Freeman Announces Robust Maiden Preliminary Economic Assessment FOR Lemhi: After Tax NPV of US$ 212 Million
FREEMAN ANNOUNCES ROBUST MAIDEN PRELIMINARY ECONOMIC
ASSESSMENT FOR LEMHI: AFTER TAX NPV OF US$ 212 MILLION
TSX Venture Exchange: FMAN
VANCOUVER, BC
,
Oct. 16, 2023
/CNW/ - Freeman Gold Corp. (TSXV: FMAN) (OTCQX: FMANF) (FSE: 3WU) ("
Freeman
" or the "
Company
") is pleased to
announce results for the maiden Preliminary Economic Assessment ("PEA") on the Company's 100% owned Lemhi Gold project ("Lemhi"), located in
Idaho, USA
.
The PEA outlines a high-grade, low-cost, open pit operation with an average annual production of 80,100 ounces of gold ("Au") in the first eight years. The
production strategy outlined in the PEA consists of a phased development with an increase in throughput during the fifth year of operation, with a flowsheet utilizing
a carbon-in-leach ("CIL") processing facility. The objective of the study has been to maximize the value of
Lemhi
, while minimizing the footprint and environmental
impact of the facility.
Lemhi PEA Highlights:
After-tax NPV(5%) of
US$212.4 million
and IRR of 22.8% using a base case gold price of
US$1,750
/oz.
After-tax NPV (5%) of
US$ 295.6 million
and IRR of 28.6% using spot gold price of
1,932.50 US$
/oz.
Average annual gold production of 75,900 oz Au for a total life-of-mine ("LOM") 11.2 years payable output of 851,900 oz Au.
LOM cash costs of
US$809
/oz Au and all-in sustaining cash costs ("AISC") of
US$957
/oz Au.
Initial CAPEX of
US$190 million
.
Average gold recovery of 96.7%.
High average mill head grade of 0.88 g/t Au.
Average annual gold production of 80,100 oz Au in the first 8 years of production.
Average mill throughput of 2.5 Mt/a (6.8 kt/d), increasing to 3.0 Mt/a (8.2 kt/d) after four years of operation.
To view an interactive 3D walkthrough of the Lemhi Gold Project, please use the following link or visit the Company's website:
https://vrify.com/decks/14336
Paul Matysek
, Executive Chairman of the Company, stated, "I am very pleased with the robust economics obtained for this high grade, high recovery, open pit
oxide deposit.
Lemhi
represents a unique opportunity for the investment community to participate in a deeply discounted gold project that remains open on strike
and trades at 6% of after tax NPV at
US$1,750
gold and less than 5% at spot price. This will certainly be attractive to gold mining developers and producers who
see value in having an operation almost entirely on patented ground, a sub
US$1,000
/oz AISC, a life of mine production over 850,000 ounces, that is highly
leveraged to gold price in a leading mining jurisdiction."
Table 1: Project Economics & Upside
Gold price
(US$/oz Au)
Post-Tax NPV
5%
(US$M)
Post-Tax IRR
$1,600
$144
17.6 %
$1,750
Ŧ
$212
22.8 %
$1,900
$281
27.6 %
$2,050
$349
32.1 %
Ŧ base case scenario
Production Profile & Economic Analysis
The results of the PEA demonstrate
Lemhi
has the potential to become a profitable, low-cost gold producer. With an average annual gold production of 75,900 oz
Au over the 11.2-year LOM,
Lemhi
has a life of mine payable output of 851,900 oz Au and average annual gold production of 80,100 oz Au in the first 8 years of
production.
Figure 1: Lemhi Annual Payable Gold Production (CNW Group/Freeman Gold Corp.)
With an average operating cost of
US$21.53
/t milled over the LOM, the operation has cash costs of
US$809
/oz Au and AISC of
US$957
/oz Au. The project has
an initial capital cost of
US$190 million
.
The economic analysis was performed assuming a 5% discount rate. Cash flows have been discounted to the start of construction, assuming that the project
execution decision will be taken, and major project financing will be carried out at this time.
The preliminary economic assessment is preliminary in nature, that it 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, and there is no certainty that the preliminary
economic assessment will be realized.
On a post-tax basis, the NPV discounted at 5% is
US$212.4 million
; the IRR is 22.8%; and payback period is 3.6 years. A summary of the post-tax project
economics is shown graphically in Figure 2 and listed in Table 2.
Figure 2: Projected Life of Mine Post-Tax Unlevered Free Cash Flow. Source: Ausenco, 2023. (CNW Group/Freeman Gold Corp.)
Table 2: Economic Analysis Summary
General
Unit
LOM Total/Avg.
Gold Price
US$/oz
1,750
Mine Life
years
11.2
Total Waste Tonnes Mined
kt
121,903
Total Mill Feed Tonnes
kt
31,128
Strip Ratio
waste: mineralized rock
3.9
Production
Unit
LOM Total/Avg.
Mill Head Grade
g/t
0.88
Mill Recovery Rate
%
96.7
Total Payable Mill Ounces Recovered
koz
851.9
Total Average Annual Payable Production
koz
75.9
Operating Costs
Unit
LOM Total/Avg.
Mining Cost (incl. rehandle)
US$/t mined
2.51
Mining Cost (incl. rehandle)
US$/t milled
11.43
Processing Cost
US$/t milled
9.03
General & Administrative Cost
US$/t milled
1.07
Total Operating Costs
US$/t milled
21.53
Treatment & Refining Cost
US$/oz
4.30
Net Smelter Royalty
%
1.0
Cash Costs
1
US$/oz Au
809
All-In Sustaining Costs
2
US$/oz Au
957
Capital Costs
Unit
LOM Total/Avg.
Initial Capital
US$M
190
Expansion Capital
US$M
8
Sustaining Capital
US$M
101
Closure Costs
US$M
30
Salvage Value
US$M
12
Financials – Pre-Tax
Unit
LOM Total/Avg.
Net Present Value (5%)
US$M
297
Internal Rate of Return
%
26.9
Payback
years
3.3
Financials – Post-Tax
Unit
LOM Total/Avg.
Net Present Value (5%)
US$M
212.4
Internal Rate of Return
%
22.8
Payback
years
3.6
Notes:
1. Cash costs consist of mining costs, processing costs, mine-level G&A and treatment and refining charges, and royalties.
2. All-in sustaining costs include cash costs plus expansion capital, sustaining capital, closure costs and salvage value.
Source: Ausenco, 2023.
Mining and Metallurgy
The deposit is amenable to open pit mining practices. Mine production planning is based on conventional drill/blast/load/haul open pit mining methods suited for the
project location and local site requirements. The open pit activities are designed for approximately two years of construction followed by 12 years of operations.
The PEA mine production plan estimates a total LOM mill feed of 31,128 kt of mineralized rock at an average feed grade of 0.88 g/t Au. Based on the current
mineralized rock extents, the pit design results in a 3.9 waste to mineralize rock ratio.
Pit designs are configured on
5 m
bench heights, with minimum
8 m
wide berms placed every four benches, or quadruple benching. Slopes of 25 degree are
applied in the thin overburden layer above the deposit bedrock. Since there has been no geotechnical test work or analysis completed on the bedrock, the applied
bench face and inter-ramp angles, 70-75 degrees and 50-55 degrees respectively, are scoping level assumptions based only on the rock type and overall depth
of the open pit.
Resource from the open pit will report to a ROM pad and primary crusher directly northeast of the pit rim. The mill will be fed with material from the pits at an
average rate of 2.5 Mt/a (6.8 kt/d), increasing to 3.0 Mt/a (8.2 kt/d) after four years of operation. Resources mined in excess of mill feed targets will be stored in
a low grade stockpile directly south of the ROM pad, and east of the open pit. This stockpile is planned to be completely reclaimed to the mill at the end of the
mine life. Waste rock will be placed in one of two facilities, each planned as a comingled facility with the processed tailings.
The mine production schedule is summarized in Figure 3 below. The overall site layout is shown in Figure 4.
Figure 3: Mine Production Schedule Summary (CNW Group/Freeman Gold Corp.)
Figure 4: Overall Site Layout. Source: Ausenco, 2023. (CNW Group/Freeman Gold Corp.)
A number of metallurgical test programs have been completed on the Lemhi Gold Project since 1994. A summary of the test programs is presented in Table 3.
Table 3- Summary of Metallurgical Test Programs
Year
Laboratory
Description
1994
Kappes Cassiday, Reno
Phase 1 - column leach, bottle roll tests on 7 composites
1995
Kappes Cassiday, Reno
Phase 2 - column leach, bottle roll tests on 1 composite
1995
Kappes Cassiday, Reno
Phase 3 - column leach, bottle roll tests on 2 composites
2021
SGS, Vancouver
11 samples tested in 2 phases; included gravity, bottle roll, flotation,
comminution. Additional phase of variability testing - 26 samples
Solid/Liquid separation
2023
Base Met, Kamloops
comminution on 5 samples
gravity and leach testing on 2 master composites
CN detox and dewatering testing
The process flowsheet for the Lemhi Gold project was selected based on the metallurgical test work results and flowsheet trade off study and was tailored to
support the ramp-up of the plant throughput in Year 5 and a production profile over the life of mine. The unit operations selected are standard technologies used in
gold processing plants. The proposed flowsheet uses conventional equipment for the following circuits which include crushing/grinding, leaching/carbon adsorption,
carbon desorption/electrowinning/refining and cyanide destruction/wet tailings deposition.
The process design is comprised of the following circuits: primary crushing of run-of-mine (ROM) material; semi-autogenous grinding (SAG) mill followed by ball
mill with cyclone classification; leach and carbon-in-leach adsorption; acid washing and elution of loaded carbon; electrowinning and smelting to produce doré;
carbon regeneration; and cyanide destruction and wet tailings disposal.
Capital & Operating Costs
The capital cost estimate conforms to Class 5 guidelines for a PEA-level estimate accuracy according to the Association for the Advancement of Cost Engineering
International (AACE International). The capital cost estimate was developed in Q2 2023 United States dollars based on Ausenco's in-house database of projects
and studies, budget pricing for equipment, as well as experience from similar operations.
The estimate includes open pit mining, processing, on-site infrastructure, tailings and waste rock facilities, off-site infrastructure, project indirect costs, project
delivery, Owner's costs, and contingency. The capital cost summary is presented in Table 4. The total initial capital cost for the Lemhi Project is
US$190
.2 M; and
life-of-mine sustaining costs are
US$101
.2 M. The cost of expansion in fifth year is estimated at
US$7
.6 M. Closure costs are estimated at
US$29
.9 M, with
salvage credits of
US$12
.0 M.
Table 4: Summary of Capital Cost
WBS
WBS Description
Initial Capital Cost
(US$M)
Sustaining
Capital Cost LOM
(US$M)
Expansion Cost
(US$M)
Total Capital
Cost LOM
(US$M)
1000
Mine
41.3
60.4
2.1
103.8
3000
Process Plant
67.0
1.7
3.5
72.2
4000
Tailings
10.2
37.9
-
48.1
5000
On-Site
Infrastructure
18.5
0.2
-
18.7
6000
Off-Site
Infrastructure
2.3
-
-
2.3
Total Directs
139.2
100.2
5.6
245.1
7100
Field Indirects
6.4
-
0.3
6.6
7200
Project Delivery
11.8
-
0.4
12.2
7500
Spares + First Fills
2.9
1.0
0.2
4.1
8000
Owner's Cost
3.7
-
-
3.7
Total Indirects
24.7
1.0
0.9
26.6
9000
Contingency
26.2
-
1.1
27.3
Project Total
190.2
101.2
7.6
298.9
Note: Totals may not sum due to rounding
The operating cost estimates was developed from first principles and applied to the mine production schedule. Productivity and cost inputs are derived from
historical reference data. and includes mining, processing, maintenance, power, and general and administration (G&A) costs. Table 5 provides a summary of the
project operating costs.
The overall life-of-mine operating cost is
US$670.3 M
over 11.2 years, or an average of
US$21.53
/t of material milled in a typical year.
Table 5: Operating Cost Summary
Area
Life-of-Mine Cost
(US$M)
LOM Annual Cost
(US$M)
LOM Unit Cost
(US$/t milled)
Mining
355.8
31.7
11.43
Process
281.2
25.0
9.03
G&A
33.2
3.0
1.07
Total
670.3
59.7
21.53
Note: Totals may not sum due to rounding
Sensitivity Analysis
A sensitivity analysis was conducted on the base case post-tax NPV and IRR of the project using the following variables: gold price, operating costs, and initial
capital costs. Table 6 summarizes the post-tax sensitivity analysis results.
Table 6: Post-Tax Sensitivity Analysis
Post-Tax NPV Sensitivity To Opex
Post-Tax IRR Sensitivity To Opex
Gold Price (US$/oz)
Gold Price (US$/oz)
$1,450
$1,600
$1,750
$1,900
$2,050
$1,450
$1,600
$1,750
$1,900
$2,050
(20.0 %)
148
217
285
353
422
(20.0 %)
18.0
23.2
27.9
32.5
36.8
Opex
(10.0 %)
111
180
249
317
385
Opex
(10.0 %)
15.0
20.4
25.4
30.1
34.5
--
74
144
212
281
349
--
11.9
17.6
22.8
27.6
32.1
10.0 %
37
107
176
244
313
10.0 %
8.5
14.6
20.1
25.1
29.7
20.0 %
(1)
70
139
208
276
20.0 %
4.9
11.4
17.2
22.4
27.2
Post-Tax NPV Sensitivity To Initial Capex
Post-Tax IRR Sensitivity To Initial Capex
Gold Price (US$/oz)
Gold Price (US$/oz)
Initial Capex
$1,450
$1,600
$1,750
$1,900
$2,050
Initial Capex
$1,450
$1,600
$1,750
$1,900
$2,050
(20.0 %)
113
182
251
319
388
(20.0 %)
17.1
23.8
29.8
35.4
40.7
(10.0 %)
94
163
232
300
368
(10.0 %)
14.3
20.4
26.0
31.1
36.0
--
74
144
212
281
349
--
11.9
17.6
22.8
27.6
32.1
10.0 %
55
124
193
262
330
10.0 %
9.8
15.2
20.1
24.6
28.9
20.0 %
36
105
174
242
311
20.0 %
7.9
13.1
17.8
22.1
26.1
Recommendations & Opportunities
Recommendations for upcoming work programs include a follow-up exploration and drilling program to expand the resource base at
Lemhi
, geotechnical studies in
the project area, additional test work to confirm recoveries, evaluation of a heap leach option, and further environmental and socio-economic baseline studies.
Qualified Persons
A team of Independent Qualified Persons (as such term is defined under NI 43-101) at Ausenco, MMTS and APEX has led the PEA and has reviewed and verified
the technical disclosure in this press release, including:
Kevin Murray
, P.Eng., of Ausenco is an independent QP for process and infrastructure capital and operating cost estimation, and project financials.
Peter Mehrfert, P.Eng., of Ausenco is an independent QP for the metallurgical test work and recovery model.
Scott Elfen, P.E., of Ausenco is an independent QP for the tailings and waste rock management facility.
James Millard
, P.Geo., of Ausenco is an independent QP for the environmental and permitting studies.
Michael Dufresne P.Eng
., of APEX is an independent QP for the geology and mineral resource estimate.
Marc Schulte
, P.Eng., of MMTS is an independent QP for the mine planning and cost estimation.
The scientific and technical information in this news release has been reviewed and verified by
Dean Besserer
, P.Geo., the Vice-President of Exploration for the
company and Qualified Person as defined in NI 43-101.
About the Company and Project
Freeman Gold Corp. is a mineral exploration company focused on the development of its 100% owned Lemhi Gold property (the "
Project
"). The Project
comprises 30 square kilometres of highly prospective land, hosting a near-surface oxide gold resource. The pit constrained mineral resource prepared in
accordance with National Instrument 43-101 ("
NI 43- 101
"), comprises 988,100 oz gold ("
Au
") at 1.0 grams per tonne ("
g/t
") in 30.02 million tonnes (Measured &
Indicated) and 256,000 oz Au at 1.04 g/t Au in 7.63 million tonnes (Inferred). The Company is focused on growing and advancing the Project towards a production
decision.
Ausenco is a global diversified engineering, construction and project management company providing consulting, project delivery and asset management solutions
to the resources, energy, and infrastructure sectors. Ausenco's experience in gold projects ranges from conceptual, pre-feasibility and feasibility studies for new
project developments to project execution with EPCM and EPC delivery. Ausenco is currently engaged on a number of global projects with similar characteristics
and opportunities to the Lemhi Gold Project.
On Behalf of the Company
William Randall
President and Chief Executive Officer
Neither the 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.
Forward-Looking Statements:
This press release contains "forward
looking information or statements" within the meaning of Canadian securities laws, which
may include, but are not limited to statements relating to exploration, results therefrom, and the Company's future business plans. All statements in this release,
other than statements of historical facts that address events or developments that the Company expects to occur, are forward-looking statements. Forward-
looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects," "plans", "anticipates",
"believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur.
Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not
guarantees of future performance and actual results may differ from those in the forward-looking statements. Such forward-looking information reflects the
Company's views with respect to future events and is subject to risks, uncertainties, and assumptions. For a more complete discussion of such risk factors and
their potential effects, the reader is urged to refer to the Company's reports, publicly available under the Company's profile on SEDAR+ at
www.sedarplus.ca
,
the Canadian Securities Administrator's national system that all market participants use for filings and disclosure. The Company does not undertake to update
forward
looking statements or forward
looking information, except as required by law.
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For further information:
Visit the Company's website at www.freemangoldcorp.com or contact Mr. Bassam Moubarak by email at [email protected].
CO: Freeman Gold Corp.
CNW 09:10e 16-OCT-23