May 27, 2021
 in 
Precious Metals

Mining Moves: Gold Mountain (TSX.V: GMTN) Updates PEA, Increases NPV by 21% & Decreases AISC by 25%

Gold Mountain (TSX.V: GMTN) has provided a robust updated preliminary economic analysis (PEA) of the Elk Gold Project. The update is based on the increased Mineral Resource Estimate announced on May 14, 2021, the Ore Purchase Agreement with New Gold (TSX: NGD) announced on January 26, 2021 and the Mining Contract with Nhwelmen-Lake LP announced on January 19, 2021.

Some of the key factors in de-risking a mining project is to identify if it is economical. Based on a US$1,600 long-term gold price (spot price is US$1,893), Gold Mountain has a pre-tax Net present value (NPV) of C$395M, and All in sustaining costs (AISC) of US$554/ounce. Starting in Q4 2021, the mine will produce 19,000 ounce per year mine that ramps up to 65,000 ounces of annual production by Year 4.

Highlights include:

  • Updated PEA with an After-tax NPV5% of C$231M
  • 19,000oz annual production (Years 1-3) expanding to 65,000oz annual production (Years 4-11)
  • Increased cost certainty over September 2020 PEA through executed:
  • Construction and Mining Contract with Nhwelmen-Lake LP
  • Ore Purchase Agreement with New Gold Inc.
  • Revised mine plan eliminates construction of an onsite mill and incorporates underground mining

Elk Gold Project PEA Summary

The PEA contemplates that for the life of mine, the mineralized material from the Elk Gold Project will be mined by the Company's contract mining partner, Nwhelmen-Lake and then delivered to New Gold's (TSX: NGD) New Afton Mine located approximately 130km from the Elk Gold Project.

The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Elk Gold Resource Update - Summary

Existing Infrastructure

The Elk Gold Project is a past-producing mine with much of the required surface infrastructure still in place that is required to re-start operations. The site is serviced by the all-season, four-lane Highway 97C connecting Kelowna and Merritt. An existing forest service road provides access to proposed open pits. Surface water management infrastructure around the proposed open pit is already in place including collection ditches and sumps. The stockpile pad where material will be placed prior to being shipped off-site for processing is in place, as well as the sample preparation plant which is required for sampling material from the mine for assay. A laydown area is already in place for mobile equipment maintenance, fuel storage and office facilities.

Mine Development Schedule

Year 1

The first year of mining includes two months of site preparation. The current year activities include developing the new water settling pond below the Rock Storage Facility ("RSF"), and associated collection ditches. It also includes stripping organic material, topsoil, and till from the initial footprint of the RSF and open pit Phase 1 as well as mobilizing the initial fleet of mobile equipment, modular office facilities, and explosives storage.

The remainder of Year 1 will be the initial year of mining production, including 70,000 tonnes of mineralized material shipped to the New Afton Mine.

Years 2 and 3

The mine will continue to operate the initial phases of the open pit and transport 70,000 tpa of mineralized material to the New Afton Mine. The mine will also initiate an Environmental Assessment process which is required to expand mine production in subsequent years, as well as apply for a mine permit amendment for the expanded mining rate. The increase in production in Year 4 assumes all permits are in hand. In Year 3, the existing underground decline will be rehabilitated and extended in preparation for underground mining activities.

Years 4 to 10

Upon receipt of an Environmental Assessment Certificate, the mining rate will increase deliveries to the New Afton Mine to 324,000 tpa. The open pit mining rate will increase to an average rate of 150,000 tonnes of mineralized material per year. Underground mining activities will commence on the 1300 vein system to supplement the open pit plant feed, followed by the 2500, 2600 and 2800 veins later in the mine life. The combined open pit and underground plant feed will total 324,000 tonnes per year sold to the New Afton Mine.

Year 11

The final year of production mining will also include the initiation of major reclamation activities. The mine will prepare ahead of time for the ultimate reclamation and closure of the facility.

Year 12

Major mine site reclamation activities will be completed.

DISCLAIMER: Gold Mountain is a paid marketing client*
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