Moneta Announces Positive Results from Preliminary Economic Assessment Study on South West Deposit After tax C$236 million NPV5% and 30% IRR at US$1,500 per ounce Gold
Moneta Announces Positive Results from
Preliminary Economic Assessment Study on
South West Deposit
After tax C$236 million NPV5% and 30% IRR at US$1,500 per
ounce Gold
Toronto, Ontario--(Newsfile Corp. - September 9, 2020) -
Moneta Porcupine Mines Inc. (TSX: ME)
(OTC Pink: MPUCF) (FSE: MOP) ("Moneta" or the "Company")
is pleased to announce the
excellent results from the Company's Preliminary Economic Assessment ("PEA") of the South West
deposit at its 100% owned Golden Highway Project located in Timmins, Ontario. The PEA study
demonstrates robust economics and is based on a stand-alone, owner-operated mine and mill with an
11-year mine life which produced an after-tax Net Present Value ("NPV") of C$236 million using a 5%
discount rate.
The financial model shows an after-tax Internal Rate of Return ("IRR") of 30% and a capital
payback period of 3.4 years. All amounts are shown in Canadian dollars unless otherwise stated.
South West Deposit PEA Highlights
After Tax Net Present Value at a 5% discount rate ("NPV5%") of C$236 million and after-
tax Internal Rate of Return ("IRR") of 30% at US$1,500/oz gold and exchange rate of
US$0.77/C$
C$371 million after tax cash flow over the life of mine
75,700 ounces annual production during full production for 719,000 ounces total gold
production
Peak gold production of 85,700 ounces per annum
Cash cost of US$590 per ounce and all in sustaining cost of US$747 per ounce gold
Highly leveraged to the gold price with after tax NPV5% of C$423 million and 47% IRR at
US$1,900 per ounce gold
Initial capital of C$144 million, and sustaining capital of C$136 million
After-tax discounted pay-back of 3.4 years, with an 11 year mine life
Attractive alternative Toll Milling development option with after-tax NPV5% of C$197
million and IRR of 44% at US$1,500 gold with initial capital costs of C$65 million
Potential to expand production from additional deposits located on the Golden Highway
Project
"We are extremely pleased with the positive results from this preliminary economic assessment of the
South West deposit and its robust project economics including an NPV of C$236 million and IRR of 30%
at US$1,500 ounce gold and a 5% discount rate," commented Gary O'Connor, CEO. "The PEA study
which assumed underground extraction of our South West deposit only has shown the potential to
produce up to 85,700 ounces per annum for a total of 719,000 ounces life of mine at an attractive cash
cost of US$590 per ounce, with low initial capital of C$144 million repaid over 3.4 years. The excellent
economics are afforded by the project's location in Canada's most prolific gold mining camp, Timmins
Ontario, with extensive existing infrastructure and experienced and available services and workforce.
The South West deposit would generate C$371 million after tax cash flow over the life of mine. We will
now be able to focus on expanding the adjacent deposits and discovering new zones of gold
mineralization to continue to add value to the Golden Highway Project with a growing resource base. In
addition to our base case development plan, we also have a highly attractive development option which
involves minor initial capital expenditure, shorter development time line and negates the need to permit
and build our own processing plant and associated infrastructure assuming Toll Milling of the ore."
Mr. O'Connor commented, "In addition to the highly successful PEA on our South West deposit, we have
5 additional gold deposits on the Golden Highway project and have discovered three new mineralized
areas, Westaway, Halfway and South Basin in 2020, of which a maiden resource for Westaway is
planned for this year. During 2020 we have doubled the footprint of continuous mineralization from 2
kilometres to 4 kilometres at Golden Highway. In addition, we have discovered regional scale potential
with gold mineralization discovered over 1.2 km on the southern margins of the South Basin with a
potential strike length of 12 km."
PEA: TECHNICAL INPUT AND FINANCIAL RESULTS SUMMARY
Table 1 - Technical Inputs and Financial Assumptions
Economics
Pre-Tax
Post-Tax
Net present value (NPV5%)
C$ million
$368.2
$236.4
Internal rate of return (IRR)
%
39.2 %
29.7 %
Payback Period (undiscounted)
years
2.9 years
3.4 years
LOM avg. annual cash flow
C$ million
$66.9
$ 48.6
LOM cumulative cash flow (undiscounted)
C$ million
$556.3
$371.3
LOM Average cash costs
US$ per
ounce
US$590
LOM Average AISC - All in Sustaining Costs
US$ per
ounce
US$747
LOM Average AIC - All in Costs
US$ per
ounce
US$902
Initial Capital Costs
C$ Million
C$144.2
Sustaining Capital Costs (LOM)
C$ Million
C$135.7
Profitability Index
NPV/Initial
Capital
1.64
Peak Investment
C$ million
C$114.3
Gold price assumption
US$ per
ounce
US$1,500
Exchange rate
US$/C$
0.77
Royalty
per ounce
nil
Mine life
years
11
Mill Head Grade (diluted) and Recovery
g/t Au, %
3.93 g/t Au, 94.2%
Average annual mining rate
tonnes/day
(tpd)
1,750tpd
Average annual gold production
thousand
ounces/yr
76Koz/pa
Total LOM recovered gold
thousand
ounces
719.2koz
The average annual mining rate and gold production is calculated for years 3 to 11 of mining when
mining is at full production rates. All other parameters are measured for life of mine (LOM) and include
the 2 year ramp up period. No royalties or encumbrances are attributed to any of the South West
deposit.
The PEA was prepared in accordance with National Instrument 43-101 ("
NI 43-101
") by Micon
International Limited ("Micon") of Toronto, Canada with an effective date of September 09, 2020. The
Company will file the PEA on SEDAR at www.sedar.com in accordance with NI 43-101 within 45 days.
This preliminary economic assessment is preliminary in nature; 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.
GOLD PRICE SENSITIVITIES
The following table demonstrates the post-tax sensitivities of NPV and IRR to gold price per ounce. The
base case, highlighted in the table below, assumes US$1,500 per ounce of gold and an exchange rate
of 0.77 (US$/C$):
Table 2: Gold Price Sensitivities
To view an enhanced version of Table 2, please visit:
https://orders.newsfilecorp.com/files/4852/63412_table2.png
Figure 1: Sensitivities Chart
To view an enhanced version of Figure 1, please visit:
https://orders.newsfilecorp.com/files/4852/63412_fig1.png
The Project economics are most sensitive to revenue drivers (gold prices, gold grade and recovery).
Operating and capital cost sensitivities are similar and are also presented in Figure 1.
OPPORTUNITIES
The PEA outlined several initiatives that may enhance the Project including:
Potential to mine additional ounces from the current resource estimate from the developed
underground infrastructure with more selective mining
Opportunity to drill out additional gold mineralization from underground not currently in the mineral
resource estimate
Include lower grade gold mineralized haloes and veins systems not currently in the resource model
which will lower the amount of dilution
With modelling of lower grade veins and haloes, development through these areas could potentially
be processed through the mill. Current mine plan assumes the development in these areas carries
no grade
Optimize the metallurgical recoveries with more test work to potentially increase the overall gold
recoveries
The possibility of increasing the tonnes mined per year with longer/additional mining shifts
Additional mineral resources located adjacent to South West and currently the focus of ongoing
exploration and resource updates by Moneta are not covered in this PEA. Additional resources
and mine plans have the potential to significantly increase production from the project
Optimization of the mine plan and mine production schedule to potentially decrease costs and
increase production
NEXT STEPS
The South West resource requires additional infill drilling to upgrade inferred resources to
measured and indicated categories
Continue and expand the current environmental base line studies and data collection
Drill known open extensions of the resource to expand the potential size of the South West deposit
Additional metallurgical recovery and environmental test work is required to better define the
process flow sheet
Drill out adjacent gold deposits to enable additional resources to be considered in any further
development plans
Drill test exploration targets to continue to grow the resource base
Hydrological and geotechnical studies will be required
Commence pre-feasibility level mine engineering and development studies upon completion of
resource expansion and infill drill programs
MINE PRODUCTION SCHEDULE
The PEA at South West considers underground mining utilizing ramp access with longitudinal long hole
stoping mining methods. The initial development of the access ramp is to be performed by contractors
with mine development and ore production transitioning to 100% owner owned operations in year 2. Two
years have been scheduled for the ramp-up of production with the full production rate of 1,750 tpd being
achieved in year 3. Full production occurs for 9 years for a total of 11 years mine life with average
production of 75,700 ounces per year during full production, peaking in year 5 with 85,700 ounces of
gold produced.
A minimum mining width of 3.00 m is used for the longitudinal long hole stoping mining planned, with 20
m between sub-levels and 15 m long stopes planned. The average width of stopes is approximately 8.0
m. Dilution of 0.5 m on both the footwall and hanging wall of stopes is added with no grade.
Table 3: Mine Production Schedule
Year
-1
1
2
3
4
5
6
7
8
9
10
Totals
Tonnes (t)
213
462
603
621
620
617
622
621
621
621
417
6,035
Grade (g/t)
3.93
4.05
3.91
3.90
4.57
3.73
3.56
3.95
4.19
3.70
3.77
3.93
Contained
Au
26.8
60.1
75.9
77.8
91.0
73.9
71.2
78.8
83.6
73.7
50.4
763.5
Recovery
(%)
94.2%
94.2%
94.2%
94.2%
94.2%
94.2%
94.2%
94.2%
94.2%
94.2%
94.2%
94.2%
Recovered
Au
25.3
56.6
71.5
73.3
85.7
69.7
67.1
74.3
78.8
69.4
47.5
719.2
Figure 2: Annual Gold Production Chart
To view an enhanced version of Figure 2, please visit:
https://orders.newsfilecorp.com/files/4852/63412_fig2.png
Table 4: Mine Production Technical Details
Mine Plan Summary
Mine Life
Years
11
Including Ramp-up
Years
2
Mining rate
tpd
1,750
Height between sub-levels
m
20.00
Minimum mining width
m
3.00
Length of stopes
m
15.00
Dilution
m
0.5 / 0.5
Average width of stopes
m
~8.00
Dilution grade
g/t Au
0.00
Cut-off grade
g/t Au
2.60
Total mill-feed mined
Million tonnes
6.035
Diluted Grade
g/t Au
3.93
Contained Ounces
Thousand ounces
763.49
Recovered ounces
Thousand ounces
719.21
OPERATING COSTS
Owner operating costs were developed from first principles. Initial access development will be
contracted and contractor rates were based on written quotes. Owner mining is assumed for all ore
production and associated development. Ore is brought to the surface by means of a 4.0 m x 4.5 m
access ramp utilizing 30 t trucks.
Table 5: Operating Cost Summary
Operating Costs
Cost Centre
LOM (C$MM)
(C$/t)
Mining
$393.2
$65.16
Processing
$112.9
$18.70
G&A
$36.8
$6.10
Total
$542.9
$89.96
Figure 3: Cash flow and Operating Cost Chart
To view an enhanced version of Figure 3, please visit:
https://orders.newsfilecorp.com/files/4852/63412_fig3b.png
CAPITAL COSTS
Initial capital costs include a 15% contingency on direct and indirect costs. The initial capital costs also
include owner's costs, EPCM costs, first fills, insurance and indirect costs. Sustaining costs include a
10% contingency on underground development costs.
Trade-off studies were evaluated to include "lease-to-purchase" options for mining equipment. The lease
to purchase equipment does result in lower initial capital and higher IRR's but returned lower NPV
valuations and higher cash costs of production. The lease to purchase remains an attractive
development option to reduce initial capital costs.
Table 6: Capital Cost Summary
Capital Costs
Cost Centre
C$MM
Mining Equipment
6.05
Auxiliary
43.64
Processing
40.39
Infrastructure
21.50
In-directs
15.68
Contingency
16.91
Total Initial Capital
144.16
Sustaining Capital (LOM)
135.72
Closure
10.00
Total Capital Costs
289.88
SOUTH WEST MINERAL RESOURCE ESTIMATE UPDATE
The mineral resource estimate for South West was updated by Micon for the PEA. The same geological
interpretation and geological wireframes were used as per the November 2019 mineral resource
update. No additional drilling has been performed by Moneta at South West since the November 2019
resource. Due to the updated economic parameters used in the PEA, the cut-off grade for the South
West resource was changed from 3.0 g/t Au to 2.6 g/t Au, assuming US$1,250 per ounce gold. The
current PEA only assessed the economics of producing gold from the South West deposit and did not
evaluate the adjacent deposits on the Golden Highway Project.
Table 7: Golden Highway Project Mineral Resource Estimate
Deposit
Name
Cut-off
Used
(Au g/t)
Indicated
Inferred
Tonnes
(t)
Grade
(g/t)
Ounces
(oz)
Tonnes
(t)
Grade
(g/t)
Ounces
(oz)
South West
2.6
4,530,000
4.07
592,400
9,607,000
4.01
1,237,900
Windjammer
South
3.0
364,000
4.19
49,100
173,000
4.59
25,500
55
3.0
216,000
5.11
35,400
327,000
4.31
45,300
West Block
3.0
-
-
-
301,000
3.23
31,200
Discovery
3.0
-
-
-
108,000
4.12
14,300
Windjammer
North
3.0
-
-
-
265,000
3.80
32,400
Total
5,110,000
4.12
676,900
10,781,000
4.00
1,386,600
Notes:
1
.
Mineral Resource Estimates are reported at a cut-off grade of 3.00 g/t Au for an underground
mining scenario, except for the South West zone which used the cut-off determined in this PEA
(2.6 g/t).
The cut-off grade was calculated at a gold price of US$1,250 per ounce, an exchange
rate of US$/C$ of 0.75 and operational assumptions outlined in Section 14 of this report.
The cut-
off for the South West zone was derived by calculations presented in the mining sections of this
report.
2
.
The resource estimate is supported by statistical analysis with different high-grade capping
applied to each of the deposits ranging from 6.0 g/t Au to 37.0 g/t Au on 1-m composites.
3
.
The mineral resources presented here were estimated with a block size of 10 m x 5 m x 10 m
utilizing sub-blocks of variable size as required, and constrained within geological wire frames with
a minimum width of 1.50 m, except for the South West update.
There the mineral resources were
estimated using a sub-blocked model with a parent block size of 15 m x 5 m x 15 m and child
block size down to 5 m x 1 m x 5m utilizing these sub-blocks as required and constrained within
geological wire frames with a minimum width of 1.50 m.
The cells are estimated by Ordinary
Kriging using the appropriate variogram model of each structure with individual search ellipsoids.
4
.
The mineral resources presented here were estimated by Micon International Limited using the
Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definitions and Standards on Mineral
Resources and Reserves.
5
.
Mineral resources which are not mineral reserves do not have demonstrated economic viability.
The estimate of mineral resources may be materially affected by environmental, permitting, legal,
title, market or other relevant issues.
6
.
The quantity and grade of reported Inferred Resources are somewhat uncertain in nature and there
has not been sufficient work to define these Inferred Resources as Indicated or Measured
Resources.
7
.
There are no historical underground voids from mining including shafts, ramps drifts or stopes in
any of the deposit areas.
8
.
Tonnage estimates are based on bulk densities individually measured and calculated for each of
the deposit areas, averaging 2.78 tonnes per cubic metre for the total resource.
Resources are
presented as undiluted and in situ.
9
.
The mineral resource estimates for South West and West Block are dated September 09, 2020.
All other zones are dated January 15, 2019. The effective date for the drill hole database used to
produce this updated mineral resource estimate for South West and West Block is November 26,
2019 and November 19, 2018 for the other zones. Tonnages and ounces in the tables are rounded
to the nearest thousand and hundred respectively. Numbers may not total precisely due to
rounding.
10
.
At the present time, Micon does not believe that the mineral resource estimate is materially
affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other
relevant issues.
METALLURGY
Gold recoveries in the processing plant are based on metallurgical recovery test work performed by
SGS-Lakefield Laboratory Limited, based in Ontario, Canada performed in 2012 and 2019. Historical
metallurgical recovery test-work conducted by Newmont Gold and Barrick in the 1990's was also
reviewed. An average gold recovery of 94.2% is used for the owner build scenario assuming the
inclusion of a gravity gold recovery circuit in the process flow sheet to capture coarse gold with 24 hour
cyanide leaching of the gravity tails after crushing and grinding, based on the results of
test work
completed to date.