Sprott Resource Holdings Inc. Announces Mineral Reserves and Resources for Minera Tres Valles are In-Line with Management Assumptions
Sprott Resource Holdings Inc. Announces Mineral Reserves and Resources for
Minera Tres Valles are In-Line with Management Assumptions
Sprott Resource Holdings Inc. (“ SRHI” or the “ Corporation”) (TSX: SRHI) is pleased to
announce the results of an updated NI 43-101 compliant mineral reserve and mineral resource
estimate, pre-feasibility study for the implementation of chloride media leaching (“Salt Leach”),
and feasibility study for the expansion of the Don Gabriel Manto open pit, as well as an update
on the operating and growth activities for its 70% -owned Minera Tres Valles (SpA) (“ MTV”)
property located near Salamanca, Chile.
“We are very pleased that the updated technical studies validate our investment thesis through
mineral reserve and resource estimates that are in -line with the due diligence we conducted
before acquiring the MTV asset,” said Steve Yuzpe, CEO of SRHI.
Since October 2017, MTV has been working diligently with several consulting and engineering
firms to update the historical information to provide a mineral reserve and mineral resource
estimate for the MTV property in compliance with the standards prescribed by NI 43-101, define
the capital requirements to convert the acid leach process to a Salt Leach process, and provide
a feasibility level mine plan to expand production from the Don Gabriel Manto open pit mine.
These studies, which are being compiled into a NI 43-101 compliant technical report, comprise
the first stage of the expansion of the MTV operation. In t he next stage , Wood plc (“ Wood”,
formerly AMEC Foster Wheeler ) has been engaged to complete a pre -feasibility level
underground mining study for the exploitation of the Papomono Massive underground deposit ,
with the objective of defining further mineral reserves. It is MTV’s objective to combine the
studies with preliminary economic assessment (“PEA”) level studies on ancillary deposits to
produce a property-wide production profile.
Updated Mineral Resource Estimate Highlights:
Total measured and indicated mineral resource of 18.3 million tonnes at 1.03% CuT
containing 417 million pounds of copper
Total inferred mineral resource of 3.5 million tonnes at 1.11% CuT containing 84.4
million pounds of copper
Salt Leach Pre-Feasibility Study Highlights:
Potential to increase copper recoveries by 10%, up to 40% reduction of leaching cycle,
and up to 40% reduction in sulfuric acid consumption
Estimated capital cost of US$6. 9 million, which includes the activities from detailed
engineering to the end of construction
Approximately 11 months to implement
Less than two year payback
Don Gabriel Manto Feasibility Study Highlights:
Almost triples production from the Don Gabriel Manto open pit
Mine plan based on mineral reserves of 5.17 million tonnes at 0.81% CuT at a copper
cut-off grade of 0.25%
Produce approximately 14 million pounds of copper per year over a six-year reserve life
Currently selecting the open pit contract mining contractor for Don Gabriel
Corporate Activity Highlights:
Wood has commenced a pre -feasibility level underground mining study on the
Papomono Massive underground deposit
Expanded management team to include experienced underground mining professional
to lead underground development
Appointed Joe Phillips, a highly experienced operations and project development senior
executive, to board of directors of MTV
“These are excit ing times for SRHI as we undertake the studies to define the growth plan to
reach the full potential of the MTV asset s,” said Mr. Rick Rule, CIO of SRHI. “Chile is a
wonderful country in which to do business, and we are seeing many opportunities to expand our
operational footprint in Chile and South America.”
“Based on these studies and our prior diligence, the e xisting facilities, with an additional capital
investment allow for production expansion to reduce unit costs,” said Mr. Yuzpe. “We are
benefiting from higher copper prices and we are pleased to have reached a mutually beneficial
three year agreement with the labour union at MTV.”
“The planned tripling of open pit production will allow MTV to secure more favo urable mining
and haulage rates,” said Luis Vega, CEO of MTV . “Significant work has been completed on the
Papomono Massive deposit, and we have added an experienced project manager with
significant project and underground experience to assist with the development of the min e plan
at Papomono Massive and the other deposits.”
NI 43-101 Mineral Reserve and Mineral Resource Estimates
MTV engaged Independent Mining Consultants, Inc. (“ IMC”) of Tucson, Arizona to prepare NI
43-101 compliant mineral reserve and mineral resource estimate s and a supporting technical
report for the Don Gabriel and Papomono mines on MTV’s property located near Salamanca ,
Chile. Based on 771 diamond drill holes totaling 145.5 thousand meters, the total measured and
indicated mineral resources is 18.3 million tonnes at 1.03% copper containing 417.3 million
pounds of copper. Inferred mineral resources total 3.5 million tonnes at 1.11% copper
containing 84.4 million pounds of copper. Tables 1 and 2 summarize the mineral reserves and
mineral resources for the nine deposits comprising Don Gabriel and Papomono.
For the Don Gabriel Manto open pit deposit, IMC calculated a measured and indicated mineral
resource of 6. 5 million tonnes at a grade of 0.8 3% containing 118 million pounds at a cut -off
grade of 0.2% copper, and this mineral resource estimate was used in the Don Gabriel Manto
feasibility level open pit mine plan described below. Using a long -term copper price of
US$2.75/lb, IMC produced an optimized mine plan for the Don Gabriel Manto open pit mine,
defining proven and probable mineral reserves of 5.17 million tonnes at a grade of 0.81% CuT
containing 92.7 million pounds of copper. The Don Gabriel Vein deposit, located below the Don
Gabriel Manto open pit , is planned to be mined using underground methods. Further infill
drilling is planned to increase the confidence level and expand the mineral resource estimate for
the Don Gabriel Vein deposit.
For the Papomono Massive deposit, IMC estimated a measured and indicated mineral resource
of 3.34 million tonnes at a grade of 1.86% copper containing 137 million pounds of copper at a
cut-off grade of 0.34%.
In November 2017, Wood was engaged to develop an underground mine plan at Papomono
Massive at a pre-feasibility level. Ingeroc Ltda. has completed the geotechnical drilling program
at the Papomono Massive underground mine to assist in the trade-off studies and preparation of
the mine plan.
It is planned that th e ancillary deposits be exploited opportunistically in order to maximize
crusher feed and copper grade to the plant and provide operational flexibility. Further drilling is
required to increase the confidence level and expand the ancillary deposits.
In the next stage, MTV will incorporate the Don Gabriel feasibility study results in its study and
supporting technical report . The development of the Papomono underground is the next stage
of the expansion of the MTV mine to full capacity. MTV is expected to complete its studies and
the related technical report in the middle of 2018.
Mining Ore CuT Contained
Method Ktonnes (%)
Copper
(klbs)
Don Gabriel Manto Mineral Reserve
Proven Mineral Reserve OP 898 0.80 15,827
Probable Mineral Reserve OP 4,270 0.82 76,871
Total P&P Mineral Reserve 5,168 0.814 92,698
Table 1: Don Gabriel Manto Mineral Reserve
Mining CuT Resource CuT Contained
Method Cutoff(%) Ktonnes (%)
Copper
(klbs)
Measured Mineral Resource
Don Gabriel Manto
OP 0.20 983 0.82 17,857
Don Gabriel Veins
UG 0.64 0 0.00 0
PPM Massivo
UG 0.34 2,449 1.94 104,796
PPM Cumbre
OP 0.19 266 0.49 2,844
PPM Cumbre
UG 0.34 0 0.00 0
PPM Mantos Connection UG 0.59 262 1.27 7,312
PPM South
UG 0.58 634 1.28 17,821
Epithermal
UG 0.65 0 0.00 0
PPM North
OP 0.19 102 0.96 2,150
North Manto UG 0.58 834 1.08 19,894
Total Measured Mineral Resource 5,530 1.42 172,674
Indicated Mineral Resource
Don Gabriel Manto
OP 0.20 5,476 0.83 99,959
Don Gabriel Veins
UG 0.64 0 0.00 0
PPM Massivo
UG 0.34 891 1.62 31,881
PPM Cumbre
OP 0.19 2,388 0.54 28,429
PPM Cumbre
UG 0.34 351 0.48 3,699
PPM Mantos Connection UG 0.59 1,287 1.02 28,856
PPM South
UG 0.58 989 1.00 21,760
Epithermal
UG 0.65 509 0.98 10,997
PPM North
OP 0.19 250 1.00 5,506
North Manto
UG 0.58 633 0.97 13,495
Total Indicated Mineral Resource 12,774 0.87 244,581
Measured and Indicated Mineral Resource
Don Gabriel Manto
OP 0.20 6,459 0.83 117,816
Don Gabriel Veins
UG 0.64 0 0.00 0
PPM Massivo
UG 0.34 3,340 1.86 136,676
PPM Cumbre
OP 0.19 2,654 0.53 31,273
PPM Cumbre
UG 0.34 351 0.48 3,699
PPM Mantos Connection UG 0.59 1,549 1.06 36,168
PPM South
UG 0.58 1,623 1.11 39,581
Epithermal
UG 0.65 509 0.98 10,997
PPM North
OP 0.19 352 0.99 7,656
North Manto
UG 0.58 1,467 1.03 33,389
Total Measured and Indicated Mineral Resource 18,304 1.03 417,255
Inferred Mineral Resource
Don Gabriel Manto
OP 0.20 79 0.70 1,216
Don Gabriel Veins
UG 0.64 2,020 1.33 59,273
PPM Massivo
UG 0.34 22 2.64 1,282
PPM Cumbre
OP 0.19 537 0.66 7,861
PPM Cumbre
UG 0.34 298 0.53 3,482
PPM Mantos Connection UG 0.59 117 0.79 2,043
PPM South
UG 0.58 111 0.95 2,317
Epithermal
UG 0.65 223 1.01 4,970
PPM North
OP 0.19 13 2.90 832
North Manto
UG 0.58 37 1.39 1,131
Total Inferred Mineral Resource 3,457 1.11 84,408
Table 2: MTV Mineral Resource Statement
Salt Leach Pre-feasibility Study
MTV engaged ProPipe S.A. (“ProPipe”) of Santiago to undertake a pre-feasibility study on Salt
Leach to validate prior column and test-heap leach results, and define the cost and timeline for
the infrastructure and implementation. The results and more detail of this study will be included
in the IMC Technical R eport. Twelve three -meter columns and four test heap leach pads
containing 2.4 thousand tonnes of mineralized material from both Papomono and Don Gabriel
Manto demonstrated increased recovery of sulphide material, primarily chalcocite, through the
application of salt, coupled with a 30-day rest period prior to applying sulphuric acid.
Benefits of Salt Leach process include:
More than 10% increase in overall metallurgical recoveries
Up to 40% reduction of leach cycle time
The Company's mineral reserve and mineral resource estimates as at January 1, 2018 are classified in
accordance with the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") "CIM Definition Standards -
For Mineral Resources and Mineral Reserves" adopted by the CIM Council (as amended) in accordance with the
requirements of National Instrument 43-101 "Standards of Disclosure for Mineral Projects" ("NI 43-101"). Mineral
reserve and mineral resource estimates reflect the Company's reasonable expectation that all necessary permits
and approvals will be obtained and maintained.
Mineral reserves were estimated using a copper price of US$2.75/lb.
Mineral resources were estimated using a copper price of US$3.30/lb
OP means open pit mining, UG means underground mining method
Cutoff grades vary by deposit to reflect likely mining methods, variations in costs and slight variances in expected
metal recovery by deposit.
CuT is total copper assay, comprised of acid soluble (CuS), cyanide soluble (CuCN) and residual copper (CuR),
each with different leach kinetics. Recoveries based on conversion from existing acid leach method to chloride
media acid leaching as described in this announcement and pending technical report from IMC.
Further information, including key assumptions, parameters and methods used to estimate mineral reserves and
mineral resources will be described in the technical report on the MTV deposits to be published within 45 days of
this announcement.
Mineral resources are reported inclusive of mineral reserves. Mineral resources that are not mineral reserves do
not have demonstrated economic viability. Mineral Resources for proposed open pit deposits are constrained
within an economic pit shell.
The estimate of mineral resources and mineral reserves may be materially affected by environmental, permitting,
legal, title, taxation, socio-political, marketing or certain other risks. Please refer to the risks related to the mining
sector in the risk management section of the 2017 MD&A.
Totals may not add due to rounding.
Up to 40% reduction in sulphuric acid consumption
ProPipe has delivered a pre-feasibility level report with capital and operating cost estimates with
20% accuracy and have recent and relevant experience in building and commissioning these
systems in Chile . Capital costs including project administration, owner ’s costs, procurement,
construction, initi al fill and contingency total US$6.9 million. MTV expects a payback of the
investment in less than two years at current prices.
Main elements of the implementation include the construction of a salt -delivery system to the
agglomerator drum, conversion of pipes and valves to non -corrosive materials, change to the
extractant, the addition of a three coalescer units to reduce impurities in the organic phase and
an additional wash tank , along with minor electrical and civil works. A minimal amount of
disruption to production is expected during the transition.
Expected implementation time is 11 months from the MTV board approval including detailed
engineering, procurement, permitting, construction and commissioning. The results of this
report will be used to submit a Carta Pertinencia to SEA, the Chilean permitting authority, for the
conversion to chloride media acid leaching from the current acid leaching.
Figure 1: Test heap leach results for Don Gabriel with and without salt (a) copper recovery and (b) sulphuric
acid consumption
Figure 2: Test heap leach results for Papomono with and without salt (a) copper recovery and (b) sulphuric
acid consumption
Don Gabriel Manto Feasibility Study Results
At the operating Don Gabriel Manto open pit mine, MTV plans to increase production from the
current 25 thousand tonnes per month to 70 thousand tonnes per month and will use mining
contractors to drill, blast, load and haul ore and waste. MTV’s management team has extensive
experience in negotiating with and managing mining contractors, and is targeting the increase to
a higher production rate to commence in April 2018, with minor interruption of Don Gabriel
Manto ore to the crushing plant . The mineral reserve estimate and mine plan consider a pit-
angle of 50 degrees, and a cutoff grade of 0. 25%. MTV anticipate a phased layback of 2.67
million tonnes in 2018; the life-of-mine strip ratio of 4.3:1 (waste:ore) includes the capitalized
lay-back program.
Don Gabriel Manto
Open Pit 2018 2019 2020 2021 2022 2023 2024 Total
Tonnes Mined (000t) 464 936 892 902 881 875 218 5,168
Grade Mined (%CuT) 0.9% 0.7% 0.8% 0.7% 0.8% 1.0% 0.8% 0.8%
Payable Copper
(mmlbs) 7.2 12.7 14.5 12.7 13.7 16.5 3.1 80.5
Revenues (US$MM) $19.9 $34.9 $39.8 $35.1 $37.8 $45.5 $8.6
$221.5
Total Costs
(US$MM) 1 $18.3 $31.0 $29.7 $23.8 $21.8 $21.3 $5.4 $151.3
Table 3: Don Gabriel Manto open pit mine plan with expected revenues and costs at a copper price of
US$2.75/lb
1 Includes all stripping costs, including capitalized portion; allocation of the Salt Leach capital expenditure
not included
Figure 3: Payable copper production for Don Gabriel Manto deposit
Operations Update
MTV sold 2.7 million pounds of copper in the last quarter of 2017 . Cash costs per recoverable
pound placed on the heap leach pad were US$2.37. In the fourth quarter of 2017, MTV crushed
and processed 2.3 thousand tonnes per day, a 29% increase over the average of the prior three
quarters. Total material crushed in 2017 was 682 thousand tonnes, delivering 12.9 million
pounds of recoverable contained copper to the heap leach pad. Recent increases in sulfide
material production have increased inventory build -up in the heap leach, and we expect to see
the benefit of increased mining production in the latter part of 2017 in the coming months.
Mineralized material supply from t hird party miner activity is increas ing with the higher copper
price, reaching 23 thousand tonnes in December 2017 , and t otal deliveries of third -party
material of 51 thousand tonnes in the fourth quarter. MTV expects this increase d level of third
party supply to continue in 2018, although budget s for deliveries of 15 thousand tonnes per
month. Deliveries from ENAMI were 13 thousand tonnes of mineralized material in the fourth
quarter of 2017.
In November 2017, MTV hired Jorge Baraqui, an experienced underground mining professional
with over 20 years of planning and execution of underground mining projects for Codelco. Mr.
Baraqui specializes in Block and Panel caving methods, mine preparation and mining
innovation.
In November 2017, SRHI nominated Joe Phillips to serve on the board of directors of MTV. Mr.
Phillips is currently the Vice P resident of operations for Laguna Gold , and has extensive
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2018 2019 2020 2021 2022 2023 Q1-2024
Payable Copper to Heap
Leach Pad (million pounds)