Galleon Gold Delivers Maiden Preliminary Economic Assessment and Updated Mineral Resource Estimate for West Cache Gold Project
Galleon Gold Delivers Maiden Preliminary
Economic Assessment and Updated Mineral
Resource Estimate for West Cache Gold
Project
Toronto, Ontario--(Newsfile Corp. - January 12, 2022) - Galleon Gold Corp. (TSXV: GGO) (the
"Company" or "Galleon Gold") is pleased to announce the positive results of an independent maiden
Preliminary Economic Assessment ("PEA"), including an updated Mineral Resource Estimate prepared
in accordance with National Instrument 43-101 -
Standards of Disclosure for Mineral Projects
("NI 43-
101") for its West Cache Gold Project (the "Project" or the "Property"), Timmins Ontario.
The PEA
considers an underground mine utilizing Toll Processing for treatment of mineralized material over an
11-year mine life. All amounts are shown in Canadian dollars unless otherwise stated.
PEA Highlights - West Cache Gold Project
Pre-Tax Net Present Value at a 5% discount rate ("NPV
5%
") of $378 million with Internal
Rate of Return ("IRR") of 33.7%, 3.0 years payback at US$1,700/oz gold price
After-tax NPV
5%
of $240 million with IRR of 26.7% and 3.3 years payback
11 years Life of Mine ("LOM") plus two years of ramp-up. Production at 2,400 tpd
940,200 ounces of gold mined over LOM with average annual production of 85,500
ounces. Recovered gold is estimated at 893,200 ounces over the LOM
Cash cost of US$814 per ounce and all-in sustaining cost of US$987 per ounce
Initial capex $150 million
Alternative scenario for construction of on-site mill demonstrates positive economics
(NPV
5%
$368 million, IRR 24.5%, payback 3.7 years on pre-tax basis)
Project is now progressing towards bulk sample of Zone #9 and Pre-Feasibility Study,
including plans for upgrading and expanding the Mineral Resource
Updated Mineral Resource Estimate Highlights
(underground Mineral Resource at 1.6 g/t Au cut-off
grade)
Significant increase in the grade and total ounces in the Indicated and Inferred Mineral Resource
classifications
Indicated
Mineral Resource of
472,000 ounces
(4,051 kt at an average grade of 3.63 g/t Au)
Inferred
Mineral Resource of
1,088,000 ounces
(11,788 kt at an average grade of 2.87 g/t Au)
Comments from the CEO
R. David Russell, President and CEO of Galleon Gold commented,
"I am extremely pleased with the
first economic valuation for West Cache, as the results from our PEA demonstrate that the project
could support a profitable underground mining operation. The PEA incorporates the near-term option
of using local toll processing, while also suggesting on-site processing becomes increasingly
attractive with further growth in the project's Mineral Resource.
Based on our geologic model, I believe West Cache has the potential to extend the LOM beyond the
initial 11 years by expanding the Mineral Resource downdip and along strike.
Moreover, we have
explored less than 10% of the Property and recent geological interpretations suggest we should be
looking to pursue new exploration targets in untested host rock both north and south of the current
Mineral Resource. Our primary exploration goal for 2022 is to add high grade gold ounces and
expand the Mineral Resource through surface drilling.
In early to mid 2023, pending permits, we plan
to commence underground test mining the high-grade Zone #9 area."
PEA Financial Results Summary
The economic analysis was performed assuming a 5% discount rate. A summary of project economics
is listed in Table 1. On a pre-tax basis the NPV
5%
is estimated at $378 million, IRR is 33.7 % and the
payback is 3.0 years. On an after-tax basis the NPV
5%
is estimated at $240 million, IRR is 26.7 % and
the payback is 3.3 years.
Table 1: Summary of PEA Financial Results
(All costs in Canadian dollars unless otherwise noted)
General
Gold Price (US$/oz)
1,700
Exchange Rate (US$:C$)
0.76
LOM (years)
11
Production
Total Gold Mine Production (oz)
940,200
Average Annual Production (oz)
85,470
Total Mill Ounces Recovered (oz)
893,200
Operating Costs
Mining Cost ($/t Mined)
64.40
Processing Cost ($/t Processed)
28.00
G&A Cost ($/t Processed)
4.51
Total Operating Costs ($/t Processed)
96.92
Royalty NSR after 1 % buyback (%)
2
Cash Costs (US$/oz Au)
814
AISC (US$/oz Au)
987
Capital Costs
Initial Capital ($M)
150
Sustaining Capital ($M)
199
Closure Costs ($M)
5
Financials
Pre-Tax
After-Tax
NPV (5%) ($M)
378
240
IRR (%)
33.7
26.7
Payback (years)
3.0
3.3
The PEA was prepared in accordance with National Instrument 43-101 ("NI 43-101") by P&E Mining
Consultants Inc. of Brampton, Ontario, Canada with an effective date of January 10, 2022. The Company
will file the PEA on SEDAR at
www.sedar.com
in accordance with NI 43-101 within 45 days of this news
release.
Cautionary Statement - The reader is advised that the PEA summarized in this news release is intended
to provide only an initial, high-level review of the project potential and design options. The PEA mine plan
and economic model include numerous assumptions and the use of Inferred Mineral Resources. Inferred
Mineral Resources are considered to be too speculative to be used in an economic analysis except as
allowed by NI 43-101 in PEA studies. There is no guarantee the project economics described herein will
be achieved.
Gold Price Sensitivities
Table 2 outlines the sensitivities of the NPV and IRR to gold price per ounce using an exchange rate of
0.76 (US$/C$).
Table 2: Economic Sensitivity to Gold Prices
Pre-Tax
After-Tax
Price
(US$/oz)
NPV
5%
(C$ million)
IRR
(%)
NPV
5%
(C$ million)
IRR
(%)
1,5
00
224.5
23.3
128.6
17.2
1,600
301.4
28.6
184.3
22.0
1,700
378.3
33.7
240.1
26.7
1,800
455.5
38.7
291.8
30.8
1,900
532.6
43.6
343.6
34.8
2,000
609.8
48.4
395.3
38.7
Mine Design and Production Schedule
Mineralization has been planned to be extracted from 20 geological domains, over an area of 2.1 km x
1.2 km.
The Deposit extends at depth over 1.0 km from surface, with extraction targets covering the
entire vertical extent.
Due to the large extents of the Mineral Resource, it has been divided into four
mining areas (Mines A-D) with separate portals.
Each mining area is further sub-divided into mining
"Blocks" to increase available working faces and limit development requirements prior to
commencement of production. Ramps developed from each portal will provide access to the Deposit.
Extraction of mineralized material will use the longhole retreat stoping method with cemented hydraulic
backfill. Sublevels have been planned at 30 m high intervals. Mining equipment will consist of 30 tonne
trucks with 7 and 10 tonne load-haul-dump units.
Production has been scheduled at 2,400 tpd which is equivalent to 880,000 tpa.
Figure 1 and 2 show the West Cache project in plan view and longitudinal projection respectively, while
Figure 3 shows 3D views of the four mining areas and grades. Table 3 outlines LOM production.
Figure 1: Mine Development Plan - Plan View
To view an enhanced version of Figure 1, please visit:
https://orders.newsfilecorp.com/files/1014/109753_717c1f2ad46a8b7a_001full.jpg
Figure 2: 3D Longitudinal Projection of West Cache Project
To view an enhanced version of Figure 2, please visit:
https://orders.newsfilecorp.com/files/1014/109753_717c1f2ad46a8b7a_002full.jpg
Figure 3: 3D Views of the Four West Cache Project Mining Areas
To view an enhanced version of Figure 3, please visit:
https://orders.newsfilecorp.com/files/1014/109753_717c1f2ad46a8b7a_003full.jpg
Table 3: Production Summary
Description
LOM Total
Mineralized Material Mined (tonnes)
9,459,000
Grade (g/t Au)
3.09
Contained Gold (ozs)
940,200
Recovered Gold (ozs)
893,200
Operating Costs
Mining and development will be performed entirely by Company personnel, with an owned equipment
fleet.
Mining equipment will be leased over five-year terms. Processing will be performed at an offsite toll
process plant in the Timmins area, with tailings backhauled from the process plant to the West Cache
site for use as backfill.
A contractor will be engaged to transport mineralized material to the toll process
plant and backhaul tailings. Table 4 provides a summary of the estimated operating costs.
Table 4: Operating Cost Summary
Operating Cost Item
LOM Cost
($M)
Cost
($/t processed)
Mining
609.2
64.40
Processing
264.8
28.00
G&A
42.7
4.51
TOTAL
916.7
96.92
Capital Costs
Initial capital costs are estimated at $150 million and are relatively low for a project of this size since they
do not include construction of a process plant or a tailings storage facility. The majority of initial capital
costs will be for underground mine development since the Mineral Resource extends over a large area.
Infrastructure costs are minimal due to the close proximity of the site to Timmins, Highway 101 and an
existing powerline. Sustaining capital is estimated at $199 million over the LOM and is primarily for mine
development. Capital costs are summarized in Table 5.
Table 5: Capital Cost Summary
Capital Cost Item
Initial ($M)
Sustaining ($M)
Total ($M)
Mining and mine development
111.7
171.5
283.2
Laboratory
0.5
-
0.5
Site Infrastructure
7.7
-
7.7
Backfill System
13.7
1.3
15.0
Contingencies @ 15%
16.0
25.9
41.9
TOTAL PROJECT
149.6
198.6
348.2
CLOSURE COSTS
5.0
Updated Mineral Resource Estimate
The Mineral Resource Estimate was based on the results of 557 holes and 210,000 metres of drilling
including 213 holes for 46,380 metres of surface diamond drilling completed since the Company
acquired the project. Geological modeling undertaken as part of a Mineral Resource Estimate
announced last year (see September 8, 2021 news release) identified un-assayed areas from historic
drilling with significant gold potential by projecting known gold zones intersected in the 2020-2021 drill
program. The Company undertook a re-log and sampling program as well as verified assay data from
third party drilling in 2015-2016. These recent results identified additional areas of better geological
continuity and were used to re-build the Mineral Resource model wire-framing and mine plan from a
combined open pit/underground approach to the all-underground design plan used in the current PEA.
The Mineral Resource Estimate for the West Cache Project, with an effective date of January 10, 2022,
is summarized in Table 6, while Table 7 provides select cut-off grade sensitivities.
Table 6: West Cache Mineral Resource Estimate
(1-5)
Underground Mineral Resource @ 1.6 g/t Au Cut-Off
Classification
Tonnes
k
Au
g/t
Au
k oz
Indicated
4,051
3.63
472
Inferred
11,788
2.87
1,088
1.
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
2.
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 potentially be upgraded to an
Indicated Mineral Resource with continued exploration.
4. The Mineral Resources were estimated in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on
Mineral Resources and Reserves, Definitions (2014) and Best Practices Guidelines (2019) prepared by the CIM Standing Committee on Reserve
Definitions and adopted by the CIM Council.
5.
The Au cut-off parameters used were US$1,650/oz Au, 0.76 FX with a process recovery of 95% Au, mining cost of C$85/tonne, C$16/tonne
process cost and C$4/tonne G&A. Mineral Resources selected exhibited continuity and reasonable potential for extraction by the long hole
underground mining method.
Table 7: Select Au Cut-Off Grade Mineral Resource Sensitivities
Classification
Cut-off
Au g/t
Tonnes
k
Au
g/t
Au
k oz
Indicated
5.0
753
7.79
189
3.0
1,750
5.54
311
2.5
2,287
4.88
359
2.0
3,142
4.16
420
1.6
4,051
3.63
472
1.25
5,288
3.11
528
1.0
6,564
2.72
574
0.5
10,591
1.96
668
Inferred
5.0
759
6.96
170
3.0
3,492
4.49
504
2.5
5,629
3.81
690
2.0
8,707
3.25
911
1.6
11,788
2.87
1,088
1.25
15,649
2.51
1,265
1.0
19,681
2.23
1,410
0.5
30,286
1.71
1,661
Next Steps
The results for the PEA, using the base case assumptions, indicate that the West Cache Project has
both technical and financial merit. The project's next steps include:
Infill drilling to increase near-mine Mineral Resources and convert Inferred Mineral Resources to
the Indicated classification
Additional drilling along strike and dip to extend mineralization as well as identify new high-grade
shoots
Deeper exploration drilling to test plunge and area between Zone #9 and West Deep
Step-out drilling to test regional targets outside of the known Mineral Resource area- only 10% of
the project area has been drill tested
Continue baseline and permitting studies in support of bulk sample application
Commence planning and studies for initial ramp engineering for bulk sample
Webcast Details
The Company will host a webcast and conference call to review the PEA and future plans on January 13,
2020 at 11:00 am ET. A replay of the webcast will be available on the Company's website.
Conference Call Number:
Toll Free Canada/USA: 1-800-319-4610
Toronto Toll: 1-416-915-3239
Webcast Link:
https://www.gowebcasting.com/11698
Technical Content and Qualified Persons
The PEA and Mineral Resource Estimate for West Cache included in the press release were prepared
under the supervision of Eugene Puritch, P.Eng., FEC, CET, President of P&E Mining Consultants Inc.,
an Independent Qualified Person as defined by NI 43-101. The geological technical content has also
been reviewed and approved by West Cache Gold Project Manager Leah Page, P. Geo. (APGNS
#217) and West Cache Gold Resource Geologist, Rochelle Collins, P. Geo (PGO #1412), both
"Qualified Persons" as defined in National Instrument 43-101 - Standards of Disclosure for Mineral
Projects.
A Technical Report to support the PEA and updated Mineral Resource Estimate for the West Cache
Project, prepared in accordance with NI 43-101, will be filed on SEDAR (
www.sedar.com
) within 45
days of this news release.
About West Cache Gold Project
The West Cache Gold Project is located 13 km west of Timmins Ontario and is serviced by Provincial
Highway 101 and secondary access roads. It is situated along the Porcupine - Destor Deformation Zone
in the Timmins Gold Belt, approximately 7 km northeast of Pan American Silver's Timmins West Mine
and 14 km southwest of Newmont's Hollinger Mine. Figure 4 depicts the Projects location in relation to
Timmins.
West Cache is an advanced-stage gold exploration project covering over 3,600 ha that hosts the current
Mineral Resource near the center of the Property, with additional Exploration Targets to the north and
south. The Mineral Resource is contained within the Porcupine Sedimentary Basin, a favourable litho-
structural corridor with over 5 km of strike-length on the Property. Mineralization is open in all directions
and at depth.