Liberty Gold Announces Positive Preliminary Economic Assessment for the Goldstrike Oxide Gold Deposit, Great Basin, USA Post-tax NPV5% of US$129.5 million, IRR of 29.4%, and Initial Capex of US$113.2 million
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NEWS RELEASE 18-12 July 10, 2018
Liberty Gold Announces Positive Preliminary Economic Assessment for the
Goldstrike Oxide Gold Deposit, Great Basin, USA
Post-tax NPV5% of US$129.5 million, IRR of 29.4%, and Initial Capex of US$113.2 million
VANCOUVER, B.C. – Liberty Gold Corp. (LGD - TSX) ("Liberty Gold" or the "Company") is pleased to
announce the results of a Preliminary Economic Assessment (“PEA”) at its Goldstrike oxide gold
property, Utah. The PEA utilizes the maiden resource estimate completed in February 2018 (see
news release dated February 8, 2018), and provides a strong, base-case economic scenario upon
which to expand the scope and scale of the project with ongoing drilling. The PEA confirms a low
capital intensity, low operating cost, open-pit, run-of-mine, heap-leach operation, with a 7.5 year mine
life and highly attractive economics.
“This positive PEA marks a solid milestone for the Goldstrike project and for Liberty Gold,” stated Cal
Everett, President and CEO of Liberty Gold. “Importantly, it is based on a high degree of confidence in
the deposit geometry because it is backed up by over 1,700 drill holes with 75% of the resource in the
indicated category. There is a high level of certainty in the metallurgical assumptions, as they are
consistent with historical recoveries obtained from 209,000 ounces of historical production between
1988 and 1994. The PEA does not include any potential benefits from by-product silver production or
from processing residual gold remaining in the historical heap leach pads, which are currently being
drill-tested. A gold cut-off grade of 0.20 grams per tonne (“g/t”) was selected for this study, in contrast
to 0.25 g/t used in the original resource estimate. The lower cut-off improves the economics of the
project, delivers a lower strip ratio, produces more ounces, and extends the mine life. We see this
project as scalable in terms of both size and throughput through future additions to the resource base,
moving us closer to our goal of becoming a 100,000+ ounce per year producer.”
PEA Highlights
The base case assumes a gold price of US$1,300/ounce (“oz”). All figures are stated in U.S. Dollars
(“$”) unless otherwise noted. The Technical Report pursuant to National Instrument (“NI”) 43-101
guidelines for the Preliminary Economic Assessment will be filed on SEDAR within 45 days.
• After-tax Net Present Value at a 5% discount rate (“NPV5%”) and Internal Rate of Return (“IRR”)
of $129.5 million and 29.4% respectively with a 2.3 year payback of initial capital (pre-tax
NPV5% and IRR of $176.2 million and 34.8% respectively)
• Mine life of 7.5 years with a 2 year pre-production period
• Life of mine (“LOM”) head grade of 0.48 g/t gold
• Low LOM Strip Ratio of 1.2:1
• Total amount of gold recovered is estimated at 713,000 oz
• Average annual gold production of approximately 95,000 oz
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• Peak annual gold production of approximately 117,000 oz
• LOM direct operating cash cost1 is estimated at $642/oz of gold recovered
• All-in sustaining cost or AISC2 is estimated at $793/oz of gold recovered
• Pre-production capital cost estimated at $113.2 million, using an owner-operator approach
• LOM sustaining capital costs estimated at $61.6 million, plus $20.0 million for closure costs
1 Cash cost includes mining cost, mine-level G&A, leaching and refining cost
2 All-in sustaining cost (AISC) includes adjusted cash cost per ounce, sustaining capital and closure costs. This is a non-GAAP
performance measure; please see “Non-GAAP Measures and Other Financial Measures” below.
The PEA was prepared by SRK Consulting (Canada) Inc., of Vancouver, British Columbia (“SRK”),
Golder Associates Inc. of Reno, Nevada (“Golder”), Kappes Cassiday and Associates of Reno,
Nevada (“Kappes”), Advantage Geoservices of Osoyoos, British Columbia and GL Simmons
Consulting LLC of Larkspur, Colorado.
The PEA is preliminary in nature and includes inferred mineral resources that are too speculative
geologically to have economic considerations applied to them that would enable them to be
categorized as mineral reserves. There is no certainty that PEA results will be realized. Mineral
resources are not mineral reserves and do not have demonstrated economic viability.
PEA Overview
Goldstrike hosts disseminated gold mineralization similar to deposits on the Carlin Trend, with strong
oxidation in most areas.
The PEA envisions recovery of gold and silver from the Goldstrike mineralized material using a run of
mine (“ROM”) heap-leach circuit. The ROM material will be leached with a dilute cyanide solution, and
the leached gold will be recovered from solution using a carbon adsorption circuit followed by
electrowinning and refining in a furnace to produce doré bars.
Important project metrics are presented in the following tables.
Assumptions
Gold Price $1300/oz
Production Profile
Total Tonnes of Mineralized Material Mined and Processed 59.3 million tonnes
Total Tonnes Waste Mined 70.6 million tonnes
Head Grade 0.48 g/t
Mine Life 7.5 years
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Tonnes per Day Mineralized Material Mined 22,500 tonnes per day
Strip Ratio (Waste:Mineralized Material) 1.2:1
Average Gold Recovery 78%
Total Gold Ounces Mined 915,516 oz
Total Gold Ounces Recovered 713,000 oz
Average Annual Gold Production 95,000 oz
Peak Annual Gold Production 117,855 oz
Unit Operating Costs
LOM Average Cash Cost1 $642/oz
LOM Average Adjusted Cash Cost2 $675/oz
LOM Cash Cost plus Sustaining Cost (AISC)3 $793/oz
Project Economics
Royalties (estimate; royalties differ slightly by location and gold price) 2.50%
Pre-tax NPV5%/ After-Tax NPV5% $176.2 million/$129.5 million
Pre-tax IRR/ After-Tax IRR 34.8%/29.4%
Undiscounted Operating Pre-Tax Cash Flow/After-Tax Cash Flow $259.3 million/$195.5 million
After-Tax Payback Period 2.3 years
1Includes mining cost, mine-level G&A, leaching and refining cost
2Includes the above plus royalties
3Includes the above plus sustaining and closure costs
Capital Requirements Units Initial LOM
Mining Capital $ million $23.50 $61.30
Total Infrastructure Capital $ million $31.40 $35.10
Total Processing Capital $ million $48.30 $68.40
Closure Costs $ million $0.00 $20.00
Owners Costs $ million $10.00 $10.00
Total Capital Costs $ million $113.20 $194.80
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Mining
The PEA Study utilizes open pit mining with mine planning based on economic pit shells generated by
mine planning software. Mine production is planned at 22,500 tonnes per day or 8.2 million tonnes per
year of leach feed (mineralized) material. With an average waste to leach feed material strip ratio of
1.2 to 1, the average mining rate is approximately 50,000 tonnes per day of leach feed and waste
material. The open pit mining at Goldstrike was designed utilizing an owner-operated, conventional
mine fleet of front end loaders and trucks.
1million tonnes
2numbers may not add due to rounding
Processing
The PEA Study assumes processing of run-of-mine (without crushing) leach feed material by truck
stacking onto a single heap leach pad in nine metre vertical lifts. Gold and silver will be extracted via
conventional heap leaching and will be recovered from the pregnant solution using a carbon
adsorption circuit. The gold and silver will then be stripped from carbon using a desorption process
followed by electrowinning to produce a precipitate sludge. The sludge is then roughly refined on site
in a furnace to produce doré bars, which are shipped to a refinery.
Operating Costs
Operating costs are based on the mining and processing scenario outlined above. Mining costs are
relatively well known in the Great Basin, where a large number of similar operations are in existence.
Parameter Units LOM2 1 2 3 4 5 6 7 8 9
Total Leach
Material Mt1 59.3 6.9 8.2 8.2 8.2 8.2 8.2 8.2 3.1 0.0
Gold Grade g/t 0.48 0.60 0.57 0.45 0.43 0.46 0.48 0.44 0.35 0.00
Contained Gold oz 915,516 132,899 151,769 120,079 114,051 120,316 125,926 115,976 34,499 0
Total Waste Mt 70.5 8.0 11.4 11.5 13.0 12.0 11.5 2.5 0.7 0.0
Total Material
Moved Mt 129.9 14.9 19.7 19.7 21.2 20.2 19.7 10.7 3.8 0.0
Gold Produced oz 713,004 87,876 117,855 97,463 88,650 92,447 97,234 90,742 36,427 4,309
Operating Costs LOM ($million) $/oz $/tonne
Mine Operating Cost1 $272.1 $392.16 $4.59
Leach Operating Costs $117.5 $169.37 $1.98
Water Supply $3.5 $5.01 $0.06
Road and Infrastructure Maintenance $17.0 $24.50 $0.29
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1Includes extraction of both mineralized material and waste rock
PEA Sensitivities
The PEA examines the effect on NPV5% of up to a 40% increase or decrease in capital (Capex) and
operating (Opex) expenditures. NPV5% is strongly influenced by the price of gold.
The following tables show the change in NPV5% over a range of Opex, Capex and gold prices. The
base case is shaded grey.
NPV5% in $M Operating Cost
-40.0% -20.0% 0.0% 20.0% 40.0%
Capital Cost -40.0% $288.2 $236.0 $183.7 $131.4 $79.1
-20.0% $261.3 $209.0 $156.6 $104.3 $51.9
0.0% $234.2 $181.9 $129.5 $77.1 $24.5
20.0% $207.1 $154.7 $102.3 $49.6 ($3.5)
40.0% $180.0 $127.4 $74.8 $21.9 ($32.0)
NPV5% in $M Gold Price/oz
$900 $1,100 $1,300 $1,500 $1,700
Capital Cost -40.0% $21.4 $102.6 $183.7 $264.7 $344.8
-20.0% ($6.5) $75.5 $156.6 $237.7 $318.7
0.0% ($35.2) $48.1 $129.5 $210.6 $291.7
20.0% ($67.7) $20.4 $102.3 $183.5 $264.6
40.0% ($101.4) ($7.8) $74.8 $156.4 $237.5
NPV5% in $M Gold Price/oz
$900 $1,100 $1,300 $1,500 $1,700
Operating Cost
-40.0% $71.7 $153.1 $234.2 $315.3 $396.3
-20.0% $18.9 $100.7 $181.9 $262.9 $344.0
0.0% ($35.2) $48.1 $129.5 $210.6 $291.7
20.0% ($101.8) ($5.0) $77.1 $158.3 $239.4
40.0% ($169.8) ($64.2) $24.5 $106.0 $187.1
The following tables show the effect of Capex, Opex and Gold Price on IRR
Post-tax IRR in % Operating Cost
-40.0% -20.0% 0.0% 20.0% 40.0%
Capital Cost -40.0% 74.5% 65.0% 54.7% 43.2% 30.3%
-20.0% 56.7% 48.4% 39.5% 29.8% 18.6%
0.0% 44.5% 37.3% 29.4% 20.7% 10.5%
20.0% 35.8% 29.2% 22.0% 13.9% 4.3%
40.0% 29.1% 22.9% 16.2% 8.5% -0.6%
Site G&A $35.2 $50.73 $0.59
Total $445.3 $641.77 $7.51
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Post-tax IRR in % Gold Price/oz
$900 $1,100 $1,300 $1,500 $1,700
Capital Cost -40.0% 12.9% 36.1% 54.7% 70.6% 85.0%
-20.0% 3.1% 23.8% 39.5% 53.3% 65.6%
0.0% -3.7% 15.2% 29.4% 41.5% 52.4%
20.0% -10.1% 8.8% 22.0% 33.0% 42.8%
40.0% -16.6% 3.7% 16.2% 26.5% 35.4%
Post-tax IRR in % Gold Price/oz
$900 $1,100 $1,300 $1,500 $1,700
Operating Cost
-40.0% 19.5% 32.9% 44.5% 55.2% 64.9%
-20.0% 9.2% 24.6% 37.3% 48.5% 58.9%
0.0% -3.7% 15.2% 29.4% 41.5% 52.4%
20.0% N/A 3.8% 20.7% 34.0% 45.6%
40.0% N/A -13.3% 10.5% 25.8% 38.3%
The following table illustrates the effect of gold price and discount rate on NPV.
NPV in $M Discount Rate
0.0% 5.0% 6.0% 7.0% 8.0%
Gold Prices -20.0% $56.8 $23.5 $18.3 $13.4 $8.9
-10.0% $126.2 $76.7 $68.8 $61.5 $54.7
0.0% $195.5 $129.5 $119.0 $109.3 $100.2
10.0% $264.7 $182.2 $169.1 $156.9 $145.5
20.0% $333.9 $235.0 $219.2 $204.5 $190.7
Project Enhancement Opportunities
The PEA demonstrates the potential economic viability of the Goldstrike Project. The PEA also
outlines a number of opportunities for Project Enhancement.
• Potential additions to the bedrock resource base: drilling is ongoing at Goldstrike, and a
large number of areas, both peripheral to the current resource and in satellite targets, are
undrilled, insufficiently drilled or are currently undergoing drill testing. An updated resource
estimate is targeted for the first half of 2019.
• Potential additions to the resource through testing of surficial areas: Historic heap leach
pads, stockpiles and waste dumps are currently undergoing drill testing. While these areas
were considered sub-economic in the late 1990s, they may prove to be of greater interest today.
Much of this material, currently classified as waste, falls within the high walls of the PEA pits.
• Potential upgrade of inferred mineral resources to measured and indicated mineral
resources: Infill drilling for this purpose is ongoing.
• Silver credits: The Goldstrike Mine operated from 1988 through 1994 and, based on historical
records from operators Tenneco Minerals Co. and USMX, produced 209,000 oz of gold and
197,000 oz of silver, or approximately 0.95 oz of silver for every oz of gold recovered. Based on
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this, silver assays from approximately 550 Liberty Gold drill holes, and Liberty Gold
metallurgical testing carried out to date, the Company believes there is potential for significant
silver revenues from a future operation at Goldstrike. Liberty Gold intends to pursue a silver
resource study to quantify a silver resource, as well as a review of metallurgical test data to
estimate silver recoveries that could be expected at the Goldstrike Project.
• Optimization of the mine plan: The PEA represents the first step toward addressing the
viability of a mining operation at Goldstrike. Further work may identify opportunities for cost-
saving, such as waste haul optimization and improved pit sequencing through pit phasing.
Contract mining or a leased mine fleet will also be assessed.
• Further metallurgical test work: Metallurgical test work is currently underway in areas not
previously tested. This work may lead to changes in the recovery curves used for this study,
and more advanced studies may identify other ways to enhance recovery.
Jim Lincoln, Chief Operating Officer for Pilot Goldstrike, a subsidiary of Liberty Gold, stated, “In our
team’s operating history, we have consistently adopted a mine development approach that
emphasizes project de-risking through concurrent engineering, metallurgy, social license
considerations, procurement of process water and addressing what is necessary to a develop a mine
from advanced exploration projects. This has proven to add value to mining projects which I have
worked on such as Long Canyon, Nevada and Karma, Burkina Faso, West Africa. Liberty Gold’s
Goldstrike project continues to progress with this development philosophy.”
Further details of the PEA will be available in a NI 43-101 technical report to be filed on SEDAR within
45 days. For an illustrative graphic of the PEA highlights, as-mined resource blocks and mine site
layout, please click here:
https://libertygold.ca/images/sites/default/files/GS_PEA_Highlights.pdf
Future Plans
Liberty Gold is committed to a program of continuing to address key development requirements and
advance the project while further demonstrating economic viability in the most efficient way possible
through:
• Continued drilling to address potential resource conversion, possible additions to the resource
through drilling adjacent to the existing resource and drilling of superjacent surficial deposits,
and testing of new targets (in progress)
• Metallurgical testing (in progress)
• Geochemical characterization of waste rock
• Baseline studies (meteorology, hydrology, etc.)
• Procurement of process water (in progress)
• Expanded permitting for drilling (in progress)
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• Earning our social license (ongoing).
Restated Mineral Resource Estimate
The Company’s February 2018 mineral resource estimate formed the original basis for the PEA. This
resource estimate, and the Technical Report within which it is reported, was prepared by SRK, and
entitled “Independent Technical Report and Resource Estimate for the Goldstrike Project, Washington
County, Utah, USA” effective February 8, 2018 and signed March 21, 2018. (the “Technical Report”).
The Technical Report was authored by Independent Qualified Persons David Rowe, CPG, of SRK
Consulting (Canada) Inc., James N. Gray, P.Geo, of Advantage Geoservices and Gary Simmons,
MMSA of GL Simmons Consulting LLC. The report is available under the Company’s profile at
www.sedar.com and on the Company’s website at www.libertygold.ca.
In the course of preparing the PEA, a lower cut-off grade of 0.20 g/t gold (compared to 0.25 g/t gold in
the original resource) was determined to be more suitable for the economic assessment. Accordingly,
the mineral resource was restated to reflect this change (the mineral endowment at the 0.20 g/t gold
cut off was previously released in a sensitivity table in the Technical Report).The effective date for the
data used in the resource estimate remains February 8, 2018, and all other parameters remain the
same.
Restated Mineral Resource Statement for Goldstrike Project – Effective February 8, 2018*
Indicated Inferred
Tonnes
(1,000s)
Grade Au
(g/t)
Ounces
Au
(1,000s)
Tonnes
(1,000s)
Grade Au
(g/t)
Ounces Au
(1,000s)
Resource 57,846 0.50 925 19,603 0.47 296
* Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
There is no certainty that all or any part of the Mineral Resources estimated will be converted into
Mineral Reserves. The estimate of Mineral Resources may be materially affected by changes in
environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues that
may arise subsequent to the effective date. The CIM definitions were followed for the classification of
Indicated and Inferred Mineral Resources. The quantity and grade of reported Inferred Mineral
Resources in this estimation are uncertain in nature and there has been insufficient exploration to
define these Inferred Mineral Resources as an Indicated Mineral Resource and it is uncertain if further
exploration will result in upgrading them to an Indicated Mineral Resource category. All figures have
been rounded to reflect the relative precision of the estimates. Mineral Resources are reported at a
cut-off grade of 0.20 g/t gold based on $1,500 per troy ounce gold and gold metallurgical recoveries on
a sliding scale by grade.
Qualified Persons
The following persons are the Company's designated Qualified Persons for this news release within
the meaning of National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101")
and have reviewed and approved the information contained in this news release and verified all data