Update of 43-101 Resources FOR Elder MINE and Tagami Property and Update of the Preliminary Economic Analysis (PEA) Prepared BY Roche, Consulting-Group IN 2012 ___________________________________________________
FOR IMMEDIATE RELEASE
TSX Venture – ABI.V
October 30, 2018
UPDATE OF 43-101 RESOURCES FOR ELDER MINE AND
TAGAMI PROPERTY
and
UPDATE OF THE PRELIMINARY ECONOMIC ANALYSIS (PEA)
PREPARED BY ROCHE, CONSULTING-GROUP IN 2012
___________________________________________________
Mont-St-Hilaire, Québec, Canada, October 30, 2018.
Mr. Renaud Hinse, President and Chief Executive Officer of Abcourt Mines Inc. (TSX -
V: ABI, Berlin: AML-BE and Frankfurt Stock Exchanges: AML -FF) (“Abcourt” or the
“Company”) is pleased to announce that a NI 43-101 update report of resources on the Elder
mine and the Tagami property has been prepared by Mr. Jean-Pierre Bérubé, engineer in
geology. Mr. Bérubé is an independent consultant. Mr. Renaud Hinse, mining engineer, has
prepared an update of the Preliminary Economic Assessment (PEA) report prepared by Roche,
Consulting-group in 2012. An independent PEA was not required as there has not been a 100%
increase in the mineral resource estimate. Both persons are designated as “qualified persons”
according to NI 43-101, each one of them has pertinent experience in his domain.
The Elder mine is made up of one mining concession, two mining leases and claims.
At the Elder mine, vein No. 1 vein is the main vein. It extends over a strike distance of about
650 meters, from surface to the bottom of the min e. The dip is 22 o to the South. It is
accompanied by vein #3 and #6 with the same strike and dip. There are also veins No.2 and
No.2A, from the 4th level to surface, with the same strike and a dip of 40o S and vein No.4 with
a North-South direction and a dip of 22 o to the East. See the cross -section on the following
page.
Vein #7 is indicated in one hole with marginal values. Additional drilling will be done to assess
the economic potential of this structure.
The Tagami property is made up of 10 claims and it is located immediately to the north of the
Elder property. The known mineralization from surface to a depth of 150 meters is found in a
shear zone with a strike of N -40o-E and a dip of 50% to the so uth-east and in the walls of the
shear zone where veins with the same direction are found with a dip of 20o to the south-east.
Abcourt owns 100% of the Elder and Tagami properties.
See a cross-section of the Elder mine on the following page.
Table of resources and parameters used
As of May 31, 2018, mineral resources in the measured and indicated categories were as
follows:
ZONE
MEASURED
INDICATED
MEASURED+ INDICATED
GOLD
OUNCES
(OZ) TONNES GRADE TONNES GRADE TONNES GRADE
(metric) (g/t) (metric) (g/t) (metric) (g/t)
ELDER
VEIN 1 32,607 5.09 159,502 6.91 192,109 6.60 40,755
VEIN 2 5,343 5.36 75,957 6.39 81,300 6.32 16,516
VEIN 3 0 0,00 15,321 6.27 15,321 6.27 3,088
VEIN 4 18,181 6.35 104,176 6.26 122,357 6.28 24,691
VEIN 6 0 0 52,739 6.53 52,739 6.53 11,077
SUB-TOTAL 56,131 5.52 409,695 6.57 463,826 6.45 96,126
TAGAMI 0 0,00 174,258 6.22 174,258 6.22 34,848
TOTAL:
56,131
5.52
581,952
6.47
638,083
6.38
130,974
Elder and Tagami Measured and Indicated Resources
The technical parameters used for the calculation of measured and indicated resources
were:
Density: 2.70 t/m3, minimum thickness: 1.8 m
Lower cutting grade = 3.45 g/t Au
Higher cutting grade = 31.1 g/t Au
The total measured and indicated resources for Elder and Tagami is 638 083 tonnes with a
grade of 6,38 g/t Au.
In addition, the inferred resources total 547 746 tonnes with a grade of 5,48 g/t Au. See
below:
CATEGORIES
INFERRED
GOLD
OUNCES
(Oz)
ZONE
TONNES GRADE
(metric) (g/t)
ELDER
VEIN 1 119,276 5.41 20,749
VEIN 2 75,051
,7
5.70 13,755
VEIN 3 43,847 5.37 7,571
VEIN 4 102,169 7.89 25,920
VEIN 6 39,808 5.36 6,877
SUB-TOTAL 380,251 6.12 74,872
TAGAMI 167,495 5.48 29,510
TOTAL: 547,746 5.93 104,382
Inferred resources
The technical parameters used for the calculation of the inferred resources were the same as
those used for the calculation of the measured and indicated resources.
Note: Presently, the inferred resources are not considered as measured and indicated
resources. However, it is reasonably expected that the majority of the inferred
mineral resources could be upgraded to measured or indicated mineral resources with
continued exploration.
RESOURCES WITH A REASONNABLE PROSPECT FOR EVENTUAL
ECONOMIC EXTRACTION
MINERAL
RESOURCES
MEASURED AND
INDICATED
RECOVERABLE
MINERAL
RESOURCES
85%
40% DILUTION
RESOURCES AS
DESCRIBED
ABOVE
TONNES GRADE
g/t
TONNES GRADE
g/t
TONNES GRADE
g/t
TONNES GRADE
g/t
MEASURED 56,131 5.52 47,711 5.52 19,084 0.0 66,795
3.94
INDICATED 407,695 6.57 346,541 6.57 138,616 0.0 485,157
4.69
TOTAL 463,826 6.45 394,252 6.32 157,700 0.0 551,952 4.51
Here is the CIM definition of resources:
“ A Mineral Resource is a concentration or occurrence of solid material of economic interest in or on the Earth’s
crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic
extraction. The location, quantity, grade or quality, continuity and other geological characteristics of a Mineral
Resource are know n, estimated or inter preted from specific geological eviden ce and knowledge, including
sampling.”
Dilution factor during the mining
Commercial production started on January 1, 2016.
From January 1, 2016 to June 30, 2018, a total of 267,064 metric tonnes were mined with a
grade of 4.43 g/t of gold (car samples).
In his preliminary economic study in 2012, Roche used a factor of 85% for the recovery of
resources. We used the same factor.
In the mining operation, to be sure to extract all the mineralization, it is necessary to take some
waste. If we take only 0.15 m above and below the ore in an 1.8 m face, we get 15% dilution.
In addition, frequent changes of dip of the mineralization result in getting some uncontrolled
dilution. We also have to adjust to variations of grade in veins . Blasts in sheared zones also
produce unwanted overbreaks. All these factors combined account for an apparent 40%
dilution. We give no grade to the dilution material.
However, Roche used only 20% of dilution with a grade of 0.69 g/t Au. Th e Roche estimate
was made without the benefit of test mining, as the mine was flooded at that time. According
to our experience, by doing our best to control the mining, we get 40% of dilution, without any
value given to the dilution material, as explained previously.
Mining method
Veins generally have a dip angle of 22o and a 2-meter thickness.
The mine is serviced by 2 shafts and 16 levels. Shaft #1 is used for the ventilation of the mine
and as an escape way. Shaft #2 is used for production. The distance between levels varies
between 41 and 61 meters. Drifts (2.7 m x 2.8 m) give access to the mineralized zone. Then,
drifts follow the zone to give access to stopping sites. On levels 3, 4 and 6, drifts will follow
the mineralization over a distance of 240 meters.
Mining is done with the room and pillar method. The roof and part of the walls are secured
with rock bolts and screen. With this method of mining, about 15% of the resources are left in
pillars. Part of these pillars will be recovered at the end of the mine.
The width of rooms and the si ze of pillars were determined by a geotechnical study done by
Golder Associates in 1986 and by an inspection in 2014.
A stope team is made up of two drillers, 2 scrapping operators and one mucker.
The monthly rate of production of Elder is about 11,000 tonnes. Our objective is to get 12,500
tonnes per month. The life of the mine, based on the existing measured and indicated resources,
is 4.25 years. The eventual conversion of inferred resources into measured and indicated
resources would add about 3.5 y ears for a total of 7.75 years, without taking into account the
Tagami resources.
Economical analysis
General
A preliminary economical analysis was prepared according to the net present value method.
This method is built on the basis of a constant dollar. There is no provision for inflation nor
for taxes to pay. The mine is presently in exploitation, without debt. The internal rate of return
was not used in this report as the mine is operating and there is no initial investment.
Hypothesis
The hypothesis used are indicated in the table below. The sensitivity analysis is made for
variations in the price of gold of plus and minus 10%.
Hypothesis
Description Units Value
Price
$US / ounce 1,230
Exchange Rate
Cdn / US 1.30
Discount Rate
Annual % 8
Royalties
The cost of royalties is already incorporated into operating costs.
Technical Hypothesis
Technical Hypothesis
Description Units
Value $
Recoverable measured and indicated resources
Tonnes 551,953
Annual rate of extraction
Tonnes / year 130,000
Life of mine
Years 4.25
Grade of mineralization
g/t Au 4.51
Gold recovery in mill
% 97
Net recoverable value
$ Cdn/t 224.74
Annual gold production
Ounces 18,300
Ongoing capital costs
$ Cdn/t 19.19
Total operating costs per tonne
$ Cdn/t 191.24
Gold refining
$ Cdn/oz 1.31
Financial model and results
A summary of the technical hypothesis is given in the table above. A total revenue at the mine
of $124 M is expected, that is $224,74 per tonne. Ongoing capital expenditures, necessary in
the course of mining, is estimated at $10,6 M, that is $19,19 per tonne of recoverable measured
and indicated resources.
Operating costs are $191,24 per tonne for a total of $105,4 M, including $6,89 per tonne of
royalties for a total of $3,8 M. A working capital of about $2,5 M is necessary to cover about
one month of operation costs, but this amount was already available on June 30, 2018. The
financial analysis shows a net cash flow of $7,9 M before taxes and $4,1 M after taxes. The
net present value, discounted at 8%, is $6,5 M before taxes and $3,5 M after taxes.
Summary of project evaluation
Description
Evaluation base
$ Cdn
Total mine revenue 124,000,000
Ongoing capital expenditures
10,600,000
Total operating expenses including royalties
105,600,000
Net cash flow before taxes
7,900,000
Net cash flow after taxes 4,200,000
Taxes and income taxes
The Elder mine is subject to provincial and federal income taxes and Quebec mining taxes. The
income tax is calculated according to the federal and provincial tax legislations. The federal
income tax is 15%. The provincial income tax varies as follows:
o 2017 11.8 %
o 2018 11.7 %
o 2019 11.6 %
o 2020 11.5 %
The Quebec mining tax is calculated according to the Quebec Mining tax Law modified in 2014.
According to the new Law, a producer has to pay a minimum progressive rate determined by
the value of production at the shaft collar and a progressive mining ta x on annual profits. The
new mining tax on annual profits is calculated with a progressive rate of 16% to 28%, (replacing
the single rate of 16% with the previous Law), determined according to the profit margin of the
operator:
o Up to 35% profit margin 16%
o From 35% to 50% profit margin 22%
o From 50% to 100% profit margin 28%
It is obvious that according to the new Law, an enterprise with a high rate of profit will pay a
higher mining tax.
The minimum progressive mining tax corresponds to 1% of the first $80 M of the value of
production at the shaft collar and 4% of the value of production at the shaft collar exceeding
$80 M.
Sensitivity analysis
A sensitivity analysis was done, based on the economical and technical hypothesis presented in
preceding sections to estimate the impact of variations in capital expenditures, operating costs
and the price of gold on the net present value, discounted at 8%. Each variable is analysed
separately. The analysis was made for variations of 10% for each item.
According to the analysis made, the net present value is not affected greatly by an increase or
a decrease in the capital cost. In fact, the capex line is almost horizontal. This indicates that
variations of this item have little effect on the net present value. The proportion of the capital
cost (less than 1%), compared to all the other costs, is not important and that explains the fact
that a variation in costs has a low impact on the present value. The latter is more sensitive to
operating costs and the price of gold.
The net present value is equally sensitive to the grade of the ore. An increase of 10% of grade,
that is to 5 g/t of gold would increase the net cash flow, before taxes by $15 M, and would give
a present value of about $11.9 M. During the latest quarter of the 2018 fiscal period, from
April to June, the average grade of the mineralization was 4,81 g/t of gold. Our objective, for
the next months, is to have 5,0 g/t of gold at the mill.
(30)
(20)
(10)
-
10
20
30
40
30% 20% 10% 0% - 10% - 20% - 30%
NPV 8% (M$)
SENSITIVITY ANALYSIS
REVENU CAPEX OPEX