Pinecrest’S Enchi GOLD Project Update
PINECREST RESOURCES LTD.
News Release
PINECREST’S ENCHI GOLD PROJECT UPDATE
November 6, 2019 TSX-V: PCR
Vancouver, British Columbia: Pinecrest Resources Ltd. (“Pinecrest” or the “Company”) (TSX-V:
PCR) announces that the Company is evaluating options to build value for its shareholders on the
Company’s 100% owned Enchi Gold Project (“Enchi or “the Project”) in Ghana, West Africa. As
part of this review , given the recent r ise in the gold price to US$1,500/oz and changes to both
capital and operating costs since completion of the Preliminary Economic Assessment (the “PEA”
or the “Study”) in 2016, the Company is evaluating the metal price sensitivity analysis completed
by WSP Canada Inc. (“WSP”) in the PEA completed on the Enchi Project dated January 27, 2016.
Enchi is comprised of eight licenses covering a 50 kilometres (km) strike length of the Bibiani
Shear zone , a regional scale structure that hosts a number of major gold mines and deposits
including Kinross Gold Corporation’s (“Kinross”) Chirano Mine located 70 km north-east of the
Project and the Bibiani Gold Deposit located 90 km north -east of the Project . The preliminary
economic assessment is preliminary in nature, that it includes inferred mineral resources that are
considered too speculative geologically to have the economic considerations applied to them that
would enable them to be categorized as mineral reserves, and there is no certainty that the
preliminary economic assessment will be realized.
Financial Model Sensitivity Analysis
The financial models in the PEA prepared by WSP were completed using a base case gold price
of US$1,300 per ounce . The PEA included metal price sensitivities detailed in the table below
(See Table 22.9, Page 171 of the PEA); all inputs to the financial models remain unchanged. All
amounts are in US$ unless otherwise specified. (see the full Technical Report and Update of the
Preliminary Economic Assessment on The Enchi Gold Project, issued January 27, 2016) available
on Sedar under Pinecrest Resources or on www.pinecrestresources.com.
Table 1 Financial Model Sensitivity Analysis
Description Units
Pre-Tax Gold Price Scenarios (US$/oz)
$1,170 $1,300 $1,430 $1,560
Owner
Operated
NPV (5%
discount) US$ M $49,899 $101,882 $153,865 $205,848
IRR % 20% 34% 47% 59%
Payback Year 3.8 2.8 2.5 2.3
Cumulative
Cash Flow US$ M $80,028 $145,126 $210,225 $275,323
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Description Units
Post-Tax Gold Price Scenarios (US$/oz)
$1,170 $1,300 $1,430 $1,560
Owner
Operated
NPV (5%
discount) US$ M $28,236 $62,399 $95,961 $129,750
IRR % 15% 25% 34% 43%
Payback Year 4.6 3.4 2.9 2.6
Cumulative
Cash Flow US$ M $50,501 $92,502 $135,130 $177,444
Sensitivity on Total Capital Costs and Contingencies (pre-tax)
Description Unit Net Present Value (US$ 000's)
% Variation % 30% 15% 0% -15% -30%
Total Capital Costs
with Contingencies US$ 000's 107,204 95,597 83,989 76,633 60,774
Discount Rate (%)
0% 75,171 86,779 98,387 105,742 121,602
5% 52,139 62,776 73,413 81,674 94,687
10% 34,952 44,967 54,982 63,633 75,012
IRR % 27% 35% 44% 57% 74%
Payback period years 2.80 2.56 2.32 2.08 1.89
Sensitivity on Operating Costs (pre-tax)
Description Unit Net Present Value (US$ 000's)
% Variation % 30% 15% 0% -15% -30%
Total Operating Costs US$ 000's 606,465 537,201 467,937 398,673 329,409
Discount Rate (%)
0% (40,235) 29,076 98,387 167,697 237,008
5% (35,783) 18,815 73,413 128,011 182,609
10% (33,142) 10,920 54,982 99,044 143,106
IRR % N/A 20% 44% 62% 77%
Payback period years N/A 2.61 2.32 2.14 2.01
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Ryan King, Chief Executive Officer stated, “We have continued to evaluate options for the Enchi
Gold Project which hosts wide-spread Ashanti-style gold mineralization. Pinecrest completed a
3,000-metre drill program in 2018 which intersected additional gold mineralization outside of
known resource zones, providing Pinecrest the opportunity to potentially expand the scope and
size of the Enchi Gold Project. Our exploration team believes there is incredib le opportunity to
explore along this +40 km highly prolific Bibiani shear zone that has only seen shallow previous
drilling used to define the current resource zones. The gold resources outlined in the PEA are open
at depth and along strike. At Kinross’ Chirano gold mine located 70 km north of the Enchi Project
on the same Bibiani shear zone, gold mineralization has been intersected to a depth of 800 metres
whereas the average depth of drilling on the Enchi Project extends to a depth of only 175 metres.
The entire Project land package is 568 km2 with numerous high priority drill targets situated
immediately outside of the inferred resource boundary highlighting excellent growth potential.
The Company is evaluating options to build value at this asset for its shareholders as the Project
demonstrates extensive exploration opportunities along the prolific Bibiani shear zone.”
The financial model s include the following : an initial capital cost of $ 84.4 million, including
directs costs, indirect costs and a contingency of $ 11.8 million (20% of direct costs) . Sustaining
capital of $ 38.6 million including a reclamation and closure , mining costs, infrastructure costs,
EPCM and contingencies . The financial model was completed on a 100% Project basis and
includes a 5% NSR to the Ghanaian Government and a 2% NSR to Red Back Mining Ghana Ltd.,
a wholly owned subsidiary of Kinross. The Government of Ghana have the right to a 10% free
carried interest in the Project.
The PEA was based on the 2015 NI 43-101 Inferred Mineral Resource estimate prepared by WSP
and detailed in the technical report entitled “Technical Report and Preliminary Economic
Assessment on the Enchi Gold Project” dated April 2015 using a 0.5 g/t cut-off grade. (See Table
2 for details). It is the opinion of the QP that the PEA remains current for purposes of NI 43-101.
Table 2 Enchi Gold Project - Inferred Mineral Resource (0.5 g/t Cut-Off)
Cut-off
Au (g/t) Zone Tonnes
Grade
Au (g/t)
Contained Gold
(ounces)
0.5 Boin 15,872,000 0.96 489,892
0.5 Nyamebekyere 5,350,000 0.96 165,129
0.5 Sewum 16,135,000 0.82 423,676
Total 37,357,000 0.90 1,078,697
1. CIM definition standards were followed for the resource estimate.
2. The 2015 resource models used ordinary kriging (OK) grade estimation within a three -dimensional block model with mineralized
zones defined by wireframed solids.
3. A base cut-off grade of 0.5 g/t Au was used for reporting resources with a capping of gold gra des at 18 g/t.
4. A US$1,300/ounce gold price, open pit with heap leach operation was used to determine the cut -off grade.
5. A density of 2.45 g/cm3 was applied.
6. Numbers may not add exactly due to rounding.
7. Mineral Resources that are not mineral reserves do not have economic viability
The 2015 Mineral Resource estimate was based on 52,385 metres of diamond and RC drilling in
646 holes as well as data from 102 surface trenches totalling 13,799 metres. The drilling was
generally spaced at 25 to 50 metre intervals.
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Since the completion of the PEA, Pinecrest has completed 28 RC drill holes totaling 3,406 metres
of drilling on the Enchi. See Pinecrest Resources news release dated March 21, 2018 (Drilling
Expands Zones of Oxide Gold Mineralization at 100% owned Enchi Gold Project, Ghana), results
included: 38.0 metres grading 1.12 g/t gold, 35.0 metres grading 1.15 g/t gold, highlight ing
excellent potential to expand oxide gold zones. Drill intercept results from the March 21, 2018
news release were not included in the PEA.
Highlight Drill Results Outside of NI 43-101 Inferred Resources
Sewum Gold Zone
• Highlight drill holes include;
o SWRC060 intersected 31.0 m grading 0.94 g/t gold including 20.0 m grading 1.27
g/t gold,
o SWRC062 intersected 35.0 m grading 0.50 g/t gold and,
o SWRC064 intersected 38.0 m grading 1.12 g/t gold.
• All of these intercepts are oxidized mineralization expanding previously defined zones of
gold mineralization.
Kojina Hill Gold Target
• The Kojina Hill Gold Target (“Kojina”) is a new gold zone located outside of the current
NI 43-101 inferred resource on the Enchi Gold Project.
• KJRC010 intersected 9.0 m grading 1.99 g/t gold from surface and a second zone of 29.0
m grading 0.87 g/t gold confirming continuity of the mineralized gold zone at depth.
Boin Gold Zone
• Drilling at the Boin Gold Zone (“Boin”) successfully intersected mineralization outside of
the defined NI 43-101 Inferred resource areas.
• KBRC137 intersected 35.0 m grading 1.15 g/t gold including; 19.0 m grading 1.67 g/t gold,
opening a new expanded zone of mineralization to the northeast, potent ially open along
strike.
• KBRC128 intersected 10.0 m grading 1.46 g/t gold with the drill hole ending in a
previously unrecognized new gold zone.
• KBRC127 intersected 25.0 m grading 0.58 g/t gold.
Boin Northwest Gold Zone
• Boin Northwest Gold Zone (“Boin NW”) is a new gold zone located outside of the current
NI 43-101 inferred resource on the Enchi Gold Project.
• KBRC126 intersected 18.0 m grading 0.59 g/t gold.
• Boin NW has been traced over a strike length of 300 metres and is open along strike and
down dip.
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The PEA was prepared by WSP using an Inferred Mineral Resource of 1.07 million ounces (oz)
of gold (37.3 million tonnes grading 0.9 gram of gold per tonne (g/t Au), at a cut-off of 0.5 g/t Au).
This Study evaluates both owner -operated and contract mining, open pit, heap leach operation
processing of 3.0 million tonnes per annum (Mtpy). All currency figures are in US Dollars (US$
or $) and using a base case gold price of $1,300/oz.
Owner Operated Base Case $1,300/oz gold price
Average Mined Gold Grade (g/t) 0.91
Processing Rate (Mtpy) 3.0
Mine Life (years) 8.7
Life-of-Mine (LOM) Strip Ratio 3.16:1
IRR Pre-Tax (%) 34
NPV Pre-Tax (5% Discount Rate) (US$ Million) 102
NPV After-Tax (5% Discount Rate) (US$ Million) 62
IRR After-Tax (%) 25
Initial Capital Cost (US$ Million) 84
LOM Sustaining Capital Cost (US$ Million) 39
Payback (Pre-Tax)(years) 2.8
Payback (After-Tax) (years) 3.4
LOM Cash Costs (US$/oz) 802
Metallurgical Recoveries (oxide/transition/sulphide %) 75/75/73
Total Recovered Gold (oz) 538,450
Average Annual Gold Production (oz) 61,749
Peak Annual Gold Production (oz) 76,210
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Initial Capital Cost
An initial capital expenditure of $ 84.4 million is required to construct the project and is detailed
in the following table.
Table 3 Initial Capital Cost (in US$ Million)
Description Owner Operated
Direct Costs
Mining (Owner’s share included) 18.8
Process Plant 35.6
Infrastructure 4.4
Sub-total – Direct Costs 58.8
Indirect Costs
Engineering and Procurement 4.9
Construction Indirect 5.9
Owners Costs 3.1
Sub-total – Indirect Costs 13.9
Total Capital Costs 72.7
Contingency: 20% of direct cost 11.8
Total Capital Costs with Contingency 84.4
Numbers may not add exactly due to rounding
The initial capital cost of $ 84.4 million, including directs costs, indirect costs and a contingency
of $11.8 million (20% of direct costs). Sustaining capital of $38.6 million including a reclamation
and closure , mining costs, infrastructure costs, EPCM and contingencies . Capital costs were
calculated during 2015 when work for the PEA was completed. Capital costs and operating costs
may have changed since originally co mpleting the NI 43 -101 Technical Report dated June 30,
2015 and the PEA dated January 27, 2016.
Site Operation Cost
The Project is modelled as a near surface open pit heap leach mine with heap leach feed material
trucked from three proximal deposits (Boi n, Nyamebekyere, Sewum) to a central crushing and
process facility. Open pits have been designed with bench heights ranging between 10 - 20 metres,
interramp slope angles ranging between 44 and 47 degrees for oxide material and 55 degrees for
fresh materi al. Life of mine operating costs (including royalties and refining fees) are
$15.45/tonne processed as detailed in the following table.
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Table 4 Site Operating Cost (in US$ Million)
Description Operating Cost ($/tonne*)
Owner Operated
Mining (including waste and labour) 9.19
Processing 5.18
Environment, Infrastructure 0.22
G & A, including mineral tenure fees 0.87
Operating Costs 15.45
Royalties and refining fees 2.01
Cash Costs (Operating + Royalties and Refining) 17.46
Sustaining Capital Costs 1.56
Total All-in site costs 19.02
* Per metric tonne of heap leach feed
Numbers may not add exactly due to rounding
Operating costs have been calculated during 2015 when work on the PEA was completed. Capital
costs and operating costs may have changed since originally completing the NI 43-101 Technical
Report dated June 30, 2015.
Table 5 Life of Mine Production Schedule
Description Units Value
Oxide tonnes processed million t 16.60
Transitional tonnes processed million t 5.15
Sulphide tonnes processed million t 2.97
Tonnes processed million t 24.72
Waste mined million t 78.02
Gold grade g/t 0.91
Average Annual recovered gold Troy ounce 61,749
Strip ratio w/o 3.16:1
Infrastructure
The Enchi Gold Project is located in southwest Ghana, in the Aowin district of the Western Region,
and is accessed from Accra on sealed roads via the regional port city of Takoradi or the mining
center of Tarkwa. The district capital, Enchi, is located 5 km west of the Project. From either of
these centers, access to Enchi (population 9,270) is available by paved and gravel roads. The
Enchi Project currently totals 568 km² with 50 km covering the Bibiani Shear Zone, a well-known
gold belt in Ghana. The Project is located 70 km southwest of the open pit and underground
Chirano Mine owned and operated by Kinross and 90 km south of the Bibiani Mine (past
production of 4 million ounces). Ghana’s current electrical generation capacity of 2125 megawatt
is made up of about 50% hydro and 50% thermal plants. There is a 33-kilovolt line available near
the Enchi property with a couple of options for connection routes depending on demand and
capacity required, with the utility company ultimately deciding on the preferred set up.
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Metallurgy and Processing
The current Study utilized 75% for the oxide and transitional gold recover ies and 73% for the
sulphide gold recovery. These recoveries are based on preliminary basic bottle roll tests on oxide
material and assume processing configurations to be similar to other heap leach facilities in the
region. The initial tests show that cyanide leaching may be a viable option for the extraction of
gold from the oxide domains. Further work on the metallurgical behavior and physical constraints
associated with heap leaching is still required to definitively select heap leaching as the best
technical process option.
The PEA is preliminary in nature, and it includes inferred mineral resources that are considered
too speculative geologically to have the economic considerations applied to them that would
enable them to be categorized as mineral reserves. Mineral resources that are not mineral reserves
do not have demonstrated economic viability. There is no certainty that the PEA will be realized.
Qualified Persons Statement
The PEA was prepared by WSP and authored by Todd McCracken, P.Geo. (Geology), Ms. Joanne
Robinson, P.Eng. (Mining), Mr. Mireno Dhe Paganon, Eng, (Metallurgical and processing), Mr.
Bruce White, PrEng. (Infrastructures), Mr. Paul Vermaak, Pr.Sci.Nat, (Environmental and social
aspects), and Mr. Jean-Sebastien Houle, Eng. (financial). All indi viduals providing certifications
are Independent Qualified Persons as defined by NI 43-101.
Mr. Gregory Smith, P. Geo. , Vice President, Exploration of Pinecrest is a Qualified Person as
defined by NI 43 -101 and has prepared and approved the technical data and information in this
news release.
About Pinecrest Resources Ltd.
Pinecrest Resources Ltd. is a British Columbia corporation that is based in Vancouver, B .C. The
Company engages principally in the acquisition, advancement and developmen t of precious
mineral properties. The Company is presently advancing and developing its 100% owned Enchi
gold project located in South West Ghana. Major shareholders of the Company include Red Back
Mining Ghana Ltd. (a wholly-owned subsidiary of Kinross Gold Corporation) and management.
On Behalf of the Board of Directors
PINECREST RESOURCES LTD.
Signed “Ryan King”
Ryan King,
President & CEO, Director
For further information, please contact:
Ryan King, President & CEO, Director