IDM Mining's Updated Preliminary Economic Assessment for Red Mountain Gold Project Demonstrates Increased Annual Production and Robust Economics
(firmenpresse) - VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 07/12/16 -- IDM Mining Ltd. (TSX VENTURE: IDM) ("IDM" or the "Company") is pleased to announce the results of an updated Preliminary Economic Assessment (the "2016 PEA") for the Red Mountain Gold Project (the "Project"), located in northwestern British Columbia near the town of Stewart, BC. The 2016 PEA report is authored by JDS Energy and Mining Ltd. ("JDS") with input from a number of other specialized and experienced consulting and advisory firms in the areas of infrastructure development, metallurgy, environmental science and geology.
"The 2016 PEA confirms the potential for a near-term, low CAPEX and OPEX, high-grade underground gold-silver mine," said Rob McLeod, President and CEO of IDM Mining. "The Project Economics are complimented by the significant exploration upside for the project near current resources as well as throughout the Property."
IDM commissioned the 2016 PEA to incorporate the new mine and infrastructure plan for the Project, confirm capital, operating costs and development timelines. This updated study confirms the anticipated low capital and operating costs, robust economic potential and near-term production profile of the Project, from the previous preliminary economic assessment announced on July 24, 2014 (the "2014 PEA"). Highlights of the 2016 PEA base case analysis are as follows (all amounts are in Canadian dollars unless otherwise indicated):
"Red Mountain is currently in the permitting process including continued dialogue with the Nisga'a First Nation and is planning to file a Project Application report in late 2016 under the BC Environmental Assessment Act and Canadian Environmental Assessment Act," said Michael McPhie, Executive Chairman of IDM. "Our comprehensive 2016 field program including: resource delineation drilling, engineering, metallurgy and environmental baseline work will support our Feasibility Study which is anticipated for early 2017."
The 2016 PEA 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 that there is no certainty that the 2016 PEA will be realized. Please see the important disclosure under "Cautionary Note Regarding the 2016 PEA" below.
JDS was engaged by IDM in April 2016 to produce an updated Independent Preliminary Economic Assessment for the Red Mountain Gold Project with input from a number of other specialized and experienced consulting and advisory firms. A technical report prepared in compliance with the requirements of the Canadian Securities Administrators' National Instrument 43-101 ("NI 43-101") will be filed on SEDAR and the Company's website within 45 days. The technical report is being prepared by Gord Doerksen, P.Eng a qualified person independent of the Company in accordance with section 1.5 of NI-43-101.
THE RED MOUNTAIN GOLD PROJECT
The 17,125 hectare Red Mountain Gold Project is located in northwestern BC, 15km northeast of the Town of Stewart. Discovered in 1989, the property was explored extensively until 1996 by Lac Minerals Ltd. and Royal Oak Mines Inc., with 466 diamond drill holes and over 2,000 meters of underground development completed, along with extensive engineering and environmental baseline work. Additional studies were completed over the past 12 years by Seabridge, North American Metals Corp. ("NAMC") and Banks Island Gold Ltd. ("Banks Island").
Red Mountain is a porphyry-related hydrothermal gold system, located in the Stikine terrain. Gold mineralization is associated with, and partially hosted within an early to mid-Jurassic multi-phase intrusive complex, with associated volcanic and volcaniclastic rocks and sediments. Many gold mineralized zones occur on the Property, including four primary mineralized zones and multiple satellite zones with established resource estimates. The three main mineralized zones (Marc, AV and JW) have been folded, and are separated by dip-slip fault zones. The 141 Zone is a parallel mineralized zone located 200 meters southwest. These mineralized zones are moderate to steeply dipping, roughly tabular and vary in widths from one to forty meters, averaging about sixteen meters in thickness. Gold and silver mineralization is associated with stockworks, disseminations and patches of coarse grained pyrite. Alteration facies includes strong quartz-sericite alteration.
Red Mountain 2016 Preliminary Economic Assessment Results
A summary of the 2016 PEA results based on a gold price of US$1,250 per ounce (2014 PEA - US$1,250) and silver price of US$15 per ounce (2014 PEA - US$20) is as follows:
Key Aspects and Assumptions of the PEA Study
Summary Economics 2016 PEA: US$1,250/oz. gold (2014 PEA - US$1,250), US$15/oz. silver (2014 - US$20)
Sensitivities
Metal Price Sensitivity:
Source: JDS (2016). Based on exchange rate of C$1.00 equals US$0.80
Discount Rate Sensitivity:
Summary of Operating Costs
Opportunities to Enhance Value
In addition to the favourable economics outlined in the 2016 PEA, there are numerous opportunities to further enhance project value through additional resource expansion and optimization work at Red Mountain.
Risks
It is the conclusion of the QPs that the 2016 PEA summarized in this technical report contains adequate detail and information to support the potentially positive economic result. The 2016 PEA proposes the use of industry standard equipment and operating practices. To date, the QPs are not aware of any fatal flaws for the Project.
The most significant potential risks associated with the Project are uncontrolled dilution, operating and capital cost escalation, permitting and environmental compliance, unforeseen schedule delays, changes in regulatory requirements, ability to raise financing and metal price. These risks are common to most mining projects, many of which may be mitigated, at least to some degree, with adequate engineering, planning and pro-active management.
Capital Costs
The capital cost (the "CAPEX") estimate includes all costs required to develop, sustain, and close the operation for a planned 5-year operating life. The construction schedule is based on an approximate 24-month build period. The accuracy of this estimate is (-20/+30%).
The high-level CAPEX estimate is shown in the table below; the sustaining capital is carried over operating Years 1 through 5, and closure costs are projected in Year 6.
Capital Cost Summary and 2014 Comparison
The variances of the 2016 and 2014 CAPEX estimates are based on the following:
Mining
The Red Mountain deposit is proposed to be mined using two underground mining methods, based on geometry and grade of the mineralized zones:
The remaining 8% of the potentially mineable tonnage comes from access and stope cross-cut development.
Cemented and un-cemented rock fill will be used as backfill to maximize mining recovery. The deposit will initially be accessed from the existing portal and exploration ramp in addition to a new portal accessing the top level of the mine and acting as a ventilation exhaust. A third lower access to be used for haulage will be added in Year 1 of the mine life. Access ramps will be driven at maximum grade of 15% at a 4.5 m by 4.5 m profile to accommodate 30 tonne haul trucks. Level spacing is variable up to a maximum of 30 m. Mineralized zone development will be on a 4.0 m x 4.0 m profile.
The initial mine design was based on basic assumptions to generate lower limits for cut-off grades (the "COG") for the two planned mining methods. A value of 3.65 g/t Au was determined as the COG for longhole stoping and 4.75 g/t Au for D&F mining. These COG's were used to design initial mining shapes.
The 2016 PEA mine plan focusses on accessing and mining higher grade material early in the mine life. As such, the plan commences with mining of Marc, followed by AV, and then JW and 141 zones. The mine production rate is targeted at 1,500 tpd.
Mining recovery and dilution factors were applied to each mining shape based on the mining method used.
Mine Production Schedule
Recovery Methods
The results of the metallurgical test work together with financial evaluation data, were used to develop metallurgical design criteria, which in turn were used to design the process facility for the Project.
The testwork has shown that Red Mountain mineralization can be treated using conventional mineral processing techniques for the recovery of gold and silver dore. A trade-off study was conducted to compare processing the mill feed material using either a whole-ore leach or a flotation/regrind/leach circuit. The flotation/regrind/leach circuit was selected due to estimated lower operating costs of approximately 15%, similar capital costs and slightly lower recoveries when compared to a whole-ore leach plant.
The plant will process material at a rate of 1,000 tpd with an average life of mine ("LOM") head grade of 7.0 g/t gold and 21.5 g/t silver.
The plant will consist of the following unit operations:
The grinding circuit product size is targeted at approximately 80% passing (P80) 150 microns, and the rougher concentrate will undergo further grinding to at least a P80 of approximately 20 microns, before the leaching stage. The flowsheet includes 3-stage crushing, 2-stage ball mill circuit, gravity gold recovery, flotation, regrind, leaching, CCD thickeners, Merrill Crowe and gold refinery. The tailings will be pumped to a tailings management facility (the "TMF"). The crushing circuit will operate at an availability of 70%. The milling and leaching circuits will operate 24 hours per day, 365 days per year at an availability of 92%.
Project Infrastructure
The project envisions the upgrading or construction of the following key infrastructure items:
These key items would be constructed during a two-year pre-production period. The access road and right-of-way for the electrical power transmission line are constructed early in the pre-production period.
Environment, Reclamation, First Nations and Stakeholder Engagement
The Project has been designed to minimize any short and long-term environmental impacts and to ensure that the Project provides lasting benefits to local communities while generating substantial economic and social advantages for shareholders, employees, and the broader community. IDM respects the traditional knowledge of the Aboriginal peoples who have historically occupied or used the Red Mountain project area. The project area watershed is relatively undisturbed by human activities with the exception of an access road that was constructed in the late 1990s but is currently decommissioned.
The objective is to retain the current watershed and local ecosystem integrity as much as possible during the construction and operation of the Project. Upon closure and reclamation of the Project, the goal will be to return the relatively small-disturbed areas to a level of pre-mine existence.
Pursuant to section 3(1) of the Reviewable Projects Regulation, the proposed production capacity for the Project exceeds the criteria of 75,000 tonnes per annum (t/a) of mineral material for a new mineral mine and is undergoing a provincial and federal environmental assessment under the British Columbia Environmental Assessment Act (BC EAA) and the Canadian Environmental Assessment Act (CEAA). Significant steps in the process have been undertaken successfully and IDM is planning to file a Project Application report in late 2016 that will fulfill the requirements of both BC and Canada. Approval for the Project under BC EAA and CEAA is expected in the second half of 2017. Provincial permitting for the Project will be pursued concurrently with the environmental assessment process.
Restoration activities are planned to consist of covering the tailings management facility to minimize infiltration. Covers will be graded to create natural drainage to reduce erosion. All underground development rock will be placed as backfill in the mining process. Infrastructure will be removed and disturbed sites regraded to natural slopes. The access roads will be deactivated in accordance with the Forest Practice Code. It is planned to hydrostatically seal the lower underground portal with an engineered bulkhead.
Resource Estimate
Numerous resource estimates were completed from 1989 to present. The drilling database consists of historical drilling most of which has been carried out by LAC in the early 1990s. Between 2000 and 2001, North American Metals Corporation (NAMC) relogged all of the mineralized intervals and carried out an extensive database validation of the drill database. Banks Island Gold drilled two holes in the Marc zone in 2013 and IDM drilled five holes in the deposit in 2014, three holes targeting the 141 zone and two holes targeting the AV zone. IDM also drilled seven exploration holes targeting other areas on the Red Mountain gold project in 2014.
On April 4, 2016 IDM Mining announced an updated Resource Estimate for the Red Mountain Project, prepared by Dr. Gilles Arsenault, P.Geo ("ACS") and Andrew Hamilton, P.Geo (the "Technical Report"). The updated mineral resources for the Red Mountain Project are reported at a 3.0 g/t Au cut-off.
A 3D block model was created using Geovia GEMs Version 7.2 to represent the lithological and structural characteristics specific to the Red Mountain deposit. This model was used as a framework for the grade model, which relied on geostatistical analysis of the sample data and a detailed understanding of the geology to produce a robust estimate of the resource.
The model is rotated 045 degrees counter-clockwise from the UTM grid so that blocks are orthogonal to the drill sections (azimuth of 315 degrees ) and mine grid. Block size was set to 4 m x 4 m x 4 m to better define the mineralized zones and to stay consistent with previous resource estimates. The rock type element in the block model was coded for all zones using a 0.001% selection process. The rock and percent models were then updated with specific codes for each of the mineralized zones.
Gold grades were interpolated within the individual zones using ordinary kriging and multiple passes. Grades were only interpolated into blocks if the blocks had not been interpolated by a previous pass.
Bulk density was interpolated using Inverse distance weighted to the second power. For those blocks that had insufficient density data to generate a block estimate, the block densities were assigned the average density for the rock type.
In order to determine the quantities of material satisfying "reasonable prospects for economic extraction", ACS assumed a minimum mining cut off of 3 g/t gold representing an approximate mining cost of $160.
ACS is unaware of any known environmental, permitting, legal, title, taxation, socio-economic, marketing, political issues that may adversely affect the Mineral Resources presented in the Technical Report.
ACS considers that the blocks with grades above the cut-off grade satisfy the criteria for "reasonable prospects for economic extraction" and can be reported as a Mineral Resource.
Red Mountain Mineral Resource Statement at a 3 g/t Gold Cut-off Effective April 4, 2016
Mineral resources were estimated in conformity with generally accepted CIM "Estimation of Mineral Resource and Mineral Reserve Best Practices" Guidelines. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. The Mineral Resources may be affected by subsequent assessment of mining, environmental, processing, permitting, taxation, socio-economic and other factors.
Inferred mineral resources have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. It cannot be assumed that all or any part of the Inferred mineral resources will ever be upgraded to a higher category. Mineral resources that are not mineral reserves have no demonstrated economic viability.
TECHNICAL REPORT
JDS Energy & Mining Inc., a full service, British Columbia-based, Engineering, Procurement, Construction & Management firm, is the principal consultant for the 2016 PEA. The executive summary of the 2016 PEA, prepared by JDS, and subsequently a technical report will be posted on the Company's website and the technical report will be filed on SEDAR within 45 days.
Gord Doerksen, P.Eng. of JDS Energy & Mining Inc., a 'Qualified Person' for the purpose of National Instrument 43-101 Standards of Disclosure for Mineral Projects of the Canadian securities administrators ("NI 43-101") has approved the disclosure of, and is the qualified person responsible for, the scientific and technical information in this news release inclusive of the Resource Estimate information. He has verified the data disclosed.
Rob McLeod, P.Geo, President and CEO of IDM Mining Ltd and a 'Qualified Person' under NI 43-101 has reviewed and approved the technical content of this release.
ABOUT IDM MINING LTD.
IDM Mining Ltd. is mineral exploration and development company based in Vancouver, BC, Canada. The Company's current exploration activities are focused on precious metals in British Columbia and Yukon, with a primary focus on the high grade underground Red Mountain Project which has entered the BC and Canadian environmental assessment process Further information can be found on the Company's website at .
ON BEHALF OF THE BOARD of IDM Mining Ltd.
Robert McLeod, President, CEO and Director
Cautionary Note Regarding the 2016 PEA: The 2016 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 categorized as mineral reserves. Furthermore, there is no certainty that the preliminary economic assessment will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Readers are encouraged to read the technical report when it is filed.
Forward-Looking Statements: Some statements in this news release contain forward-looking information or forward-looking statements for the purposes of applicable securities laws. These statements include, among others, statements with respect to proposed exploration and development activities and their timing, resource estimates and potential mineralization, the 2016 PEA, including estimates of capital and sustaining costs, anticipated internal rates of return, mine production, estimated recoveries, mine life, estimated payback period and net present values, opportunities to enhance the value of the Red Mountain Project and other plans and objectives of IDM. These statements address future events and conditions and, as such, involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the statements. Such factors include, among others and in addition to those described elsewhere in this release, delays in obtaining or inability to obtain required government or other regulatory approvals, permits or financing, the risk of unexpected variations in mineral resources, grade or recovery rates, of failure of plant, equipment or processes to operate as anticipated, of accidents, labor disputes, and unanticipated delays in completing other development activities, the risk that estimated costs will be higher than anticipated and the risk that the proposed mine plan and recoveries will not be achieved, equipment breakdowns and bad weather, the timing and success of future exploration and development activities, exploration and development risks, mineral resources are not as estimated, title matters, third party consents, operating hazards, metal prices, political and economic factors, competitive factors and general economic conditions.
In making the forward-looking statements, the Company has applied several material assumptions including, but not limited to, the assumptions that: required approvals, permits and financing will be obtained; the proposed exploration and development will proceed as planned; with respect to mineral resource estimates, the key assumptions and parameters on which such estimates are based; that the proposed mine plan and recoveries will be achieved, that capital costs and sustaining costs will be as estimated, and that no unforeseen accident, fire, ground instability, flooding, labor disruption, equipment failure, metallurgical, environmental or other events that could delay or increase the cost of development will occur, and market fundamentals will result in sustained metals and minerals prices. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise except as otherwise required by applicable securities legislation.
Contacts:
IDM Mining Ltd.
Robert McLeod
604-681-5672 direct
604-617-0616 cell
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