(TSX-V: GXS) (OTCBB: GXSFF) (FWB:
G5M)
VANCOUVER, Aug. 25, 2016 /CNW/ - Goldsource Mines Inc.
("Goldsource" or the "Company") today announced that throughput and
production from the Eagle Mountain Gold Project ("Eagle Mountain")
in Guyana have been affected in
July and August, primarily as a result of weather related issues, a
delay in the shipment of a 40-tonne truck to site and the low grade
of available material. Processing operations were suspended on
July 23, 2016 to reduce consumable
costs and focus on developing access to Pit #4 and preparing Pit #4
for open pit mining. Eagle Mountain is expected to begin processing
higher-grade material from Pit #4 in early September 2016.
Since July 1, 2016, the Company
has processed 13,922 tonnes over 19 days, with average throughput
of 732 tonnes per day ("tpd"). During the same period, Goldsource
poured 38 ounces of gold and sold 37 ounces of gold at an average
price of US$1,336 per ounce. As a
result, Eagle Mountain, during July and August, has performed below
commercial production levels achieved June 20, 2016 (see news
release dated June 21, 2016 and the Preliminary Economic
Assessment report titled "Preliminary Economic Assessment of
the Eagle Mountain Saprolite Gold Project, Guyana", dated September 12, 2014 with an effective date of
June 15, 2014 (the "PEA")).
In the first half ("H1") of 2016, Management elected to shift
focus from development of Pit #6 (with material designed to be
transported by a gravity fed chute) to the higher grade and closer
proximity Pit #4, which is at a lower elevation relative to the
process plant, requiring the use of a truck to haul material.
Management was originally expecting the delivery of a 40-tonne
truck to site in late July to deliver higher-grade material from
Pit #4 to the processing plant. A lack of tire availability
and an error by the ground transportation freight forwarder
resulted in a delay in the ground shipment, which significantly
delayed the sea freight departure. The arrival of the truck in
Guyana on August 23, 2016 has been confirmed, with an
expected arrival on site in early September
2016.
During the commissioning phase of Eagle Mountain, the focus was
on processing low-grade material during the optimization process.
The plan was to continue to process lower-grade mineralization
until higher-grade material could be exploited through the arrival
of the 40-tonne truck to site. However, with the grade processed
averaging just 0.43 grams per tonne ("g/t") gold (below the 0.5 g/t
cutoff grade for the Eagle Mountain resource) Management elected to
stop processing material on July 23 to reduce the cost of
onsite consumables and shift focus to developing access and mine
preparation for the higher-grade material at Pit #4.
Unexpectedly heavier rainfall due to "La Nina" at Eagle Mountain
has made road access challenging, which contributed to additional
downtime in July and August. Fewer weather related issues are
expected as we move into the drier months of September through
March.
While Eagle Mountain has underperformed in July and August, the
Company expects to return to commercial production levels in early
September based on the following:
- Purchase and operation of a 15-tonne truck: With the start of
the dry season in Guyana, the
Company was able to procure and operate a 15-tonne truck to begin
stockpiling the higher-grade material from the higher grade Pit #4.
During dry weather this vehicle is capable of stockpiling 350-750
tpd. To date, the Company has stockpiled 5,913 tonnes of material
from Pit #4. Once a sufficient higher-grade stockpile is built up,
Management expects to resume processing operations prior to the
arrival of the 40-tonne truck on site.
- With the 40-tonne truck onsite in early September 2016, a throughput of 1,250-1,500 tpd
from Pit #4 to the processing plant should be achieved.
2016 Guidance
Weather and a delay in the delivery of the 40-tonne truck
procured in Q2, 2016 have impacted operations in Q3, 2016. In
addition, Management has also applied for a permit from the
Government of Guyana to operate a
low impact intensive cyanide leaching circuit ("SLR unit") at Eagle
Mountain, which is expected to substantially improve gold recovery
and production from the mine. While the permit was originally
expected in July 2016, to allow the
SLR unit to be operational by October
2016, the permit has not yet been granted and there is no
firm date for its issuance. As a result, the Company has revised
its targets and assumptions previously announced in its news
release dated June 21, 2016 as
follows:
- The Company anticipates a total production of approximately
1,400-2,100 ounces of gold for 2016, down from the previous
guidance of 3,600 ounces of gold in 2016. The revised production
forecast is based on the following:
- Average throughput of 1,000 tpd in September, ramping up to
1,500 tpd from October to December
2016, down from the previous guidance of 1,800 tpd.
- Average gravity gold recovery of 50%. With an average table
recovery of 50-60%, resulting in a net recovery to dore of
25-30%.
- Mining focused on low strip higher grade material in Pit #4 to
increase the average grade and gold production.
Outlook
While the Company has reduced its 2016 production guidance, the
phased expansion approach to Eagle Mountain remains intact. The
throughput expansion plan and the contemplation of integrating an
SLR unit into the process flow sheet warrants completion of a
pre-feasibility study ("PFS") by H1 2017. Management's expects the
PFS to support the design, purchase and deployment of the Phase II
plant, which should increase throughput capacity to approximately
4,000 tpd. The Company expects to achieve this expansion through
the implementation of the following:
- Night shift: A second (night) shift is to be phased in during
the latter part of Q3, 2016.
- Phase II Plant: A second modified scrubber is to be added to
the Phase II Plant and the current falcon concentrators are to be
doubled from 2 to 4 units.
- Management is optimistic that the total cost of the Phase II
expansion could be achieved for less than the US$18.3 million total capital budget outlined in
the PEA (see news release dated August 1,
2014).
The Company continues to evaluate opportunities to improve
recoveries and the average head grade at Eagle Mountain to increase
production prior to the Phase II expansion. Opportunities
include:
- Pit #4: Management expects to start processing material from
Pit 4 in early September 2016. The
average grade of the material in Pit #4 is estimated to average 1.4
g/t gold. Goldsource has procured a 15-tonne truck, which is
currently onsite building a stockpile from Pit #4 with the larger
40-tonne articulating truck expected to arrive onsite in early
September 2016.
- SLR unit: Management has been evaluating the potential to
install an SLR unit to process the gravity gold concentrate and
significantly improve the overall gold recovery. Goldsource began
the permitting process in May 2016.
If the Company obtains this permit, Goldsource would look to
expedite the installation of the system to improve recovery and
production and treat and recover gold from the onsite inventory of
stockpiled table concentrate.
- Sluice Box: A small sluice box has been installed to capture
coarse gold before it flows into tailings. A substantially larger
sluice box is under construction and is expected to be installed
before the end of Q3, 2016. To date, the small sluice box is adding
incremental recovery 0.5-1%. Management believes that the new
expanded sluice box should increase the incremental recovery by up
to 5%.
With Eagle Mountain expected to begin processing the
higher-grade material from Pit #4, a significant improvement in
production is expected, with potential for a material improvement
in production and operating margins should a permit for an SLR unit
be granted.
The Qualified Person under National Instrument 43-101 -
Standards of Disclosure for Mineral Projects for this news
release is Mark Horan, P.Eng MSc.
(Rhodes) BSc. Eng (Witwatersrand) Senior Mining Engineer for Tetra
Tech EBA, who has reviewed and approved its contents.
ABOUT GOLDSOURCE MINES INC.
Goldsource Mines
Inc. (www.goldsourcemines.com) is a Canadian resource company that
has recently achieved commercial production for Phase I at it
100%-owned Eagle Mountain Gold Project, located in Guyana. Goldsource is led by an experienced
management team, proven in making exploration discoveries and in
project construction.
Ioannis (Yannis)
Tsitos
President
Goldsource Mines
Inc.
CAUTIONARY STATEMENT AND FORWARD-LOOKING
DISCLAIMER
Management's production decision for
the Eagle Mountain Gold Project is not based on a feasibility study
of mineral reserves demonstrating economic and technical viability.
This project has a much higher risk of economic or technical
failure and may adversely impact the Company's projected profits,
if any. The risks associated with this decision are set forth in
the Company's latest annual management's discussion and analysis
available on the Company's website and the under Goldsource's SEDAR
profile on www.sedar.com.
This news release contains "forward-looking statements" within
the meaning of Canadian securities legislation. Such
forward‑looking statements concern Goldsource's strategic plans and
expectations for the development of the Eagle Mountain Gold Project
based on the PEA and variations to mining plans as mining
operations progress and decrease gold production is encountered;
the amount of future production of gold over any period; cash
operating costs per ounce of gold; life of mine; estimated
pre-production cost; the amount of expected grades and ounces of
metals; gold recoveries mine life and gold production rates of the
Eagle Mountain Gold Project; and expectations regarding the
Company's ability to manage capital resources and meet working
capital requirements. Such forward‑looking statements or
information are based on a number of assumptions, which may prove
to be incorrect. Assumptions have been made regarding, among other
things: conditions in general economic and financial markets;
ability to realize the PEA and develop and finance the project and
ability to positively adjust mining operations when assumptions and
expectations on which mining operations are based are not fully
met; accuracy of the interpretations and assumptions used in
calculating inferred mineral resource estimates; availability of
mining equipment; availability of skilled labour; timing and amount
of capital expenditures; performance of available laboratory and
other related services; and future operating costs. The actual
results could differ materially from those anticipated in these
forward‑looking statements as a result of the risk factors
including: the timing and content of work programs; results of
exploration activities and development of mineral properties; the
interpretation of drilling results and other geological data; the
uncertainties of resource estimations; uncertainty as to actual
capital costs, operating costs, production and economic returns at
the Eagle Mountain Gold Project; reliance on the PEA for initial
mining operations and on management decisions to appropriately
adjust mining operations and depart from mining plans contemplated
in the PEA when considered warranted; and general market and
industry conditions. Forward-looking statements are based on the
expectations and opinions of the Company's management on the date
the statements are made. The assumptions used in the preparation of
such statements, although considered reasonable at the time of
preparation, may prove to be imprecise and, as such, readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date the statements were
made. The Company undertakes no obligation to update or revise any
forward-looking statements included in this news release if these
beliefs, estimates and opinions or other circumstances should
change, except as otherwise required by applicable law.
Neither TSX-V nor its Regulation Services Provider (as that term
is defined in policies of the TSX-V) accepts responsibility for the
adequacy or accuracy of this release.
SOURCE Goldsource Mines Inc.
