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Auryn Delivers Positive Preliminary Economic Assessment for Homestake
Ridge Gold Deposit
US$108 Million NPV 5% with IRR of 23.6% at US$1,350/oz Gold; US$670/oz gold AISC1
US$173 Million NPV 5% with 32% IRR at US$1,620/oz Gold
US$88 Million Pre-Production Capital Expenditures
Vancouver, Canada – April 15th, 2020 – Auryn Resources Inc. (TSX: AUG, NYSE American: AUG)
(“Auryn” or the “Company”) is pleased to announce positive results from an independent preliminary
economic assessment (PEA) and an updated resource estimate for its 100% owned 7,500 hectare
Homestake Ridge gold project located in the prolific Iskut-Stewart-Kisault gold belt in northwestern British
Columbia, Canada (Figure 1). The PEA demonstrates the project’s potential to become a high-grade, small
footprint, underground gold mine with positive economics and upside potential from both a rising gold price
and prospective expansion. The PEA presentation can be viewed by clicking here, and a visualization of the
Life Of Mine (LOM) model can be viewed here.
A Message from Ivan Bebek, Executive Chairman and Director:
“This is an early look into the Homestake Ridge high-grade gold project’s current value, which demonstrates
a highly profitable deposit with a low capex in an established mining jurisdiction, and importantly, it is open
for considerable expansion.
“We took a conservative approach in our study to see the project’s resilience at $1,350 gold, which
generated a 23.6% IRR, however, at $1,620 gold the project generates an IRR of 32% and an NPV of over
US$173 million.
“The Homestake Ridge gold project is a valuable part of our portfolio, which also includes multiple tier-one
exploration opportunities, such as Sombrero and Curibaya in southern Peru and Committee Bay in northern
Canada. We are very much looking forward to advancing our portfolio as we continue to see improving metal
prices.”
1 All-in sustaining cost (“AISC”) is a Non-GAAP measure. The Company has calculated AISC using operating costs (Table 3)
as a basis, and then adjusting it in accordance with the World Gold Council guidance.
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PEA Summary:
Base Case: $1,350/oz gold, $12/oz silver, $3.00/pound copper, $1.00/pound lead and an
exchange rate of 0.70 (US$/C$)
Net present value (NPV 5%) after tax and mining duties US$108 million
Internal rate of return (IRR) after tax 23.6%
Pre-production capital costs US$88 million
After tax payback period 36 months
All in sustaining costs (AISC) per ounce gold US$670
PEA life of mine (LOM) 13 years
LOM metal production gold equivalent ounces 590,040 AuEq ounces
LOM average diluted head grade 6.42g/t AuEq
Peak year annual production (year three) 88,660 AuEq ounces
Average LOM payable production 45,400 AuEq ounces
LOM mineralized material mined 3.4 Million tonnes
Mining scenario tonnes per day 900 tonnes
The Company cautions that the PEA is preliminary in nature in that it includes Inferred Mineral
Resources which are considered too speculative geologically to have the economic considerations
applied to them that would enable them to be characterized as mineral reserves, and there is no
certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have
demonstrated economic viability.
The PEA was prepared in accordance with National Instrument 43-101 (“NI 43-101”) by MineFill Services
Inc. of Seattle, WA with other contributors including Roscoe Postle Associates Inc. (RPA), now part of SLR
Consulting Ltd. (SLR), (QP for updated mineral resource estimate) and One-Eighty Consulting Group
(environmental, permitting and social). The Company plans to file the PEA on SEDAR
at www.sedar.com within 45 days in accordance with NI 43-101.
Updated Mineral Resource Estimate:
The PEA is based on an updated mineral resource estimate that was prepared in-house by Auryn and
audited by RPA using block models constrained to new geological wireframes. Grades for gold, silver, lead,
arsenic and antimony were estimated using Inverse Distance (ID3) weighting. Two block models were
constructed in Leapfrog Geo Edge software: one for the Homestake Main and Silver deposits and the other
for South Reef.
The updated mineral resource estimate was developed using a revised geological model based on a
complete re-log of the deposits that defined the geometry of breccia bodies and vein arrays that were
successfully traced both laterally and vertically within the deposits. These resulting geometries provided
additional confidence in tracing high-grade mineralization within the deposits. The resource remains open for
expansion at depth and along strike (Figure 2). The updated mineral resource estimate demonstrates higher
grades with a decrease in tonnes as compared to the previous resource estimate dated September 1, 2017
(detailed in a Canadian National Instrument 43-101 Technical Report dated September 29, 2017 as
amended October 23, 2017 and filed on SEDAR) with overall metal content largely unchanged. The updated
2019 mineral resource estimate is summarized in Table 1.1 below:
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Table Error! No text of specified style in document..1 Mineral Resource by Zone – Effective Date:
December 31, 2019
Average Grade Metal Content
Classification Zone Tonnage
Mt Gold g/t Silver
g/t
Copper
%
Lead
%
Gold
oz
Silver
Moz
Copper
Mlb
Lead
Mlb
Indicated HM 0.736 7.02 74.8 0.18 0.077 165,993 1.8 2.87 1.25
Total Indicated 0.736 7.02 74.8 0.18 0.077 165,993 1.8 2.87 1.25
Inferred HM 1.747 6.33 35.9 0.35 0.107 355,553 2.0 13.32 4.14
HS 3.354 3.13 146.0 0.03 0.178 337,013 15.7 2.19 13.20
SR 0.445 8.68 4.9 0.04 0.001 124,153 0.1 0.36 0.00
Total Inferred 5.545 4.58 100.0 0.13 0.142 816,719 17.8 15.87 17.34
Notes:
1. Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards for Mineral Resources
and Mineral Reserves dated May 10, 2014 (CIM (2014) definitions), as incorporated by reference in NI 43-
101, were followed for Mineral Resource estimation.
2. Mineral Resources are estimated at a cut-off grade of 2.0 g/t AuEq.
3. AuEq values were calculated using a long-term gold price of US$1,300 per ounce, silver price at US$20
per ounce and copper price at US$2.5 per pound and an exchange rate of US$/C$1.20. The AuEq
calculation included provisions for metallurgical recoveries, treatment charges, refining costs and
transportation.
4. Bulk density ranges from 2.69 t/m3 to 3.03 t/m3, depending on the domain.
5. Differences may occur in totals due to rounding.
6. The Qualified Person responsible for this mineral resource estimate is Philip A. Geusebroek, P. Geo.,
RPA.
The Mineral Resource sensitivity to cut-off grade is shown on Table 1.2 below.
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Table Error! No text of specified style in document..2 Mineral Resource Sensitivity by Cut-Off Grade
Average Grade Metal Content
Cut-off g/t
AuEq
Tonnage
Mt
Gold
g/t
Silver
g/t
Copper
%
Lead
%
Gold
oz
Silver
Moz
Copper
Mlb
Lead
Mlb
Total Indicated
5.0 0.372 10.99 131.3 0.20 0.120 131,463 1.6 1.7 0.99
4.0 0.465 9.57 111.2 0.20 0.105 142,911 1.7 2.0 1.07
3.0 0.592 8.18 90.5 0.19 0.090 155,730 1.7 2.5 1.18
2.0 0.736 7.02 74.8 0.18 0.077 165,993 1.8 2.9 1.25
1.0 0.862 6.19 65.2 0.17 0.069 171,441 1.8 3.1 1.32
Total Inferred
5.0 2.158 8.25 145.7 0.21 0.216 572,444 10.1 9.8 10.26
4.0 2.972 6.78 133.4 0.18 0.189 648,212 12.8 11.9 12.36
3.0 4.136 5.52 118.6 0.15 0.163 734,275 15.8 14.0 14.84
2.0 5.545 4.58 100.0 0.13 0.142 816,719 17.8 15.9 17.34
1.0 6.448 4.09 90.9 0.12 0.127 847,996 18.9 17.0 18.07
PEA Project Overview:
To-date the project has been investigated with more than 275 drill holes, totaling more than 90,000 meters.
In addition to the three known zones of mineralization, multiple exploration targets remain to be tested. The
PEA envisions a 900 tonne per day underground mining operation spanning a 13-year mine life based on a
mine plan using a gold price of US$1,300/oz. Mining would commence in the larger Homestake Main zone
first, followed by the Homestake Silver zone around year six and finally the South Reef zone. The material
would be treated in a conventional crushing, grinding and flotation plant to produce a copper concentrate, a
lead/zinc concentrate and finally Au-Ag dore from cyanide leaching of regrind tailings.
Mining and Processing:
The mine plan and production schedule were developed in Deswik mine stope optimizer software (MSO).
The principal mining method in the MSO runs was overhand longhole retreat mining on 20-meter sublevel
intervals. The minimum mining width was 2.5 meters and a mining cutoff grade of 3.5 g/t AuEq was used to
develop the stope wireframes. An ELOS (equivalent linear overbreak) of 0.25 meters was added at the
hanging-wall and footwall to account for dilution.
Processing of the Homestake Ridge mineralization is determined by the difference in metal contents across
the three deposits included in the study. Given that 97% of the metal value is gold and silver, the realization
of the value of the Homestake Ridge deposits will be dependent on the recovery of precious metals. Based
on recent metallurgical test work, the optimal processing stream appears to be campaign processing of each
deposit in sequence, rather than blending. The flowsheet thus consists of an initial rougher flotation to
produce a base metal concentrate, followed by secondary flotation to produce a pyrite concentrate. The
pyrite concentrate is then reground and subjected to cyanide leaching to recover the remaining gold and
silver in rougher tailings.
The Homestake Main mineralization would be processed first to produce a copper concentrate rich in gold,
then Homestake Silver to produce a lead/zinc concentrate rich in silver and finally South Reef to produce a
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gold concentrate. The metallurgical recoveries are estimated to be 86% for gold, 74% for silver, 70% for
copper and 66% for lead.
Capital and Operating Costs:
The pre-production capital is estimated at US$88 million (CAD$126 million) with US$86 million (CAD$123
million) in sustaining capital, primarily capitalized development underground. The PEA is based on owner-
operated equipment and manpower. A contingency of 15% has been applied to all direct costs. Details of the
pre-production and sustaining capital are shown on Table 2 below:
Table 2: Capital Cost Summary
Expenditure Initial (US$M) Sustaining (US$M)
Mining Equipment $3.0 $2.1
Surface mobile equipment $3.5 $2.5
Capitalized Underground Development $66.4
Tailings $8.4
Site Development – Roads, Airport $6.3
Camp Facilities $3.2
Site Infrastructure $3.5
Power Supply $8.4
Process Plant $26.2
Access Upgrades – barge landing and roads $2.1
EPCM costs – 15% of directs $8.7
Owner Costs – 10% of directs $5.8
Reclamation – tailings $3.5
Closure $3.5
Water Treatment $1.4
Environmental Permits/Baseline Data $0.6
End of Life Salvage ($3.5)
Operating costs were developed from unit costs for projects of a similar scale in Canada and translated to
USD at an exchange rate of 0.70 (US$/C$). A summary of the operating costs is shown in Table 3 below.
Table 3: Operating Cost Summary
Area Unit Cost (US$) Life-of-Mine (US$)
Mining ($/t mined) $63.50 $182.9 million
Processing ($/t milled) $21.00 $71.9 million
General and Administration ($/t) $14.00 $48.0 million
Environmental/Water Treatment $0.82 $2.8 million
Community/Social $0.17 $0.6 million
Total Operating Costs ($/t milled) $89.39 $306.2 million
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Project Economics and Sensitivity Analyses:
The following tables illustrate the PEA project economics and the sensitivity of the project to changes in the
base case metal prices, operating costs and capital costs. As is typical with precious metal projects, the
project is most sensitive to metal prices, followed by operating costs and initial capital costs.
Table 4: Project Economics at $1,350 Gold
NPV at 0%
(US$M)
NPV at 5%
(US$M)
NPV at 7%
(US$M) IRR Payback (Mo)
Before Tax $278 $170 $140 30.1% 26
After Tax $184 $108 $87 23.6% 36
Table 5: Metal Price Sensitivity – After-Tax
Gold
Price
(US$/oz)
Silver
Price
(US$/oz)
NPV at 0%
(US$M)
NPV at 5%
(US$M) IRR Payback
(Mo)
40% $1,890 $16.80 $373 $239 39.4% 31
30% $1,755 $15.60 $326 $206 35.8% 32
20% $1,620 $14.40 $278 $173 32.0% 33
10% $1,485 $13.20 $231 $141 28.0% 34
Base
Case $1,350 $12.00 $184 $108 23.6% 36
-10% $1,215 $10.80 $137 $75 18.8% 40
-20% $1,080 $9.60 $90 $42 13.2% 46
-30% $945 $8.40 $39 $6 6.4% 75
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Table 6: Operating Cost Sensitivity – After-Tax
NPV at 0%
(US$M)
NPV at 5%
(US$M) IRR Payback (Mo)
20% $145 $82 20.1% 39
10% $165 $95 21.9% 38
Base Case $184 $108 23.6% 36
-10% $203 $121 25.3% 35
-20% $223 $134 26.9% 35
Table 7: Capital Cost Sensitivity – After-Tax
NPV at 0%
(US$M)
NPV at 5%
(US$M) IRR Payback (Mo)
20% $149 $79 17.1% 43
10% $167 $93 20.1% 40
Base Case $184 $108 23.6% 36
-10% $201 $128 27.7% 34
-20% $219 $137 32.5% 33
Indigenous and Community Relations:
The pursuit of environmentally sound and socially responsible mineral development guides all of Auryn’s
activities as the Company understands the broad societal benefits that responsible mining can bring, as well
as the risks that must be managed through the implementation of sustainable development practices. Auryn
strives to maintain the highest standards of environmental protection and community engagement at all of its
projects.
Auryn considers sustainability to include the pursuit of three mutually reinforcing pillars: environmental and
cultural heritage protection; social and community development; and, economic growth and opportunity. The
Company assesses the environmental, social and financial benefits and risks of all our business decisions
and believes this commitment to sustainability generates value and benefits for local communities and
shareholders alike.
Auryn places a priority on creating mutually beneficial, long-term partnerships with the communities and
countries in which it operates, and with its shareholders, respecting their interests as its own. At the
community level, the Company works to establish constructive partnerships to address and contribute to
local priorities and interests and ensure that local people benefit both socially and economically from its
activities.
Auryn has undertaken early and ongoing engagement with respect to the Homestake Ridge gold project
since January 2017. Engagement goals include providing Indigenous groups, residents of nearby
communities and other regional interests with corporate and project-related information, details of work
programs and other activities being undertaken in the field, project updates and opportunities for feedback
and local involvement in the Homestake Ridge project.
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Auryn’s approach to Indigenous and stakeholder engagement provides opportunities and benefits through:
• the provision of jobs and training programs
• contracting opportunities
• capacity funding for Indigenous engagement
• sponsorship of community events
Members of local Indigenous groups comprise approximately 40% of Auryn’s Homestake Ridge project
team. Two of our primary contractors are local Indigenous-owned companies. Auryn and the Nisga’a Lisims
Government entered into a Confidentiality Agreement in January 2020. The parties look forward to a
collaborative relationship based on mutual respect and a desire for economic prosperity generated by
responsible natural resource development in British Columbia.
Figure 1: Illustrates the general location and access to infrastructure at the Homestake Ridge project.