Eros Announces Results of Preliminary Economic Assessment for the Bell Mountain Gold Project
NEWS RELEASE
NR: 17-11
October 11, 2017
Eros Announces Results of Preliminary Economic
Assessment for the Bell Mountain Gold Project
Vancouver, BC (October 11, 2017) Eros Resources Corp. (TSX.V: ERC) (“Eros” or the
“Company”) hereby provides the results of a Preliminary Economic Assessment (“ PEA”) on
its 100% owned Bell Mountain gold project (the “Bell Mountain Property” or the “Project”) in
Churchill County, Nevada. The PEA provides a base case assessment of the current st atus
of the Project notwithstanding the Bureau of Land Management ( “BLM”) September 1, 201 6
notice that the US Navy had applied to expand the Fallon Range Training Facility and
withdraw 604,789 acres of public land, an area that includes the entire Bell Mo untain
Property. As a result, the BLM has segregated the proposed expansion area for a two -year
period such that no entry or work can be conducted on existing mining claims therein
(including the Bell Mountain P roperty) while an environmental impact statement (“EIS”)
respecting the expansion proposal is completed by the US Navy. The withdrawal will require
ratification by the US Congress, who are expected to make a final decision following the
completion of the EIS and upon receiv ing a recommendation from the Secretary of the
Interior.
“The PEA was compiled to provide an assessment of the Project as it stands today. The
restriction placed on Eros to explore and advance the Project has prevented us from
attempting to expand and upgrade the resource base and further enhance the potential
economics of the Project. Nonetheless, t he results of the study clearly indicate continued
investment into the Bell Mountain Property is justified,” stated Ron Stewart, President and
CEO of Eros.
PEA Highlights
The base case PEA economics assumed a gold price of $1,300/oz and a silver price of
$17.50/oz. All currencies are stated in US dollars.
• Pre-Tax Net Present Value (“NPV”) @ 5% and Internal Rate of Return (“IRR”) of $17.6
million and 41.4%, respectively with a payback period of ~1.7 years;
• After-Tax Net Present Value @ 5% and IRR of $9.3 million and 24.7%, respectively
with a payback period of ~2.7 years;
• Pre-production capital cost estimated at $18.5 million including a $1.7 million
contingency;
• Life of Mine (“LOM”) production of 60,056 ounces of gold and 408,498 ounces of silver
over a 4.0 year mine-life; and
• LOM cash cost of US$759/oz , net of by -product silver credits and including royalty
payments totalling $2.56 million.
The PEA was prepared by Welsh Hagen Associates (“WHA”) of Reno, Nevada in accordance
with National Instrument 43 -101 Standards of Disclosure for Mineral Projects (“NI 43 -101”).
The study is being summarized into a technical report entitled "NI 43-101 Technical Report on
the Bell Mountain Project Preliminary Economic Assessment, Churchill County, Nevada,
USA" (the “Technical Report”), to be filed on SEDAR in accordance with NI 43-101 within 45
days.
The reader is caut ioned that the PEA is preliminary in nature and includes some 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.
There is no certainty that the PEA will be realized. There is no certainty that the inferred
mineral resources will be converted to the indicated or measured categories, or that the
potential measured or indicated resources would be converted to the proven or probable
mineral reserve categories. Mineral resources that are not mineral reserves do not have
demonstrated economic viability.
The estimates of mineral resources in the PEA and the mineral resource statement may be
materially affected by environmental, permitting, legal, title, taxation, socio -political,
marketing, or other relevant issues. The PEA recommends that the Project be advanced to a
feasibility level for a total estimated cost of $1,787,500 . The scope of work recommended
includes additional exploration and infill drilling, water well maintenance, metallurgical testing,
engineering and environmental studies.
Mineral Resource
The mineral resource estimate was prepared by Zachary J. Black, SME -RM, with Hard Rock
Consulting (“HRC”). The Project is subdivided into four (4) individual areas known as Spurr,
Varga, Sphinx and East Ridge. Each modelled area was divided into three domains: country
rock, stockwork and vein. HRC estimated the mineral resource using an ordinary krige
algorithm. In order to meet the test of ‘reasonable prospects for economic extraction,’ HRC
constructed a Lerchs -Grossmann pit shell based on $ 1,300/oz gold and $ 17.50/oz silver.
Resources were assigned measured, indicated and inferred classifications based on the
confidence of the estimate, domain of the geologic model and proximity to drill holes.
Resource Statement for the Bell Mountain Project, Churchill County, Nevada
Note: Open pit optimization was used to determine potentially mineable tonnage. Measured, Indicated and Inferred mineral
classification was determined according to CIM Standards. Mineral resources, which are not mineral reserves, do not have
demonstrated economic viability. The 2017 Measured, Indicated and Inferred resource is constrained within a $1, 300/oz Au
and $17.50/oz Ag Lerchs-Grossman Pit shell. The base case estimate applies a AuEq cutoff grade of 0.005 oz/t for Varga
and 0.004 oz /t for all other areas based on the estimated operating costs. Metallurgical recoveries used for the cutoff
calculations were 83.7% on gold and 29.6% on silver for Spurr, 68.6% on gold and 12.8% on silver for Varga and 80% on
gold and 10% on silver for Sphinx and East Ridge.
Tons
(x1000) (opt) (oz) (opt) (oz) (opt) (oz)
Measured 362.4 0.024 8,720 0.87 316,121 0.028 10,225
Indicated 494.5 0.019 9,546 0.73 360,301 0.023 11,261
M&I 856.9 0.021 18,266 0.79 676,421 0.025 21,486
Inferred 395.9 0.008 3,131 0.40 158,100 0.010 3,884
Tons
(x1000) (opt) (oz) (opt) (oz) (opt) (oz)
Measured 769.7 0.016 12,316 0.34 258,904 0.017 12,966
Indicated 1,373.3 0.016 21,424 0.31 430,519 0.016 22,505
M&I 2,143.0 0.016 33,740 0.32 689,423 0.017 35,472
Inferred 1,140.7 0.013 14,711 0.31 355,618 0.014 15,604
Tons
(x1000) (opt) (oz) (opt) (oz) (opt) (oz)
Measured 15.5 0.032 496 0.95 14,821 0.034 521
Indicated 13.6 0.017 227 0.51 6,884 0.018 239
M&I 29.1 0.025 723 0.74 21,705 0.026 760
Inferred 254.4 0.019 4,892 0.53 134,915 0.020 5,119
Tons
(x1000) (opt) (oz) (opt) (oz) (opt) (oz)
Measured 0 0.000 - 0.00 - 0.000 -
Indicated 36.1 0.028 1,016 0.85 30,598 0.030 1,067
M&I 36.1 0.028 1,016 0.85 30,598 0.030 1,067
Inferred 268.4 0.023 6,150 0.77 205,928 0.024 6,496
East Ridge at 0.004 AuEq cutoff
Classification
Gold Silver Gold Equivalent
Classification Gold Silver Gold Equivalent
Spurr at 0.004 AuEq cutoff
Classification
Gold Silver Gold Equivalent
Varga at 0.005 AuEq cutoff
Classification
Gold Silver Gold Equivalent
Sphinx at 0.004 AuEq cutoff
Capital Costs
Capital costs were developed based on scaling costs from similar facilities for p roduction
rates and from design assumptions including a contractor operated mining fleet. The
estimated life of mine capital cost for the base case is summarized below.
Estimated Life of Mine Capital Costs
Cost in US$
Mining
Haul Roads
$ 97,380
Process
Mobilization and Site
Preparation
$ 273,708
Earthworks
$ 661,388
Heap Leach Pad
$ 3,912,475
Solution Collection / Distribution
System
$ 191,194
Process Ponds
$ 611,450
Crushing Circuit
$ 3,706,642
Carbon Plant
$ 779,698
Buildings (Shop, warehouse,
lab, offices)
$ 460,000
Concrete
$ 150,000
Miscellaneous Facility Elements
$ 1,110,400
Mine Site Mobile Fleet
$ 1,950,000
Indirect
Engineering, Procurement,
Construction Management
$ 250,000
Owner Costs
$ 2,667,000
Contingency 10% $ 1,682,133
Total $ 18,503,468
Operating and Reclamation Costs
Operating cost assumptions were based on similar scale surface mining operations using
heap leach processing in northern Nevada. Reclamation cost is consistent with the projected
scale of the mining operation. Operating and reclamation cost assumptions per ton of material
processed are summarized as follows:
Estimated Operating and Reclamation Costs
Category US$ per Ton Processed
Mining Cost $ 2.30
Processing Cost $ 4.15
G&A Cost $ 0.80
Reclamation Cost $ 0.25
Total $ 7.50
Processing and Metallurgical Recovery
The deposits of the Bell Mountain Property (Spurr, Varga, Sphinx and East Ridge) generally
are quite amenable to processing by heap leaching. Metallurgical recoveries used were
83.7% on gold and 29.6% on silver for Sp urr, 68.6% on gold and 12.8% on silver for Varga
and 80% on gold and 10% on silver for Sphinx and East Ridge. Additional metallurgical
testing will be required to confirm the leaching characterization of the mineralization and will
provide information for the heap design, project operation plans and insight into leach cycles.
Mine Plan
The PEA assumed a contractor operated, conventional open pit mine, with drill and blast rock
breakage and truck and loader materials handling. The mine production schedule w as based
on an average of 5,000 tons / day delivered to the crusher and then placed on the heap leach
pad as crushed mineralized material.
Mineral resources within the pits volumes were evaluated and scheduled. The average cutoff
grade for the mine life of the conceptual mining project is 0.004 Au opt for the Spurr, Sphinx
and East Ridge deposits, and 0.005 Au opt for the Varga. A detailed conceptual mine
schedule is summarized by year as follows.
Conceptual Mine Schedule
Item Units Year 1 Year 2 Year 3 Year 4 Totals
Total Mineralized Material Tons 000's 1,500.0 1,500.0 1,500.0 406.6 4,906.6
Au Equivalent Grade AuEq opt 0.020 0.017 0.015 0.024 0.018
Contained oz Au Equivalent1 Oz AuEq 000's 29.3 25.6 22.5 9.6 87.0
Waste Rock Tons 000's 966.9 564.1 1,236.7 990.8 3,758.6
Total Mined Tons 000's 2,466.9 2,064.1 2,736.7 1,397.5 8,665.2
1 Gold Equivalent (AuEq) = Au + (Ag/AuEq Factor) where AuEq Factor = (Au Rec/Ag Rec) x ($1,250/oz gold/$15.00/oz silver)
Project Economics
A gold price of $1,300/oz and a silver price of $17.50/oz were chosen for the base case
economic evaluation based roughly on the 3 -year trailing London Gold Fix prices in
combination with the current gold and silver prices at the effective date of the PEA . The
economic evaluation base case is considered realistic and meets the test of reasonable
prospect for eventual economic extraction. The base case economic results for the metal
price assumptions are shown as follows
Cash Flow Summary
Pre-tax After Tax
IRR 41.4% 24.7%
NPV @ 5% Discount Rate (US$m) $17.64 $9.31
Average Annual Cash Flow (US$m) $10.22 $7.87
Average Operating Margin $170.11/oz Au $131.09/oz Au
Payback Period ~1.7 years ~2.7 years
Qualified Persons and NI 43-101 Disclosure
John Welsh, P.E., Douglas Willis (CPG) and Carl Nesbitt (SME -RM) representing Welsh Hagen
Associates, Zachary Black (SME -RM) representing Hard Rock Consulting, LLC, and Walter
Martin (CPG) representing Stantec Consulting Services Inc., the Qualified Persons, as defined
under NI 43 -101, responsible for the preparation of the Technical Report , have reviewed the
contents of this press release for accuracy of the technical and economic information presented.
The Technical Report, with an anticipated effective date of October 9, 2017 will be prepared by
Welsh Hagen Associates, an independent geological consulting firm located in Reno, Nevada,
USA. This report will be available on SEDAR (www.sedar.com) within 45 days.
The technical contents of this news release have also been reviewed and approved by Ronald
Stewart, P.Geo. a Qualified Person as defined by NI 43-101.
About Eros
Eros Resources Corp. is a Canadian public company focused on the exploration and
development of resource projects in North America. Eros has as its prime business objective the
identification, acquisition and exploration of advanced resource projects with a Nor th American
focus. A secondary focus of the Company is to make strategic investments with a global focus
and a diverse commodity base. The Company’s expertise in the resource sector supports the
selection of these strategic investments.
On behalf of the Board of Directors of
Eros Resources Corp.,
Ron Stewart
President & CEO
Cautionary note regarding forward-looking statements
Certain statements made and information contained herein may constitute “forward looking information” and
“forward looking statements” within the meaning of applicable Canadian and United States securities legislation,
including, among other things, t his press release includes references to mineral resources and future potential
forecast economics of extracting those resources . These statements and information are based on facts
currently available to the Company and there is no assurance that actual results will meet management's
expectations. Forward -looking statements and information may be identified by such terms as "antic ipates",
"believes", "targets", "estimates", "plans", "expects", "may", "will", "could" or "would". Forward -looking
statements and information contained herein are based on certain factors and assumptions regarding, among
other things, there is no certainty that any portion of the resources will be confirmed with greater certainty , if
confirmed, there is no certainty that it will be commercially viable to extract any portion of the resource , there is
no certainty th at access to the resour ce area will be re -established, and if access to the resource area is
blocked for an extended period of time, or permanently, there is no certainty that any compensation will be
received by the Company. Forward-looking information involves known and unknow n risks, uncertainties and
other factors that may cause actual results or events to differ materially from those expressed or implied by such
forward-looking information, including the re-establishment of physical access to the property, the availability o f
adequate and secure sources of funding to construct the extraction facilities required to extract the mineral
resources, prevailing commodity prices, the receipt of regulatory approvals, environmental risks and the
performance of personnel. While the Co mpany considers its assumptions to be reasonable as of the date
hereof, forward -looking statements and information are not guarantees of future performance and readers
should not place undue importance on such statements as actual events and results may di ffer materially from
those described herein. The Company does not undertake to update any forward -looking statements or
information except as may be required by applicable securities laws.
Neither TSX Venture Exchange nor the Investment Industry Regulatory Organization of Canada accepts
responsibility for the adequacy or accuracy of this release.