In the news release, "OceanaGold Delivers Positive Preliminary Economic Assessment Results for
OceanaGold Delivers Positive Preliminary Economic Assessment Results for Waihi District
/NOT FOR DISSEMINATION OR DISTRIBUTION IN
(All financial figures in US Dollars unless otherwise stated)
The PEA is being disclosed in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101"). An NI 43-101 Technical Report of the PEA will be finalised and filed on SEDAR within the next 45 days. Readers are cautioned that the 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 there is no certainty that the PEA will be realised. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
PEA Results Summary
BASE CASE (@$1,500/oz gold price)
- Initial after-tax IRR of 51%
- Initial after-tax net present value ("NPV") at 5% discount rate of
US$665 million - Life of Mine ("LOM") after-tax free cash flow of
US$1.1 billion - LOM All-in sustaining costs ("AISC") of
US$627 per ounce - LOM cash costs of
US$557 per ounce - Initial mine life to 2036 from multiple sources of mill feed
- Total growth capital investment of approximately
US$447 million over eight years for four distinct deposits - Increased resource for
Martha Open Pit – now 260,000 gold ounces in the Indicated category and 290,000 ounces in the Inferred category
"Using our base case assumptions, the significant exploration potential recognised at Martha Underground and WKP, combined with the existing infrastructure and skilled workforce, the results of the study give us confidence to move forward in the
"Leveraging exploration potential through aggressive drill campaigns has been the key to our success since acquiring the Waihi asset in late 2015. This year, we have over 25,000 metres of exploration drilling planned and underway at Martha Underground where our focus is on resource conversion. At WKP, we have an additional 5,000 metres of drilling underway as we continue to drill the high-grade East Graben vein and related foot-wall and hanging wall structures. We expect to update the WKP resource mid-2021."
"The critical path for success is expected to be resource consenting of WKP and surface projects including the Martha Open Pit Phase 5 and additional tailings storage capacity. The Company has successfully permitted projects in
"The results of the Waihi District Study also show significant socio-economic benefits for the rural communities in the Coromandel region and for
Overview
Mineral Resource
Since 2017, the Company has completed nearly 100,000 metres of drilling from surface and underground at Martha and approximately 35,000 metres of drilling at WKP that underpins the existing Indicated and Inferred Resources (no Measured Resource currently exists at MUG or WKP) (Table 1).
The PEA is based upon the resource estimates reported in the Company's 2019 annual reserve and resource statement (see release
- the Martha Phase 4 open pit has been superseded by MOP5, resulting in the merging of the Martha Phase 4 resource into the larger MOP5 open pit resource
- the Martha Phase 4 open pit mineral reserve of 77,000 ounces has been declassified for inclusion in the larger open pit mineral resource
- the MOP5 design utilises approximately 140,000 ounces from the upper portion of the Martha underground mineral resource resulting in a mineral resource reduction to the latter
- a review of cut-off grade applicable to the
Gladstone project resulting in an increase in both Indicated and Inferred Resource
In combination with the release of the PEA, the Company is pleased to announce an increase in the resource for the
The Company also notes that the Martha Underground resource used for the purposes of the PEA totals 706,000 gold ounces, approximately half of the reported total Indicated and Inferred ounces pending future studies around the extraction of the remnant Martha and Royal veins in historical mine working areas.
Table 1 – Updated Waihi Resources
Resource Area | Resource | Indicated Resource | Inferred Resource | ||||||||
Mt | Au | Au | Ag | Ag | Mt | Au | Au | Ag | Ag | ||
Martha OP | 0.5 g/t Au | 4.0 | 2.0 | 0.26 | 19.9 | 2.6 | 4.9 | 1.9 | 0.29 | 19 | 2.9 |
Gladstone OP | 0.5 g/t Au | 2.8 | 1.6 | 0.14 | 3.8 | 0.3 | 0.6 | 1.1 | 0.02 | 2.5 | 0.0 |
Open Pit Total | 6.8 | 1.8 | 0.40 | 13.3 | 2.9 | 5.4 | 1.8 | 0.31 | 17 | 3.0 | |
MUG | 2.15 g/t Au | 4.4 | 5.2 | 0.74 | 17.8 | 2.5 | 3.7 | 4.6 | 0.55 | 16 | 2.0 |
WKP | 2.5 g/t Au | 1.0 | 13.4 | 0.42 | 25.5 | 0.8 | 1.9 | 12 | 0.72 | 20 | 1.2 |
Underground Total | 5.4 | 6.7 | 1.16 | 19.2 | 3.3 | 5.7 | 7.0 | 1.3 | 18 | 3.2 | |
Waihi District Total | 12.2 | 4.0 | 1.56 | 15.9 | 6.2 | 11 | 4.4 | 1.6 | 17 | 6.2 |
- | MUG resources are reported below the Martha stage 5 open pit design and are constrained to within a conceptual underground designed based upon the incremental cut-off grade of 2.15 g/t which is defined at a gold price of | ||
- | WKP Resources are constrained to within a conceptual underground design based upon the cut-off grade of 2.5 g/t gold which is defined at a gold price of | ||
- | No dilution is included in the reported figures and no adjustments have been allowed for mining recoveries or processing losses | ||
- | There is no certainty that Mineral Resources that are not Mineral Reserves will be converted to Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. | ||
- | The tabulated resources are estimates of metal contained as troy ounces of gold and silver. |
Assumptions such as mine dilution and mining rates have been applied to the reported resources for the purposes of the study.
Project Economics
The base case after-tax financial model yielded an IRR of 51% and an NPV5% of
Table 2 – Forecast Financial Analysis Overview (pre-tax and after-tax)
Financial Metric | Unit | Base Case | Spot Scenario | |
Gold Price | $/oz | |||
After-Tax | ||||
NPV5% | USDm | 665 | 917 | |
Internal Rate of Return | % | 51 | 75 | |
LOM Cumulative Free Cash Flow | USDm | 1,091 | 1,466 | |
Pre-Tax | ||||
NPV5% | USDm | 931 | 1,273 | |
Internal Rate of Return | % | 61 | 92 | |
LOM Cumulative Free Cash Flow | USDm | 1,520 | 2,040 |
- | The PEA is a preliminary technical and economic study of the potential viability for the Waihi project. The production target and financial forecast referred to in the PEA are comprised of 51% Indicated Mineral Resources and 49% Inferred Mineral Resources. Inferred Mineral Resources are considered too geologically speculative to have economic considerations applied to them in order to be categorized as Mineral Reserves. There is no certainty that further drilling will convert Inferred Resources to Indicated Mineral Resources. Further drilling, evaluation and studies are required to provide any assurance of an economic development case |
Mining and Milling
The PEA assumes an initial 2.2 million ounces of gold produced, after application of metallurgical recoveries averaging 90% over the LOM from the four deposits: MUG, WKP,
Table 3 – Waihi District Forecast Production Summary
Operation | First Production | Average Annual | Steady State | Initial |
Unit | koz | koz | ||
MUG | 2021 | 75 | 90 – 100 | 2028+ |
WKP | 2026 | 156 | 190 – 230 | 2031+ |
MOP5 | 2027 | 50 | 80 – 100 | 2036 |
2024 | 13 | 15 – 30 | 2027 |
Average annual gold production is based on the total production expected over the initial mine life and includes the ramp-up period; thus, total gold production from the start of production until depletion of the mineral resources is assumed. Steady-state production assumes average production rates following ramp-up of mining operations. The Company will continue to drill both the Martha and WKP underground deposits with the aim of increasing the size of both resources.
Initial estimated mill feed used in the PEA, including initial grades and mining rates, are listed in Table 4. Mill feed grade reflects dilution factors applied to the resource. The Company expects varying timelines to ramp-up to peak mining rates for the different deposits. Total contained gold in mill feed at MUG reflects only half of the reported resources due to mine planning restrictions that reflect the exclusion of areas that prevents optimal design and requires additional resource and geotechnical drilling.
Table 4 – Waihi District Forecast
Deposit | Gold Grade | Contained Gold | Peak Mining | |
Unit | kt | g/t | koz | ktpa |
MUG | 5,000 | 4.4 | 700 | 750 |
WKP | 3,500 | 9.2 | 1,000 | 800 |
MOP5 | 8,800 | 1.9 | 550 | 1,600 |
3,400 | 1.5 | 160 | 1,200 | |
Total / Average | 20,700 | 3.7 | 2,500 |
The PEA assumes underground mining at MUG and WKP and conventional open pit mining at MOP5 and
WKP is located 10-kilometres north of the existing Waihi process plant within
Open pit mining at
The PEA includes the use of the existing Waihi process plant that currently has a throughput capacity of 1.0 to 1.3 million tonnes per annum ("Mtpa") and assumes modest growth capital investment to increase plant capacity to 1.6 Mtpa. The throughput rate of the plant will be achieved through upgrades to the crushing, milling, and carbon-in-pulp circuits (Figure 3). Options are available with increased capital to further increase the capacity of the plant to accommodate potential expansion of existing resources and production levels over the life of mine.
Preliminary metallurgical test work demonstrates average recoveries of 90% over the LOM from the existing processing circuit. Annual gold production ranges from 35,000 to 45,000 ounces in 2021 to approximately 300,000 gold ounces in 2028 with a significant contribution from WKP along with MUG and MOP5.
Options for future tailings storage facilities ("TSFs") include two upper lifts on the existing TSFs, the construction of a new (third) TSF, and the potential conversion of
The total growth capital investment for the
Total sustaining capital cost is estimated to be approximately
Table 5 – Forecast Capital Investment Summary
Capital Expenditures | Growth | Sustaining |
(USDm) | (USDm) | |
Martha Underground | ||
WKP | ||
– | ||
General (including reclamation & closure) | ||
Processing Plant | ||
Other | ||
Total / Average |
Operating Costs
The life of mine All-in Sustaining Cost is expected to be
Table 6 – Forecast Operating Cost Summary
Operating Costs | Units | Average LOM |
Martha Underground | per tonne mined | |
WKP | per tonne mined | |
per tonne mined | ||
per tonne mined | ||
Processing | per tonne milled | |
Site General & Administrative | per tonne milled |
Table 7 – Forecast Site All-in Sustaining Cost Breakdown
All-in Sustaining Cost Inputs | Units | Average LOM (per oz Au sold) |
Direct cash costs | per oz Au sold | |
By-product credits | per oz Au sold | ( |
Royalties | per oz Au sold | |
Sustaining capital expenditures | per oz Au sold | |
Total All-in Sustaining Costs | per oz Au sold |
Next Steps
The Company is committed to advancing the permitting (consenting) process under
The Company intends to complete the consenting process for all the projects as soon as possible to facilitate the development of the
For the remainder of 2020, the Company expects to drill an additional 5,000 metres at WKP on the high-grade East Graben structures. At MUG, the Company has completed approximately 10,000 metres of drilling in the first half of 2020 and expects to complete an additional 15,000 metres of drilling during the remainder of the year with a focus on resource conversion to Indicated category. In addition to the current reported resource at MUG, the Company has an identified exploration target with the potential of 6 to 8 million tonnes grading 4 to 6 g/t Au that represents future opportunity for resource addition.
It is important to note that the exploration target at MUG is exclusive of the reported resource and relates to the portion of the deposit that has not yet been adequately drill tested. This exploration target is based on the assessment of surface and underground drill data collected by the Company in addition to the significant amount of historical and archived geological and mine data from over a century of mining activity at Waihi. The exploration target is conceptual in nature and insufficient exploration has been undertaken in the areas that the exploration target relates to estimate a Mineral Resource. It is uncertain if further exploration will result in the estimation of a Mineral Resource.
Conference Call
The Company will also host a conference call / webcast to discuss the findings at
Webcast Participants
To register, please copy and paste the link below into your browser:
https://produceredition.webcasts.com/starthere.jsp?ei=1340758&tp_key=3dddf93ae1
Teleconference Participants (required for those who wish to ask questions)
Local (toll free) dial in numbers are:
All other countries (toll): + 1 416 764 8688
Playback of Webcast
If you are unable to attend the call, a recording will be available for viewing on the Company's website.
The NI 43-101 Technical Report in respect of the PEA will be filed on SEDAR and the Company's website within 45 days of this announcement.
Authorised for release to market by
www.oceanagold.com | Twitter: @OceanaGold
About
For 2020, and subject to the cautionary statement below, the Company expects to produce between 360,000 and 380,000 ounces of gold from Haile, Waihi and Macraes combined at a consolidated All-In Sustaining Costs ranging from
Qualified Persons and Technical Information
The PEA is a preliminary technical and economic study of the potential technical and economic viability for a series of four projects located in the
The reader is advised that the PEA is preliminary in nature and is intended to provide only an initial, high-level review of the
The updated Mineral Resources described herein have been verified, reviewed and approved by
The estimates of Mineral Resources contained in this public release are based on, and fairly represent, information and supporting documentation prepared by the named qualified and competent persons in the form and context in which it appears.
Messrs, Church and Maton are full-time employees of the Company's subsidiary,
Messrs Carr, Church and Maton are Members and Chartered Professionals with the
Messrs Carr, Church and Maton consent to inclusion in this public release of the matters based on their information in the form and context in which it appears. The estimates of Mineral Resources contained in this public release are based on, and fairly represent, information and supporting documentation prepared by the named qualified and competent persons in the form and context in which it appears.
Cautionary Statement for Public Release
Certain information contained in this public release may be deemed "forward-looking" within the meaning of applicable securities laws. Forward-looking statements and information relate to future performance and reflect the Company's expectations regarding the generation of free cash flow, achievement of guidance, execution of business strategy, future growth, future production, estimated costs, results of operations, business prospects and opportunities of
In particular, all of the results of the PEA for the
Forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those expressed in the forward-looking statements and information. They include, among others, the outbreak of an infectious disease, the accuracy of mineral reserve and resource estimates and related assumptions, inherent operating risks and those risk factors identified in the Company's most recent Annual Information Form prepared and filed with securities regulators which is available on SEDAR at www.sedar.com under the Company's name. There are no assurances the Company can fulfil forward-looking statements and information. Such forward-looking statements and information are only predictions based on current information available to management as of the date that such predictions are made; actual events or results may differ materially as a result of risks facing the Company, some of which are beyond the Company's control. Although the Company believes that any forward-looking statements and information contained in this press release is based on reasonable assumptions, readers cannot be assured that actual outcomes or results will be consistent with such statements. Accordingly, readers should not place undue reliance on forward-looking statements and information. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements and information, whether as a result of new information, events or otherwise, except as required by applicable securities laws. The information contained in this release is not investment or financial product advice.
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