Item 7.01 Regulation FD Disclosure.
On June 11, 2021, the Registrant issued the attached news release entitled “Goldrich Mining Releases Initial Assessment Report”, wherein the Company reported the results of the independent Initial Assessment Report (the “IA”) for the Company’s Chandalar Mine in the Chandalar Gold District in Alaska. The IA was prepared by Global Resources Engineering (“GRE”), a widely-respected mining engineering firm in Denver, Colorado.
Highlights – At $1,650 Base Case Gold Price:
·After-tax Net Present Value (NPV) (5%) of $64 million and Internal Rate of Return (IRR) of 139%
·$25 million in Undiscounted After-tax Net Cash Flow (NCF) generated by year two and $72 million generated in total.
·All-in sustaining costs of $799 per ounce of gold (Au)
·After-tax payback period of 1.3 years after start of commercial production
·Initial mine life of 7 years with significant potential to extend lifespan
·Project also includes extensive additional upside with higher gold price and resource growth potential
Due to new amendments recently adopted by the SEC to modernize property disclosure requirements for mining registrants, the preparation of the IA allows Goldrich to disclose Measured, Indicated, and Inferred resources for the first time.
Key Economic Results
Key Economic Results of the IA with a summarized gold price sensitivity analysis are as follows:
|
Parameter
|
Base Case
$1,650 Gold
|
Gold Price Sensitivity Analysis
|
|
$1,500
|
$2,000
|
$2,500
|
|
Undiscounted Pre-Tax Net Cash Flow:
|
$75 million
|
$57 million
|
$116 million
|
$175 million
|
|
After-tax NPV@5%(1):
|
$64 million
|
$50 million
|
$92 million
|
$129 million
|
|
After-tax IRR(1):
|
139%
|
112%
|
195%
|
275%
|
|
Undiscounted After-tax Net Cash Flow(1):
|
$72 million
|
$57 million
|
$103 million
|
$145 million
|
|
After-tax Payback Period (years):
|
1.3
|
1.44
|
1.19
|
1.1
|
|
All-in Sustaining Costs:
|
$799/Au oz.
|
|
|
|
|
All-in Costs:
|
$1,064/Au oz.
|
|
|
|
|
Total Operating Costs:
|
$646/Au oz.
|
|
|
|
(1) Tax calculation includes use of a GRMC $39 million tax loss carryforward.
The IA uses a base case gold price of $1,650/oz, which is the 24-month trailing average gold price as required by the new SEC regulations. The base case shows robust economics with an after-tax undiscounted net cash flow of $72 million, an IRR of 139%, and a Payback Period of 1.3 years. At recent gold prices of around $1,900/oz, the sensitivity analysis shows an undiscounted after-tax cash flow of $95 million, an IRR of 180%, and a Payback Period of 1.2 years.
Mineral Resource Estimate
Pit-constrained Mineral Resource Estimate for the Little Squaw Creek Placer Deposit:
|
Classification
|
Resource Volume
(1000s bcy)
|
Raw(1)
Gold Grade (troy oz./bcy)
|
Raw(1) Gold (troy oz)
|
Fine(2) Gold
(troy oz)
|
|
Measured
|
2,609
|
0.0302
|
79,000
|
69,000
|
|
Indicated
|
2,188
|
0.0265
|
58,000
|
51,000
|
|
Measured & Indicated
|
4,797
|
0.0285
|
138,000
|
120,000
|
|
Inferred
|
771
|
0.0245
|
19,000
|
17,000
|
(1) Raw Gold - Gold as recovered from the placer deposit, historically 84% gold and 16% other metals like silver and copper (referred to as 840 fine).
(2) Fine Gold - Gold that is 99.99% pure (referred to as 9999 fine).
The Chandalar Mine resource database includes the results from 395 drill holes, totaling 35,930 feet from three previous drilling campaigns (2007: 104 holes totaling 15,400 feet; 2013: 61 holes totaling 6,300 feet; and, 2017: 230 holes totaling 14,300 feet). The Mineral Resource estimate is based on a gold cutoff grade of 0.002 raw troy ounces (840 fineness) per bank cubic yard (bcy) at an assumed gold price of 1,600 $/tr oz, assumed mining cost of $4.50/bcy, assumed processing and administrative cost of $7.25/bcy, an assumed metallurgical recovery of 84%, and pit slopes of 45 degrees.
To determine the accuracy of the block model used for the resource estimation, GRE completed various studies, including a production reconciliation to the block model. The reconciliation compared the reported raw ounces produced from 2009 through 2018 with the estimated raw ounces using the consolidated mined-out surface for the same time period as summarized in the table below:
|
Year
|
Block Model Estimate (at assumed cutoff grade of 0.002 opy)
|
Approximate Actual Production
|
Actual Oz of Raw Gold Variance Greater/(Less) Than Estimate
|
% Actual Oz of Raw Gold Greater/(Less) Than Estimate
|
|
2009 to 2015
|
7,300
|
8,150
|
850
|
12%
|
|
2016
|
13,700
|
10,200
|
-3,500
|
-26%
|
|
2017
|
10,700
|
14,680
|
3,980
|
37%
|
|
2018
|
16,000
|
20,360
|
4,360
|
27%
|
|
Total
|
47,700
|
53,390
|
5,690
|
12%
|
The block model estimated 47,700 raw ounces (at an assumed cutoff grade of 0.002 ounces per yard [opy]) compared to actual production of 53,900 raw ounces, which was 12% greater than the estimate. If actual future production continues to be greater than the block model estimate as it has in the past, this would further strengthen the project’s already highly profitable projected economics.
Capital and Operating Cost
Estimated capital costs total $25.6 million, including initial capital of $15.1 million. Capital costs for the project include mining production and support equipment leases that assume 25% down payment of the purchase price and a lease term varying from 20 to 26 quarters, depending on the piece of equipment and when it is needed on the project at 5% interest. They also include a heavy equipment shop and fuel station, process equipment, camp, and site development.
The estimated operating costs total $95.2 million over 7 years, with a cash operating cost of $646/fine Au oz and an all-in sustaining cost of $799/fine Au oz. Operating cash costs are based on a surface mine plan, haul cycle analysis, drill and blast cost analysis, with delivery to the remote mining site by either air (landing strip already available at the mine site) or by a winter ice road. Remote labor rates and burdens were used that are consistent with other remote mining operations in the arctic region of Alaska. Power costs for the camp and wash plants is based on generated power using diesel fuel.
Preliminary Economic Assessment
GRE has also prepared a Preliminary Economic Assessment (PEA) according to Canadian 43-101 standards, which is similar to the U.S. IA, but the PEA will not be released unless Goldrich lists on a Canadian stock exchange.