GoGold Announces Filing of PEA Technical Report for Los Ricos South
GoGold Announces Filing of PEA Technical Report for Los
Ricos South
Shares Outstanding: 265,551,467
Trading Symbols: TSX: GGD
OTCQX: GLGDF
HALIFAX, NS
,
Feb. 22, 2021
/CNW/ -
GoGold Resources Inc. (TSX: GGD) (OTCQX: GLGDF) ("GoGold", "the
Company")
is pleased to announce the filing of a National Instrument 43-101 Preliminary Economic Assessment ("PEA")
Technical Report (the "Report") for their Los Ricos South Project located in Jalisco State, Mexico. The highlights of the
Report were previously announced in a news release dated
January 20, 2021
, and the effective date of the Report is
February 22, 2021
.
Highlights of the PEA, with a base case silver price of
US$21
/oz and gold price of
US$1,550
/oz are as follows (all figures in
US dollars unless otherwise stated):
After-Tax NPV (using a discount rate of 5%) of
$295 Million
with an After-Tax IRR of 46% (Base Case);
11-year mine life producing a total of 69.6 million payable silver equivalent ounces ("AgEq"), consisting of 42.9 million
silver ounces, 352,000 gold ounces and 4.5 million copper pounds;
Initial capital costs of
$125 million
, including
$16 million
in contingency costs, over an expected 18 month construction
period, and additional sustaining capital costs of
$62 million
over the life of mine ("LOM");
Average LOM operating cash costs of
$8.65
/oz AgEq, and all in sustaining costs ("AISC") of
$11.35
/oz AgEq
At approximate spot metal prices of
$24.40
silver/oz and
$1,800
gold/oz, provides an After-Tax NPV (using a discount
rate of 5%) of
$408 million
and an After-Tax IRR of 58%;
Average annual production of 8.7 million AgEq in years two through six;
Approximately 2/3 of LOM production is open pit ("OP"), and approximately 1/3 is bulk underground ("UG") mining;
22 months from project acquisition to PEA, including initial Mineral Resource on first target at Los Ricos South.
"We are advancing Los Ricos South towards Pre-Feasibility and towards a mine in parallel with our
100,000m
drill program at
Los Ricos North to define Mineral Resources and new discoveries," said
Brad Langille
, President and CEO. "We see the Los
Ricos district unfolding into continued value creation for our shareholders in 2021 and beyond."
What's Next for Los Ricos South
In 2021, the Company will continue the engineering studies required for a Pre-Feasibility Study. These studies include further
defining the capital and operating costs including geotechnical drilling and bedrock studies, civil earthworks, metallurgical
studies, and socio-economic programs with the local, State and Federal authorities.
PEA Summary
The PEA was prepared by the independent firm P&E Mining Consultants Inc. ("P&E"), with metallurgical test work completed
by SGS Canada Inc.'s
Lakefield
office ("SGS"), geotechnical study by Golder & Associates of
Tucson
, process plant design
and costing by D.E.N.M. Engineering Ltd., and environmental and permitting led by CIMA
Mexico
.
Following are tables showing key assumptions, results, and sensitivities.
Table 1 – Los Ricos South PEA Key Economic Assumptions and Results
Assumption / Result
Unit
Value
Assumption / Result
Unit
Value
Total OP Plant Feed Mined
kt
10,228
Net Revenue
US$M
1,437.6
Total UG Plant Feed Mined
kt
4,983
Initial Capital Costs
US$M
125.1
Total Plant Feed Mined
kt
15,211
Sustaining Capital Costs
US$M
62.3
Operating Strip Ratio
Ratio
7.7
OP Mining Costs
$/t Feed
18.33
Silver Grade
1
g/t
99.59
UG Mining Costs
$/t Feed
30.31
Gold Grade
1
g/t
0.78
LOM Mining Costs
$/t Feed
22.32
AgEq Grade
1
g/t
157.31
Operating Cash Cost
US$/oz AgEq
8.65
Silver Recovery
%
88
All in Sustaining Cost
US$/oz AgEq
11.35
Gold Recovery
%
93
Mine Life
Yrs
11
Silver Price
US$/oz
21
Average process rate
t/day
5,000
Gold Price
US$/oz
1,550
After-Tax NPV (5% discount)
US$M
295.0
Copper Price
US$/lb
3
Pre-Tax NPV (5% discount)
US$M
465.9
Payable Silver Metal
Moz
42.9
After-Tax IRR
%
45.8
Payable Gold Metal
koz
352.9
Pre-Tax IRR
%
64.1
Payable Copper
Mlb
4.5
After-Tax Payback Period
Yrs
2.0
Payable AgEq
Moz
69.6
1.
Grades shown are LOM average feed grades including both OP and UG sources. Dilution of approximately 15% for OP material and 34% for UG material was used.
Table 2 – Los Ricos South PEA Gold and Silver Price Sensitivities
Sensitivity
Base
Case
Gold Price (US$/oz)
1,200
1,300
1,450
1,550
1,650
1,800
2,000
Silver Price (US$/oz)
16.26
17.61
19.65
21.00
22.35
24.39
27.10
After-Tax NPV (5%) (US$M)
136.5
181.8
249.7
295.0
340.2
408.1
498.7
After-Tax IRR (%)
26.5
32.4
40.6
45.8
50.8
58.1
67.4
After-Tax Payback (years)
3.6
3.0
2.5
2.0
1.9
1.8
1.7
Table 3 – Los Ricos South PEA Operating Expense and Capital Expense Sensitivities
Sensitivity
-20%
-10%
Base
Case
10%
20%
Operating Costs – NPV (US$M)
352.3
323.6
295.0
266.3
237.6
Operating Costs – IRR (%)
52.2
49.0
45.8
42.5
39.1
Capital Costs – NPV (US$M)
318.4
306.7
295.0
283.2
271.5
Capital Costs – IRR
56.9%
50.3%
45.8%
40.2%
36.1%
Capital and Operating Costs
The Los Ricos South Project has been envisioned as a combined open pit and underground mining operation, with contract
open pit mining in years one to six of the mine plan, and contract underground mining in years six to eleven.
The processing plant is comprised of conventional crushing and grinding followed by cyanide tank leaching. Back end filtration
is required to maximize water recycling (dry stack tailings) as well as a SART (sulfidation, acidification re-neutralization and
thickening) circuit to re-generate cyanide back to the process and to produce a saleable Cu
2
S copper sulfide product. Water
supply to the process plant is provided by a nearby seasonally charged water dam and high voltage grid power is provided by
the local utility.
Key components of the capital cost estimate are provided in Table 4 and operating costs are provided in Table 5.
Table 4 – Capital Cost Estimate
Initial Capital
Cost (US$M)
Sustaining Capital
Cost (US$M)
Plant direct costs
68,008
Underground Development
45,723
Pre-stripping
17,628
Plant Direct Costs
7,800
Project indirect costs
9,098
Open Pit Development
680
EPCM
9,187
Infrastructure
4,890
Total
108,811
Total
54,203
Contingency (15%)
16,321
Contingency (15%)
8,130
Total – Initial Capital
125,132
Total – Sustaining Capital
62,333
Capital – Initial & Sustaining
187,465
Table 5 – Operating Costs (Average LOM)
Operating Costs (Average LOM)
US$/tonne
Plant Feed
US$/tonne
Rock
Open Pit Mining
1
18.33
1.89
Underground Mining
2
30.31
Total LOM Mining
3
22.32
Processing ($/t processed)
16.26
General and admin ($/t processed)
1.54
Total ($/t processed)
40.12
1.
Open pit mining costs include a double-benched waste rock of $1.82/t and mineralized material cost of $2.52/t.
2.
Bulk underground long hole mining. $30.31 is the cost of in-stope mining, additional development costs of $12.35/t mined are included in sustaining capital in table 4, providing a total UG mining cost of $42.66/t.
3.
Average LOM mining cost of both open pit and underground.
Mining
The open pit mining will be contracted and carried out by drill and blast followed by conventional loading and truck haulage to
the waste rock storage facilities and the processing plant. The contract underground mining will involve long hole stoping and
cemented paste back filling of the mined-out stopes. A cement reinforced plug will be placed in the bottom of the open pits
after they are mined out to provide additional support for underground mining of the crown pillars to maximize mineralized
material recovery.
Metallurgy
A metallurgical test program was carried out by SGS Lakefield of
Ontario, Canada
. The program included grinding and
leaching as well as comminution testing. The leach samples comprised of drill core sampling rejects representing the various
zones of the Mineral Resource and whole HQ drill core for the comminution work. This preliminary test program estimated a
gold and silver respective metallurgical recoveries of 93% and 88%.
Surface Rights Agreement
The Company has an agreement with the
Ejido
of
Cinco Minas
, which owns the surface rights over all of those concessions
included in this PEA. The agreement allows GoGold to mine and explore the 1,280 hectares of land that is owned by the local
Ejido
for a period of twelve years with an option to renew for a further twelve years.
Mineral Resource Estimate
The basis for the PEA is the Mineral Resource Estimate completed by P&E in the National Instrument 43-101 Technical
Report on the Initial Mineral Resource Estimate for the Los Ricos South Project located in Jalisco State,
Mexico
, which has an
effective date of
July 28
, 2020. A summary of the Mineral Resource Estimate is provided in Table 6.
Table 6: Los Ricos South Mineral Resource Estimate – Pit Constrained and Out-of-Pit
(1-8)
Mining
Method
Category
Tonnes
Average Grade
Contained Metal
Au
Ag
AuEq
AgEq
Au
Ag
AuEq
AgEq
(M)
(g/t)
(g/t)
(g/t)
(g/t)
(koz)
(koz)
(koz)
(koz)
Pit Constrained
5
Measured
1.1
1.10
152
2.84
249
39
5,464
102
8,917
Indicated
8.7
0.89
113
2.18
191
247
31,681
610
53,330
Measured & Indicated
9.8
0.91
118
2.26
197
287
37,146
711
62,243
Inferred
2.3
0.75
73
1.58
138
56
5,421
118
10,296
Out-of-Pit
6,7
Indicated
0.2
1.23
185
3.35
293
6
907
16
1,434
Inferred
0.9
1.21
209
3.60
315
37
6,360
110
9,588
Total
Measured
1.1
1.10
152
2.84
249
39
5,464
102
8,917
Indicated
8.8
0.89
115
2.20
193
253
32,588
626
54,765
Measured & Indicated
10.0
0.91
119
2.27
199
293
38,053
728
63,677
Inferred
3.3
0.88
112
2.17
190
93
11,781
227
19,884
1.
Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-
political, marketing, or other relevant issues.
2.
The Inferred Mineral Resource in this estimate has a lower level of confidence than that applied to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority
of the Inferred Mineral Resource could be upgraded to an Indicated Mineral Resource with continued exploration.
3.
The Mineral Resources in this news release were estimated in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and
Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by the CIM Council.
4.
Historically mined areas were depleted from the Mineral Resource model.
5.
The pit constrained AuEq cut-off grade of 0.43 g/t Au was derived from US$1,400/oz Au price, US$16/oz Ag price, 93% process recovery, US$18/tonne process and G&A cost. The constraining pit optimization
parameters were $2.00/t mineralized mining cost, $1.50/t waste mining cost and 50-degree pit slopes.
6.
The out-of-pit AuEq cut-off grade of 1.4 g/t Au was derived from US$1,400/oz Au price, US$16/oz Ag price, 93% process recovery, $40/t mining cost, US$18/tonne process and G&A cost. The out-of-pit Mineral
Resource grade blocks were quantified above the 1.4 g/t AuEq cut-off, below the constraining pit shell and within the constraining mineralized wireframes. Out–of-Pit Mineral Resources are restricted to the Los Ricos and
Rascadero Veins, which exhibit historical continuity and reasonable potential for extraction by cut and fill and longhole mining methods.
7.
No out-of-pit Mineral Resources are classified as Measured.
8.
AgEq and AuEq were calculated at an Ag/Au ratio of 87.5:1.
Qualified Persons
Robert Harris
, P.Eng. and
David Duncan
, P.Geo. are the GoGold Qualified Persons and
Eugene Puritch
, P.Eng., FEC, CET,
president of P&E Mining Consultants Inc. is the Independent Qualified Person all as defined by National Instrument 43-101 and
whom are responsible for the technical information in this press release.
VRIFY Slide Deck and 3D Presentation
VRIFY is a platform being used by companies to communicate with investors using 360° virtual tours of remote mining assets,
3D models and interactive presentations. VRIFY can be accessed by website and with the VRIFY iOS and Android apps.
Access the GoGold Company Profile on VRIFY at:
https://vrify.com
The VRIFY Slide Deck and 3D Presentation for GoGold can be viewed at:
https://vrify.com/explore/decks/9404
and on the
Company's website at:
www.gogoldresources.com
.
Los Ricos District Exploration Projects
The Company's two exploration projects at its Los Ricos Property are in Jalisco State, Mexico. The Los Ricos South Project
began in
March 2019
and includes the 'Main' area, which is focused on drilling around a number of historical mines including
El
Abra
, El Troce,
San Juan
, and Rascadero, as well as the
Cerro Colorado
, Las Lamas and East Vein targets. An initial
Mineral Resource on the Los Ricos South project was announced on
July 29, 2020
and indicated a Measured & Indicated
Mineral Resource of 63.7 million ounces AgEq grading 199 g/t AgEq contained in 10.0 million tonnes, and an Inferred Mineral
Resource of 19.9 million ounces AgEq grading 190 g/t AgEq contained in 3.3 million tonnes. An initial PEA on the project was
announced on
January 20, 2021
indicating an NPV
5%
of
US$295M
.
The Los Ricos North Project was launched in
March 2020
and includes drilling at the El Favor, La Trini, and El Orito targets.
During 2020, GoGold's exploration team identified over 100 targets on the Los Ricos North properties, demonstrating the
significant exploration potential. The Company plans to drill 10 of these targets as part of its 2021 drilling program which is
planned to exceed 100,000 metres of drilling and will be one of the largest in
Mexico
.
About GoGold Resources
GoGold Resources (TSX: GGD) is a Canadian-based silver and gold producer focused on operating, developing, exploring
and acquiring high quality projects in Mexico. The Company operates the Parral Tailings mine in the
state of Chihuahua
and
has the Los Ricos South and Los Ricos North exploration projects in the state of
Jalisco
. Headquartered in
Halifax, NS
,
GoGold is building a portfolio of low cost, high margin projects. For more information visit
gogoldresources.com
.
CAUTIONARY STATEMENT:
The securities described herein have not been, and will not be, registered under the United States Securities Act of 1933, as
amended (the "U.S. Securities Act"), or any state securities laws, and may not be offered or sold within
the United States
or
to, or for the benefit of, U.S. persons (as defined in Regulation S under the U.S. Securities Act) except in compliance with the
registration requirements of the U.S. Securities Act and applicable state securities laws or pursuant to exemptions therefrom.
This release does not constitute an offer to sell or a solicitation of an offer to buy of any of GoGold's securities in
the United
States
.
This news release may contain "forward-looking information" as defined in applicable Canadian securities legislation. All
statements other than statements of historical fact, included in this release, including, without limitation, statements regarding
the Los Ricos South and North projects, and future plans and objectives of GoGold, including the NPV, IRR, initial and
sustaining capital costs, operating costs, and LOM production of Los Ricos South, constitute forward looking information that
involve various risks and uncertainties. Forward-looking information is based on a number of factors and assumptions which
have been used to develop such information but which may prove to be incorrect, including, but not limited to, assumptions in
connection with the continuance of GoGold and its subsidiaries as a going concern, general economic and market conditions,
mineral prices, the accuracy of Mineral Resource Estimates, and the performance of the Parral project. There can be no
assurance that such information will prove to be accurate and actual results and future events could differ materially from
those anticipated in such forward-looking information.
Important factors that could cause actual results to differ materially from GoGold's expectations include exploration and
development risks associated with GoGold's projects, the failure to establish estimated Mineral Resources or Mineral
Reserves, volatility of commodity prices, variations of recovery rates, and global economic conditions. For additional
information with respect to risk factors applicable to GoGold, reference should be made to GoGold's continuous disclosure
materials filed from time to time with securities regulators, including, but not limited to, GoGold's Annual Information Form. The
forward-looking information contained in this release is made as of the date of this release.
View original content to download multimedia:
http://www.prnewswire.com/news-releases/gogold-announces-filing-of-pea-technical-report-for-los-ricos-south-301232518.html
SOURCE
GoGold Resources Inc.
View original content to download multimedia:
http://www.newswire.ca/en/releases/archive/February2021/22/c1755.html
%SEDAR: 00029249E
For further information:
Steve Low, Corporate Development, GoGold Resources, T: 416 855 0435, E:
CO: GoGold Resources Inc.
CNW 16:15e 22-FEB-21