TNR Gold Update on NSR Royalty - Los Azules Copper, Gold & Silver Project – McEwen Mining Preliminary Economic Assessment
NEWS RELEASE
TNR Gold Update on NSR Royalty - Los Azules Copper, Gold &
Silver Project – McEwen Mining Preliminary Economic
Assessment
Vancouver, British Columbia – June 26, 2023: TNR Gold Corp. (TSX-V: TNR) (“TNR”, “TNR Gold”
or the “Company”) is pleased to announce that McEwen Mining Inc. (“McEwen Mining”) has provided
an update on the Los Azules copper, gold and silver project in San Juan, Argentina. TNR holds a 0.4%
net smelter returns royalty (“NSR Royalty”) (of which 0.04% of the 0.4% NSR Royalty is held on behalf
of a shareholder) on the Los Azules Copper Project. The Los Azules project is held by McEwen Copper
Inc. (“McEwen Copper”), a subsidiary of McEwen Mining.
The news release issued by McEwen Mining stated:
“McEwen Mining Inc. (NYSE: MUX) (TSX: MUX) is pleased to provide results of the updated Preliminary Economic
Assessment (the “2023 PEA”) on the Los Azules Copper Project in San Juan Argentina (the “ Project”). Los Azules
is 100% owned by McEwen Copper Inc., which is 52% owned by McEwen Mining.
The PEA includes an updated independent mi neral resource estimate, which increased to 10.9 billion (B) lbs. Cu
(Indicated, grade 0.40%) and 26.7 B lbs. Cu (Inferred, grade 0.31%)
Base Case Highlights (Open-pit, Heap Leach, SX/EW, Nameplate capacity of 175 ktpa Cu Cathodes):
• Average annual copper ( Cu) cathode production of 401 million lbs. (182,100 tonnes) during the first 5
years of operation, and 322 million lbs. (145,850 tonnes) over the 27-year life of the mine (LOM)
• Total Cu recoverable to cathode of 8.68 billion lbs. (3.94 million tonnes), based on the LOM extraction of
mineralized material containing approximately 11.90 billion lbs. of total Cu (5.40 million tonnes), and
average copper recovery of 72.8%
• After-tax net present value ( NPV8%) of $2.659 billion (1), internal rate of return (IRR) of 21.2%, and a
payback period of 3.2 years – at $3.75 per lb. Cu.
• Initial capital expenditure of $2.462 billion, and a project capital intensity of $7.66 per lb. Cu ($16,880 per
tonne Cu)(2)
• Average C1 (2) cash costs of $1.07 per lb. Cu and all -in sustaining costs (2) of $1.64 per lb. Cu (AISC Margin
of 56%)(2)
• Average EBITDA(3) per year of $1.101 billion (Years 1-5) and $692 million (Years 6-27)
• Estimated carbon intensity of 670 kg CO2 equivalent per tonne of Cu (CO2-e/t Cu) (4) for Scope 1&2 GHG
Emissions, well below the industry average of 1,980kg CO2-e/t Cu (5). McEwen Copper’s goal at Los Azules
is to be carbon neutral by 2038, a target which is achievable through the use of emerging technologies and
offsets
#1120, 789 West Pender Street,
Vancouver, B.C.
V6C 1H2 , Canada
T: +1 (604) 229-8129
E-mail: [email protected]
Website: http://www.tnrgoldcorp.com
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• Estimated site-wide water consumption of 137 liters per second (L/s) from years 1 to 10, increasing to 163
L/s from years 11 to 27, this compares to approximately 600 L/s (6) for a conventional mill producing copper
concentrate
• 1.182 billion tonnes of mineralized material placed on heap leach pad with in -situ total copper grade
of 0.46% and in-situ soluble copper grade of 0.31% (7)
The 2023 PEA Technical Report is prepared in accordance with the requirements set forth by Canadian National
Instrument 43 -101 (“ NI 43-101”) for the disclosure of material information and is intended to meet the
requirements of a Preliminary Economic Assessmen t (PEA) level of study and disclosure as defined in the
regulations and supporting reference documents. The effective date of the report is May 9, 2023. All currency
shown in this report is expressed in Q1 2023 United States Dollars unless otherwise noted.
This study is preliminary in nature and includes 26% inferred mineral resources in the conceptual mine plan.
Inferred mineral resources are considered too speculative geologically and in other technical aspects to enable
them to be categorized as mineral reserves under the standards set forth in NI 43 -101. There is no certainty that
the estimates in this PEA will be realized.
Study Contributors
The 2023 PEA technical report was prepared by Samuel Engineering Inc., with contributions from Knight Piésold
Consulting, Stantec Consulting International Ltd, McLennan Design, Whittle Consulting Pty Ltd, and SRK
Consulting UK Limited under the supervision of David Tyler, McEwen Copper Project Director. The 2023 PEA
technical report has been filed on SEDAR and on the Company’s website.
2023 PEA vs 2017 PEA
The base case development strategy selected in the 2023 PEA is distinctly different from that presented in the
prior PEA published in 2017. In 2017, the strategy was to construct a mine with a conventional mill and flotation
concentrator producing a concentrate for export to international smelters. The 2023 PEA proposes a heap leach
(leach) project using solvent extraction -electrowinning (SX/EW) to produce copper cathodes (LME Grade A) for
sale in Argentina or international markets. There are three principal reasons why the implementation strategy
was changed to leach in the 2023 PEA:
1. Environmental Footprint: Fresh water consumption is reduced by approximately 75% (150 vs. 600 L/s).
Electricity consumption is reduced by approximately 75% (57 vs. 230 MW). GHG emissions are reduced by
approximately 57% (670 vs. 1,560 CO2-e/t Cu Scope 1&2), with paths to further reductions by implementing
new technologies, with the goal of reaching net -zero carbon by 2038 with some offsets. Los Azules copper
cathodes will thus be attractive to end -users seeking to measurably reduce their u pstream environmental
impacts.
2. Reduced Permitting Risk: When proposing any mega -project development, it is vital to understand the local
standards and sensitivities around permitting. The Project uses technology (heap leach) that is in operation
in San Juan today. It also eliminates tailings and tailings dams, conserves scarce water resources, and reduces
the overall complexity of the mine, optimizing the permitting process.
3. Producing Cathodes: The leach process produces LME Grade A copper cathodes, which c an be directly used in
industry, including within Argentina reducing export taxes. This eliminates reliance on 3 rd party foreign
smelters for the processing of concentrates into refined copper products. It also eliminates significant GHG
emissions associated with transportation, and pollution associated with smelting. Counterparty and pricing
risks are also reduced.
McEwen views the progress made with the 2023 PEA towards reducing our environmental footprint and greater
environmental and social stewardship sets the Project apart from other potential mine developments, which
appropriately justifies certain economic trade -offs. The primary trade -offs to achieve these environmental
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benefits is lower overall copper recovery, slightly higher unit costs, and less immediate cashflow due to extended
leach cycles. Nevertheless, the leach project remains very robust. Furthermore, McEwen believes that some of
these drawbacks can be mitigated by implementing developing technologies such as Nuton ™, discussed below.
Property Description
The Los Azules deposit is a classic Andean -style porphyry copper deposit. The large hydrothermal alteration
system is at least 5 kilometers (km) long and 4 km wide and is elongated in a north -northwest direction along a
major structural corridor. The Los Azules deposit area is approximately 4 km long by 2.2 km wide and lies within
the alteration zone. The limits of the mineralization along strike to the North and at depth have not yet been
defined. Primary or hypogene copper mineralization extends to at least 1,000 meters (m) below the surface. Near
surface, leached primary sulfides (mainly pyrite and chalcopyrite) were redeposited below the water table in a
sub-horizontal zone of supergene enrichment as secondary chalcocite and covellite. Hypogene bornite appears at
deeper levels together with chalcopyrite. Gold, silver, and molybdenum are present in small amounts, but copper
is the economic driver at Los Azules.
A New Vision and Approach
We developed regenerative guiding principles to reframe the approach to sustainable innovation and set forth
high-reaching goals that explore all facets of the mining processes considered for Los Azules. The project
development seeks to significantly reduce the environmental footprint of mining opera tions and their associated
GHG emissions by integrating the latest renewable and environmentally responsible technologies and processes.
The Project aims to obtain 100% of its energy from renewable sources (wind, hydro, and solar) in a combination
of offsite and onsite installations. The Project is also seeking to have long-term net positive impacts on the greater
Andean ecosystem, local flora and fauna, the lives of miners, and of the other citizens of nearby communities,
while contributing positively to the local and national economy of Argentina. Refer to the full 2023 PEA Technical
Report for more information about our regenerative approach.
Metal Price Assumption
The copper price use in the 2023 PEA was $3.75 per pound (except for the mineral resource estimate), in line with
analysts’ consensus projections for long-term copper prices that range between $3.25 and $4.25 per pound, with
a mean price of $3.75 per pound.
Study Highlights
This 2023 PEA development strategy begins with processing of resources associated with the oxide and supergene
copper mineralization in the near surface portion of the deposit using heap leaching methods. This approach
results in low average C1 costs of $1.07 per lb. Cu ( $0.88 per lb. in the first 8 years) and an attractive 3.2-
yearpayback period. Copper cathode production during the first 5 years of operation averages 401 million lbs.
per year (182 ktpa), and average over the 27-year LOM is 322 million lbs. per year (146 ktpa).
A nominal copper cathode production capacity of 385 million lbs. per year ( 175 ktpa) is met or exceeded during
the first 11 years of mining and was selected as the Base Case, with a smaller Alternative Case presented at 275
million lbs. per year (125 ktpa) of copper cathodes. The 2023 PEA financial model does not include potential future
development phases focused on primary copper mineralization found beneath the supergene copper layer but
some of these opportunities are discussed in the report, including the potential of deploying Nuton™ technologies.
The processing facility will function through to the completion of mining in Year 23 with stockpile reprocessing
and residual leaching operations to Year 27. Mining operations ramp up over the proposed mine life from
approximately 80 million total tonnes per year to 150 million tonnes per year through the life of the project as
copper grades decrease, and material movements increase.
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Summary results for the Base Case and Alternative Case are provided in Table 1.
Table 1: Summary Results
Project Metric Units Base Case
175 ktpa
Alternative Case
125 ktpa
Mine Life Years 27 32
Tonnes Processed Billion tonnes 1.182 1.182
Tonnes Waste Mined Billion tonnes 1.366 1.366
Strip Ratio 1.16 1.16
Total Copper Grade % Cu 0.457% 0.457%
Soluble Copper Grade (CuSOL) % CuSOL 0.311% 0.311%
Copper Recovery (Total Copper) % 72.8% 72.8%
Soluble Copper Recovery(8) % 107% 107%
Copper Production (LOM avg.) tonnes/yr 145,820 123,060
Copper Production (Yr 1-5) tonnes/yr 182,100 136,100
Copper Production – cathode Cu ktonnes 3,938 3,938
Initial Capital Cost USD Millions $2,462 $2,153
Sustaining Capital Cost USD Millions $2,243 $2,351
Closure Costs USD Millions $180 $180
C1 Cost (Life of Mine) USD/lb Cu $1.07 $1.11
All-in Sustaining Costs (AISC) USD/lb Cu $1.64 $1.67
Before Taxes
Net Cumulative Cashflow USD Millions $15,820 $15,679
Internal Rate of Return (IRR) % 26.5% 22.9%
Net Present Value (NPV) @ 8% USD Millions $4,436 $3,278
After Taxes
Net Cumulative Cashflow USD Millions $10,240 $10,159
Internal Rate of Return (IRR) % 21.2% 18.4%
Net Present Value (NPV) @ 8% USD Millions $2,659 $1,929
Pay Back Period Years 3.2 3.4
Sensitivity Analysis
The Base Case project economics are reasonably robust (>15% post -tax IRR) at a copper price above $3.00 per
pound and are similarly resistant to an increase in LOM capital expenditure of up to 30% and an increase in
operating expenses of up to 60%. Table 2 below shows the sensitivity of the Base Case project economics to the
Copper Price (+/- 20%) on a post-tax basis. The project NPV8% is breakeven at a copper price of $2.34 per pound.
Tables 2: Base Case (175 ktpa) Copper Price Sensitivity
Sensitivity (%)
Metal Pricing Post-Tax
Copper Price NPV IRR Payback
$ Cu/lb $M % Years
-20% $3.00 $1,277 15% 5.48
-15% $3.19 $1,624 17% 4.84
-10% $3.38 $1,969 18% 4.24
-5% $3.56 $2,314 20% 3.68
0% $3.75 $2,659 21% 3.18
5% $3.94 $3,003 23% 2.90
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10% $4.13 $3,346 24% 2.75
15% $4.31 $3,689 25% 2.61
20% $4.50 $4,032 27% 2.49
Table 3 below show the sensitivity of the Base Case project economics to initial and sustaining capital
expenditure escalation on a post-tax basis.
Table 3: Base Case (175 ktpa) Initial & Sustaining CAPEX Sensitivity
Sensitivity
(%)
Post-Tax
NPV IRR Payback
$M % Years
0 $2,597 21% 3.18
5% $2,484 20% 3.54
10% $2,372 19% 3.94
15% $2,260 18% 4.25
20% $2,148 17% 4.56
25% $2,036 17% 4.88
Table 4 below show the sensitivity of the Base Case project economics to operating expenditure escalation on a
post-tax basis.
Table 4: Base Case (175 ktpa) OPEX Sensitivity
Sensitivity
(%)
Post-Tax
NPV IRR Payback
$M % Years
0 $2,597 21% 3.18
5% $2,496 21% 3.28
10% $2,396 20% 3.38
15% $2,295 20% 3.49
20% $2,195 19% 3.62
25% $2,095 19% 3.75
Capital Costs Estimates
The Project includes the development of an open pit mine with muti -stage crushing and screening, a heap leach
pad, and a copper solvent extraction -electrowinning (SX/EW) facility with a nominal production capacity of 175
ktpa copper cathodes. There is also a sulfuric acid plant and other associated infrastructure to support the
operations. Initial capital infrastructure for the Base Case includes the following facilities:
• Mine development and associated infrastructure
• Coarse rock storage and handling (crushing, conveying, agglomeration)
• Heap leach pads and conveyor stacking systems
• SX/EW facility
• Sulfuric acid plant
• On-site utilities and ancillary facilities including a construction camp
• Off-site infrastructure: power transmission line (outsourced), access roads, and permanent camp
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The project initial capital costs are based on budgetary quotes for major equipment, recent in -house cost
information and installation factors, and regional contractor inputs and facilities obtained between Q4 2022 and
Q1 2023. T he capital costs for the project are summarized in Table 5 and should be viewed with the level of
accuracy expected for a preliminary analysis.
The approximate construction cost of the 132 kV power supply line to site is $155 million and has not been
included in the capital estimate because it is assumed that YPF Luz, a large Argentinean power utility company,
will be constructing the line at their expenses pursuant to a long -term renewable power purchase agreement.
Table 5: Initial Capital Costs by Case
Capital Cost Base Case Alternative Case
175k tpa Cu ($) 125k tpa Cu ($)
Mining $65,600,000 $65,600,000
Ore Storage & Handling $234,500,000 $192,500,000
Heap Leaching $158,500,000 $142,100,000
SX/EW Facilities $250,400,000 $167,700,000
Acid Plant $94,900,000 $79,900,000
Ancillary Facilities $23,300,000 $23,300,000
Site Development & Yard Utilities $126,300,000 $112,200,000
Off-Sites $167,400,000 $167,400,000
Total Direct Costs $ 1,120,900,000 $ 950,700,000
Common Indirect Costs $ 379,200,000 $ 323,800,000
Owners Costs $ 466,700,000 $ 455,900,000
Subtotal $ 1,966,800,000 $ 1,730,400,000
Contingency $495,000,000 $423,100,000
Total Capital Cost $ 2,461,800,000 $ 2,153,500,000
Operating Costs Estimates
Table 6 summarizes the LOM project operating costs per tonne of material processed and per pound of copper
produced.
Table 6: LOM Cash Costs
Base Case
175 ktpa
Alternative Case
125 ktpa
Description LOM
Cost/tonne ($)
LOM
Cost/lb. ($)
LOM
Cost/tonne ($)
LOM
Cost/lb. ($)
Mining 4.14 0.56 4.27 0.57
Processing 2.73 0.37 2.74 0.37
General & Administrative 0.94 0.13 1.11 0.15
Selling Expenses 0.15 0.02 0.15 0.02
LOM C1 Costs 7.96 1.07 8.27 1.11
Royalties and Taxes
The 2023 PEA includes all government and private royalties on production, export taxes, as well as income taxes
and banking taxes. Royalty calculations vary, however royalties and retentions based on net smelter return (NSR)
total approximately 9.2%. In the financial model it was assumed that 10,000 tonnes per year of copper cathodes
are sold within Argentina and consequently they are not subject to export taxes. 95% of VAT is assumed to be
recoverable after two years. A 0.2% portion of the bank tax is recoverable in the following year.
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Table 7: Royalties and Taxes (All Cases)
Income Tax Argentine Corporate Income % Profit 35 %
VAT Taxes Argentine Value Added Tax % on Capital 10.5 %
% on Operating 21 %
Royalties
San Juan Province % “Mine Mouth” 3 %
TNR Royalty % NSR 0.4 %
McEwen Mining Royalty % NSR 1.25 %
Export Retentions Argentine Export Retention % NSR 4.5 %
Bank Tax Debit and Credit Bank Tax % on Operating 1.2 %
Nuton Opportunity
Nuton LLC is a copper heap leaching technology venture of Rio Tinto that became a strategic partner in 2022. Its
Nuton™ suite of proprietary technologies provide opportunities to leach both primary and secondary copper
sulfides, providing significant opportunity to optimize the mine plan and the overall mining and processing
operations. In addition, Nuton ™ provides significant other benefits, such as lower overall energy consumption,
allowing earlier conversion to renewable energy sources, and lower water consumption than conventional sulfide
mineralization treatment processes.
Based on preliminary scoping testing, Nuton™ technologies offer the potential for copper recoveries of more than
80% from predominantly chalcopyrite, depending on the specific mineralogy make-up of the mineral resource. At
Los Azules, Nuton ™ has the potential to economically process the large primary sulfide copper resource as an
alternative to a concentrator, with low incremental capital following the oxide and supe rgene leach, no tailings
requirement, and a smaller environmental footprint. Producing copper cathode with Nuton™ on-site also has the
advantage of simplifying outbound logistics for copper concentrates and offers a finished product to the domestic
and international market.
The outcomes modelled using the Nuton proprietary computational fluid dynamics model, are very encouraging
and indicate that unoptimized copper recovery to cathode from primary material should range from 73% to 79%.
Furthermore, Nuton r ecovery from secondary material is high, ranging from 80% to 86%. This could provide a
significant opportunity to optimize the mine plan and the need for selective mining, as simultaneous stacking of
both secondary and primary mineralization will not impac t on the copper recovery from either material type.
Based on the current resource estimate, this could have a significant positive impact on the expected life of the
mine, without significantly increasing the initial capital investment required.
Nuton is currently validating modelled data with column leach tests. Column leaching of the composite samples
at their facilities is underway and expected to be completed in Q1 2024. Validation of the modelled results could
be obtained much sooner, depending on the trends provided by the actual column leach results.
McEwen Copper does not currently have a commercial arrangement with Nuton that enables it to deploy their
technologies at Los Azules , and there is no guarantee that such an agreement will come to fruition, however
McEwen Copper and Nuton intend to work in good faith toward such an arrangement. The results in Table 8
below assume that Nuton ™ technologies are implemented without includin g costs associated with technology
licensing or some other commercial cost structure.
Table 8: Nuton™ Opportunity Economic Summaries
Project Metric Units Base Case-Nuton
175 ktpa
Mine Life Yr 39
Strip Ratio 1.43
Tonnes Processed Billion tonnes 1.737
Copper Grade (Total) % Cu 0.409
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Copper Production – cathode Cu ktonnes 6,411
Initial Capital Cost USD Millions $2,444
Sustaining Capital Cost USD Millions $2,793
C1 Cost (Life of Mine) USD/lb Cu $1.04
All-in Sustaining Costs (AISC) USD/lb Cu $1.54
After Taxes
Internal Rate of Return (IRR) % 23.9%
Net Present Value (NPV) @ 8% USD Millions $3,701
Pay Back Period Yr 2.7
Project Development Schedule
The Gantt chart below presents a conceptual project development timeline based on regional contractor inputs
and long-lead equipment and materials delivery assumptions provided by vendors. The schedule assumes that
the feasibility study work is completed by the end of 2024, finalization o f the environmental permitting process
(IIA/DIA) and other necessary permits to begin work are completed during the proposed feasibility study and
preliminary timeframe and financing are in place to achieve the scheduled milestones. Following this conceptu al
schedule, the SX/EW plant start-up could occur in Q1 2029.