Gold Resource Corporation (NYSE American: GORO) (the
“Company”, “we”, “our” or “GRC”) is
pleased to announce the results of a SK1300 compliant Technical
Report Summary for an Initial Assessment (“IA” or the “Technical
Report”) which comprises an updated Mineral Resource Estimate
(“MRE”) and a financial analysis for the Company’s 100% owned Back
Forty Project (“Back Forty” or the “Project”), located in the Upper
Peninsula of Michigan.
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Figure 1: Proposed Back Forty Project
Infrastructure Layout (Graphic: Business Wire)
Allen Palmiere, the Company’s CEO stated: “We are very happy
with the results of the study. It confirms our belief that the Back
Forty Project represents an opportunity to create substantial value
for our shareholders. This study is the result of veery strong
technical work and represents a compete revision to the mine plan,
process flow, project footprint and the elimination of any wetlands
impact. It has been designed to minimize the environmental impact
by reducing the footprint and adopting dry-stack tailings
management thus eliminating the need for a tailings dam. We are
very pleased with the results and are looking forward to advancing
the project.”
The IA integrates the work done by InnovExplo Inc.
(“InnovExplo”), Foth Infrastructure & Environment (“Foth”), and
GRC since the 2020 NI43-101 Preliminary Economic Assessment (“PEA”)
to improve the Project while at the same time reducing its
environmental impact. The results suggest a very robust Project
with a moderate capital investment and a 9-year mine life during
which 504 koz of gold, 6,150 koz of silver, 61.6 Mlbs of copper and
778 Mlbs of zinc would be produced.
The Project consists in two open pit mines, an underground mine,
a nominal 2,500 metric tonnes per day (“tpd”) processing plant and
the supporting infrastructures (Figure 1). A 21-month construction
period would be followed by open pit mining in the Pinwheel Pit and
then in the Main Pit for the first 3 years. Development for the
underground mine would start in Year 2 from inside the Main Pit to
support the processing plant starting in Year 4.
STUDY HIGHLIGHTS:
- $214.4 million after-tax net present value at a 6% discount
rate (“NPV6”) (pre-tax $291.5 million) at a base case metal prices
of $1,800 per ounce (“/oz”) for gold, $23.30/oz for silver, $3.90
per pound (“/lb”) for copper, and $1.25/lb for zinc;
- 25.7% after-tax internal rate of return (“IRR”);
- $25.8 million average annual after-tax free cash flow
(“FCF”);
- $361.2 million cumulative after-tax life-of-mine (“LOM”)
FCF;
- 56,000 ounces (“oz”) of gold, 683,300 oz of silver, 6.8 Mlbs of
copper, and 86.4 Mlbs of zinc LOM average annual production
- 504 koz of gold, 6,150 koz of silver, 61.6 Mlbs of copper and
778 Mlbs of zinc LOM total cumulative metal production;
- 2.37 grams per tonne (“g/t”) gold, 26.2 g/t silver, 0.39%
copper, and 4.29% zinc for $210 per tonne (“$/t”) net smelter
return (“NSR”) average LOM diluted head grade;
- Average overall LOM recovery rates 77.8% for gold, 86.8% for
silver, 86.4% for copper, and 95.7% for zinc;
- 84.81 $/t milled LOM total unit operating costs;
- $325.1 million initial capital expenditures (including $28.9
million in contingency costs);
- $102.8 million sustaining capital expenditures (including $8.7
million in contingency costs).
STUDY DETAILS
The Back Forty Project is an advanced stage polymetallic
exploration project fully owned by GRC located in the Upper
Peninsula of Michigan. The IA was prepared and compiled by GRC with
support by independent consulting firms InnovExplo and Foth.
ECONOMIC ANALYSIS
The Company used a base case where material from the inferred
resource category was included in the mine plan, and an alternative
case without, to highlight the sensitivity of the Project to the
resource categories, the high proportion of indicated material and
the possible upside of the actual case. The base case has 2.5% of
the mill feed from the Inferred category. The metal price
assumptions are based on the median of the consensus prices from
analysts collected by GRC. These prices are $1,800/oz Au, $23.30/oz
Ag, $3.90/lb Cu, and $1.25/lb Zn. Based on these assumptions, the
Project generates an after-tax NPV6 of $214 million and an
after-tax IRR of 25.7% on an unlevered basis when Inferred
resources are included in the mine plan. The case without Inferred
resources shows an after-tax NPV6 of $194 million and an after-tax
IRR of 24.5% under the same assumptions. The economics of the
Project are most sensitive to gold and zinc prices, followed by
operating costs and capital costs.
Table 1: Back Forty Project IA
Summary Results
Metric
Unit
Base Case with
Inferred
Base Case Indicated
only
Total Process Plant Feed
Mt
8.77
8.55
Grade
Au
g/t
2.37
2.35
Ag
g/t
26.2
25.8
Cu
%
0.39
0.38
Zn
%
4.29
4.34
NSR
$/t
210.38
209.57
Payable metal
Au
koz
487.6
472.8
Ag
koz
4,800.9
4,605.9
Cu
Mlbs
59.1
56.5
Zn
Mlbs
658.0
645.7
Life of Mine (“LOM”)
Years
9.0
9.0
Metal Prices
Au
$/oz
1,800
1,800
Ag
$/oz
23.30
23.30
Cu
$/lb
3.90
3.90
Zn
$/lb
1.25
1.25
Gross Revenue
$M
2,042.5
1,985.9
Charges
$M
180.0
176.1
Penalties
$M
17.4
18.0
Net Revenue
$M
1,845.1
1,791.8
Stream
Au
$M
113.7
110.2
Ag
$M
78.8
75.6
Royalties
$M
24.2
24.1
Taxes
$M
106.7
103.6
OPEX
Total
$M
743.8
732.6
per tonne
$/t
84.81
85.69
CAPEX
Initial
$M
325.1
325.4
Sustaining
$M
102.8
103.8
Cashflow Pre-Tax
$M
471.2
434.6
Cashflow Post-Tax
$M
361.2
331.0
Discounted Cashflow Post-Tax @ 6%
$M
214.4
194.2
Post-Tax internal rate of return
%
25.7
24.5
Post-Tax Payback
Years
2.4
2.5
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
Au Price
-29.6
23.3
75.3
122.3
168.6
214.4
259.4
303.7
347.1
390.5
433.7
Ag Price
210.4
211.2
212.0
212.8
213.6
214.4
215.3
216.0
216.8
217.7
218.5
Cu Price
139.1
154.1
169.3
184.3
199.4
214.4
229.2
243.8
258.4
272.9
287.3
Zn Price
-26.2
26.1
76.4
123.0
169.2
214.4
259.0
302.6
345.8
388.8
431.4
OPEX
439.0
395.2
351.4
306.8
261.4
214.4
165.6
115.6
65.1
9.2
-47.0
CAPEX
408.0
369.3
330.6
291.9
253.2
214.4
175.7
137.0
98.3
59.6
20.9
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
Au Price
3.1%
8.2%
13.0%
17.3%
21.5%
25.7%
29.7%
33.6%
37.4%
41.1%
44.7%
Ag Price
25.3%
25.4%
25.5%
25.5%
25.6%
25.7%
25.8%
25.8%
25.9%
26.0%
26.1%
Cu Price
18.0%
19.5%
21.0%
22.5%
24.1%
25.7%
27.3%
28.9%
30.5%
32.2%
33.9%
Zn Price
1.7%
9.4%
14.8%
19.0%
22.6%
25.7%
28.5%
31.0%
33.4%
35.5%
37.5%
OPEX
41.8%
38.8%
35.8%
32.7%
29.3%
25.7%
21.7%
17.5%
12.8%
7.0%
0.0%
CAPEX
89.9%
65.9%
50.6%
39.9%
31.9%
25.7%
20.7%
16.5%
13.0%
9.9%
7.3%
MINERAL RESOURCE ESTIMATE
The IA includes an updated MRE done by InnovExplo. No additional
drilling has occurred on site since 2019, but the geological
interpretation, interpolation parameters and NSR calculations were
updated. This represents an increase of 17% in the total value in
the block model (NSR x tonnes) compared to the previous MRE.
However, deductions for the gold and silver streams, along with the
royalties, were included in the NSR calculations against the
cut-off grade (“CoG”). These deductions were not part of the
previous MRE. When the deductions are included, the total value in
the block model is 4% less than the previous MRE. The underground
part of the MRE was confined using a Stope Optimizer software,
which is more restrictive than the method used in the previous MRE.
The CoG for open pit and underground were updated to reflect costs
closer to the proposed mining methods. In total, the Measured and
Indicated resource reduced by 21% while the Inferred resource is
within 1% of the previous MRE. The effective date of the MRE is
September 30th, 2023.
Table 2: Back Forty Project
Mineral Resource Statement - September 30th, 2023
Area (Mining Method)
Classification
NSR cut-off ($/t)
Tonnes (000s)
Au
(g/t)
Au
(Moz)
Ag
(g/t)
Ag
(Moz)
Zn
(%)
Zn
(Mbs)
Cu
(%)
Cu
(lbs)
Open pit
Indicated
33
9,360
2.41
725
28.06
8,444
3.74
772
0.36
74
Inferred
33
566
2.70
49
48.84
889
1.31
16
0.35
4
UG long hole
Indicated
73
5,137
1.86
306
24.05
3,972
2.65
300
0.41
47
Inferred
73
627
2.00
40
26.10
526
2.89
40
0.37
5
Total Indicated
14,497
2.21
1,032
26.64
12,416
3.35
1,072
0.38
121
Total Inferred
1,193
2.33
89
36.89
1,415
2.14
56
0.36
9
Notes to accompany the Mineral Resource Estimate:
- The independent and qualified persons for the mineral resource
estimate, as defined by S-K 1300, are Marina Iund, P.Geo., Carl
Pelletier, P.Geo. and Simon Boudreau, P.Eng. all from InnovExplo
Inc. The effective date is September 30th, 2023.
- These mineral resources are not mineral reserves, as they do
not have demonstrated economic viability. The mineral resource
estimate is reported in accordance with the S-K 1300 Regulations
and Definition Standards.
- The results are presented undiluted and are considered to have
reasonable prospects of economic viability.
- The estimate encompasses a gold, silver, zinc and copper
deposit subdivided into 53 individual zones using the grade of the
adjacent material when assayed or a value of zero when not assayed.
Fifty-three 10 m buffers around each zone were also created.
- High-grade capping supported by statistical analysis was done
on raw assay data before compositing and is established on a
per-zone basis varying from 40 to 75 g/t Au; 350 to 1100 g/t Ag;
0.6 to 12% Cu and none to 14% Zn.
- The estimate was completed using sub-block models in GEOVIA
Surpac 2022.
- Grade interpolation was performed on 1.5 m composites with the
ID3 method for Au and Ag and the ID2 for Zn and Cu.
- The density was interpolated with the ID2 method for Type 1
(rich massive sulfide mineralized zones), Type 2 (stockwork
stringer and peripheral sulfide mineralized zones) and Type 3
(precious metal-rich, low sulfide mineralized zones). A value of
3.05 g/cm3 was assigned to Type 4 (gossan mineralized zones). A
value of 2.7 g/cm3 was assigned to the surrounding waste and to the
cross-cutting mafic dykes. A value of 2.00 g/cm3 was assigned to
the overburden and the cross-cutting sandstone unit.
- The mineral resource estimate is classified as Indicated and
Inferred. For Type 3 zones, the Indicated mineral resource category
is defined for blocks estimated in the first pass, with a closest
distance of 45 m and where there is reasonable geological and grade
continuity. The Inferred category is defined for blocks estimated
in the first and/or second pass, with a closest distance of 90 m
and where there is reasonable geological and grade continuity. For
Types 1,2 and 4 zones, the Indicated mineral resource category is
defined for blocks estimated in the first pass, with a closest
distance of 55 m and where there is reasonable geological and grade
continuity. The Inferred category is defined for blocks estimated
in the first and/or second pass, with a closest distance of 110 m
and where there is reasonable geological and grade continuity.
- The mineral resource estimate is locally pit-constrained with a
bedrock slope angle from 31 to 49° and an overburden slope angle of
30°. It is reported at a rounded NSR cut-off of $33/t (in pit) and
$73/t (underground). The NSR cut-off was calculated using the
following parameters: Total processing cost = $28.00/t; Ore premium
mining cost = none to $40.00/t; Administration & General =
$5.00/t; gold price = $1,800.00/oz; silver price = $23.30/oz;
copper price = $3.90/lb and zinc price = $1.25/lb. The cut-off
grades should be re-evaluated in light of future prevailing market
conditions (metal prices, exchange rates, mining costs etc.).
- The number of metric tonnes was rounded to the nearest
thousand, and any discrepancies in the totals are due to rounding
effects. The metal contents are presented in troy ounces (tonnes x
grade / 31.10348).
- The authors are not aware of any known environmental,
permitting, legal, title-related, taxation, socio-political, or
marketing issues, or any other relevant issue not reported in the
Technical Report, that could materially affect the MRE.
CAPITAL COSTS The total initial capital cost for the
construction of the Back Forty Project is estimated at $325.1M. The
sustaining capital, which includes the capital required to bring
the underground mine into production starting in 2028, is estimated
at $102.8M. In both cases, contingencies and indirect costs are
included in the estimations.
Table 3: Back Forty Project
Capital Costs Summary
Cost Area
Initial capital cost
($M)
Sustaining capital cost
($M)
Total cost ($M)
Mobile equipment
5.8
24.3
30.1
Open pit mine
1.4
1.7
3.1
Underground mine
-
50.6
50.6
Capitalized OPEX
17.9
7.3
25.1
Electrical and communications
8.1
-
8.1
Surface infrastructures
26.8
4.9
31.7
Process plant
131.1
5.4
136.5
Rock and tailings management
27.9
-
27.9
Water treatment plant
21.8
-
21.8
Construction indirects
22.0
-
22.0
Owner’s costs
33.5
-
33.5
Contingency
28.9
8.7
37.6
Total
325.1
102.8
427.9
Site reclamation and closure
-
22.6
22.6
Salvage value
-
(7.1)
(7.1)
Project total
325.1
118.4
443.5
OPERATING COSTS The operating costs estimate includes
mining, both open pit and underground, ore processing, concentrate
shipping, tailings management, water treatment and general and
administration expenses. The average operating costs over the
9-year mine life is estimated to be $84.81/t. The open pit mining
operating costs are estimated at $6.04/t mined while the
underground mining costs are estimated at $38.04/t mined.
Table 4: Back Forty Project
Operating Costs
Cost area
Total cost ($M)
Cost per tonne milled
Overburden Removal and Storage
5.4
0.61
Open Pit Mining
50.4
5.75
Underground Mining
194.6
22.19
Rehandling
1.0
0.12
Processing
256.9
29.30
Tailings Deposition
23.7
2.70
WRMF Reclamation
4.4
0.51
General and Administration
79.6
9.07
Concentrate Shipping
153.0
17.44
Capitalized OPEX
(25.1)
(2.87)
Total
743.8
84.81
MINING The mine plan consists of a combined open pit and
underground mining operation at an average 2,600 tpd. Open pit
mining will take place from Year 1 to Year 4. Underground
development will be initiated in Year 2 and underground production
mining will continue to Year 10.
Open pit mining will occur in two distinct areas, the Pinwheel
pit and the Main pit. The Pinwheel pit will be mined first and
contains material with a higher grade in gold and copper than the
average resource. This pit will be mined for 18 months. The Main
pit will be started at the end of year 1 to complement the
production of the Pinwheel pit. Waste material from the Main pit
will be used to backfill the Pinwheel pit once its resources are
exhausted.
The development of the underground mine will start at the end of
Year 2 with a portal located inside the Main pit. Production from
the underground mine will start replacing the open pit one in Year
4. Mining underground is accomplished mostly from long hole open
stoping with stopes averaging 24,000 t.
PROCESSING The processing facility will be used to
process at a nominal rate of 2,500 tpd of mineralized material and
up to 2,800 based on feed material characteristics over the LOM.
The flowsheet consists of a three-stage crushing followed by ball
mill to a target P80 size of 50 microns. The facility will have two
flotation circuits to recover copper and zinc. The copper and zinc
circuits will see their respective concentrate filtered to reduce
residual moisture content to approximately 10%. Both concentrates
will be loaded for shipment to smelters.
Zinc flotation tailings will be leached and dewatered using a
press filter. Solids will be washed and dewatered to 15% humidity
in the press filter before being sent to dry stack. Filtrate from
the press filter will be processed through reverse osmosis membrane
for salt rejection and through the SART circuit. Cyanide species
from the solution will be converted to NaCN. Precious metals are
recovered from solution in zinc precipitation circuit. Precious
metal barren solution will be recirculated to leaching and recycled
cyanide will be re-introduced. Cyanide destruction will be
performed on excess dilute solution from the press filter not
processed by SART and released to the collecting pond.
Paste backfill will be installed later during the life of mine
when the underground mine will be in operation.
The proposed process will recover zinc and copper concentrates,
as well as gold and silver in the form of doré bars. SART process
will also generate copper and zinc concentrate. The copper
concentrate flotation will have an estimated average of 14% copper
content as well as payable gold and silver; the zinc concentrate
flotation will have an estimated average of 51% zinc content.
INFRASTRUCTURES The Back Forty Project is situated in a
location with close proximity to existing infrastructure. There are
road networks on either side of the property and a high voltage
electrical transmission corridor near the main access county road,
providing grid power. Water is collected from different areas
within the property at the Contact Water Basin and either
re-distributed for use within the facility or treated for
discharge.
The project site can be largely divided into five main
areas:
- Access from County Road 356 leading to security gates for site
entry.
- Facility Storage Areas: Waste Rock Management Facility
(“WRMF”), Two Overburden Management Facilities (“OMF”), Ore Storage
Facility (“OSF”) and Tailings Management Facility (“TMF”), as well
as the associated water collection ponds.
- Central area where the crushing, mill, administration,
electrical substation, shop and ancillary facilities are
located.
- Contact Water Basin (“CWB”) and Waste Water Treatment Plant
(“WWTP”).
- The open pit area is comprised of the two open pits, the
underground portal located inside the Main pit and the underground
ventilation infrastructures to the southwest of the open pit. To
the east of the open pit there is an area designated for ore
stockpiling, and adjacent to this is the overburden stockpile
TECHNICAL INFORMATION AND QUALIFIED PERSONS The IA is
prepared by personnel of GRC and independent representatives of
InnovExplo and Foth, each of whom is a "qualified person" (within
the meaning of Regulation S-K Subpart 229.1300 Disclosure by
Registrants Engaged in Mining Operations (“SK1300”)) (each, a
"QP"). Each of the QPs have reviewed and confirmed that this news
release fairly and accurately reflects, in the form and context in
which it appears, the information contained in the respective
sections of the Back Forty IA for which they are responsible. At
the effective date of the IA, the QPs certified that to the best of
their information, knowledge and belief, the parts of the IA for
which they were responsible, contained all scientific and technical
information that was required to be disclosed to make the Back
Forty Project IA not misleading. The affiliation and areas of
responsibility for each QP involved in preparing the IA are
provided below.
InnovExplo QPs
- Carl Pelletier, P.Geo – Mineral Resources Estimate
- Marina Iund, P.Geo – Mineral Resources Estimate
- Eric Kinnan, P. Geo – Data Verification
- Simon Boudreau, P.Eng – Mineral Resources Estimate
Foth QPs
- Andrea K. Martin, P.Eng – Environmental Studies and
Permitting
GRC QPs
- Rodrigo Simidu, P.Eng – Underground Mining
- Michael J. Foley, P.Eng – Infrastructures
- Christian Laroche, P.Eng – Metallurgical testing and Process
Plant Design
- Patrick Frenette, P.Eng – Open Pit Mining, Capital Costs,
Operating Costs, Economic Analysis, Overall study integration.
About GRC:
Gold Resource Corporation is a gold and silver producer with its
operations centered on the Don David Gold Mine in Oaxaca, Mexico
its Back Forty gold-copper development Project in Michigan, USA.
Under the direction of an experienced board and senior leadership
team, the Company’s focus is to unlock the significant exploration
upside of its mine and surrounding large land package to the
benefit of its existing infrastructure. For more information,
please visit GRC’s website, located at www.goldresourcecorp.com and
read the Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2022 for an understanding of the risk factors
associated with its business.
Forward-Looking Statements:
This press release contains forward-looking statements that
involve risks and uncertainties. The statements contained in this
press release that are not purely historical are forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Exchange Act of 1934,
as amended. When used in this press release, the words “plan”,
“target”, "anticipate," "believe," "estimate," "intend" and
"expect" and similar expressions are intended to identify such
forward-looking statements. Such forward-looking statements
include, without limitation, the statements regarding the potential
for additional mineral resources in future mine plans. All
forward-looking statements in this press release are based upon
information available to Gold Resource Corporation as of the date
of this press release, and the Company assumes no obligation to
update any such forward-looking statements. Forward looking
statements involve a number of risks and uncertainties, and there
can be no assurance that such statements will prove to be accurate.
Forward-looking statements are subject to risks and uncertainties,
including the possibility of lower than anticipated revenue or
higher than anticipated costs, volatility in commodity prices, and
declines in general economic conditions. Additional risks related
to the Company may be found in the periodic and current reports
filed with the SEC by the Company, including the Company’s Annual
Report on Form 10-K for the year ended December 31, 2022, which are
available on the SEC’s website at www.sec.gov.
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version on businesswire.com: https://www.businesswire.com/news/home/20231026557009/en/
Allen Palmiere Chief Executive Officer
www.goldresourcecorp.com
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