Kaminak Reports Robust PEA at US $1250/oz Gold on Coffee Gold
Project
Pre-Tax NPV@5% of $522 million and IRR of 32.8%; Average Annual
Gold Production of 167,000 Ounces and All-In Sustaining Costs of
US$688/oz
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Jun 10, 2014) -
Kaminak Gold Corporation (TSX-VENTURE:KAM) is pleased to announce
the results of a Preliminary Economic Assessment (PEA) prepared
pursuant to National Instrument 43-101 (NI 43-101) on the Company's
100% owned Coffee Gold Project (Coffee), located 130km south of
Dawson City, Yukon. The study indicates that Coffee represents a
robust, high margin, rapid pay-back, 11-year open pit mining
project at current gold prices. The study was prepared by JDS
Energy & Mining Inc., an established Yukon mine builder, under
the direction of Fred Lightner (Director of Mine Development,
Kaminak) with contributions from Kappes Cassiday and Associates,
Knight Piésold and Co. and SIM Geological Inc. At a gold-price of
US$1250/oz and using an exchange rate of C$1.00 equal US$0.95,
Coffee generates a pre-tax net present value (NPV) at a 5% discount
rate of more than $500 million and an Internal Rate of Return (IRR)
of 33%. Further, the mine could become a significant Yukon gold
producer, yielding close to 450,000 ounces in the first two years
and producing an average of 167,000 ounces annually over the life
of mine at an all-in sustaining cash cost of US$688 per ounce of
gold.
Kaminak will be hosting a live video webcast presentation at
10:30am Eastern Time (7:30am Pacific Time) on June 11, 2014 to
discuss the results of the PEA. To participate in the live webcast,
please click the following link:
http://kaminak.com/investors/register/. For those who cannot
participate, the video webcast will be archived on Kaminak's
website (www.kaminak.com) within 24 hours of the presentation.
The PEA envisages an owner-operated, approximately 11-year
open-pit mine targeting 53 million tonnes of primarily oxide facies
material at an average diluted grade of 1.23 grams/tonne gold (g/t
Au). The study incorporates a three-stage crushing circuit and a
valley fill heap leach facility designed by Knight Piésold and Co.,
along with a standard carbon adsorption gold recovery plant to
produce 1,859,000 ounces of gold doré over life of mine (LOM). It
should be noted that the study outlines several opportunities to
further enhance economics (see below) and the current resource
remains open along strike and to depth. Further, more than 20km of
untested gold in soil anomalies remain to be evaluated and Kaminak
remains confident that additional near surface oxide resources can
be identified in the near term; drilling is ongoing.
Highlights (all amounts are in Canadian dollars unless otherwise
indicated; base case is stated using a gold price of US$ 1,250 per
ounce and an exchange rate of C$1.00 equal US$0.95):
- NPV of $522 million at a 5% discount rate and an IRR of 32.8%
before taxes and mining duties, and an NPV of $330 million and an
IRR of 26.2% after taxes and mining duties
- Mine life of 11 years with peak production of 231,000 ounces
per annum (Year 1) and average LOM production of 167,000 ounces of
gold
- Average metallurgical recoveries of 88% gold
- 1,859,000 ounces LOM gold production at an average diluted
grade of 1.23 g/t Au
- All-in sustaining costs* of US $688/oz (including royalties)
for LOM, generating an Operating margin of over US $560/oz or
42%
- Initial capital costs of $305 million (including a 15%
contingency)
- Payback of 1.8 years pre-tax and 2.0 years post-tax
- Gross Revenue of $2.4 Billion and Operating Cash-flow of $1.24
Billion * All-in Sustaining Costs are presented as defined by
the World Gold Council ("WGC") less Corporate G&A.
Eira Thomas, CEO commented: "The recently completed Coffee
PEA has delivered a high value, high margin, low risk gold project
in one of the World's safest, pro-mining jurisdictions, Yukon
Canada, and marks a significant milestone for our Company. At a US
$1250 gold-price, Coffee will generate more than $2 billion in
gross revenue, deliver total life of mine, pre-tax, free cash of
$800 million and payback capital in under 2 years. Further upside
to this evaluation is anticipated through optimization studies and
continued exploration. All of the deposits in the current resource
remain open along strike and to depth."
Fred Lightner, Kaminak's Director of Mine Development,
stated: "With the completion of the PEA, we now have an initial
look at the economic potential of the Coffee Project. The grade of
the deposit and strip ratio, metallurgical response, and relatively
low operating costs are strong factors which create value. We
believe that with additional exploration, delineation drilling, and
project engineering the project will be further enhanced."
JDS Energy & Mining Inc. (JDS) was engaged by Kaminak Gold
Corporation in 2013, under the direction of Fred Lightner (Director
of Mine Development, Kaminak) to produce an independent Preliminary
Economic Assessment (PEA) for the Coffee Gold Project. A technical
report following the guidelines of the Canadian Securities
Administrators' National Instrument 43-101 will be filed on SEDAR
and on the Company website within 45 days.
The reader is advised that the PEA summarized in this press
release is intended to provide only an initial, high-level review
of the project potential and design options. The PEA mine plan and
economic model include the use of Inferred resources. Inferred
resources are considered to be too speculative to be used in an
economic analysis except as allowed for by Canadian Securities
Administrators' National Instrument 43-101 (NI 43-101) in PEA
studies. There is no guarantee that Inferred resources can be
converted to Indicated or Measured resources, and as such, there is
no guarantee the project economics described herein will be
achieved.
PEA Summary (Reported in 2014 Canadian $, except where
noted)
Total Heap Leach Material Mined (tonnes) |
53,400,000 |
Average Diluted Grade of Heap Leach Material (g/t Au) |
1.23 |
Total Waste (tonnes) |
212,000,000 |
Strip Ratio (Waste : Heap Leach Material) |
4.0 |
Total Gold Contained (oz.) |
2,111,000 |
Total Au Produced (oz.) |
1,859,000 |
Gold Recovery (%) |
88% |
Average Gold Production of Year 1 and 2 (oz. per year) |
224,000 |
Total Initial Capital Cost (including 15% contingency) |
$304,800,000 |
Sustaining Capital (including 15% contingency) |
$145,500,000 |
Total Life of Mine Capital (including 15% contingency) |
$450,300,000 |
Unit Operating Costs (per tonne leached) |
|
Mining |
$11.86 |
Processing |
$6.67 |
General & Administrative |
$4.00 |
Total Operating Costs |
$22.53 |
Summary Economics at US$1250/oz. Gold:
Total LOM Operating Cash Flow (C$M) |
|
$1246.3 |
Total LOM Pre-Tax Free Cash Flow (C$M) |
|
$796.0 |
Average Annual Pre-Tax Free Cash Flow (C$M) |
|
$72.0 |
LOM Income Taxes (C$M) |
|
$280.8 |
Total LOM After-Tax Free Cash Flow (C$M) |
|
$515.2 |
Average Annual After-Tax Free Cash Flow (C$M) |
$46.6 |
|
|
|
Discount Rate |
|
5% |
Pre-Tax NPV (C$M) |
|
$522.4 |
Pre-Tax IRR |
|
32.8% |
Pre-Tax Payback (Yrs) |
|
1.8 |
After-Tax NPV (C$M) |
|
$330.4 |
After-Tax IRR |
|
26.2% |
After-Tax Payback (Yrs) |
|
2.0 |
|
|
|
|
US $* |
C $ |
Cash Cost ($/oz) |
$613.15 |
$645.43 |
Cash Cost Incl. Sustaining CAPEX ($/oz)** |
$687.50 |
$723.69 |
* Exchange rate of C$1.00 equal US$0.95 was
used. |
** All-in Sustaining Costs are presented as defined by the
World Gold Council ("WGC") less Corporate G&A. |
All in Cash Costs Including Sustaining Capex
On-Site Mining & Rehandle (C$M) |
$610.0 |
On-Site Processing (C$M) |
$343.2 |
On-Site G&A (C$M) |
$205.8 |
Refining (C$M) |
$14.7 |
Royalties (C$M) |
$26.3 |
Sustaining (C$M) |
$99.5 |
Closure (C$M) |
$46.0 |
Total (C$M) |
$1,345.5 |
All-in Cash + Sustaining Cost (C$/oz)* |
$723.69 |
All-in Cash + Sustaining Cost (US$/oz)* |
$687.50 |
* All-in Sustaining Costs are presented as defined
by the World Gold Council ("WGC") less Corporate G&A. Exchange
rate of C$1.00 equal US$0.95 was used. |
The Base Case summarized above was selected and reported to take
advantage of the economies of scale that are realized with high
production rates and to demonstrate the project potential from the
known resources. The base case assumed an owner operated open pit
mine, three-stage crushing circuit to nominal 12.5 mm, a valley
fill heap leach facility, and a carbon adsorption gold recovery
plant to produce gold doré. Other assumptions include access to
site via an all-season road and power generation using diesel.
Total installed power, including process equipment and other site
infrastructure is estimated to be 5.0 megawatts (MW). The average
operating power demand is 3.6 MW. With additional exploration and
based on past performance, the possibility to expand the near
surface oxide resources exists.
Sensitivities:
Gold Price US$/oz |
$1,000 |
$1,100 |
$1,200 |
$1,250 |
$1,300 |
$1,400 |
$1,500 |
Pre-Tax NPV 5% C$M |
$165 |
$308 |
$451 |
$522 |
$594 |
$737 |
$880 |
After-Tax NPV 5% C$M |
$99 |
$194 |
$285 |
$330 |
$375 |
$465 |
$553 |
Pre-Tax IRR |
15% |
23% |
30% |
33% |
36% |
42% |
48% |
After-Tax IRR |
12% |
18% |
24% |
26% |
29% |
33% |
38% |
Pre-Tax Payback |
4.4 |
3.2 |
2 |
1.8 |
1.6 |
1.4 |
1.2 |
After-Tax Payback Yrs |
4.7 |
3.5 |
2.5 |
2 |
1.8 |
1.6 |
1.4 |
Opportunities to Enhance Value
Although Kaminak considers the PEA results for the base case
excellent, future trade off studies are anticipated to evaluate
alternate development scenarios that would be used to reduce the
initial capital requirements. Such items as coarser crushing or
run-of-mine leaching coupled with high fragmentation blasting in
the mine, contract mining or mine equipment leasing, liquefied
natural gas (LNG) as a potential power generation fuel source and a
staged development of a smaller project followed by expansion, are
a few of the scenarios being considered. Moreover, Coffee has high
potential for resource expansion; the deposits in the current
resource remain open along strike and to depth, and more than 20 km
of priority gold in soil anomalies outside of the current resource
area remain to be drill-tested.
PEA DETAILS
Mineral
Resources:
The PEA is based on an Indicated and Inferred mineral resource
estimate completed by independent Qualified Person Robert Sim,
P.Geo., of SIM Geological Inc. and was derived from 961 diamond
core and reverse circulation drill holes completed from 2010 to
2013 for a total of 185,000 metres. This estimate consists of
719,000 ounces Indicated (14 Mt grading at 1.56g/t Au), and
3,434,000 ounces Inferred (79 Mt grading at 1.36g/t Au) using base
case cut-off of 0.5 grams per tonne gold ("g/t Au") for Oxide and
Transitional material and a 1g/t Au cut-off for Sulphide material.
For further details, please see Company press release of January
28, 2014
(http://kaminak.com/investors/news_releases/index.php?&content_id=539)
and the NI 43-101 Technical Report released March 12, 2014.
Capital and Operating
Costs Summary:
Capital Costs |
|
Pre-Prod (C$M) |
Sust/Clsr (C$M) |
Total (C$M) |
|
|
|
|
Capitalized Mining |
$50.3 |
$0.0 |
$50.3 |
Pre-Prod Operating Costs |
$16.7 |
$0.0 |
$16.7 |
Site |
|
$57.1 |
$4.8 |
$61.9 |
Mining Equipment |
$46.3 |
$64.5 |
$110.8 |
Leach Facility |
$43.7 |
$17.2 |
$60.9 |
Crushing & Conveying |
|
$12.4 |
$0.0 |
$12.4 |
Camp |
|
$10.3 |
$0.0 |
$10.3 |
Indirects |
|
$37.0 |
$0.0 |
$37.0 |
Closure |
|
$0.0 |
$40.0 |
$40.0 |
|
|
|
|
|
Subtotal |
|
$273.8 |
$126.5 |
$400.3 |
Contingency |
15% |
$31.0 |
$19.0 |
$50.0 |
Total Capital Costs |
$304.8 |
$145.5 |
$450.3 |
Operating Costs |
$/t Processed |
Mining |
$11.86 |
Processing |
$6.67 |
G&A |
$4.00 |
Total Operating Costs* |
$22.53 |
* The operating costs above are for the operational
period only and do not include capitalized operating costs during
pre-production. |
Mining
Coffee is amenable to development as an open pit (OP) mine as
all mineralized lodes commence at surface in all pits and pre-strip
is limited to 1-2m of soil. Mining of the deposit is planned to
produce a total of 53.4 Mt of heap leach feed and 212.4 Mt of waste
(4.0:1 overall strip ratio) over a 13-year project production life
which includes two years of pre-production. The current LOM plan
focuses on achieving consistent heap leach production rates, and
mining of higher grade material early in the production schedule.
The tonnage and distribution of mined material is summarized
below:
Material Type |
Heap Leach Tonnage Mined |
Distribution (%) |
Supremo Oxide |
39,100,000 |
73 |
Supremo Upper Transition |
1,200,000 |
2 |
Latte Oxide |
10,500,000 |
20 |
Latte Upper Transition |
700,000 |
1 |
Double Double Oxide |
1,200,000 |
2 |
Kona Oxide |
700,000 |
1 |
Total |
53,400,000 |
100.0 |
Mine planning for Coffee was
conducted using a combination of Mintec Inc., MineSight™ software
and CAE NPV Scheduler (NPVS) software. Pit slopes range from 37° to
50° as derived from a preliminary geotechnical assessment completed
by SRK Consulting (U.S.) Inc. A series of optimized shells were
generated for each of Supremo, Double Double, Latte and Kona
deposits based on varying revenue factors. Selected pits range from
75m depth (Kona) to 200m depth (Supremo). Cut off grades for Oxide
mineralization is 0.31g/t Au for Supremo, Double Double and Kona,
and 0.32g/t Au for Latte.
The proposed heap leach
processing rate of 5.0 Mtpa was used, along with deposit and pit
geometry constraints, to estimate the mining equipment fleet
needed. The fleet has an estimated maximum capacity of 90,000 t/d
total material, which would be sufficient for the LOM plan.
The total capital cost of the mining equipment of $110.8 million
has been based on a detailed equipment list and budget cost
quotations from a major equipment supplier. The initial
pre-production capital cost of the mine is estimated at $46.3
million and the remaining cost of $64.5 million will be spent after
the pre-production period as sustaining capital. It should be noted
that the $304.8 million of initial capital in the economic model
includes $50.3 million of mining costs that have been capitalized
in the pre-production period.
The open pit mine operations require a total average of 100
personnel, mine maintenance requires 35 personnel, and
supervision/technical needs a total of 30 personnel, for a total of
165 open pit personnel.
Open pit mining costs were
calculated from first principles based on equipment required and
include pit and dump operations, road maintenance, mine supervision
and technical services cost.
The average open pit operating
costs for the LOM plan (which includes pre-production mining) are
listed below:
Function |
Average Cost (C$)/Tonne Mined |
Drilling |
$0.28 |
Blasting |
$0.39 |
Loading |
$0.36 |
Hauling |
$0.71 |
Roads & Dumps |
$0.35 |
General Mine/Maintenance |
$0.17 |
Supervision & Technical |
$0.22 |
Total Open Pit Operating Cost |
$2.48 |
Processing
The process flowsheet includes a three-stage crushing plant
followed by a heap leach operation. Gold is extracted by an
Adsorption-Desorption-Recovery (ADR) carbon plant. The process
flowsheet is based on a processing rate of 5.0 million dry tonnes
per year.
The design particle crush size is minus 16 mm (80% passing 12.5
mm) however, rock types found to leach adequately at coarser sizes
could bypass the tertiary crushing circuit. Based on experience
gained during actual operations, the crush size for each rock type
may be modified as conditions permit.
The estimates for ultimate gold recovery and major reagent
consumptions for various rock types were based on the results of
laboratory column leach tests conducted by Kappes Cassiday &
Associates, industry leading experts in heap leach processing and
consultants to Kinross for the development of the successful Ft.
Knox Heap Leach mine in Alaska.
A summary of the ultimate recoveries and reagent consumptions
used for each deposit facies is summarized below:
Deposit Facies |
Ultimate Au Recovery % |
Reagent Consumptions |
NaCN kg/t |
CaO kg/t |
Supremo Oxide |
90 |
0.20 |
1.50 |
Supremo Upper Transition |
70 |
0.20 |
1.50 |
Latte Oxide |
88 |
0.20 |
1.50 |
Latte Upper Transition |
44 |
0.20 |
1.50 |
Double Double Oxide |
90 |
0.20 |
1.50 |
Kona Oxide |
90 |
0.20 |
1.50 |
Column leach test work was conducted under simulated cold
climate conditions. Agglomeration was not required and low reagent
consumption was reported.
The total capital cost of the process facilities of $73.3
million has been based on budget cost quotations from major
equipment suppliers. The initial pre-production capital cost of the
process facilities mine is estimated at $56.1 million and the
remaining cost of $17.2 million will be spent after the
pre-production period as sustaining capital. For the heap leach
facility (HLF), Knight Piésold and Co. conducted a two phased
conceptual study to first evaluate alternate locations for the
siting of the HLF, followed by completion of design, scheduling and
cost estimation to construct the HLF. Again it should be noted that
the $304.8 million of initial capital in the economic model
includes $8.7 million of processing costs that have been
capitalized in the pre-production period.
Process operating costs were estimated to include all crushing,
heap loading, and gold recovery activities to produce unrefined
gold bullion (doré). Process manpower requirements were estimated
to require 126 personnel. All reagents cost estimates were
calculated by projected consumptions and estimated prices. All
power is supplied by diesel generators and power costs are
estimated at $0.35 per kilowatt hour.
The LOM process operating costs (which include pre-production
processing) are summarized below:
|
$CDN / Year |
$CDN / tonne leached |
Crushing & Conveying |
$11,608,000 |
$2.32 |
Leach & Plant |
$18,503,000 |
$3.70 |
Refine & Laboratory |
$3,228,000 |
$0.65 |
Total Processing Cost |
$33,339,000 |
$6.67 |
Project Infrastructure
and Indirects
The project envisions the construction of the following key
infrastructure items to support the mine and process
facilities:
- Approximately 250 km all-season access road from the Klondike
Highway at Carmacks to the project site; includes upgrading 74 km
of existing road and building 179 km of new road
- Approximately 7 km of new on-site access roads for light
vehicles to by-pass the active mining areas
- New airstrip
- Truck shop, warehouse and camp
- Fresh water supply developed from groundwater
- Bulk explosives storage and magazines
- Power plant and bulk fuel storage
- Potable, fire and sewage water systems
- Camp and administrative office
The total capital cost of the project infrastructure and
development indirect costs is $109.2 million based on a budget
quotation to construct the access road, JDS' northern operating
experience, and more specifically, their Yukon project experience.
The all-season access road will be constructed to connect the
project site to Carmacks, Yukon Territory, Canada. The conceptual
design for the road includes upgrading approximately 74 km of
existing public road and 179 km of new road construction (250 km
total). The road will be designed as a single-lane (5m width), mine
access road with intermittent turnouts and traffic will be radio
controlled. The road will be suitable for semi-trailer trucks and
will eliminate the need to supply the site by barge, ice-road or by
air. The mine will own and operate a fleet of snow plows and
graders used to maintain the road through the winter.
The initial pre-production capital cost of the infrastructure
and indirects is $104.4 million and the sustaining cost is $4.8
million to be spent after the pre-production period. The General
and Administrative operating costs for the operation are estimated
to be approximately $20 million per year or $4.00 per tonne
leached.
Environment,
Reclamation and Stakeholder Engagement
In 2014, Kaminak initiated comprehensive environmental baseline
studies, building on the environmental studies that have been
ongoing since 2010 with the aim of completing an Environmental
Impact Statement for submission in advance of Permitting. Kaminak
will be seeking the input and involvement of local First Nations
(Tr'ondëk Hwëch'in, Selkirk First Nation, White River First Nation
and Little Salmon/Carmacks First Nation) in the design and
implementation of these baseline studies and is committed to
working with stakeholders to ensure that concerns are addressed. A
closure and reclamation plan will be prepared for the project
proposal submission. Financial assurance must be posted to secure
the closure and reclamation works. In the PEA, the estimate for the
closure cost is $46,000,000, including a 15% contingency, and is
based on the owner-operator closing the mine and completing the
reclamation activities. The Government of Yukon will determine the
amount and form of security to be provided.
PEA CONTRIBUTORS
- JDS Energy & Mining Inc., Lead Author, Overall Mine and
Project Design
- Knight Piésold and Co., Heap Leach Facility Design
- Sim Geological, Mineral Resource Estimate (January 2014)
- Kappes Cassidy and Associates, Metallurgical Consultants
Qualified Persons
Fred Lightner, PE, Kaminak Director of Mine Development, is the
Company's designated QP for this news release within the meaning of
NI 43-101 and has reviewed and validated that the information
contained in the release is consistent with that provided by the
QPs responsible for the PEA.
Kaminak's disclosure of technical or scientific information in
this press release has been reviewed and approved by Tim Smith,
MSc, P.Geo., Vice President Exploration of Kaminak Gold
Corporation, who serves as a Qualified Person under the definition
of National Instrument 43-101.
On behalf of the Board of Directors of Kaminak
Eira Thomas, President and CEO
Kaminak Gold Corporation
For further information about Kaminak Gold Corporation or this
news release, please visit our website at www.kaminak.com.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Caution Concerning Forward-Looking Statements
Certain disclosures in this release, including management's
assessment of the future potential of the Coffee Project and future
exploration programs, constitute forward-looking statements that
are subject to numerous risks, uncertainties and other factors
relating to Kaminak's operations as a mineral exploration company
that may cause future results to differ materially from those
expressed or implied in such forward-looking statements, including
risks as to the completion of the plans and projects. Readers are
cautioned not to place undue reliance on forward-looking
statements. Except as required by law, Kaminak 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.
The Company has not made a production decision and the Company's
strategic plan to develop a stand-alone heap leach operation is
subject to the results of its Feasibility Study. Further, if and
when the Company makes any production decision, it will disclose
the basis of such decision in accordance with the requirements of
National Instrument 43-101 Standards of Disclosure for Mineral
Projects ("NI 43-101").
Cautionary Note concerning estimates of Inferred and Indicated
Resources:
This news release uses the terms "Inferred Resources" and
"Indicated Resources", which have a great amount of uncertainty as
to their existence, and great uncertainty as to their economic and
legal feasibility. It cannot be assumed that all or any part of an
Inferred and/or Indicated Mineral Resource will ever be upgraded to
a higher category. Under Canadian rules, estimates of Inferred
Resources may not form the basis of feasibility or other economic
studies. Kaminak advises U.S. investors that while this term is
recognized and required by Canadian regulations, the U.S.
Securities and Exchange Commission does not recognize it. U.S.
investors are cautioned not to assume that part or all of an
Inferred and Indicated resource exists, or is economically or
legally minable.
Kaminak Gold CorporationTony RedaVice-President of Corporate
DevelopmentToll Free: 1-888-331-2269 or Direct:
604-646-4534info@kaminak.comwww.kaminak.com