Minnova Corp. Announces Positive Feasibility Study for the PL Gold Mine
Minnova Corp.
MCI:TSXV
www.minnovacorp.ca
Office: +1 647 985 2785
365 Bay Street, Suite 400
Toronto, Ontario M5H 2V1
Minnova Corp. Announces Positive Feasibility Study for the PL Gold Mine
November 1, 2017, Toronto, Ontario – Minnova Corp. (TSXV: MCI, OTC Pink: AGRDF, "Minnova” or
the “Company”), an advanced-stage mining exploration and gold development company focused on
the advancement and re- start of our 100% owned PL Gold Mine in central Manitoba is pleased to
announce results of the Feasibility Study (“2017 FS”) considering the re-start of the PL Gold Mine
initially as an underground mine located near, Sherridon, Manitoba. The FS 2017 was prepared by A-
Z Mining Professionals Ltd. (“AZM”) based on an updated mineral resource estimate prepared by Leon
McGarry of CSA Global Pty Ltd. (“CSA”). Currencies reported below are in Canadian dollars unless
otherwise specified.
Highlights from the Feasibility Study Base Case, which uses a long term gold price of US$1, 250 per
ounce gold and USD:CAD exchange rate of 1.30, include:
• Pre-tax Net Present Value ("NPV") at a 5% discount rate of $55.9 million and an Internal
Rate of Return ("IRR") of 65%;
• After-tax NPV at a 5% discount rate of $36.7 million and IRR of 53%;
• Proven & Probable Mineral Reserves of 259,000 ounces of gold (1.27 million tonnes at
6.34 g/t Au), a subset of the Measured and Indicated Resources of 282,500 ounces of
gold (1.48 million tonnes at 5.93 g/t Au). The 2017 FS excludes Inferred Resources of
301,700 ounces of gold (1.84 million tonnes at 5.08 g/t Au)
• After-tax payback of 1.5 years after plant start-up;
• Minimum 5 year mine life, mining and processing 1.27 million tonnes, averaging 6.34
grams per tonne ("g/t") gold, and producing 232,463 ounces of gold;
Underground production amounts to 0.95 million tonnes at an average diluted
grade of 7.00 g/t gold;
Open pit production amounts to 0.31 million tonnes at an average grade of 4.35 g/t
gold;
• Total payable gold production of 232,463 ounces with an average Life of Mine (“LOM”)
cash cost of US$715 per ounce and average AISC of US$942 per ounce;
Years 2 to 5 mill feed planned at 788 tpd to produce an average of 45,637 ounces;
• Pre-production (Year -1) capital cost of $35.35 million including a 10% for contingency,
environmental bonds and initial working capital;
In Year 1, the projected $12.5 million capital expenditure is offset by net income of
$38.5 million;
• Sustaining Capital and Closure Costs of $54.16 million over LOM;
• Opportunity to increase potentially mineable ounces through;
a) conversion of inferred mineral resources to the measured and indicated
resource categories through further drilling along strike and down dip and;
b) expansion and delineation of resources on strike to the north of the current
resource area, where mineralization has been traced for a further 320 metres on
surface.
Minnova Corp.
MCI:TSXV
www.minnovacorp.ca
Office: +1 647 985 2785
365 Bay Street, Suite 400
Toronto, Ontario M5H 2V1
Gorden Glenn, President & CEO of Minnova commented, "We are very pleased with the feasibility study
results. This detailed study significantly de-risks the project and supports that the re-start of the PL mine
is economically robust. The low pre-production capital cost, low operating and All-In-Sustaining-Cost’s
(“AISC”), short time line to production, quick payback of 1. 5 years from the start of production and a
minimum 5 year mine life offer a significant value proposition for all stakeholders.
Our fo cus on upgrading the PL resource and de -risking the mine development plan positions the
company to advance towards production. In addition to seeking a market re-rating as an emerging gold
producer we have identified further opportunities to add further value by expanding the potentially
minable resource, further enhancing already robust base case project economics.
These results mark another significant milestone for Minnova and we can now move forward with
strategic plans to seek a partner or independently finance and initiate construction/rehabilitation of the
mine and mill infrastructure starting in early 2018 toward achieving initial production in early 2019.”
Comparison to the July 2014 Preliminary Economic Assessment (the “2014 PEA”)
The key differences in the 2017 FS from the 2014 PEA include:
• Updated mineral resource estimate – conducted by Leon McGarry of CSA Global Pty
Ltd. (“CSA”) and based on additional 8,919 metres of infill drilling during the winter-
spring 2017 season;
• Maiden reserve estimate – additional delineation drilling supports Proven and Probable
reserve estimate of 259,000 ounces of gold in 1.27 million tonnes at a diluted grade
6.34 g/t Au.
• Revised and more detailed mine operating schedule – operating and devel opment
schedule targets higher grade mineralization at north end of the deposit and defers
refurbishment and future production from area of past production until after year 1;
• Revised production schedule – shorter forecast mine life but based on only Proven and
Probable reserves;
• Updated process flow sheet – incorporates new bank of cleaner flotation cells, an
intense leach reactor for the gravity concentrate and more detailed refurbishment and
upgrade schedules for existing equipment;
• Addition of a water treatment plant;
• Addition of Ragged TMF dam expansions and discharge point upgrades;
• Addition of onsite assay lab services;
• Addition of a construction and on site mine camp and related site infrastructure;
• Additional refurbishment and upgrade considerations for the powerline, access road,
process plant and mine site; and
• Updated capital and operating costs based on improved detail, information and quotes.
PL Mine Execution and Development
Minnova Corp.
MCI:TSXV
www.minnovacorp.ca
Office: +1 647 985 2785
365 Bay Street, Suite 400
Toronto, Ontario M5H 2V1
The PL Mine re-start plan includes the following:
Project Economic Assessment
The PL Mine was assessed using a discounted cashflow approach with a Base Case long -term gold
price of US$1,250/oz and a USD:CAD exchange rate of 1.30.
The results of the economic analysis, summarized in Table 1 and Table 2, support re -starting
operations. Undiscounted after -tax cash flow amounts to $46 .8 million and returns a robust IRR of
53%.
Table1: Results of the Economic Analysis
IRR Pre-Tax 65% After-Tax 53%
Undiscounted NPV ($000) $70,842 $46,827
NPV5% ($000) $55,903 $36,701
NPV8% ($000) $48,576 $31,683
Payback
2.5 yrs from start of development
1.5 yrs from start of production
Development, Refurbishment and Pre-Production Year -1 (starts January 1, 2018)
• The overall construction and commissioning period for the Project is estimated to be
approximately 15 months from the start of the development to first gold pour.
• During Year -1, underground mine development will commence utilizing the existing portal
and upper por tions of the ramp. The time and costs to develop a new ramp targeting
higher grade mineralization in new mining areas at the north end of the deposit versus
dewatering and rehabilitating the old workings at the south end of the deposit was
assessed to be of lower risk and have greater economic impact. Initial mining and stope
development will target the lower and main mineralized structure approximately 400
meters north of the portal. Refurbishment and development of the old mining areas in the
southern portion of the deposit utilizing existing infrastructure will be assessed in year one.
• Underground mining will be carried out by the Up Dip Panel Stoping method, with stopes
developed and mined at the inclination of the ore zones. Mining will utilize Alimak’s and
slusher’s in the stopes and mobile rubber tired mining equipment elsewhere.
Underground haul trucks will haul ore directly to surface via the levels and ramp.
• The past producing mine included a conventional processing plant comprising crushing,
grinding, gravity concentration (jig), flotation and regrinding, Merrill Crowe, leaching and
refining for gold recovery to dore bars. The crushing circuit and processing plant buildings
and majority of the old equipment exist. Much of the existing equipment and facilities can
be refurbished and upgraded, as required, for use again.
• The past employed Ragged Tailings Management Facility (TMF) will be recommissioned.
To utilize the existing TMF it must be added to Schedule 2 of the Metal Mining Effluent
Regulations (MMER) to re-designate it as a tailings disposal area. The Ragged TMF has
the capacity to store all of the tailings not placed back underground for the present
projected life of the mine, with addition of some dams over the life of the project.
Minnova Corp.
MCI:TSXV
www.minnovacorp.ca
Office: +1 647 985 2785
365 Bay Street, Suite 400
Toronto, Ontario M5H 2V1
Forecast Gold Production
AZM estimates total mill feed to be 1.27 million tonnes at an average diluted grade of 6.34 g/t. Of this
approximately 0.95 million tonnes at an average diluted grade of 7. 00 g/t would be sourced from
underground operations and 0.31 million tonnes would be sourced from shallow open pits at an average
diluted grade of 4.35 g/t Au.
Total recoverable gold production over the LOM is estimated at 232,463 ounces for an average annual
production rate of approximately 46,493 ounces of gold (see Figure 1).
Figure 1: Summary of Projected Annual Gold Production, Cash Operating Costs and AISC
Table 2: Results of the Cashflow Analysis
Undiscounted
LOM Total
($000)
Discounted
at 5%
($000)
Discounted
at 8%
($000)
IRR
(%)
Gross Sales $377,376 $314,890 $284,148
Less royalties $11,286 $9,417 $8,498
Less selling expenses $1,163 $970 $876
Net Sales Revenue $364,927 $304,503 $274,774
Mining costs $131,751 $109,305 $98,317
Processing costs $39,367 $38,492 $34,535
G&A costs $37,530 $30,925 $27,727
Total cash operating costs $215,861 $178,722 $160,579
Net cash operating margin $204,575 $169,305 $152,081
Initial capital $35,352 $33,668 $32,733
Sustaining capital $54,158 $45,626 $41,384
Net cash flow before tax $70,842 $55,903 $48,576 65%
Taxes payable $24,015 $19,202 $16,893
Net cash flow after tax $46,827 $36,701 $31,683 53%
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Year 1 Year 2 Year 3 Year 4 Year 5
Gold Production Cash Costs (US$/oz) AISC (US$/oz)
Ounces Gold Production
Costs US$ per Ounce
Minnova Corp.
MCI:TSXV
www.minnovacorp.ca
Office: +1 647 985 2785
365 Bay Street, Suite 400
Toronto, Ontario M5H 2V1
PL Deposit Resources
The PL gold deposit mineral resource was updated to include an additional 8,919 metres of drilling
completed during the winter-spring of 2017. Infill drilling to upgrade Measured, Indicated and Inferred
resources from surface to a depth of -450 metres resulted in a maiden Proven and Probable reserve
estimate containing 215,000 ounces of gold in 954,000 tonnes grading 7.00 g/t gold. Measured and
Indicated mineral resources total 282,500 ounces of gold in 1,481,000 tonnes grading 5.93 g/t gold and
Inferred mineral resources of 301,700 ounces of gold in 1,846,000 tonnes grading 5.08 g/t gold. See
mineral resource summary in Table 3 below.
Table 3: PL Deposit Mineral Resource Estimate as of November 1, 2017
Category
Au
Cut-off
(g/t)
Tonnes
(Kt)
Au Grade
(g/t)
Contained
Au oz
Measured 2.5 425 7.53 102,900
Indicated 2.5 1,056 5.29 179,600
M+I 2.5 1,481 5.93 282,500
Inferred 2.5 1,846 5.08 301,700
Notes PL Deposit:
1. The volume of the historical mined areas was depleted from the resource estimate.
2. Grade capping values range from 30 to 45 g/t Au and affected 16 samples.
3. Bulk densities of 2.81 t/m3 were used for tonnage calculations.
4. A gold price of US$1,250/oz and an exchange rate of US$0.80=C$1.00 was utilized in the Au cut-off grade calculations of 2.5
g/t underground. Operating costs of C$125/t. Process recovery used was 95%.
5. Tonnes and ounces have been rounded to reflect the relative accuracy of the mineral resource estimate; therefore numbers may
not total correctly.
6. 1 troy ounce equals 31.10348 grams
7. Mineral Resource tonnes quoted are not diluted.
8. The NI 43-101 mineral resources in this press release were estimated using the Canadian Institute of Mining, Metallurgy and
Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM
Standing Committee on Reserve Definitions and adopted by CIM Council.
9. Mineral resources are not mineral reserves and by definition do not demonstrate economic viability. This mineral r esource
estimate includes inferred mineral resources that are normally considered too speculative geologically to have economic
considerations applied to them that would enable them to be categorized as mineral reserves. There is also no certainty that
these inferred mineral resources will be converted to the measured and indicated resource categories through further drilling,
or into mineral reserves, once economic considerations are applied.
Mining Reserve Estimate
The Mineral Reserve for the Project was estimated by Malcolm Buck, P. Eng., and an independent
Qualified Person of AZM. All Mineral Reserves are Proven and Probable Mineral Reserves. The
Mineral Reserves are not in addition to the Mineral Resources, but are a subset thereof. The QP has
not identified any risk including legal, political, or environmental that could materially affect potential
Mineral Reserves development. See mineral reserve summary in Table 4 below.
Minnova Corp.
MCI:TSXV
www.minnovacorp.ca
Office: +1 647 985 2785
365 Bay Street, Suite 400
Toronto, Ontario M5H 2V1
Table 4: PL Deposit Estimated Mineral Reserves as of November 1, 2017
Category Diluted Tonnes
(Kt)
Au Grade
(g/t)
Contained Au
(Koz)
Underground
Proven 367 7.77 92
Probable 586 6.51 123
Open Pits
Proven 87 4.71 13
Probable 226 4.21 31
Total Proven and Probable 1,266 6.34 259
1. Using a gold price of US$1,250/oz and an exchange rate of US$0.77 to CDN$1.00.
2. A gold cut-off grade of 4.0 g/t for underground mining and 2.7 g/t for open pit mining.
3. Rounding as required by reporting guidelines may result in summation differences.
Both the Mineral Resource and Mineral Reserve Estimates take into consideration on- site operating
costs (e.g. mining, processing, site services, general and administration, royalties), metallurgical
recoveries, and selling costs. In addition, the reserves incorporate allowances for mining recovery and
dilution, and overall economic viability.
Mining Model Construction
The mine plan developed for the feasibility study considers the re -opening of the PL mine initially
utilizing underground mining techniques as the environmental permits for this type of mining are already
in effect and valid. The future development of open pits has been factored in and is subject to amending
existing Environment Act License 1207E to include open pit mining methods.
The relative contribution of open pit and underground feed to the mill has been optimized so as to
generate the highest value early in the mine life. This is done to accelerate capital payback and
maximize cash flow and hence deliver the highest Net Present Value. The defining variables used for
this work are summarized in Table 5 and Table 6 below.
Table 5: Parameters used to create the financial model for the PL Gold Deposit
Parameter Unit Values
Au price US$/oz 1,250
Exchange rate USD:CAD 1.30
Au recovery % 90
Au payable % 99
Selling costs (Au refining, transportation and insurance) US$/payable oz 5
Table 6: PL Gold Mine Estimated Unit Operating Costs
Item Unit Operating Costs
Underground development and mining costs:
Typical lateral development cost $4,243 / m for drift and ramp development
Production stoping cost $65.38 / t potentially economic mineralization
Underground mine indirect operating costs $43.29 / t potentially economic mineralization
Underground haul to mill $3.01 / t potentially economic mineralization
Processing & Tailings cost $24.37 / t processed
Surface Services & Facilities $14.08 / t processed
Minnova Corp.
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www.minnovacorp.ca
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General and Administration cost $34.72 / t processed
Production royalties 3% at PL deposit
Projected corporate taxes 15% federal & 12% provincial
The initial mine plan is based on a ramp access underground mining operation, approximately 590
tonnes per day to a vertical depth of 150 meters. Access ramps will be driven at a maximum grade of
15% with a 4.5 m by 4.5 m profile to accommodate 30-tonne haul trucks.
Underground mining of the mineralized zones will be at a proposed rate of approximately 590 tonnes
per day or 216,000 tonnes per year. Open pit mining will supplement underground production for Years
2 to 5 with approximately 190 tonnes per day or yearly production of approximately 68,000 tonnes to
111,000 tonnes of reserves.
The proposed mining method is Up Dip Panel Stoping, with stopes developed and mined at the
inclination of the ore zones. Mining will utilize Alimak ’s and slusher’s in the stopes and mobile rubber
tired mining equipment elsewhere. Underground haul trucks will haul ore directly to surface via the
levels and ramp.
Mining recovery and dilution factors were applied to each mining shape based on the mining method
used. Average external dilution for the production stopes was calculated to be 12%.
Levels will vary up to a maximum spacing of 3 5 metres. Mineralized zone development will be driven
using a 4.0 m x 3.5 m profile. All stopes will be backfilled with hydraulic backfill to prevent caving. Mine
water and ground water will be collected at the level sumps and pumped to surface to be treated and
discharged to the Ragged TMF.
The 2017 FS mine plan focusses on accessing and mining higher value material early in the mine life.
The plan commences with the mining of lower and main zones at the north end of the PL deposit.
Future development of small open pits to access the near surface portions of the orebody would be
done using conventional open pit equipment and technologies.
The mine would operate 350 days/year . Underground mining would take place on two 10 hour shifts
per day basis with four rotating crews. The mill would operate on a two 12 hour shifts per day with two
rotating crews.
Processing
The existing process plant has capacity of approximately 750-780 tonnes per day and has been on care
and maintenance since April 1989. The plant included a conventional processing flow sheet comprising
crushing, grinding, gravity concentration (jig), flotation and regrinding, Merrill Crowe, leaching and
refining for gold recovery to dore bars. The crushing circuit and processing plant buildings and majority
of the old equipment exist and will be refurbished or replaced as required. For example the old gravity
circuit will be replaced with a Knelson concentrator circuit. In addition the existing Merrill Crowe circuit
and one drum filter will be replaced by modern equipment. New additions to the plant will be a new
bank of cleaner flotation cells, an intense leach reactor for the gravity concentrate, all equipment for the
refinery room, piping and all electri cal cabling and mill electrical control systems. A modern process
control system will be included in the plant.
The initial throughput rate for this study is approximately 590 tonnes per day or 216,000 tonnes per
year which will yield a nominal grind ( P80) of approximately 110 microns utilizing the existing
conventional crushing and grinding circuits. Based on planned tonnage and grade and assuming
Minnova Corp.
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www.minnovacorp.ca
Office: +1 647 985 2785
365 Bay Street, Suite 400
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continuous stable operation, an overall gold recovery of 90% is projected. This recovery estimate would
be confirmed by additional test work on samples from a planned test mining and bulk sample program.
Infrastructure
The PL Mine site has considerable existing infrastructure. The planned re-start of operations envisions
the upgrading or construction of the following key infrastructure items:
• The existing 9 km year-round access road to the processing plant site;
• Re-establishing the electrical connection to Manitoba Hydro power grid by refurbishing the
existing 138kV transmission line located adjacent to the access road;
• Distribution powerline at 25 kV from processing plant site to the mine portal;
• Refurbishing and upgrading the existing process plant;
• Utilizing the existing and past used Ragged TMF by having it listed on Schedule 2 of the
MMER;
• Refurbishment and upgrade of existing administration office, mine dry, maintenance shop
and warehouse facilities;
• Mine operations office and emergency facilities at the mine portals;
• Tailings effluent water treatment plant; and
• Process and fire water storage and distribution;
The past employed Ragged Tailings Management Facility (“Ragged TMF”), which is presently in the
process of being added to Schedule 2 of the Metal Mining Effluent Regulations (MMER), designating
the area as a tailings disposal area, will be recommissioned. The Ragged TMF has the capacity to
store all of the tailings not placed back underground for the present projected life of the mine, with
addition of some dams over the life of the project.
Environment, Permits, Reclamation, First Nations and Stakeholder Engagement
The PL Mine is a past producing mine that operated under E nvironment Act License 1207E from late
1987 through April 1989. Development and operations included a portal, ramp, over 7,000 met res of
underground workings, construction and operation of a conventional processing plant with a nameplate
capacity of 1,000 tonnes per day with over 350,000 tonnes of tailings deposited into the Ragged TMF.
As such the area of the mine site has already been environmental ly impacted. Our re -start plan
maximizes the use of existing infrastructure and is designed to minimize short - and long- term
environmental impacts, and to maximize lasting benefits to local communities, employees, and
shareholders. Th e Company’s goal is to create a sustainable operation that employs best available
technology and practices in all aspects of the design and operation, and considers both the short and
longer term effects on the environment and its surroundings.
The Company maintains a positive and active dialogue with local communities and First Nations. As we
advance towards operations our community and social relations program will continue to focus on
maximizing employment and contracting opportunities for local stakeholders.
Proposed initial production from underground operations only , at a rate less than 600 tonnes per day
does not require any additional permits and is not considered a designated project under item 16(c) of
the Schedule to the Regulations. As a result, the company is not required to submit a Project Description
under the Canadian Environmental Assessment Act (CEAA).