Trigon Metals Files NI 43-101 Technical Report in Support of the Kombat Open Pits Feasibility Study Results and Mineral Reserves, and Updates PEA Results on the Kombat Underground Mines and Gross Otavi
Trigon Metals Files NI 43-101 Technical Report in Support of the Kombat Open
Pits Feasibility Study Results and Mineral Reserves, and Updates PEA Results
on the Kombat Underground Mines and Gross Otavi
HIGHLIGHTS
• NI 43-101 Mineral Resource estimate for the Kombat Mine, comprising both the surface accessible (targeted open pit)
and underground, of 1.529 million tonnes of Indicated Mineral Resources at a grade of 1.14% copper, 0.72% lead and
2.88 g/t silver and 5.511 million tonnes of Inferred Mineral Resources (open pit and underground) at a grade of 3.05%
copper, 1.25% lead and 22.93 g/t silver.
• Positive Feasibility Study completed on the Kombat open pits, representing phase 1 of the Company’s life of mine
operation to facilitate early cash flow generation.
• Start-up capital cost for the Kombat targeted open pits of US$6.4 million, includes US$4.7 million for plant
refurbishment.
• Further optimized PEA completed on the Kombat underground mines and Gross Otavi.
TORONTO, July 20, 2018 -- Trigon Metals Inc. (TSX-V:TM) (“Trigon” or the “Company”) is pleased to announce the filing of its
updated National Instrument 43-101 technical report (the “technical report”) on the Company’s Kombat operations located in
northern Namibia (“Kombat” or the “Kombat Mine”). This follows the Company’s press release issued on June 5, 2018
announcing the results of a feasibility study and reserve estimate on the surface mining areas of the Kombat Mine (the
“Feasibility Study”).
The proposed surface mining operations in the Kombat East and Kombat Central areas (the “Kombat open pits”) represent the
first phase of the Company’s life of mine (“LoM”) strategy on which the Feasibility Study was undertaken. The details of the
Feasibility Study are presented in the technical report.
Future phases of the Company’s strategy include the recommencement of the various historic underground mines at Kombat,
starting with the Asis Far West underground mine (“AFW”), followed by surface mining at Gross Otavi, and ultimately back
into the Asis West underground mine (“AW”) to mine the gap area and explore the resource at depth. The preliminary
economic assessment (“PEA”) presented in the technical report updates and supersedes the preliminary economic
assessment previously presented on the Kombat operations. The updated PEA excludes the Kombat open pits which are
presented separately in the Feasibility Study, and is further optimized, as summarized in Item 24 of the technical report.
Stephan Theron, President and CEO of Trigon, commented: “The publication of the updated technical report provides additional
information to the market on the Kombat Mine, and we continue to seek the market’s support to achieve our target of bringing
Kombat back into production over the next few months to start generating positive cash flows. Trigon’s board and
management are extremely pleased with the progress made over the past few months and we are excited to see the project
implementation advancing as planned. The study further underlines the excellent potential of the Kombat project and the ability
to generate strong profits at higher copper prices.”
Mineral Resources and Reserves
The Company confirms its Mineral Resource estimate for the Kombat Mine, comprising both the surface accessible (targeted
open pit) and underground, of 1.529 million tonnes of Indicated Mineral Resources at a grade of 1.14% copper, 0.72% lead and
2.88 g/t silver and 5.511 million tonnes of Inferred Mineral Resources (open pit and underground) at a grade of 3.05% copper,
1.25% lead and 22.93 g/t silver (collectively, the “Mineral Resource Estimate”).
The Company also reports a probable Mineral Reserve estimate for the Kombat East and Kombat Central areas of 0.77 million
tonnes at a grade of 1.30% copper, 0.47% lead and 4.33 g/t silver.
The Feasibility Study analysis is based on the Indicated Mineral Resource Estimates for the Kombat East and Kombat
Central areas and the PEA is based on the Inferred Mineral Resource Estimates for AFW, AW (collectively, the “Kombat
underground mines”) and Gross Otavi.
The Mineral Resource and Reserve Estimates have been prepared and classified by Minxcon (Pty) Ltd (“Minxcon”) in
accordance with the reporting guidelines as required by the Canadian Securities Administrators.
Feasibility Study
As announced on June 5, 2018, the Kombat open pits have a net present value (“NPV”) of US$4.6 million, at a real discount
rate of 7.6%, which represents a payback period of 1.6 years and an attractive IRR of 103.4%.
The table below summarizes the economic results of the Feasibility Study.
Low Case Base Case High Case
Copper Price* US$/lb 2.99 3.10 3.28
Silver Price US$/oz 18 18 18
Revenue (LoM) US$ million 56.7 58.7 62.2
Free Cash Flows (LoM) US$ million 4.4 5.7 7.7
NPV 7.6% ** US$ million 3.5 4.6 6.5
IRR ** % 75.0% 103.4% 158.9%
Payback ** Years 1.8 1.6 1.5
*Low case and high case prices are based on the 25 th and 75 th percentile consensus copper price over the LoM, as per
various bank and analyst forecasts in real terms.
**NPV, IRR and payback are reported after-tax.
PEA
The Company has further optimized the PEA which supersedes the previous preliminary economic assessment published in
the technical report entitled “NI 43-101 Technical Report on the Kombat Copper Project, Namibia”, dated March 22, 2018. The
updated PEA, as summarized in the technical report, focuses on the Kombat underground mines and Gross Otavi, and
excludes the Kombat open pits. The results of the PEA do not impact on the results of the Feasibility Study.
The Kombat underground mines and Gross Otavi are projected to have a combined estimated NPV of US$83.6 million at a real
discount rate of 10%, a payback period of 2.5 years from start of PEA production and an attractive internal rate of return of
63.9%.
A summary of the key components of the PEA is set out below.
Production and processing
The Kombat underground mines and Gross Otavi have a potential LoM of 5 years mining a total of 3,003 kt. The average
copper grade of the underground mines is 3.68% copper and for Gross Otavi, 1.19% copper, for an overall average copper
grade of 3.29%. The average lead grade of Gross Otavi is 3.43% lead. The average overall silver grade is 27 g/t.
Gross Otavi is anticipated to produce a lead concentrate as its primary product.
Item Unit PEA
Total Ore Tonnes Mined Kt 3,003
Ore Tonnes from Underground Mines Kt 2,535
Ore Tonnes from Gross Otavi Kt 468
Average Cu Grade Mined % 3.29%
Average Pb Grade Mined (Gross Otavi) % 3.43%
Average Ag Grade Mined g/t 27.00
Total Cu Concentrate Dry Tonnes kt 261.7
Total Pb Concentrate Dry Tonnes kt 28.6
Total Cu Metal Recovered Kt 91.2
Total Pb Metal Recovered (Gross Otavi) Kt 14.5
Total Ag Metal Recovered Koz 2,300
LoM Years 5
Capital expenditure
The total start-up capital required for the Kombat underground mines and Gross Otavi is estimated at US$33.3 million for
AFW, US$20.4 million for AW and US$0.8 million for Gross Otavi (excluding contingencies and stay in business capital). In
addition, capital of US$9.4 million (excluding contingencies and stay in business capital) is estimated to be required for
expansion of the plant, infrastructure and tailings storage facility.
Total direct capital expenditure over the LoM of the Kombat underground mines and Gross Otavi is estimated at US$63.9
million (excluding contingencies and stay in business capital) with the peak capital expenditure during year 2021, and a peak
funding requirement on a cumulative expenditure basis of an estimated USD$59 million during 2021. Peak funding is partially
offset by projected revenue from copper sales in 2021.
Revenue and operating costs and commodity prices
The Kombat underground mines and Gross Otavi are forecast to generate revenue of US$624 million over their LoM, based on
the following commodity price forecasts (in real terms) as used in the PEA.
Item Unit 2019 2020 2021 2022 2023 Long-term
Silver USD/oz. 17.6 17.9 18.1 18.3 18.2 19.0
Copper USD/tonne 6,758 6,682 6,740 6,688 6,595 6,551
Copper USD/lb 3.07 3.03 3.06 3.03 2.99 2.97
Lead USD/tonne 2,410 2,231 2,115 2,050 1,990 1,966
Lead USD/lb 1.09 1.01 0.96 0.93 0.90 0.89
Direct cash costs (C1) for the Kombat underground mines and Gross Otavi consist of mining and plant operating costs,
concentrate transport costs, treatment costs and refining costs. Other cash costs (C3) include corporate overheads and the
Namibian revenue royalty of 3%. The Kombat underground mines and Gross Otavi have an estimated all-in sustainable cost of
US$1.83/copper equivalent pound (“CuEq lb”).
The turnover, cost and earnings numbers are displayed in the table below per recovered copper equivalent pound.
Item Unit PEA
Copper Equivalent Tonnes Tonnes 93,719
Net Turnover US$/CuEq lb 3.02
Mine Cost US$/CuEq lb 0.74
Plant Costs US$/CuEq lb 0.18
Other Costs US$/CuEq lb 0.43
Direct Cash Costs (C1) US$/CuEq lb 1.36
Capex US$/CuEq lb 0.34
Production Costs (C2) US$/CuEq lb 1.70
Royalties US$/CuEq lb 0.09
Corporate Overheads US$/CuEq lb 0.04
All-in Sustainable Costs (C3) US$/CuEq lb 1.83
Readers are cautioned that the PEA on the Kombat underground mines and Gross Otavi is separate and apart from
the Feasibility Study conducted on the Phase 1 Kombat open pits. PEAs have a significantly lower level of
certainty than feasibility studies. The PEA is preliminary in nature, and 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. There is no certainty that the results of the PEA will be
realized.
The technical report entitled “NI 43-101 Technical Report on the Kombat Copper Project, Namibia”, dated July 20, 2018 with an
effective date of April 30, 2018, was prepared for Trigon by Mr. D van Heerden (B Eng (Min.), MCom (Bus. Admin.), MMC,
Pr.Eng. No. 20050318, FSAIMM, AMMSA), Mr. U Engelmann (BSc (Zoo. & Bot.), BSc Hons (Geol.), Pr.Sci.Nat., MGSSA),
and Mr. NJ Odendaal (BSc (Geol.), BSc (Min. Econ.), MSc (Min. Eng.), Pr.Sci.Nat., FSAIMM, MGSSA) of Minxcon, and is
available under the Company's profile on SEDAR at www.sedar.com and on the Company’s website at www.trigonmetals.com.
Qualified Persons
Mr. D van Heerden (B Eng (Min.), MCom (Bus. Admin.), MMC, Pr.Eng. No. 20050318, FSAIMM, AMMSA), Mr. U Engelmann
(BSc (Zoo. & Bot.), BSc Hons (Geol.), Pr.Sci.Nat., MGSSA), and Mr. NJ Odendaal (BSc (Geol.), BSc (Min. Econ.), MSc
(Min. Eng.), Pr.Sci.Nat., FSAIMM, MGSSA) of Minxcon are all “qualified persons” as such term is defined in NI 43- 101 and
CIM definition standards and have reviewed and approved the technical information and data included in this press release. Mr.
van Heerden, Mr. Engelmann and Mr. Odendaal are considered independent of Trigon.
Trigon Metals Inc.
Trigon is a publicly traded Canadian exploration and development company with its core business focused on copper
operations in Namibia, one of the world’s most prospective copper regions, where it has substantial assets in place with
significant upside. The Company continues to hold an 80% interest in five mining licenses in the Otavi Mountain lands, an area
of Namibia widely recognized for its high-grade copper deposits. Within these licenses are three past producing mines
including the Company’s flagship property, the Kombat Mine.
For further information, contact:
Stephan Theron
+1 (416) 861 5899
Website: www.trigonmetals.com
Cautionary Notes
This news release contains information with respect to certain Non-GAAP measures, including certain cash costs per pound
and all-in sustaining costs. These measures are included because these statistics are key performance measures that
management may use to monitor performance. Management may use these statistics in future to assess how the Company is
performing to plan and to assess the overall effectiveness and efficiency of mining operations. These performance measures
do not have a meaning within International Financial Reporting Standards ("IFRS") and, therefore, amounts presented may not
be comparable to similar data presented by other mining companies. These performance measures should not be considered
in isolation as a substitute for measures of performance in accordance with IFRS.
This news release contains forward-looking statements. These statements include statements regarding the Feasibility Study
and the PEA, including without limitation, expected costs, capital required, production, revenues, free cash flow, LoM, NPV
and other economic and operational performance parameters metrics, mineral resources and mineral reserves, the Company’s
strategies and the Company’s abilities to execute such strategies, the Company’s ability to restart the Kombat Mine, the
Company’s ability to obtain adequate financing, the Company’s expectations for the Kombat Mine, the economic viability of
mining at the Kombat Mine and the Company’s future plans and objectives. These statements are based on current
expectations and assumptions that are subject to risks and uncertainties including, without limitation, risks and uncertainties
inherent to economic studies; risks and uncertainties relating to: history of losses; requirements for additional capital; dilution;
loss of its material properties; interest rates increase; global economy; no history of production; future metals price
fluctuations, speculative nature of exploration activities; periodic interruptions to exploration, development and mining
activities; environmental hazards and liability; industrial accidents; failure of processing and mining equipment to perform as
expected; labor disputes; supply problems; uncertainty of production and cost estimates; the interpretation of drill results and
the estimation of mineral resources and reserves; changes in project parameters as plans continue to be refined; possible
variations in ore reserves, grade of mineralization or recovery rates may differ from what is indicated and the difference may be
material; legal and regulatory proceedings and community actions; accidents, title matters; regulatory restrictions; permitting
and licensing; volatility of the market price of Trigon common shares; insurance; competition; currency fluctuations; loss of
key employees; uncertainties and risks inherent with doing business in a developing country, including, without limitation, war,
corruption, terrorism, political instability and the uncertainty of the rule of law; and other risks of the mining industry. Actual
results could differ materially because of factors discussed in the management discussion and analysis section of our interim
and most recent annual financial statements or other reports and filings filed at www.sedar.com from time to time. We do not
assume any obligation to update any forward-looking statements, except as required by applicable laws.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.