Galleon Gold Files PEA Technical Report for West Cache Gold Project
Galleon Gold Files PEA Technical Report for
West Cache Gold Project
Toronto, Ontario--(Newsfile Corp. - February 23, 2022) - Galleon Gold Corp. (TSXV: GGO) (the
"Company" or "Galleon Gold") is pleased to announce that further to its news release dated January 12,
2022, the Company has filed on SEDAR a Technical Report detailing the Preliminary Economic
Assessment ("PEA") and updated Mineral Resource Estimate for the West Cache Gold Project,
Timmins, Ontario.
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 Technical
Report can be found on the Company's website (
www.galleongold.com
) and on SEDAR under the
Company's profile (
www.sedar.com
).
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 year payback at US$1,700/oz gold price
After-tax NPV
5%
of $240 million with IRR of 26.7% and 3.3 year payback
11 year Life of Mine ("LOM") plus two year ramp-up. Production at 2,400 tpd.
940,200 ounces of gold mined over Life of Mine ("LOM") with average annual production of 85,500
ounces. Recovered gold is estimated at 893,200 ounces over the LOM.
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)
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 at 33.7 % and
payback over 3.0 years. On an after-tax basis: NPV
5%
is estimated at $240 million, IRR at 26.7 %, and
the payback in 3.3 years.
Table 1: Summary of PEA Financial Results
(All costs in Canadian dollars unless otherwise noted)
General
Gold Price (US$/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 Payable 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
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
(%)
1,500
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
Planned mineral extraction utilized 20 separate geological domains covering an area of 2.1 km x 1.2 km.
The Deposit extends to a depth of over 1.0 km from the surface, with extraction targets covering the
entire vertical extent. Due to the large areal extent 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 vertical 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 shows the West Cache mining areas and portals, while Figure 2 shows the West Cache site
plan. Table 3 outlines LOM production.
Figure 1: West Cache Mining Areas and Portals (Isometric View)
To view an enhanced version of Figure 1, please visit:
https://orders.newsfilecorp.com/files/1014/114534_df18993af4a00ada_001full.jpg
Figure 2 :West Cache Project Site Plan
To view an enhanced version of Figure 2, please visit:
https://orders.newsfilecorp.com/files/1014/114534_df18993af4a00ada_002full.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
Under this PEA, 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 with 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 historical
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-frames and mine plan from a
combined open pit/underground approach to the all-underground mine plan design 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 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
mineralized 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
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.
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 3 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 Estimate near the center of the Property, with additional Exploration Targets to the
north and south. The Mineral Resource Estimate 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.
Figure 3: West Cache Project Location and Land Tenure
To view an enhanced version of Figure 3, please visit:
https://orders.newsfilecorp.com/files/1014/114534_df18993af4a00ada_003full.jpg
About Galleon Gold
Galleon Gold is an exploration and development company focused on advancing the West Cache Gold
Project in Timmins, Ontario. The project is situated along the Porcupine-Destor gold belt, approximately
7 km northeast of Pan American Silver's Timmins West Mine and 14 km southwest of Newmont's
Hollinger Mine.
Since acquiring the project the Company has demonstrated significant Mineral Resource
growth while providing a strong valuation in its maiden Preliminary Economic Assessment. Permitting
and baseline studies in support of a bulk sample are currently underway. Eric Sprott holds approximately
23% of the Company's outstanding common shares.
Non-IFRS Financial Performance Measures
This press release includes certain terms or performance measures commonly used in the mining
industry that are not defined under International Financial Reporting Standards ("IFRS"), including
cash costs and All-in Sustaining Costs ("AISC") per Ounce of gold. Non-GAAP measures do not have
any standardized meaning prescribed under IFRS and, therefore, they may not be comparable to
similar measures employed by other companies. The Company believes that, in addition to
conventional measures prepared in accordance with IFRS, certain investors use this information to
evaluate performance. The data presented is intended to provide additional information and should
not be considered in isolation or as a substitute for measures of performance prepared in accordance
with IFRS.
Forward-Looking Statements:
This news release contains "forward-looking information" within the meaning of applicable Canadian
securities legislation. All statements, other than statements of historical facts, are forward-looking
information and statements. Forward-looking information includes, but is not limited to, disclosure
regarding the economics and project parameters presented in the PEA, including, without limitation,
NPV, IRR, initial and sustaining capital costs, operating costs, LOM production of West Cache and
other costs and economic information, possible events, conditions or financial performance that is
based on assumptions about future economic conditions and courses of action; the timing and costs
of future development and exploration activities on the Company's project; success of development
and exploration activities; permitting time lines and requirements; time lines for further studies;
planned exploration and development of the West Cache Project and the results thereof; and planned
expenditures and budgets and the execution thereof. Generally, forward-looking information can be
identified by the use of words such as "believes", "plans", "expects", or "does not expect", "is
expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not
anticipate", or "believes" or variations of such words and phrases or state that certain actions, events
or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved". Forward-
looking information is based on the opinions and estimates of management at the date the
information is made, and is based on a number of assumptions and is subject to known and unknown
risks, uncertainties and other factors that may cause the actual results, level of activity, performance
or achievements of Galleon Gold to be materially different from those expressed or implied by such
forward-looking information, including the risks outlined in this news release, risks associated with the
exploration, development and mining such as economic factors as they effect exploration, future
commodity prices, changes in foreign exchange and interest rates, actual results of current
development and exploration activities, government regulation, political or economic developments,
environmental risks, permitting timelines, capital expenditures, operating or technical difficulties in
connection with development activities, employee relations, the speculative nature of gold exploration
and development, including the risks of diminishing quantities of grades of Mineral Resources,
contests over title to properties, and changes in project parameters as plans continue to be refined.
Although Galleon Gold believes the expectations expressed in these forward-looking statements are
based on reasonable assumptions, such statements should not be in any way be construed as
guarantees that the West Cache Project will secure all required government permits, establish the
commercial feasibility of the West Cache Project, achieve the required financing or develop the West
Cache Project.
Although the Company has attempted to identify important factors that could cause
actual results to differ materially from those contained in forward-looking information, there may be
other factors that cause results not to be as anticipated, estimated or intended. There can be no
assurance that such information will prove to be accurate, as actual results and future events could
differ materially from those anticipated in such information. Accordingly, readers should not place
undue reliance on forward-looking information. The Company does not undertake to update any
forward-looking information, except in accordance with applicable securities laws.