 tonnes/annum, power consumption by 10.2 Mwh/year, and annual water consumption by over 14,000,000L1.
Ore Purchase Agreement
Under the terms of the OPA, the Company will deliver 70,000 tonnes of high-grade ore per annum or approximately 200 tonnes per day to New Gold. The OPA has a term of three years and is effective upon the first delivery of high-grade ore. In June 2021, the Company announced that it signed a letter of intent with New Gold to increase its tonnage delivered to New Afton from 70,000 to 350,000 tonnes per annum beginning in Year Four. The increase in tonnage delivered is subject to both the Company and New Gold obtaining the necessary regulatory and Indigenous approvals.
By securing a world-class ore purchase partner in New Gold and a fixed cost mining contract with Nhwelmen-Lake LP, Gold Mountain has the operational partners in place to consistently execute its business plan which the Company anticipates will result in increased shareholder value.
Disclaimer: Gold Mountain is a paid marketing client*