Spruce Ridge Receives Positive PEA at Great Burnt Copper-Gold Property
Spruce Ridge Resources Ltd.
7735 Leslie Road West, Puslinch, ON N0B 2J0
Telephone (519) 822-5904
Spruce Ridge Receives Positive PEA at Great Burnt Copper-Gold Property
Spruce Ridge Resources Ltd. (TSX-V: SHL) (“Spruce Ridge” or the “Company”) is pleased to announce that it has
received the results of a Preliminary Economic Assessment (“PEA”) on the Company’s wholly-owned Great Burnt
Copper-Gold Project in Central Newfoundland. The PEA is incorporated in a Technical Report, with an updated
Mineral Resource Estimate that has an Effective Date of January 17th, 2022, prepared by P&E Mining Consultants
Inc. (the “Technical Report”).
J
ohn Ryan, CEO of Spruce Ridge, stated “We are very encouraged to have received this PEA, which illustrates
the robust economics of a copper-gold mine at Great Burnt. Although the Mineral Resource is just over a million
tonnes, the high copper grade provides a strong revenue stream, and we look forward to proceeding towards
possible mine development and production in the near term. The PEA uses a copper price of US$4.00 per pound,
and the spot price of copper has been higher than that since last April. The sensitivity analysis in the PEA indicates
a base-case IRR of 23.3%, and if the financial model were to use the current NYMEX spot price of US$4.55 a
pound, the IRR would rise to 81.5%. With industrialized countries moving towards near-total electrification of their
economies in response to climate change, we envisage an increasingly strong demand for copper to continue for
the foreseeable future”.
The PEA is based on an underground mine, with 20- metre deep “starter pits” to provide rapid cash flow, on both
the Great Burnt Copper Deposit and the South Pond “A” Copper-Gold Zone. Following are some highlights of the
PEA:
Mine Life 4.0 years
Production rate 1,000 tonnes per day
Mining methods “Starter” open pits and underground mining with ramp access
Average grades over life-of-mine (LOM) 2.13% Cu, 0.08 g/t Au after estimated dilution and losses (blended
average of open pit & underground, Great Burnt & South Pond)
Processing Custom (toll) processing is contemplated
Projected process plant recoveries Copper 96% (25% Cu concentrate), gold 55% overall LOM average
Total tonnage mined & processed 1,068,300 tonnes
Following are some of the salient points of the cash flow analysis and financial model included in the PEA (all
figures are in Canadian dollars unless indicated otherwise):
Commodity prices used Copper US$4.00/pound, gold US$1,675/ounce, Cdn$ = US$0.77
IRR after tax 23.3%
Payout 2.9 years
After tax cash flow over LOM $14.7 million
After tax NPV @ 6% $9.3 million
Revenue over LOM $215.7 million
Cash operating cost $125.71 per tonne processed
Cash cost of product US$2.18 per pound of copper (net of by-product credits)
AISC US$3.15 per pound of copper (net of by-product credits)
Total CAPEX $59.0 million
PRESS RELEASE 2022-01 February 23, 2022
Table 1 shows the results of sensitivity analysis included in the PEA, using the price of copper as the dependent
variable. The line using a current NYMEX spot price has been added for illustration p urposes.
TABLE 1: Sensitivity analysis - copper price
Cu Price After-tax NPV at 6% After-tax IRR
US$/lb $millions Percent
$3.20 -$26.3 -31.6%
$3.60 -$8.5 -7.7%
Base case $4.00 $9.3 23.3%
$4.40 $27.2 64.9%
$4.55* $32.9 81.5%
$4.80 $42.6 114.2%
* - NYMEX spot price Feb 18th, 2022
Access: The PEA assumes that a new all -weather road will be constructed to link with existing forestry roads at
Atlantic Lake, 27 km from the Great Burnt Copper Deposit and 17.5 km northeast of the South Pond “A” Copper-
Gold Zone. This would reduce road distance from Great Burnt to Grand Falls -Windsor, the commercial hub of
Central Newfoundland, from its current 250 km to less than 90 km.
Mining Methods: The PEA envisages initial mining to take place in open pits to a depth of 20 metres at the Great
Burnt and South Pond “A” Zone, which will partially finance the underground development phase. Underground
access will be by decline ramp, with trackless transport of mineralized material and waste rock. Mining will be by
longitudinal-retreat longhole stoping. The G reat Burnt Lower Zone, which has a relatively low dip, will be mined
by a combination of cut-and-fill and drift-and-fill methods.
Metallurgical Testwork: The Technical Report presents the results of preliminary metallurgical testwork carried
out by SGS Lakefield. A composite sample was made up of quartered drill core from the 2020 drilling program on
the Great Burnt Main Zone, with an average grade of 2.82% Cu and 0.03 g/t Au, to approximate the run- of-mine
grade. It responded well to preliminary flotati on tests. A locked- cycle test run on material ground to 80% minus
55µm produced a concentrate grading 25.1% Cu and 0.23 g/t Au, with copper recovery of 98.5% and gold recovery
of 58.6%. The PEA used a grind to 80% minus 50µm, a copper recovery of 96%, a concentrate grade of 25% Cu
and a gold recovery of 55%.
Preliminary tests were run on sorting using X-Ray atomic density, with a view to upgrading the run-of-mine material
to reduce shipping and processing costs. Copper recovery was 80%, and the grade was increased to 5.35% Cu.
It was considered that the loss was excessive, and the PEA was completed on the assumption that run- of-mine
would be trucked to a toll process plant. Further tests, possibly using different sensing equipment, are being
considered for the future.
The Technical Report includes an updated Mineral Resource Estimate that incorporated the results of the 2020
diamond drilling program on the Great Burnt Main Zone, which was summarized in news release 2021-12 on July
8th, 2021. It is repeated in Table 2 below.
TABLE 2: Great Burnt Underground Mineral Resource Estimate at 0.90% CuEq Cut-Off
Classification Tonnes
(k)
Cu
%
Au
g/t
CuEq
%
Cu
Mlbs
Au
koz CuEq Mlbs
Great Burnt Main Zone
Indicated 667 3.21 Nil 3.21 47.2 Nil 47.2
Inferred 482 2.35 Nil 2.35 25.0 Nil 25.0
South Pond “A” Deposit
Indicated 214 1.26 1.21 2.10 6.0 8.3 9.9
Inferred 145 1.07 1.02 1.78 3.4 4.8 5.7
Total
Indicated 881 2.74 0.29 2.94 53.2 8.3 57.1
Inferred 627 2.05 0.24 2.22 28.4 4.8 30.7
John Ryan, CEO, added “We are awaiting assay results from last fall’s 3,000 metre drill program on the South
Pond “B” Gold Zone, and anticipating that this may give us a possible addition to the Mineral Resource.
Furthermore, we will be doing infill and step- out drilling at the South Pond “A” Copper-Gold Zone, which will firm
up - and possibly add to - that Mineral Resource. We will also be following the recommendations of the Technical
Report to do additional drilling on the Great Burnt Copper Deposit, with a view to converting some of the Inferred
Mineral Resource into the Indicated classification.”
Colin Bowdidge, Ph.D., P.Geo. and Eugene Puritch, P.Eng., Fec, CET, Qualified Persons as defined in NI43-101,
have reviewed and approved the technical information in this news release . Mr. Bowdidge is a director and VP
Exploration of Spruce Ridge and Mr. Puritch is independent of Spruce Ridge.
About Spruce Ridge Resources Ltd.
Spruce Ridge holds a 100% interest in 26,640 hectares in Central Newfoundland, including:
• the 2,890-hectare Great Burnt VMS copper-gold property;
• the 4,575-hectare Pipestone nickel prospect and;
• the 19,175-hectare Foggy Pond property
In addition to its mineral assets, Spruce Ridge acquired leases with petroleum and natural gas rights, plus shut-in
oil and gas wells, pipelines, and facilities , in the Unity area of southwestern Saskatchewan and is in the process
of putting these assets back into production.
Spruce Ridge currently holds 5,594,955 shares of Canada Nickel Company Inc. and 10,000,000 shares of Noble
Mineral Exploration Inc.
For further information please contact:
John Ryan, President and CEO
Spruce Ridge Resources Ltd.
Phone: 519-822-5904
Email: [email protected]
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