GoGold Announces NPV of US$413M for Los Ricos North Initial PEA
GoGold Announces NPV of US$413M for Los Ricos North
Initial PEA
Shares Outstanding: 326,138,511
Trading Symbols: TSX: GGD
OTCQX: GLGDF
HALIFAX, NS
,
May 17, 2023
/CNW/ -
GoGold Resources Inc.
(TSX: GGD) (OTCQX: GLGDF)
("GoGold", "the
Company")
is pleased to release the results of its initial Preliminary Economic Assessment ("PEA") at its Los Ricos North
Project located in Jalisco State,
Mexico
. This is the Company's second PEA completed within the Los Ricos District, in
addition to the Los Ricos South PEA completed in
January 2021
, with an updated Mineral Resource Estimate ("MRE") and
PEA for Los Ricos South expected to follow this summer.
Highlights of the PEA, with a base case silver price of
US$23
/oz and gold price of
US$1,800
/oz are as follows (all figures in
US dollars unless otherwise stated):
After-Tax NPV (using a discount rate of 5%) of
$413 Million
with an After-Tax IRR of 29% (Base Case);
13-year mine life producing a total of 110.3 Million payable silver equivalent ounces ("AgEq"), consisting of 68.0 Million
silver ounces, 221,700 gold ounces, 22.8 Million pounds of copper, 144.1 Million pounds of lead and 242.2 Million
pounds of zinc;
Initial capital costs of
$221 Million
, including
$29 Million
in contingency costs, over an expected 18 month build,
additional expansion capital of
$137 Million
, and sustaining capital costs of
$6 Million
over the life of mine ("LOM");
Average LOM operating cash costs of
$9.50
/oz AgEq, and all in sustaining costs ("AISC") of
$9.68
/oz AgEq
Average annual production of 8.8 Million AgEq oz in years one through twelve;
Approximately 3/4 of LOM production is from four open pits containing oxide mineralization and approximately 1/4 is
from a separate open pit which contains only sulphide mineralization.
"This is a first look at the strong economics around our Los Ricos North Mineral Resource with average annual production of
8.8 Million AgEq oz at a first quartile AISC of
$9.68
/oz AgEq. Los Ricos North forms a pipeline of growth after the
construction of Los Ricos South, which we see as a high grade bulk underground mine targeted to be our first deposit
advanced to production. We look forward to the updated Los Ricos South Mineral Resource including the Eagle Zone and
an updated PEA to be completed this summer," said
Brad Langille
, President and CEO. "The release of this PEA
represents one of the milestones for the 2023 year in the Los Ricos District. The other key milestones for the 2023 year in
the Los Ricos District are an updated Mineral Resource and PEA in Los Ricos South incorporating the Eagle Zone, followed
by a Pre-Feasibility Study in Los Ricos South which is anticipated before year's end. With
US$100 Million
in cash we are
well positioned to develop Los Ricos South pending the results of the upcoming studies."
PEA Summary
The PEA was prepared by independent consultants P&E Mining Consultants Inc ("P&E"), with metallurgical test work
completed by SGS Canada Inc.'s
Lakefield
office ("SGS"), process plant design and costing by D.E.N.M. Engineering Ltd.,
and environmental and permitting led by CIMA
Mexico
.
Table 1 below shows the key economic assumptions and results of the PEA, with Table 2 showing the physical attributes,
Table 3 showing a sensitivity analysis based on varying metal prices and assumptions, and Table 4 showing a sensitivity
analysis based on changes to operating and capital costs.
Table 1 – Los Ricos North PEA Key Economic Assumptions and Results
Assumption / Result
Unit
Value
Assumption / Result
Unit
Value
Total Oxide Feed Mined
kt
25,557
Net Revenue
US$M
2,307
Total Sulphide Feed Mined
kt
9,964
Initial Capital Costs
US$M
221
Total Plant Feed Mined
kt
35,521
Sustaining Capital Costs
US$M
143
Total Strip Ratio
Ratio
6.0
Mining Costs
$/t Mined
2.07
Mine Life
Yrs
13
Mining Costs
$/t Plant Feed
12.28
Average process rate
t/day
8,000
Operating Cash Cost
US$/oz AgEq
9.50
Silver Price
US$/oz
23.00
All in Sustaining Cost
US$/oz AgEq
9.68
Gold Price
US$/oz
1,800
After-Tax NPV (5% discount)
US$M
413
Copper Price
US$/lb
4.00
Pre-Tax NPV (5% discount)
US$M
645
Lead Price
US$/lb
1.00
After-Tax IRR
%
29.1
Zinc Price
US$/lb
1.40
Pre-Tax IRR
%
39.8
Payable AgEq
Moz
110.3
After-Tax Payback Period
Yrs
3.0
Table 2 – Los Ricos North PEA Summary of Physical Attributes
Attribute
Unit
Oxide
Sulphide
Total
Plant Feed Mined
kt
25,557
9,964
35,521
Silver Grade
1
g/t
83.2
30.1
68.3
Gold Grade
1
g/t
0.29
0.07
0.23
Copper Grade
1
%
-
0.12
0.12
Lead Grade
%
-
0.87
0.87
Zinc Grade
%
-
1.24
1.24
Silver Recovery
%
87
88
87
Gold Recovery
%
87
76
86
Copper Recovery
%
-
89
89
Lead Recovery
%
-
75
75
Zinc Recovery
%
-
89
89
Payable Silver
Moz
59.5
8.5
68.0
Payable Gold
koz
205.2
16.5
221.7
Payable Copper
Mlb
-
22.8
22.8
Payable Lead
Mlb
-
144.1
144.1
Payable Zinc
Mlb
-
242.2
242.2
Payable AgEq
Moz
75.5
34.8
110.3
1.
Grades shown are LOM average plant feed grades. Dilution of approximately 10% was used.
Table 3 – Los Ricos North PEA Metal Price Sensitivities
Sensitivity
Base
Case
Silver Price (US$/oz)
17
19
21
23
25
27
30
Gold Price (US$/oz)
1330
1487
1643
1800
1957
2113
2348
Copper Price (US$/lb)
2.96
3.30
3.65
4.00
4.35
4.70
5.22
Lead Price (US$/lb)
0.74
0.83
0.91
1.00
1.09
1.17
1.30
Zinc Price (US$/lb)
1.03
1.16
1.28
1.40
1.52
1.64
1.83
After-Tax NPV (5%) (US$M)
120
222
318
413
508
603
746
After-Tax IRR (%)
13.3
19.2
24.3
29.1
33.6
37.9
44.0
After-Tax Payback (years)
5.4
4.4
3.6
3.0
2.5
2.1
1.8
Table 4 – Los Ricos North Operating Expense and Capital Expense Sensitivities
Sensitivity
-20 %
-10 %
Base
Case
10 %
20 %
Operating Costs – NPV (US$M)
503
458
413
368
323
Operating Costs – IRR (%)
33.4
31.2
29.1
26.8
24.5
Capital Costs – NPV (US$M)
457
435
413
392
370
Capital Costs – IRR (%)
36.3
32.2
28.8
25.9
23.4
Capital and Operating Costs
The Los Ricos North Project has been envisioned as an open pit mining operation, with contract mining comprising five open
pits. The first four pits contain oxide mineralization and will be mined over years one to nine of the Project, with the final pit
containing sulphide mineralization which will be mined in years 10 to 13.
The processing plant is comprised of conventional crushing, grinding, cyanide tank leaching, tailings filtration (dry stack), and
Merrill Crowe
precipitation for the oxide mineralization. For the sulphide mineralization, processing will be completed through
a flotation circuit which is included in sustaining capital and will be constructed in year eight of the Project.
Water supply to the process plant will be provided by a nearby surface water source and high voltage grid power will be
provided by the local utility.
Key components of the capital cost estimate are provided in Table 5 and operating costs are provided in Table 6.
Table 5 – Capital Cost Estimate
Type
Initial
(US$K)
Expansion
(US$K)
1
Sustaining
(US$K)
Total
(US$K)
Process plant direct costs
141,020
25,864
5,000
171,884
Pre-stripping and haul roads
10,268
88,090
98,358
Project indirect costs
19,108
2,870
21,978
EPCM
13,792
2,328
16,120
Infrastructure
7,680
7,680
Total
191,869
119,151
5,000
316,020
Contingency (15%)
28,780
17,873
750
47,403
Total
220,649
137,024
5,750
363,423
1. Expansion capital is not included in AISC calculations
Table 6 – Operating Costs (Average LOM)
Operating Costs (Average LOM)
US$/tonne
Plant Feed
US$/tonne
Rock
Mining
12.28
2.07
Processing
13.81
General and admin
1.02
Total
27.12
Mining
The open pit mining will be contracted and carried out by drilling and blasting followed by conventional loading and truck
haulage to the waste rock storage facilities and the process plant.
Metallurgy
A preliminary metallurgical test program was carried out by SGS Lakefield of
Ontario, Canada
on four Los Ricos North
deposit areas – Favor, Trini, Casados, and Orito. Based on the zone geology, Favor, Trini, and Casados (oxide) were
designated for whole mineralized material cyanidation testing. The Orito (sulphide) sample was deemed to be flotation ideal.
The subsequent oxide testing included grinding (no comminution testing) and leaching only. The sulphide testing included
grinding and bulk flotation to produce a single bulk concentrate with locked cycle (LCT) testing completed. The samples
were comprised of four drill core rejects representing the noted zones of the Mineral Resource. This preliminary test
program estimated a gold and silver oxide recovery of 87% for both. The sulphide recovery on the Orito sample recovered
76% gold, 88% silver, 89% copper, 89% zinc, and 75% lead.
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 North Project located in Jalisco State,
Mexico
, which has
an effective date of
December 1, 2021
. A summary of the Mineral Resource Estimate is provided in Table 7.
Table 7: Los Ricos North Mineral Resource Estimate
(1-11)
Deposit
Tonnes
Average Grade
Contained Metal
Au
Ag
Cu
Pb
Zn
AuEq
AgEq
Au
Ag
Cu
Pb
Zn
AuEq
AgEq
(Mt)
(g/t)
(g/t)
( %)
( %)
( %)
(g/t)
(g/t)
(koz)
(koz)
(Mlb)
(Mlb)
(Mlb)
(koz)
(koz)
Indicated:
El Favor
7.7
0.27
98
-
-
-
1.61
119
68
24,413
-
-
-
399
29,454
Casados
3.2
0.42
124
-
-
-
2.09
154
43
12,871
-
-
-
218
16,061
La Trini
3.1
0.54
74
-
-
-
1.54
114
54
7,428
-
-
-
155
11,424
Mololoa
0.4
0.36
130
-
-
-
2.12
157
5
1,788
-
-
-
29
2,161
Silver-Gold
Oxide Zone
14.5
0.37
100
-
-
-
1.71
127
171
46,500
-
-
-
801
59,100
El Orito Sulphide
Zone
1
7.8
0.06
28
0.11
0.88
1.33
1.55
114
15
7,011
19
151
229
389
28,708
Total Indicated
22.3
1.66
122
186
53,510
1,190
87,808
Inferred:
El Favor
12.4
0.27
89
-
-
-
1.47
108
106
35,505
-
-
-
587
43,350
Casados
1.8
0.35
108
-
-
-
1.82
135
21
6,323
-
-
-
106
7,843
La Trini
0.1
0.43
108
-
-
-
1.89
139
1
201
-
-
-
4
260
Mololoa
0.7
0.39
94
-
-
-
1.66
122
9
2,102
-
-
-
37
2,739
Silver-Gold
Oxide Zone
15.0
0.28
91
-
-
-
1.52
112
136
44,131
-
-
-
734
54,191
El Orito Sulphide
Zone
1
5.5
0.06
28
0.12
0.74
1.20
1.46
108
11
4,888
15
90
146
258
19,007
Total Inferred
20.5
1.51
111
148
49,019
992
73,198
1.
El Orito is a silver-base metal sulphide zone, all other deposits are silver-gold oxide zones.
2.
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.
3.
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.
4.
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 (2014) prepared by the CIM Standing Committee on Reserve Definitions and adopted by the CIM Council and CIM Best Practices (2019).
5.
Historically mined areas were depleted from the Mineral Resource model.
6.
Approximately 98.9% of the Indicated and 91.3% of the Inferred contained AgEq ounces are pit constrained, with the remainder out-of-pit. See tables 4 and 6 for details of the split between pit constrained and out-of-pit
deposits.
7.
The pit constrained AgEq cut-off grade of 29 g/t Ag was derived from US$1,550/oz Au price, US$21/oz Ag price, US$3.66/lb Cu, US$0.90/lb Pb, US$1.26/lb Zn, 93% process recovery for Ag and Au, 90% process
recovery for Cu, 80% process recovery for Pb and Zn, US$18/tonne process and G&A cost. The constraining pit optimization parameters were US$2.00/t mineralized mining cost, US$1.50/t waste mining cost and 50-
degree pit slopes.
8.
The out-of-pit AuEq cut-off grade of 119 g/t Ag was derived from US$1,550/oz Au price, US$21/oz Ag price, US$3.66/lb Cu, US$0.90/lb Pb, US$1.26/lb Zn, 93% process recovery for Ag and Au, 90% process
recovery for Cu, 80% process recovery for Pb and Zn, US$57/t mining cost, US$18/tonne process and G&A cost. The out-of-pit Mineral Resource grade blocks were quantified above the 119 g/t AgEq cut-off, below
the constraining pit shell within the constraining mineralized wireframes and exhibited sufficient continuity to be considered for cut and fill and longhole mining
9.
No Mineral Resources are classified as Measured.
10.
AgEq and AuEq calculated at an Ag/Au ratio of 73.8:1.
11.
Totals may not agree due to rounding
Figure 1: Los Ricos North Block Model Visualization (CNW Group/GoGold Resources Inc.)
The Preliminary Economic Assessment Technical Report will be filed on SEDAR within 45 days of this news release.
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. and
David Salari
, P. Eng., DENM Engineering Ltd. are Independent Qualified
Persons 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.
The VRIFY 3D Slide Deck for GoGold can be viewed at:
https://vrify.com/companies/gogold-resources-inc
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 an initial Mineral Resource Estimate was announced on
July 29, 2020
, which disclosed 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 after-tax NPV
5%
of
US$295M
. The Eagle
Concession was acquired in
October 2022
and is adjacent to the Main Area which contains the initial Mineral Resource.
The Los Ricos North Project was launched in
March 2020
and an initial Mineral Resource Estimate was announced on
December 7, 2021
, which disclosed an Indicated Mineral Resource of 87.8 Million ounces AgEq grading 122 g/t AgEq
contained in 22.3 Million tonnes, and an Inferred Mineral Resource of 73.2 Million ounces AgEq grading 111 g/t AgEq
contained in 20.5 Million tonnes.
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.
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For further information:
Steve Low, Corporate Development, GoGold Resources, T: 416 855 0435, E:
CO: GoGold Resources Inc.
CNW 06:30e 17-MAY-23