Montage Announces Koné Gold Project DFS with After-Tax NPV of $746M and 35% IRR
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Montage Announces Koné Gold Project DFS with After-Tax NPV of $746M and 35% IRR
Vancouver, British Columbia — February 14, 2022 — Montage Gold Corp. (“Montage” or the “Company”)
(TSXV: MAU) (OTCPK: MAUTF) is pleased to announce the results of the Definitive Feasibility Study (the
“DFS” or the “Study”) for the Koné Gold Project (“Koné Gold Project”, “Project”, or “KGP”) in Côte d’Ivoire.
The DFS was prepared by Lycopodium Minerals Pty Ltd. in accordance with Canadian Sec urities
Administrators’ National Instrument 43 -101 Standards of Disclosure for Mineral Projects (“NI 43-101”).
Please note that all financial figures in this press release are in United States dollars, unless otherwise
noted.
HIGHLIGHTS
• Significant Gold Reserves and Production – A Strategic Asset in Côte d’Ivoire
o 3.42Moz of Probable Mineral Reserves
o 3.06Moz of gold produced over a 14.8-year Life-of-Mine (“LOM”)
o Average annual gold production of 257koz in first 9 years; 207koz/year LOM
o Peak production 320koz in year 2
• Strong Financial Metrics with Improved Capital Efficiency
o $746M after-tax NPV5% and 35% IRR at base case $1,600 gold price
o $1,043M after-tax NPV5% and 47% IRR at $1,800 gold price
o LOM AISC1 of $933/payable oz
o All production from open pits with LOM strip ratio of 0.90:1
o Pre-production capital requirement of $544M
• Optimizations Improve Economics and Streamline Operations
o $153M reduction in sustaining capital vs. PEA
o 40% reduction in TSF surface area
o No road diversion
• Moving Forward to Unlock Value
o Permitting process well underway; all requisite approvals expected in Q3 2022
o Project financing process to commence soon
o Aggressive satellite pit exploration ongoing
o Well-funded with ~C$10M for permitting and exploration
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Hugh Stuart, Montage CEO commented,
“The completion of the DFS for the Koné Gold Project is a tremendous milestone for Montage and is
demonstrative of the hard work , dedication and expertise of our team. In the 15 months since our IPO,
we have transformed Montage from an exploration company with a 1.5 Moz Inferred Mineral Resource,
into a development company with Probable Reserves of over 3.4 Moz with anticipated average gold
production of 257koz/year in the first 9 years, peaking at 320koz.
“We are clearly extremely pleased at how well the DFS compares to the May 2021 Preliminary Economic
Assessment (“PEA”), with nearly all metrics improving, under the same base case gold price of $1,600/oz.
Critical to these improvements are the numerous optimizations that were undertaken as part of the
feasibility process, the most significant of which is the change in tailings management which has reduced
our sustaining capital requirements by $146 million. We have also optimized the front -end of the mill
through the use of High -Pressure Grinding Rolls instead of a SAG Mill, driving a 19% reduction in unit
power requirements, a direct benefit to the operating cost profile. In addition, we have revised the mine
plan to avoid diverting the newly asphalted road without any material impact to the production profile of
the project.
“We will continue to move for ward advancing the KGP to add value. We plan to engage project finance
advisors in the near- term to solicit the market for capital for construction finance. Discussions thus far
show strong support for the project from numerous potential funding partners, and we are excited to
start that process. Permitting efforts continue and we are on pace to submit the ESIA at the end of this
month to begin the government review process. Our balance sheet remains strong, with available liquidity
of approximately C$10 mi llion, which will provide us ample budget for regional exploration and the
permitting process.”
Summary operating and financial metrics from the DFS are presented in Table 1 below along with a
comparison to the PEA. A summary model with annual projections over the project life has been included
as Appendix 1 to this release.
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Table 1 – DFS Summary Metrics
Metrics Units DFS PEA
Pit Optimization Gold Price Assumption $/oz $1,250 $1,250
Financial Model Base Case Gold Price $/oz $1,600 $1,600
Life of Mine years 14.8 14.7
Total Mineralized Material Mined Mt 161.1 161.1
Contained Gold Moz 3.42 3.37
Strip Ratio w:o 0.90:1 0.93:1
Annual Mining Rate Mtpa 35.0 35.0
Annual Milling Rate (Mill Throughput) Mtpa 11.0 11.0
Average Head Grade, first 3 years Au g/t 0.93 0.94
Average Head Grade, first 9 Years Au g/t 0.82 0.79
Average Head Grade, LOM Au g/t 0.66 0.65
Processing Recovery, first 3 Years % 91.1% 91.2%
Processing Recovery, first 9 Years % 90.2% 90.2%
Processing Recovery, LOM % 89.3% 89.4%
Total Gold Production, LOM Moz 3.06 3.01
Average Gold Production, first 3 years koz/yr 285 294
Average Gold Production, first 9 years koz/yr 257 249
Average Gold Production, LOM koz/yr 207 205
Mining Cost Per Tonne Mined, LOM $/t, mined $2.73 $2.90
Processing Cost, LOM (including rehandle) $/t, processed $8.04 $7.20
G&A, LOM $/t, processed $0.93 $0.86
Royalties, LOM $/t, processed $1.97 $1.93
Total Cash Costs1, LOM $/t, processed $15.89 $15.39
Average AISC1, LOM $/payable oz $933 $975
Initial Capital Expenditure (including contingency) $M $543.9 $489.9
Sustaining Capital (incl. Closure) $M $291.7 $444.9
NPV5%, pre-tax (100%) $M $991.7 $928.7
Pre-tax IRR % 39.6% 45.1%
NPV5%, after-tax (100%) $M $746.2 $652.2
After-tax IRR % 34.8% 30.9%
Payback Period years 2.7 2.8
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DETAILS
Koné Gold Project Overview
The Koné Gold Project is located approximately 590km north-west of Abidjan (Figure 1), the commercial
capital of Côte d’Ivoire. The Project comprises two exploration permit s (PR262 and PR 748) covering
662km2, a third exploration permit pending documentation (382km 2), and two a pplications covering a
further 398km2 all within trucking distance of Koné (Figure 1).
The communities of Fadiadougou and Batogo lie 5km east and west respectively of the resource area with
the nearest major centre at Séguéla, 80km to the south. The Project area is accessible year-round with an
asphalt highway within 500m of the proposed plant location.
The Project area is largely devoid of habitation with subsistence farming and cashew plantations the
dominant land use.
Figure 1: Location of Koné Gold Project
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Mineral Resources and Reserves Estimates
Mineral Resources were estimated for the Koné deposit by Multiple Indicator Kriging ( “MIK”) by MPR
Geological Consultants Pty Ltd. Based on 102,249m drilling completed up to July 31, 2021. Table 2 shows
the Indicated and Inferred Mineral Resource estimates at a range of cut -off grades reported within an
optimal pit shell generated at a gold price of $1,500/oz.
Table 2 – Mineral Resource Estimate
Cut-off Grade Indicated Inferred
Au g/t Mt Au g/t Au Moz Mt Au g/t Au Moz
0.1 278 0.51 4.56 32 0.35 0.36
0.2 225 0.59 4.27 22 0.45 0.32
0.3 168 0.70 3.78 14 0.56 0.25
0.4 128 0.82 3.37 9.0 0.69 0.20
0.5 99.1 0.92 2.93 5.9 0.81 0.16
0.6 76.9 1.03 2.55 3.9 0.95 0.12
0.7 59.9 1.14 2.20 3.2 1.1 0.10
0.8 46.8 1.25 1.88 1.9 1.2 0.07
Notes
1. Indicated Mineral Resources and Inferred Mineral Resources are reported in accordance with NI 43- 101
with an effective date of August 12, 2021, for the Koné deposit within the KGP.
2. The updated mineral resource estimate is reported on a 100% basis and is constrained within an optimal
pit shell generated at a gold price of US$1,500/ounce.
3. The identified Mineral Resources are classified according to the “CIM” definitions of Indicated Mineral
Resources and Inferred Mineral Resources.
4. The updated mineral resource estimate was prepared by Mr. Jonathon Abbott of MPR Geological
Consultants of Perth, Australia who is a Qualified Person as defined by NI 43 -101.
5. The estimates at 0.2g/t cut-off grade represent the base case or preferred scenario.
6. Mineral Resources are reported inclusive of Mineral Reserves.
7. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
8. The estimates may be materially affected by environmental, permitting, legal, marketing, or other
relevant issues. Please see “Forward Looking Statements” below and the technical report for the Koné
Gold Project that will be prepared in accordance with National Instrument 43 -101 and filed on SEDAR.
The maiden Mineral Reserve estimate was prepared by Carci Mining Consultants Ltd., dated as of February
14, 2022, and is presented below in Table 3. Only Probable Reserves have been incorporated into the
mine plan and economic analysis.
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Table 3 – Open Pit Mineral Reserve Estimate
Oxide Transition Fresh Total
Classification Mt
Au
g/t
Au
Moz Mt
Au
g/t
Au
Moz Mt
Au
g/t
Au
Moz Mt
Au
g/t
Au
Moz
South
Pit Probable 9.8 0.57 0.18 7.9 0.56 0.14 141.4 0.67 3.05 159.1 0.66 3.39
North
Pit Probable 0.9 0.47 0.01 0.4 0.46 0.01 0.6 0.57 0.01 1.9 0.50 0.03
Total Probable 10.7 0.56 0.19 8.3 0.56 0.15 142.1 0.67 3.06 161.1 0.66 3.42
Notes
1. The Mineral Reserves are classified according to the “CIM” definitions with an effective date of February
14, 2022.
2. All Mineral Reserves were classified as Probable based on the Indicated Mineral Resource
3. The Mineral Reserve cut off grade range from 0.19 g/t to 0.31g/t based on a $1,250/oz gold price
4. The Mineral Reserve statement was prepared by Joeline McGrath of Carci Mining Consultants Ltd. , who is
a Qualified Person as defined by NI 43-101.
5. The figures in this tables are rounded to reflect the precision of the estimates and may include rounding
errors.
6. The estimates may be materially affected by environmental, permitting, legal, marketing, or other relevant
issues. Please see “Forward Looking Statements” below and the technical report for the Koné Gold Project
that will be prepared in accordance with National Instrument 43 -101 and filed on SEDAR.
Definitive Feasibility Study Overview
The DFS is based on an open -pit gold mine feeding a gold processing facility (Figure 2). The Project will
produce an average of approximately 207,000 ounces of gold per year over the life of the mine. The initial
life of the Project is 14.8 years with upside potential through re gional exploration and identification of
satellite pits targeted at higher grades that can be mined and trucked to a central processing facility.
Initial capital to fund construction and commissioning is estimated at $ 543.9 million with total capital
estimated at $835.6 million over the LOM including closure costs. All-in sustaining costs1 are estimated at
$787 per ounce during the first three years of the P roject, well below the current industry average , and
$933 per ounce over the life of the Project. P rocessing costs of just $8.04/t position the Project to take
advantage of processing satellite pits identified through exploration.
The financial analysis performed from the results of this DFS demonstrates the economic viability of the
Koné Gold Project using the base case gold price assumption of $1,600 per ounce. This results in an after-
tax net present value cashflow at a 5% discount rate (NPV 5%) of $746.2 million and an after- tax IRR of
34.8% (both on a 100% basis).
The Company believes there are additional opportunities to further strengthen the P roject through the
continued drilling and testing of satellite pit targets through the property package.
The study was prepared for Montage by Lycopodium Minerals Pty Ltd. Other discipline specific consultants
were:
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• Mineral Resource Estimate: MPR Geological Consultants Pty Ltd.
• Metallurgical Testwork: SGS Lakefield
• Metallurgical oversight: MPH Minerals Consultancy Ltd.
• Tailings and Water Storage: Knight Piésold Pty Ltd.
• Hydrogeology: Australasian Groundwater & Environmental Consultants (AGE)
• Environment: Mineesia Ltd.
• Mineral Reserve Estimate
and Mining: Carci Mining Consultants Ltd
Key Differences in Project Scope Compared to PEA
As part of the feasibility process, several areas of the Project were re-evaluated to optimize the DFS:
• The tailings storage strategy was revised to incorporate in -pit deposition after open pit mining is
completed in year 9. This reduces sustaining capital by $146.4M compared to the PEA, reduces the
surface footprint of the TSF by 40% and mitigates environmental impact (Figure 2).
• The mine plan was revised to reduce the size of the North Pit such that road diversion could be
avoided. This has minimal economic impact but improves the Project permitting process due to the
reduction of the footprint within the Toundia Forest Reserve.
• Replacement of the SAG Mill with High-Pressure Grinding Rolls. The use of HPGR’s reduces the power
required for grinding by 19%, positively impacting operating costs.
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Figure 2: Koné Site Layout
Mining
Mining operations will be carried out by a contractor on a unit cost per tonne basis utilising a mining fleet
comprised of 145t rigid body haul trucks with suitably sized loading units at a rate of 35Mtpa. The grade
of the processed material in the first nine years is enhanced by using an elevated cut off grade and
stockpiling the lower grade material for later processing.
Pit optimizations were completed based on slope angle recommendations from SRK Consulting of 48° for
oxide, 68° for transition and 68° for fresh rock . The overall slope angle inclusive of ramps and berms is
approximately 55°.
The optimizations were run using estimates of processing cost and recovery data. Mining costs were
broken into base and incremental mining costs, derived from competitive bids received from West African
mining contractors.