Benchmark Announces Positive Preliminary Economic Assessment for the Lawyers Gold- Silver Project with Robust +30% IRR, C$ 921m Pre-Tax NPV5% and 2.1 Year Payback
Benchmark Announces Positive Preliminary
Economic Assessment for the Lawyers Gold-
Silver Project with Robust +30% IRR, C$ 921m
Pre-Tax NPV5% and 2.1 Year Payback
Vancouver, British Columbia--(Newsfile Corp. - August 16, 2022) -
Benchmark Metals Inc.
(TSXV:
BNCH) (OTCQX: BNCHF) (WKN: A2JM2X) (the "
Company
" or "
Benchmark
") is pleased to report the
completion of a Preliminary Economic Assessment ("PEA") on the Lawyers Gold-Silver Project (the
"Project") located within a road accessible
region of the prolific Golden Horseshoe area of north-central
British Columbia, Canada.
The PEA presents a robust open pit mining operation with attractive
economics at base case gold and silver prices.
PEA Highlights:
Robust financial metrics in a desirable location
Pre-tax NPV
5%
of C$ 921M, IRR 30.5%, and 2.1-year payback
Pre-tax Net Operating Income of C$ 2,140M
Base case metal price parameters of US$ 1,735 per ounce of gold and US$ 21.75 per
ounce of silver
After-tax NPV
5%
of C$ 577M, IRR 23.5%, and 2.7-year payback
Capital light development
Initial capital of C$ 493M (including C$ 72.8M in contingency)
Life of Mine capital of C$ 632M
Strong 1.9:1 Initial Capex to Pre-tax NPV
5%
ratio
Minimal pre-strip limited to TSF starter dam construction
Long mine life with exceptional expansion opportunity
Total resource production of 46.3 M tonnes over 12-year mine life
Average annual production of 169k AuEq ounces
LOM production 2.02M payable AuEq ounces
Average AuEq Head Grade of 1.47 g/t
Average gold recovery of 92.4%
Low AISC
(net of by-products)*
of US$ 824/Au oz
*All-In Sustaining Costs (Net of By-Products) are calculated for the purpose of the Study as the sum of all
operating costs (mining, processing, site administration and refining), reclamation and sustaining
capital, minus the revenue from Ag, all divided by the gold ounces sold to arrive at the per ounce Au
figure.
John Williamson, CEO, commented, "The PEA clearly demonstrates the low cost and robust return of the
Lawyer's Gold-Silver Project even when stress tested with considerable contingency in the base case.
We continue on a straightforward pathway to advancement.
We continue to test new targets on the large
prospective land package to add value to a project that is simple, low risk with a high-grade near surface
open-pit resource, combined with proximity to existing infrastructure, making it one of the best
candidates to become British Colombia's next precious metal mine."
PEA Overview
The PEA considers a conventional truck and shovel open-pit mining operation, with common equipment
sizing, covering the Cliff Creek ("CC"), Dukes Ridge (included in CC), and AGB pits, feeding a 10,600
tonnes per day industry standard processing plant with two-stage crushing, grinding, whole-ore leach
and a Merrill Crowe recovery circuit, with production of gold-silver doré bullion on site. The PEA is based
on an update of the mineral resource estimate announced by the Company on June 11, 2022 press
release.
The PEA was prepared by JDS Energy and Mining Inc. ("JDS") of Vancouver, British Columbia,
Canada.
Ian Harris, VP Engineering, commented, "The PEA confirmed the current project development timelines,
with industry standard open-pit mining methods, processing flowsheet, design criteria, and compact
footprint.
Multiple target high-grade resource areas have been identified near but outside the pit limits.
There is a significant opportunity to upgrade the already robust project through adding underground
mining to production scheduling. These evaluations that represent a considerable upside opportunity will
be incorporated into detailed mine planning of the feasibility study."
The full PEA will be filed on SEDAR at
www.sedar.com
and Benchmark's website
www.benchmarkmetals.com
within 45 days of the issuance of this news release.
PEA Economic Results
Project Economics
Royalties
% of NSR
0.5
Pre-Tax:
NPV
5%
C$ million
921
IRR
%
30.5
Payback period
years
2.1
Post-Tax:
NPV
5%
C$ million
577
IRR
%
23.5
Payback period
years
2.7
Pre-Tax Sensitivities
NPV
5%
Sensitivity Analysis
Au Price
1,500
1,600
1,700
1,735
1,800
1,900
2,000
Ag Price
19.00
$493.1
$646.4
$799.8
$853.4
$953.1
$1,106.4
$1,259.8
20.00
$517.6
$670.9
$824.3
$877.9
$977.6
$1,130.9
$1,284.3
21.00
$542.1
$695.4
$848.8
$902.4
$1,002.1
$1,155.4
$1,308.8
21.75
$560.5
$713.8
$867.1
$920.8
$1,020.5
$1,173.8
$1,327.1
22.00
$566.6
$719.9
$873.2
$926.9
$1,026.6
$1,179.9
$1,333.2
23.00
$591.1
$744.4
$897.7
$951.4
$1,051.1
$1,204.4
$1,357.7
24.00
$615.6
$768.9
$922.2
$975.9
$1,075.6
$1,228.9
$1,382.2
IRR (%) Sensitivity Analysis
Au Price
1,500
1,600
1,700
1,735
1,800
1,900
2,000
Ag Price
19.00
19.7%
23.7%
27.4%
28.7%
31.0%
34.5%
37.9%
20.00
20.4%
24.3%
28.1%
29.4%
31.7%
35.1%
38.5%
21.00
21.1%
25.0%
28.7%
30.0%
32.3%
35.8%
39.1%
21.75
21.6%
25.5%
29.2%
30.5%
32.8%
36.2%
39.6%
22.00
21.8%
25.7%
29.4%
30.7%
33.0%
36.4%
39.7%
23.00
22.5%
26.4%
30.1%
31.3%
33.6%
37.0%
40.3%
24.00
23.2%
27.0%
30.7%
32.0%
34.2%
37.7%
40.9%
After-Tax Sensitivities
NPV
5%
Sensitivity Analysis
Au Price
1,500
1,600
1,700
1,735
1,800
1,900
2,000
Ag Price
19.00
$301.8
$401.0
$499.3
$533.6
$597.3
$695.2
$792.8
20.00
$317.8
$416.7
$515.0
$549.3
$613.0
$710.8
$808.5
21.00
$333.8
$432.5
$530.7
$565.0
$628.6
$726.4
$824.1
21.75
$345.6
$444.3
$542.4
$576.8
$640.4
$738.1
$835.8
22.00
$349.6
$448.2
$546.4
$580.7
$644.3
$742.0
$839.7
23.00
$365.5
$463.9
$562.1
$596.3
$659.9
$757.7
$855.3
24.00
$381.3
$479.7
$577.7
$612.0
$675.6
$773.3
$870.9
IRR (%) Sensitivity Analysis
Au Price
1,500
1,600
1,700
1,735
1,800
1,900
2,000
Ag Price
19.00
15.3%
18.3%
21.2%
22.1%
23.9%
26.5%
29.0%
20.00
15.8%
18.8%
21.6%
22.6%
24.4%
27.0%
29.5%
21.00
16.3%
19.3%
22.1%
23.1%
24.8%
27.4%
29.9%
21.75
16.7%
19.7%
22.5%
23.5%
25.2%
27.8%
30.3%
22.00
16.8%
19.8%
22.6%
23.6%
25.3%
27.9%
30.4%
23.00
17.4%
20.3%
23.1%
24.0%
25.8%
28.3%
30.8%
24.00
17.9%
20.8%
23.6%
24.5%
26.2%
28.8%
31.3%
PEA Recommendations and Opportunities
The PEA has been presented with surface mining only. However, there is a strong opportunity to
enhance the Base Case economics with supplemental feed from underground operations. The
mineralized zones are sub-vertical, which makes them amenable to preferred low-cost mining methods,
such as sub-level open stoping. They are also reasonably thick, at 4 to 15 m, and thus could be mined at
moderate production rates, as opposed to the low throughput one would expect from narrow-vein
operations.
Underground stopes would either be accessed from multiple portals driven in the pit walls or by a
dedicated ramp driven beneath the pit (see Figure 1), for potential stope shapes above a 2.0 g/t AuEq
cut-off.
Figure 1: Potential Stope Shapes Adjacent to and Below Cliffs Creek Pit
To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/6169/133940_394e232354b1c8a7_001full.jpg
If proven to be economic in future stages of study, the stopes could be used either to extend operational
mine life with underground operations conducted after the open pit mine has been exhausted or, more
likely, mined in conjunction with open pit operations to provide higher grade supplemental feed.
An integrated surface and underground mine schedule will be evaluated in the next stage of study.
PEA Parameters and Assumptions
Assumptions
The main parameters and results of the PEA are summarized in the following table:
Assumptions:
Gold price
US$/ounce
$1,735
Silver price
US$/ounce
$21.75
Production Profile:
Mine life
years
12
Total tonnes milled
million tonnes
46.3
Diluted gold grade
g/t
1.23
Diluted silver grade
g/t
23.73
Mill throughput
t/day
10,600
Gold recovery - AGB
%
92.1
Silver recovery - AGB
%
60.0
Gold recovery - Cliffs Creek
%
92.5
Silver recovery - Cliffs Creek
%
83.0
Recovered gold
million ounces
1.696
Recovered silver
million ounces
26.695
Average annual payable gold
ounces/year
141,000
Average annual payable silver
ounces/year
2,202,000
Operating Costs
The PEA is based on assumed life of mine operating costs by activity area, as shown in the table below.
Operating Costs
C$/tonne Processed
C$M LOM
Mining
25.28
1,170.3
Processing
17.32
801.6
G&A
5.19
240.2
Total Cash Cost
47.78
2,212.1
*Numbers may not add due to rounding
Mineral Resource
The PEA is based on the resource estimate prepared by P&E Mining Consultants Inc., and APEX
Geoscience Ltd., and reported by Benchmark Metals on June 11, 2022, which is summarized in the
table below:
Total Pit and Out of Pit Constrained Mineral Resource Estimate @ 0.4 g/t and 1.5 g/t AuEq Cut-Off
Classification
Tonnes
Au*
Ag*
AuEq
Au*
Ag*
AuEq
k
g/t
g/t
g/t
k oz
M oz
koz
Measured & Indicated
67,376
1.16
22.88
1.45
2,521
49.6
3,141
Inferred
4,873
2.20
36.10
2.65
345
5.7
415
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. The
estimates of Measured,
Indicated and Inferred mineral resources assumed metal prices of US$1,750/oz
Au and US$20/oz Ag, 0.78 US$:CDN$ FX, with process recoveries of 90% Au and 83% Ag. A
C$14.50/t process cost and C$5/t G&A cost were used. The Au:Ag ratio was 80:1. The constraining pit
optimization parameters were C$3.15/t mineralized and waste material mining cost and 50° pit slopes
with a 0.30 g/t AuEq cut-off.
*
The tonnage, gold equivalent ounces and grades are unchanged from the numbers reported by
Benchmark Metals on June 11, 2022. The ounces and grades for gold and silver have been updated to
correct errors in the original table provided in the June 11, 2022 news release.
Capital Cost
The PEA is based on a capital cost summary, in accordance with AACE Class 5 guidelines with an
estimated accuracy of +/- 50%, which is shown in the table below:
Capital Item
Pre-Production
(C$ million)
Sustaining
(C$ million)
Total
(C$ million)
Mining
61.0
29.2
90.2
Site Development
5.5
-
5.5
Processing Plant
140.1
-
140.1
Tailings & Waste Management
48.2
49.7
98.0
On-Site Infrastructure
29.0
10.5
39.6
Off-Site Infrastructure
46.2
5.0
46.2
Project Indirects
51.4
2.9
54.3
Engineering and Project Management
24.5
2.3
26.8
Owner's Costs
14.1
-
14.1
Subtotal
420.0
94.7
514.7
Contingency
72.8
-
72.8
Closure
-
45
45
Total Capital
492.7
139.7
632.4
*Numbers may not add due to rounding
Contingency has been applied across the various Capex areas based on the level of design detail and
past experience.
A summary of applied contingency by area is shown below:
Area Description
Contingency %
Contingency
Value (C$M)
Mining
3%
1.5
Site Development
20%
1.1
Mineral Processing
25%
35.0
Tailings and Waste Management
25%
12.1
On Site Infrastructure
25%
7.3
Off Site Infrastructure
5%
2.3
Indirects, EPCM and Owner's Costs
15%
13.5
Total - All Areas
17%
72.8
Mining
The PEA assumes conventional open pit truck and shovel mining, and production designed to achieve a
processing rate of 10,600 tonnes per day. The average mining rate is 68,000 tonnes per day of total
material mined, with a maximum of 89,000 tonnes per day occurring in years 6 through 9.
The PEA mine design consists of four pits, with a mining sequence intended to maximize grade in the
early years, smooth stripping requirements and maintain the processing facility at full production
capacity. Operations would begin at the AGB deposit and transition in year two over to the Cliff's Creek
and Duke's Ridge Deposits for the remainder of the mine life.
The primary owner-operated diesel mine fleet is designed to consist of 144-tonne capacity haul trucks,
22 m
3
front shovels, a 17 m
3
front end loader and 203 mm diameter drills. The ancillary mine fleet would
consist of track dozers, graders, wheel dozers and water trucks.
Processing
The PEA assumes mineralized material would be processed using a single stage crushing circuit, a
grinding circuit, a cyanide leach circuit, a counter current decantation circuit ("CCD"), and a Merrill
Crowe ("MC") circuit.
The run of mine material would be fed to a primary jaw crusher, crushing to a particle size P
80
of 150
mm, which will be sent by conveyor to a mill feed stockpile. The mill feed stockpile will report to a
grinding circuit which includes a SAG mill, Ball mill, and a pebble crusher, grinding the mineralized
material to a particle size P
80
of 75 µm. The solution used in the grinding circuit will be recycled water
from the MC circuit containing residual cyanide. The grinding circuit will contain a gravity circuit located
in the ball mill cyclone underflow stream. The gravity circuit will consist of a centrifugal concentrator
followed by an intensive cyanidation, with an electrowinning ("EW") cell to produce a gold precipitate in
the refinery.
The griding circuit product will report to the leach circuit where cyanide will be added to increase the
level in solution to the target concentration of 2,000 ppm, for a retention time of 32 hours.
The leach
circuit will discharge into a CCD circuit to separate produce a clear solution with 97% (or greater) of the
gold that was dissolved in the grinding and leaching circuits.
The solution from the CCD circuit reports to the MC circuit which consists of a filter, and a Merrill Crowe
tower which removes gold from solution by precipitating with zinc dust. The zinc dust will be filtered from
the solution and report to the refinery. The remaining barren solution will report back to the process water
tank.
The gold/zinc dust will be leached with acid to remove the zinc and then will be melted, along with the EW
precipitate, into doré
bars.
The PEA assumes CCD tailings would be pumped a cyanide detoxification circuit to reduce the cyanide
concentration to permitted limits and then pumped to a tailings management facility.
Project Infrastructure
The PEA assumes general infrastructure for the Project would support operations on a 24 hour per day,
seven day per week basis. An overall Site Layout is shown below in Figure 2:
Figure 2: Overall Site Layout
To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/6169/133940_394e232354b1c8a7_002full.jpg
Major infrastructure items would include:
Site access road along the existing Finlay Forest Service Road, south of the Town of Mackenzie,
which connects to the Omineca Resource Access Road ("ORAR").
The ORAR continues beyond
the Kemess South Mine access road, past the Sturdee River Airstrip, through to the Lawyers site;
Haul roads for waste and mill feed material;
Maintenance, warehouse, administration, laboratory, security and first aid buildings;
Plant facilities, including the crushing and grinding circuit, conveying equipment, and refinery;
Ancillary facilities, including a truck shop, explosives storage and fuel storage;
230kV Power line travelling 66km from the past producing Kemess Mine;
Camp accommodations;
TMF, constructed with an initial capacity for two years of tailings, with staged construction in
subsequent years to increase storage capacity as required; and
Waste rock storage area, including backfill within appropriate pit areas to minimize costs and
disturbance areas.
Permitting
Benchmark holds the required permits and approvals to continue exploring the areas comprising the
Project.
Environmental baseline studies to support Environmental Assessment ("EA") application are well
underway. The 2-year Aquatics and Terrestrial Baseline Programs commenced in 2021. Additionally,
geochemical and hydrogeological studies have all commenced. The Company expects completion of all
environmental baseline studies by Q3 2023.
Upon completion of all environmental baseline studies, the Company expects to commence the EA
process planning and EA application preparation phase in mid-2024.
Feasibility Update
Considerable work has either already been completed or is on track to be completed for the collection of
FS data inputs, including:
Geotechnical & Hydrological field investigations for mine infrastructure design.
Investigations for Pits and site infrastructure are complete.
Investigations on the Tailings Storage Facility and Waste Rock Storage Facilities are
ongoing (expected August 2022 completion date).
Metallurgy and mineral processing testwork to validate processing methods.
Comminution testwork is complete with Recovery testwork ongoing.
Geochemistry testwork, which continues to show promising results of low acid generating potential.
Static and kinetic testwork ongoing.
The Company anticipates all necessary inputs for the FS to be complete by Q2 2023, with delivery of the
final FS report in Q4 2023.
1
The results of the PEA are preliminary in nature and are based on various assumptions. These assumptions may be affected by environmental,
permitting, geological, metallurgical, legal, title, taxation, socio-political, market or other relevant factors, including changes in metal prices. In addition,
no decision has been made by Benchmark Metals to proceed with the mine plan described in the PEA. A decision to proceed with the mine plan
would require further economic and resource study. No decision has been made by Benchmark Metals to proceed with a further economic and/or
resource study. Accordingly, there is no certainty that the results of the PEA will be realized even if Benchmark Metals decides to proceed with the
mine plan described in the PEA at any point in the future.
2
The PEA was prepared in accordance with Canadian National Instrument 43-101 (NI 43-101). The terms "mineral resource", "measured mineral
resource", "indicated mineral resource" and "inferred mineral resource" as used in the resource estimate, the PEA and this press release are
Canadian mining terms as defined in accordance with NI 43-101. The U.S. Securities and Exchange Commission (SEC) does not recognize these
terms. "Resources" are not reserves under the SEC's regulations but are categorized under the securities laws regulations of various foreign
jurisdictions (including NI 43-101), in order of increasing geological confidence into "inferred resources", "indicated resources", and "measured
resources". Investors are cautioned that resources cannot be classified as mineral reserves unless and until further drilling and metallurgical work is
completed, until other economic and technical feasibility factors based upon such work have been resolved and it is demonstrated that they may be
legally and economically extracted and produced, and, as a result, investors should not assume that all or any part of the mineralized material in any
of these categories referred to in the resource estimate, the PEA and this press release will ever be converted into mineral reserves. In addition, the
SEC normally only permits issuers to report mineralization that does not constitute mineral reserves as in-place tonnage of mineralized material and
grade without reference to unit amounts of metal.
Quality Assurance and Control
Results from samples were analyzed at ALS Global Laboratories (Geochemistry Division) in Vancouver,
Canada (an ISO/IEC 17025:2017 accredited facility). The sampling program was undertaken by
Company personnel under the direction of Rob L'Heureux, P.Geol. A secure chain of custody is
maintained in transporting and storing of all samples. Gold was assayed using a fire assay with atomic
emission spectrometry and gravimetric finish when required (+10 g/t Au). Analysis by four acid digestion
with 48 element ICP-MS analysis was conducted on all samples with silver and base metal over-limits
being re-analyzed by atomic absorption or emission spectrometry. Rock chip samples from
outcrop/bedrock are selective by nature and may not be representative of the mineralization hosted on
the project.
The technical content of this news release has been reviewed and approved by Michael Dufresne, M.Sc,
P. Geol., P.Geo., and Carly Church, P.Eng., PMP, qualified persons as defined by National Instrument
43-101.