Artemis Gold Announces Results of Expansion Study for Blackwater Mine
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February 21, 2024 TSXV: ARTG
PRESS RELEASE
Artemis Gold Announces Results of Expansion Study for Blackwater Mine
Study outlines opportunity to accelerate expansion; advancing a Tier 1 asset
All amounts in Canadian dollars except where otherwise noted
• After-tax NPV of C$3.25 billion at long-term gold price of US$1,800 per ounce (“oz”), after
taking into account repayment of Phase 1 Project Loan Facility (“PLF”), as well as the
effect of the gold and silver streams
• Greater than 500,000 gold equivalent (“AuEq”) oz average annual production for first 10
years
• Average all-in sustaining costs (“AISC”) of US$712/oz gold for first 10 years, placing
Blackwater in lowest decile of the global cost curve for gold mines
• Average annual free cash flow of approximately C$500 million for first 10 years
• Potential for mine life extension
Vancouver, British Columbia – Artemis Gold Inc. (TSX-V: ARTG) (“Artemis Gold” or the “ Company”)
announces the results of an expansion study for the Blackwater Mine in Central British Col umbia.
Blackwater is a world-class, large-scale advanced development project in a tier-one mining jurisdiction.
The construction of the Phase 1 processing plant of 6 million tonnes per annum (“Mtpa”) is well advanced,
and the expansion study considers that Phase 1 has been completed. The purpose of the expansion
study is to optimize the timing of mine expansion through the advancing of Phase 2 to year 3 of operations
at an increased production capacity of 15 Mtpa, and Phase 3 to year 7 of operations at an increased
production capacity of 25 Mtpa. The expansions are expected to be funded from operating cash flows
based on the input assumptions of the expansion study.
The expansion study is based on Blackwater’s existing Proven and Probable Mineral Reserves and no
changes were made to the Mineral Reserve and Mineral Resource estimates. The relevant capital and
operating estimates have been updated to reflect 2024 cost estimates. The Company’s Board of Directors
is yet to commit to the acceleration of the Phase 2 expansion. A decision is expected to be considered in
H2 2024.
Table 1 – Key Results of Expansion Study
Metric Units First 5 years First 10 years LOM
Average annual production AuEq oz1 488,000 506,000 469,000
Average AISC2 per gold ounce US$/oz US$615 US$712 US$781
Average annual free cash flow3 C$ C$552M C$489M C$413M
Notes
1. The Company expects to produce gold and silver doré. Gold equivalent ounces have been determined using a gold:silver ratio of 78:1 (or
US$1,800:US$23)
2. AISC includes selling costs, royalty payments, operating costs, sustaining capital and closure costs, less silver by-product credits and
adjustments to stockpile inventory, divided by payable gold ounces
3. Free cash flow = operating cash flow less sustaining capex, closure costs and taxes
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Table 2 – Operating and Financial Results of Expansion Study
Units First 5 years First 10 years LOM (17
years)
Average throughput capacity Mtpa 12 18 20
Gold grade g/t 1.29 0.91 0.75
Silver grade g/t 7.75 5.92 5.78
Gold equivalent grade AuEq g/t1 1.36 0.96 0.79
Gold recoveries % 93% 93% 93%
Average annual gold production Au oz 463,000 478,000 438,000
Average annual silver production Ag oz 1,944,000 2,165,000 2,376,000
Average annual AuEq production AuEq oz2 488,000 506,000 469,000
Strip ratio Waste:Ore 1.99 2.13 2.01
Growth capital3,4 C$ C$1,174M C$1,497M C$1,497M
Sustaining capital4 C$ C$499M C$874M C$1,122M
Operating costs C$/tonne milled C$26.86 C$23.00 C$20.03
Cash costs5 US$/oz US$456 US$577 US$645
AISC6 US$/oz US$615 US$712 US$781
Average annual free cash flow7 C$ C$552M C$489M C$413M
After-tax NPV5%8 C$ C$3.25B
Notes
1. Gold equivalent grades have been determined using a gold price of US$1,800/oz, a silver price of US$23/oz, a gold metallurgical recovery
of 93%, a silver metallurgical recovery of 65%, and mining smelter terms for the following equation: AuEq = Au g/t + (Ag g/t x 0.0085)
2. Gold equivalent ounces have been determined using a gold-to-silver ratio of 78:1 (US$1,800:US$23)
3. Includes deferred initial capex
4. Excludes closure costs and salvage value
5. Cash costs include selling costs, royalty payments, operating costs, less silver by-product credits and adjustments to stockpile inventory,
divided by payable gold ounces
6. AISC includes cash costs as defined above, sustaining capital and closure costs, divided by payable gold ounces
7. Free cash flow = operating cash flow less sustaining capex, closure costs and taxes
8. After-tax NPV represents the net present value of after-tax project cash flows, discounted at a rate of 5%. The after-tax project cash flows
take into account the repayment of the PLF of $385 million, as well as the effect of the gold stream and silver stream arrangements
Phase 1 Investments
In Q2 2023, Artemis Gold announced additional investments of approximately C$50 million in the Phase
1 scope of work to facilitate the potential fast -tracking of Phase 2. These additional investments were
included in the Phase 1 guided initial capital cost of C$730-C$750 million and included additional
structural steel and increased conveyor belt widths in the crushing circuits, as well as the introduction of
variable-speed drives to the ball mill. Selected electrical components were also upgraded to facilitate the
Phase 2 requirements and to include optionality in relation to the use of redundancy backup power
sources. Other Phase 1 optimizations included upsizing of the oxygen plant coupled with down -shaft-
sparging of oxygen to the pre-leach and carbon-in-leach (“CIL”) trains, along with the optimization of the
CIL layout to facilitate non-intrusive expansion to Phase 2, as well as full conversion of the detoxification
process to remove the need for tanker -supplied liquid sulphur dioxide. At the end of December 2023,
C$389 million of the guided initial capital had been spent, and C$615 million, or 84% of the lower end of
the guided capital range, was fully contractually committed.
For the expansion study, the Phase 1 guided initial capital costs are considered to have been spent and
are not included in the reported net present value. The net present value is reported net of the scheduled
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repayment of the PLF associated with Phase 1 of C$385 million and all gold and silver stream
participations.
Infrastructure
On completion of Phase 1, t he majority of infrastructure requirements for the Phase 2 expansion will
already be in place, including the primary crushing circuit, water storage and distribution, hydro -electric
power, maintenance workshops, laboratory, site administration buildings, warehouse and workforce
facilities. Additional infrastructure required for Phase 2 includes a secondary crushing circuit, crushed ore
stockpile, a second ball mill, a semi -autogenous (“SAG”) grinding mill, the associated expansion of the
mill, gold recovery and reagent buildings, additional leach and CIL tanks, expansion of the elution circuit,
as well as the associated e xpansion of mobile maintenance infrastructure to support additional mining
equipment.
Mining
The expansion study mine plan considers conventional open pit mining methods (drill-blast-load-haul) in
all phases . Open pit mining operations are anticipated to run for 1 5 years, excluding pre -production
mining. Following mining operations, stockpiled low -grade material is expected to be processed for an
additional two years, resulting in a total mine life of 17 years. The open pit w ould be developed with a
series of pushbacks. The initial stages would expose near-surface, high -grade, l ower-strip-ratio ore
providing mill feed over the early years of the project. The remaining stages expand the pit to the north
and south, targeting progressively deeper ore.
Owner-managed mining and fleet maintenance operations are planned for 365 days/year, with two 12 -
hour shifts planned per day. Contractor drill and blast services are planned for the first three years of
operations, with drill operations converting to an owner-operated function thereafter, and contractor
blasting services continuing throughout the remaining life of operations. Mining will be undertaken using
600-tonne class hydraulic shovels, 400-tonne class hydraulic excavators, and 240-tonne payload class
haul trucks. The initial drill and loading fleets are planned to be diesel-drive, with the expansion fleet for
drill and loading being electric-drive. The haul fleet is currently assumed to be diesel-drive for the entire
life of mine (“LOM”). The initial mine equipment fleet is paid back through a lease arrangement with the
supplier the expansion fleet being funded from operating cash flows.
Details of mining volumes and material movements contemplated in the expansion study are included in
Appendix A to this news release.
Metallurgy and Processing
Phase 1
The processing plant for Phase 1 comprises the following:
• Three-stage crushing, consisting of a primary gyratory crusher, a secondary cone crusher and two
tertiary cone crushers, each of which will be housed in stand-alone structures, with conveyors
transporting material between each stage;
• Crushed product will be stored in a crushed ore stockpile and conveyed to a dual-drive variable-
speed ball mill for grinding, with the circuit being closed by cyclones. Gravity concentration will be
incorporated into the grinding circuit using two centrifugal concentrators. An intensive cyanide leach
unit will be used for recovering gold from the gravity concentrate;
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• The leach and adsorption circuits will consist of one pre-oxidation tank, two leach tanks and six CIL
tanks fitted with mechanical agitators, with cyanide being adde d to the leach tanks and CIL tanks.
The leach and adsorption circuit residence time will be 24 hours, with gravity flow between the pre-
oxidation and leach tanks and interstage screens moving leached slurry between the tank units. The
carbon will advance counter current to the main slurry flow during periodic transfers of slurry;
• The loaded carbon will be treated in an AARL elution and electrowinning circuit consisting of an acid
wash column and an elution column operating at 120°C. An electric heating system will provide the
necessary temperature, and two additional heat exchangers will control the temperature around the
circuit. An electric-powered rotary kiln operating at approximately 750°C will be used to reactivate
carbon. Electrowinning will be carried out to recover gold and silver from the elution solution and the
resulting metallic values will be dried and smelted into doré bars;
• Cyanide destruction will be carried out in the final tailings slurry, using oxygen and the sulfur dioxide
produced by the combustion of sulfur prill.
Figure 1 – Blackwater Phase 1 Process Flow Sheet
x2
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Figure 2 – Blackwater Phase 1 Design*
*This is an artist’s rendering illustrating Phase 1 of Blackwater Mine. This rendering may not be to scale, and the location of certain elements,
materials and colours are subject to change.
Phase 2 Expansion
The expansion study assumes t he Phase 2 expansion to 1 5 Mtpa would be implemented with some
modifications and upgrades to the Phase 1 process, including splitting the ore crushed in the primary
crusher into two streams. One stream would be fed through the existing Phase 1 crushing and grinding
circuits. Another stream w ould be processed with another secondary stage of crushing , stockpiling,
followed by SAG and ball mill grinding. The rest of the plant circuits , including gravity concentration,
leaching, adsorption, elution and cyanide destruction, as well as the process and reagent buildings would
be expanded. Minor upgrades would be carried out on some infrastructure to accommodate the increased
throughput. The capital cost estimate to complete the Phase 2 expansion is C$592 million.
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Figure 3 – Blackwater Phase 2 Design*
*This is an artist’s rendering illustrating Phase 2 of Blackwater Mine. This rendering may not be to scale, and the location of certain elements,
materials and colours are subject to change.
Phase 3 Expansion
The Phase 3 expansion to 25 Mtpa would require a new process line comprised of two-stage crushing,
stockpiling, SAG and ball mill grinding and other plant circuits similar to the processing methods of
Phases 1 and 2. The capital cost estimate to complete the Phase 3 expansion is C$852 million.
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Figure 4 – Blackwater Phase 3 Design*
*This is an artist’s rendering illustrating Phase 3 of Blackwater Mine. This rendering may not be to scale, and the location of certain elements,
materials and colours are subject to change.
A brief video illustrating the changes between Phases 1, 2, and 3 can be found here:
https://youtu.be/QFfRdxCN-9E
Production Profile and Costs
The average annual production per the expansion study is 4 69,000 AuEq oz at an average AISC of
US$781 per gold o z, with average gold equivalent production of greater than 500,000 oz per annum
throughout Phases 2 and 3. AuEq oz are determined using a gold:silver ratio of 78:1 (or US$1,800 to
US$23).
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Figure 5 – Blackwater Mine Gold Equivalent Production and AISC
Operating Costs
Phase 1 operating costs are estimated at C$ 28.67/t milled, with economies of scale driving down the
processing and G&A costs to achieve an average estimated operating cost of C$20.03/t milled over the
LOM.
Selling Costs
The expansion study assumes payable factors on gold and silver of 99.9% and 95%, respectively.
Refining, treatment, transport, and insurance charges have been included at C$3/oz, applied to gold
equivalent ounces.
Hedging and Commodity Price Assumptions
The expansion study reflects the impact of the Company’s hedge program in place as of the date of the
study. This includes forward gold sales contracts to deliver a total of 190,000 ounces of gold bullion
between March 2025 and December 2027 at a weighted average price of C$2,851/ounce, as well as zero
cost collars for 30,000 oz gold with settlement dates from December 2024 to February 2025. The collars
have a weighted average put price of C$2,600/oz and a weighted average call price of C$3,353/oz.
The commodity price assumptions for unhedged production and exchange rate assumptions in the
expansion study were derived from market consensus forecasts and are as follows: