Westhaven Announces Robust Preliminary Economic Assessment of the South Zone, Shovelnose GOLD Project, British Columbia ________________________________________________________________________________________________
WESTHAVEN ANNOUNCES ROBUST PRELIMINARY ECONOMIC ASSESSMENT OF THE SOUTH ZONE,
SHOVELNOSE GOLD PROJECT, BRITISH COLUMBIA
________________________________________________________________________________________________
Vancouver, B.C. – July 18th, 2023 – Westhaven Gold Corp. (TSX -V:WHN) is pleased to report the
completion of a Preliminary Economic Assessment (“PEA”) at its 100% owned 17,623-hectare Shovelnose
Gold Property *the “Property”). Shovelnose is located within the prospective Spences Bridge Gold Belt
(“SBGB”), which borders the Coquihalla Highway 30 kilometres south of Merritt, British Columbia.
Gareth Thomas, President & CEO, comments: “Westhaven’s flagship Shovelnose Gold Property is located
in close proximity to a highway and near the city of Merritt, BC in a tier 1 mining jurisdiction. This PEA
focuses on the South Zone , discovered in late 2018 and with a n initial Mineral Resource Estimate first
reported in 2022. In addition to high grades, the South Zone benefits from wide, steeply dipping
mineralized vein domains which contribute to a robust, low -cost (AISC US $752 / oz AuEq), high margin
mining opportunity. Results from this PEA certainly underpin a significant property value with serious
economic benefits and provide an excellent cornerstone from which to build upon. Westhaven’s continued
focus is on exploration and expanding the gold-silver mineral inventory outside the South Zone. Multiple,
notable discoveries have been made on this large (17 6 sq. km.) underexplored property since the initial
South Zone discovery, all of which are outside the area assessed in the current PEA . With a fully funded
drill program underway, management expects to be able to significantly increase t he Property’s Mineral
Resource base as we drill off the newer discoveries and test additional outside targets.”
Preliminary Economic Assessment Highlights:
*Base case parameters of US$1,800 per ounce gold, US$22 per ounce silver and CDN$/US$ exchange rate of $0.76.
*All costs are in Canadian dollars unless otherwise specified.
• Robust financial metrics.
o Pre-tax Internal Rate of Return (“IRR”) of 41.4%; After-tax IRR of 32.3%.
o Low All -In Sustaining Cost (“AISC”) of $989/ounce (“oz”) (US$752/oz) g old equivalent
(“AuEq”).
o Low Cash Cost of $804 oz/AuEq (US$ 611/oz AuEq).
o Pre-tax Net Present Value (“NPV”6%) of $359 million (M) and After-tax NPV of $222M.
o Payback period from start of production year 1 of 2.4 years pre-tax and 2.6 years after-tax.
o After-tax (NPV 6%) increases to $268.4M and After-tax IRR increases to 37.2% using spot
prices of US$1,950 gold and US$24 silver.
TSX-V:WHN
• Low capital-intensive development and operating costs.
o Total Preproduction Capital of $149.6M.
o Total Life of Mine (“LOM”) Capital Costs of $247M.
o Average operating cost of $132/ tonne processed.
o 94% of total mining is cost effective longitudinal and traverse longhole stoping , with only
6% of total mining requiring cut and fill stoping.
• 9.5-year mine life and ability to expand processing to accommodate satellite discoveries.
o Production rate of 1,000 tonnes per day (“tpd”).
o Total payable metals of 534,000 oz gold (“Au”) and 2,715, 000 oz silver (“Ag”).
o Average annual production of 56,100 oz Au peaking in year 7 at 68,000 oz Au.
o Total mineralized rock production of 1,452,000 tonnes at 5.37 g/t Au and 28.62 g/t Ag.
o Metallurgical recoveries of 91.5% Au and 92.9% Ag.
• Community/stakeholder benefits.
o Total projected income taxes paid of $136M.
o Total projected British Columbia mineral taxes paid of $79M.
o More than 130 well-paying local full time jobs created during life of mine.
o Additional employment during construction phase.
o Indirect spin-off benefits during both construction and mine operations.
Mineral Resources, PEA Preparation and Results
The previous public Mineral Resource Estimate (“MRE”) for the South Zone was carried out by P&E Mining
Consultants Inc. (“P&E”) with an effective date of January 1, 2022. That MRE was built with a pit
constrained cut-off of 0.35 g/t AuEq and can be found at: 2022 News Release South Zone Pit Constrained
MRE. The January 2022 MRE is superseded by the new July 2023 underground MRE reported herein. All
drilling and assay data were provided by Westhaven, in the form of Excel data files. The GEOVIA GEMS ™
V6.8.4 database compiled by P&E for th e July 2023 M RE consisted of 162 surface drill holes, totalling
61,726 metres, of which 17 drill holes (SNR21-41 to 57), totalling 5,235 metres, were added to the initial
January 2022 MRE. A total of 83 drill holes (32,089 metres) were intersected by the Mineral Resource
wireframes used in the PEA.
P&E validated the Mineral Resource database in GEMS ™ by checking for inconsistencies in analytical
units, duplicate entries, interval, length or distance values less than or equal to zero, blank or zero -value
assay results, out-of-sequence intervals, intervals or distances greater than the reported drill hole length,
inappropriate collar locations, survey and missing interval and coordinate fields. Some minor errors were
identified and corrected in the database. P&E are of the opinion that the supplied database is suitable for
Mineral Resource estimation.
A block model was constructed using GEOVIA GEMS™ V6.8.4 modelling software and consists of separate
model attributes for estimated Au, Ag and AuEq grade, rock type (mineralization domains), volume percent,
bulk density, and classification. The Mineral Resource was classified as Indicated and Inferred based on
the geological interpretation, variogram performance and drill hole spacing. P&E also consider s
mineralization at the South Zone to be potentially amenable to underground mining methods. The revised
MRE used for the PEA is reported with an effective date of July 18, 2023, and is tabulated in Table 1.
Table 1
Shovelnose Underground Mineral Resource Estimate @ 1.5 g/t AuEq Cut-off (1-5)
Classification Tonnes Au Contained Au Ag Contained Ag AuEq Contained AuEq
(k) (g/t) (k oz) (g/t) (k oz) (g/t) (k oz)
Indicated 2,983 6.38 612 34.1 3,273 6.81 654
Inferred 1,331 3.89 166 16.9 725 4.10 176
1. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
2. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political,
marketing, or other relevant issues.
3. The Inferred Mineral Resource in this estimate has a lower level of confidence than that applied to an Indicated Mineral Resource
and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of the Inferred Mineral Resource
could potentially be upgraded to an Indicated Mineral Resource with continued exploration.
4. The Mineral Resources were estimated in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (CIM),
CIM Standards on Mineral Resources and Reserves, Definitions (2014) and Best Practices Guidelines (2019) prepared by the
CIM Standing Committee on Reserve Definitions and adopted by the CIM Council.
5. PEA is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have
the economic considerations applied to them that would enable them to be classified as Mineral Reserves, and there is no
certainty that the PEA will be realized.
A financial model was developed to estimate the L ife of Mine (“LOM”) plan and considered only
underground mining of Mineral Resources at the South Zone. Other known gold -silver mineralization at
the Shovelnose Gold Property, currently being evaluated by Westhaven, are not included.
The LOM plan covers an 11.5-year period (2 years pre-production and 9.5 years of production) Currency is
in Q2 2023 Canadian dollars unless otherwis e stated. Inflation has not been considered in the financial
analysis.
The PEA outlines a production mine life of 9.5 years with average annual production of 56,100 ounces
gold and 284,200 ounces silver at average cash costs and all -in sustaining costs ("AISC") per ounce gold
equivalent of US$752. The PEA considers the payable recovery of 534,200 oz gold and 2,715,200 oz silver
from an underground operation, at average mine production grades of 5.37 g/t and 28.62 g/t, respectively.
Revenue
The commercially saleable product generated by the Project is a gold/silver doré. Westhaven would be
paid once the doré has been delivered to a smelter and refinery, off-site.
The NSR payables were based on the following parameters:
Dore Payable (Includes refining and smelting)
Au 98%
Ag 92%
The CDN$/US$ exchange rate used in the PEA is 0.76.
Subtotal Revenue
Au (US$) $961.5M
Ag (US$) $59.7M
Net revenue
CDN$ $1,343.7M
The revenue generation by the Shovelnose Project, on a yearly basis, is presented in Table 2.
Table 2
Summary of Base Case Total Revenue Generation
Item / Year Yr -1 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 Total
Tonnes 10,771 343,150 365,250 365,250 365,250 365,250 365,250 365,250 365,250 365,250 176,509 3,452,430
Grade (g/t) - Au 8.01 5.61 5.51 5.12 5.73 5.61 6.46 4.89 5.2 4.84 3.84 5.37
- Ag 67.69 36.81 26.4 24.99 35.17 31.61 31.15 21.59 27.35 26.42 19.17 28.62
Au Ounces Payable 2,488 55,535 57,986 53,958 60,353 59,090 67,974 51,467 54,787 50,995 19,528 534,162
Ag Ounces Payable 20,035 347,099 264,961 250,841 353,003 317,271 312,635 216,716 274,479 265,193 92,997 2,715,231
Subtotal Rev.-Au (US$)M 4.5 100 104.4 97.1 108.6 106.4 122.4 92.6 98.6 91.8 35.2 961.5
-Ag (US$)M 0.4 7.6 5.8 5.5 7.8 7.0 6.9 4.8 6.0 5.8 2.0 59.7
Subtotal Rev. (Cdn$) M 6.5 141.6 145 135.1 153.2 149.1 170.0 128.2 137.7 128.5 48.9 1,343.7
Net Royalty (Cdn$) M 4.5 3.5 3.6 3.4 3.8 3.7 4.3 3.2 3.4 3.2 1.2 37.9
Net Revenue (Cdn$) M 2 138 141.4 131.7 149.3 145.4 165.8 125 134.3 125.2 47.7 1,305.8
Note Yr = Year
P&E has estimated the net revenues assuming Westhaven has taken advantage of available royalty buy-
outs. There is a 2% N et Smelter Return (“NSR”) royalty on the Shovelnose Gold P roperty held by Franco-
Nevada Corp. which Westhaven has the option to buy down to a 1.5% NSR for US$3M. There is a 2% NSR
held by Osisko Gold Royalties Ltd. which Westhaven has the option to buy down to a 1% NSR for $500,000.
Costs
Operating costs:
Total average cost $132.15/t processed
Cash Cost / AuEq oz (Cdn$/oz AuEq) $804.19/oz AuEq (US$611.18/oz)
All-in sustaining cost (“AISC”)(Cdn$/oz AuEq) $989.12/oz AuEq (US$751.73/oz)
Capital costs:
LOM $247.0M
Sustaining CAPEX $104.9M
LOM capital costs include the cost of all mine development; process plant, mine equipment; surface
infrastructure; underground infrastructure; a closure cost; a salvage credit; and a 20% contingency.
Stoping methods utilized are transverse longhole, longitudinal longhole and cut & fill. The average vein
widths to be mined are 16.2m, 6.6m and 3.0m respectively.
Mining unit costs by method are $132.77/t for transverse and longitudinal long hole, and $143.87/t for
cut & fill stoping.
The proportion of mining method during the life of mine is 62% longitudinal longhole, 32% for
transverse longhole mining and 6% cut and fill.
Table 3
Base Case Cash Flow Summary
ITEM DESCRIPTION /
YEAR UNITS YR - 2 YR - 1 YR 1 YR 2 YR 3 YR 4 YR 5 YR 6 YR 7 YR 8 YR 9 YR 10 TOTAL
Production
Mt 0.01 0.34 0.37 0.37 0.37 0.37 0.37 0.37 0.37 0.37 0.18 3.45
Au
(g/t) 8 5.6 5.5 5.1 5.7 5.6 6.5 4.9 5.2 4.8 3.8 5.4
Ag
(g/t) 67.7 36.8 26.4 25 35.2 31.6 31.1 21.6 27.3 26.4 19.2 28.6
Revenue M$ 2 138 141.4 131.7 149.3 145.4 165.8 125 134.3 125.2 47.7 1305.8
OPEX
Stope Development
(Ore) M$ 1.5 11.6 11.2 3.4 3.8 3.5 5.3 5.5 6.9 5.7 0.9 59.2
Longitudinal Longhole
Stoping M$ 0.9 2.1 2.4 2 2.3 1.2 2.3 3.1 3.1 1.9 21.3
Transverse
Longhole Stoping M$ 1.8 1 1.4 1.5 1.5 2.3 1.3 0.3 11
Cut and Fill Stoping M$ 0.5 0.3 0.1 0.4 0.5 0.2 0.4 1.2 0.1 3.9
Mine G&A M$ 2.6 4.8 5.3 5.3 5.3 5.3 5.3 5.3 5.3 5.3 2.6 52.7
Paste Backfill M$ 0.1 2.8 3 3 3 3 3 3 3 3 1.4 28.3
Process Plant M$ 0.4 13.4 14.3 14.3 14.3 14.3 14.3 14.3 14.3 14.3 6.9 134.9
Underground Haulage M$ 0.2 7.7 7.4 7.3 7.6 7.9 8.2 6.9 7.1 7.5 3.6 71.5
Stockpile Rehandling M$ 0 0.9 1 1 1 1 1 1 1 1 0.5 9.5
Table 3
Base Case Cash Flow Summary
ITEM DESCRIPTION /
YEAR UNITS YR - 2 YR - 1 YR 1 YR 2 YR 3 YR 4 YR 5 YR 6 YR 7 YR 8 YR 9 YR 10 TOTAL
Administration G&A M$ 4.6 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 4.1 64
Total OPEX M$ 9.5 50.6 51.8 44.3 45.2 44.9 47.2 45.9 47.6 47.2 22.1 456.3
CAPEX
Mine Development
(Waste) M$ 18.2 21.6 11.9 2.1 2.5 3.8 4 1.4 5.6 2.6 73.8
Process Plant M$ 44.6 22.3 3.3 3.3 3.3 3.3 80.2
Mining Equipment M$ 8 12.2 1.9 0.2 1.6 1.7 7.6 1.5 4.6 1.4 40.7
Underground
Infrastructure M$ 0.4 2.2 1.1 1.3 0.2 1.3 0.8 1.3 0.2 0.2 0.2 9.1
Surface Infrastructure M$ 45.1 0.2 2.3 0.4 1.6 3.5 0.6 53.6
Closure & Salvage M$ 3.5 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 -17.1 -10.5
Total CAPEX M$ 44.6 97.5 36.6 20.9 4 8.4 8.7 19.6 4.5 14.6 3.2 -15.6 247.0
Taxes
Income Tax M$ 5.9 17.2 20 19.6 24.4 14.9 17.2 15.2 2.9 137.3
Mineral Tax M$ 1.8 1.9 1.8 12.4 12.4 13.4 10.1 9.8 10.2 5.5 79.3
Total Taxes M$ 1.8 7.7 19.1 32.4 32.1 37.8 25 27 25.3 8.4 216.6
After-Tax Cash Flow M$ -44.6 -105 49 61 64.3 63.3 59.7 61.2 49.5 45.1 49.6 32.8 385.9
After-Tax Cumulative Cash Flow M$ -44.6 -149.6 -100.6 -39.6 24.7 88 147.7 208.9 258.5 303.5 353.1 385.9
After-tax IRR % 32.3%
After-tax NPV @ 6% M$ 221.6
Cash Flow Sensitivity Analysis
The following after-tax cash flow analysis was completed:
Net Present Value (“NPV”) (at 5%, 6%, 7%, 8%, 9% and 10% discount rates).
Internal Rate of Return (“IRR”).
Payback period.
The summary of the results of the cash flow sensitivity analysis is presented in Table 4.
TABLE 4
BASE CASE CASH FLOW SENSITIVITY ANALYSIS
Description Discount Rate Units Value
Undiscounted After-Tax CF 0% (M$) 385.9
Internal Rate of Return % 32.3%
After-Tax NPV at
5% (M$) 243.1
Base Case 6% (M$) 221.6
7% (M$) 201.9
8% (M$) 183.9
9% (M$) 167.4
10% (M$) 152.2
After-Tax Total Project Payback (including pre-production) Years 4.6
The Project was evaluated on an after-tax cash flow basis which generates a net undiscounted cash flow
estimated at $385.9M. This results in an after -tax IRR of 32.3% and an after -tax NPV of $221.6 M when
using a 6% discount rate. In the base case scenario, the Project has a payback period of 4.6 years from the
start of the Project. The average life-of-mine cash cost is Cdn$804.19/oz AuEq (US$611.18/oz AuEq), at an
average operating cost of $132.15/t processed. The average life-of -mine all-in sustaining cost (“AISC”) is
estimated at Cdn$989.12/oz AuEq (US$751.73/oz AuEq).
Sensitivity Analysis
Project risks can be identified in both economic and non-economic terms. Key economic risks were
examined by running cash flow sensitivities to: gold metal price; silver metal price; gold process plant
head grade; gold metallurgical recovery; operating costs; and capital costs.
Each of the sensitivity items were varied up and down by 10% and 20% to assess the effect they would
have on the NPV at a 6% discount rate. The value of each parameter, at 80%, 90%, 100% base case,
110% and 120%, is presented in Table 5.
Table 5
Sensitivity Parameter Values
Parameter 80% 90% 100% 110% 120%
Au Metal Price US$/oz 1,440 1,620 1,800 1,980 2,160
Ag Metal Price US$/oz 17.6 19.8 22 24.2 26.4
Au Head Grade g/t 4.29 4.83 5.37 5.9 6.44
Au Met Recovery % N/A 82.4% 91.5% N/A N/A
Capex $M 197.6 222.3 247 271.7 296.4
Opex $M 365 410.6 456.3 501.9 547.5
The resultant after-tax NPV @ 6% values of each of the sensitivity parameters at 80% to 120% are
presented in Table 6.
Table 6
After-Tax NPV Sensitivity to Base Case at 6% Discount Rate (M$)
Parameter 80% 90% 100% 110% 120%
Au Metal Price 115.9 168.9 221.6 274.2 326.7
Ag Metal Price 215 218.3 221.6 224.9 228.2
Au Head Grade 115.9 168.9 221.6 274.2 326.7
Au Met Recovery N/A 168.9 221.6 N/A N/A
Capex 263.2 242.4 221.6 200.8 180.0
Opex 260.8 241.2 221.6 202.0 182.3
Cautionary Statement
The PEA is considered by P&E Mining Consultants Inc. (“P&E”) to meet the requirements as defined in
Canadian National Instrument (“NI ”) 43-101 Standards of Disclosure for Mineral Projects. This PEA is
preliminary in nature and includes Inferred Mineral Resources that are considered too speculative
geologically to have the economic considerations applied to them that would enable them to be classified
as Mineral Reserves, and there is no certainty that the PEA will be realized. Mineral Resources are not
Mineral Reserves and do not have demonstrated economic viability. There is no guarantee that Westhaven
Gold Corporation will be successful in obtaining any or all of the requisite consents, permits or approvals,
regulatory or otherwise for the Project to be placed into production. The PEA was prepared in accordance
with the requirements of NI 43-101 and has an effective date of July 18, 2023. A technical report relating
to the PEA, prepared in accordance with NI 43 -101, will be filed on SEDAR and posted on the company ’s
website within 45 days of this news release.