(CSE: TRG)
Press Release Highlights:
- Projected average annual gold production of 16,000oz + copper concentrate
- Cash operating costs of
$648 /oz and AISC of$705 /oz Au, net of copper and silver by-product credit. - Pre-tax IRR of 120% and post-tax IRR of 85% at
$1600 /oz Au. - Pre-tax annual free cash flow of
$15.3M USD ($19.3M CAD) in peak years
Preliminary Economic Assessment Metrics:
- Initial capital costs of
$11.1M USD and after-tax payback in 1.0 years - Development timeline of 12 months
- Cash operating costs of
$648 /oz and AISC of$705 /oz Au, net of copper and silver credits - Pre-tax IRR of 120% and after-tax IRR of 85% at base case prices of
$1600 /oz gold,$22 /oz silver, and$3.40 /lb copper - Pre-tax annual free cash flow of
$15.3M USD ($19.3M CAD) and post-tax cash flow of$11.3M USD ($14.3M CAD) during years of full-rate production - LOM of 3.4 years with total production of 53,900oz Au, 75,800oz Ag and 1.9Mlbs Cu
The PEA was completed by
The current mine plan incorporates approximately 89% of the Measured and Indicated resources, however management believes additional tonnage may be scavenged from the remaining tailings to provide additional mine life. The Company is also looking to acquire other local tailings materials that could potentially be processed at the Magistral facility and ultimately extend the cash generating life of the asset.
Not only does this represent an opportunity to establish Tarachi as a producer of both gold and copper in
The addition of a SART (sulphidation, acidification, recycling and thickening) plant into the flowsheet will reduce our operating costs and improve our environmental profile by recycling at least 70% of the cyanide used in leaching while producing a high-grade copper concentrate by-product. With the PEA now complete and a clear pathway to production on the table, we will be fast tracking the development of Magistral in the New Year."
Project Economics
The project's key economic metrics are summarized in Table 1 with additional metrics and assumptions used in the PEA summarized in Table 2.
Readers are cautioned that the PEA is preliminary in nature. It includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Table 1 – Key Economic Metrics
Metric | Base Case Price ( | Spot Price |
Pre-tax IRR | 120% | 145% |
Post-tax IRR | 85% | 103% |
Pre-tax NPV 5% (M USD) | ||
Post-tax NPV 5% (M USD) |
Table 2 - Other Project Metrics and Assumptions
Cu Price ($/lb) | |
Total Feed Material (tonnes) | 1,113,000 |
Feed Rate (tpd) | 1,000 |
Life-of-Mine (years) | 3.40 |
Average Resource Grade (g/t Au) | 1.93 |
Average Diluted Head Grade (g/t Au) | 1.87 |
Gold Recovery | 80.7% |
Average Annual Gold Production (oz) | 16,000 |
Peak Annual Gold Production (oz) | 17,400 |
Total Gold Recovered (oz) | 53,900 |
Total Copper Recovered (lbs) | 1,900,000 |
Total Silver Recovered (oz) | 75,800 |
Total Gold Equivalent Recovered (oz) | 59,000 |
Initial Capital Requirement (M USD) | |
Payback Period (years) | 1.0 |
Cash Costs ($/oz Au) | |
All-in Sustaining Costs ($/oz Au) | |
Pre-tax Annual Free Cash Flow (M USD) | |
After-tax Annual Free Cash Flow (M USD) |
Mining
The tailings materials contained in the Mineral Resource Estimate are located adjacent to the existing processing facility at Magistral. Tailings will be mined using a Cat 330D class excavator and two 20-tonne dump trucks to move material to the mill. The average one-way trucking distance is estimated to be only 250m to the mill. Material will be dumped into a 24-hr stockpile and fed into a hopper using a front-end loader. Tailings will be fed into the mill at a rate of 1,000tpd.
Metallurgy and Processing
Metallurgical test work completed earlier in 2021 indicated that 83% of the gold contained in the tailings material can be leached within 12 hours without the need for additional grinding (see press release dated
Ausenco has identified several modifications and additions to the existing facility that once implemented are expected to achieve similar gold recoveries to those seen in the PEA metallurgical test work, reduce cyanide consumption, produce a copper concentrate by-product, and improve the quality of the final gold doré.
Plant modifications & additions:
- The existing plant onsite is considered to be in very good condition
- All feed material will pass through the existing, unused ball mill to ensure all tailings feed is sufficiently broken up and slurried prior to leaching. Use of the ball mill is only expected to provide minimal additional particle size reduction.
- The existing primary feed thickener will be re-piped to serve as a third stage of CCD, improving global gold recovery.
- A small SART circuit will be added to the facility. The SART circuit will allow for the recycling of at least 70% of the cyanide consumed in the process, production of a high-grade saleable copper concentrate and ensure the Merrill Crowe circuit can operate efficiently and with significantly lower zinc powder consumption by removing the majority of cyanide-soluble copper prior to zinc addition.
The feed will be processed in the existing plant, by refurbishing the existing equipment and adding new equipment including a SART circuit, gold room and oxygen generation unit. The process includes grinding, leaching, SART and
Average feed grade is expected to be 1.87g/t Au, 3.1g/t Ag and 0.17%Cu. Total plant recoveries for gold, silver and copper are estimated to be 80.7%, 68.4% and 46.2%, respectively.
Production
Approximately 89% of the recovered gold is expected to report to the Merrill Crowe precipitate where it will be smelted into doré on site and sold to refiners. The remaining 11% of recovered gold, the majority of the recovered silver and the recovered copper will report to the SART precipitate to be sold as a high-grade (approx. 60% Cu) copper concentrate with gold and silver credits.
Table 3 - Expected Metal Production
Recovered Metal | LOM Total | Year 1 | Year 2 | Year 3 | Year 4 |
Gold (oz) in Dore | 47,990 | 13,300 | 15,400 | 15,300 | 3,900 |
Gold (oz) in Concentrate | 5,950 | 1,700 | 1,900 | 1,900 | 500 |
Silver (oz) in Concentrate | 75,830 | 20,400 | 24,500 | 24,500 | 6,300 |
Copper (Mlbs) in Concentrate | 1.90 | 0.48 | 0.63 | 0.63 | 0.20 |
Gold Equivalent (oz)* | 59,021 | 16,300 | 18,975 | 18,875 | 4,911 |
* | Gold equivalent production was calculated using |
Capital Expenditures
The initial capital of
Table 4 - Capital Expenditure Breakdown by Area
WBS DESCRIPTION | TOTAL PEA | % OF | |
Mining | $ | 201,000 | 2% |
Onsite Infrastructure | $ | 380,000 | 3% |
Process Plant | $ | 5,848,000 | 53% |
Tailings Storage Facility | $ | 954,000 | 9% |
TOTAL DIRECT COSTS (USD) | $ | 7,383,000 | 66% |
Project Indirect Costs | $ | 654,000 | 6% |
Project Delivery Costs | $ | 844,000 | 8% |
Owner's Costs | $ | 250,000 | 2% |
TOTAL INDIRECTS, PROJECT DELIVERY, OWNER'S COSTS (USD) | $ | 1,748,000 | 16% |
TOTAL DIRECTS, INDIRECTS, PROJECT DELIVERY, OWNER'S COSTS (USD) | $ | 9,131,000 | 82% |
Contingency | $ | 1,981,000 | 18% |
PROJECT TOTAL (USD) | $ | 11,112,000 | 100% |
Sustaining Capital
A sustaining capital of
Table 5 - Sustaining Capital Expenditure Breakdown by Area
WBS DESCRIPTION | TOTAL | |
Mining | $ | 118,000 |
Onsite Infrastructure | $ | - |
Process Plant | $ | - |
Tailings Storage Facility | $ | 1,209,700 |
Water Management | $ | 289,000 |
TOTAL DIRECT COSTS (USD) | $ | 1,616,700 |
INDIRECT COSTS | $ | 149,000 |
CONTINGENCY | $ | 329,700 |
TOTAL SUSTAINING COSTS | $ | 2,096,300 |
Operating Costs
Mining
Mining is assumed to be completed by the owner with rental equipment. The mining costs are based on local labour rates together with the equipment rentals.
Processing and G&A Costs
Processing costs were developed by Ausenco from first principles. The largest component of the operating costs is anticipated to be the consumption of cyanide, lime and other reagents in the processing plant.
G&A cost estimates were based on a small administration office onsite. The close proximity of the project to the towns of Magistral del
Table 6 - Operating Cost Breakdown
Cost Centre | M$/year | US$/t Feed | Percentage, (%) |
G&A | 0.40 | 1.09 | 5.2% |
Mining | 2.11 | 5.79 | 27.5% |
0.83 | 2.28 | 10.8% | |
Power | 0.62 | 1.69 | 8.0% |
Maintenance Consumables | 0.33 | 0.89 | 4.2% |
Reagents and Consumables | 2.37 | 6.50 | 30.9% |
SART plant | 1.03 | 2.83 | 13.4% |
TOTAL | 7.68 | 21.05 | 100.0% |
In addition to the costs listed in Table 6, the operation will also incur tailings leasing fees on some of the tailings material to be mined, paid when mined on a tonnage basis. These fees are expected to average
Table 7 - Tailings Leasing Fee Schedule
Tailings Material Access |
Tonnage |
| Notes |
Tarachi-Owned | 163,000 | Owned by | |
Minera Rio Tinto Lease | 186,333 | Under exclusive agreement with Minera Rio | |
Ejido Magistral Lease | 763,667 | Under exclusive agreement with | |
Total Tailings in Mine Plan | 1,113,000 | LOM average fee paid per tonne of tailings |
Net of copper and silver credits, the cash operating costs, including leasing fees, are estimated at
Mineral Resource Estimate
Table 8 - Mineral Resource Estimate for Magistral Tailings
Note: |
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. |
The cutoff applied was 0.5 g/t gold. |
Summation errors may occur due to rounding. |
Mineral resources are reported within an optimized constraining shell. |
Block Matrix is 10m x 10m x 5m (no rotation). |
Blocks were estimated using OK interpolation; no grade capping was applied. |
The density for the deposit was assigned at 1.7 g/cm3. |
The drill hole database used for the mineral resource estimate consists of 37 drill holes and 178 assays. Bulk density measurements were collected during the drill campaign using only samples with 100% recovery for the calculation. The median bulk density of 1.70 was used for the tailings deposit mineral resource estimate. A block size of 10x10x5m was used to model the deposit. Resource classification parameters for measured, indicated, and inferred resources can be found in Table 9.
The PEA is preliminary in nature, 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 realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Opportunities
Work completed during the preparation of the PEA outlined a number of opportunities that have the potential to improve the economics and ESG performance of the project:
- Mine life extension: potential to mine additional material with higher dilution which has not been considered in this study
- Dry stack tailings: an evaluation of using dry stacked tailings to reduce TSF costs and improve ESG performance will be completed during the next phase of study
Quality Assurance/Quality Control
Tailing samples were selected by company geologists with each sample placed into plastic bag. Sample tags were inserted into each bag before being sealed and stored at the campsite in a secure area. At the completion of the program the samples were transported by company trucks directly to Tarachi's secure facility in
All 178 samples from the 37 vertical, auger drill holes completed were shipped to
Control samples comprising of certified reference samples, duplicates and blanks were systematically inserted into the sample stream and analyzed as part of the company's quality assurance / quality control protocol.
The remainder of the samples were then delivered to
About
The Company is also exploring on 3,708ha of highly prospective mineral concessions in the Sierra Madre gold belt of
About Ausenco
Ausenco is a global company based across 26 offices in 14 countries, with projects in over 80 locations worldwide. Combining deep technical expertise with a 30-year track record, Ausenco delivers innovative, value add consulting studies, project delivery, asset operations and maintenance solutions to the mining and metals industrial sectors.
Qualified Person
The PEA for the Company's Magistral project as summarized in this release was completed by Ausenco with support from AGP. A full technical report supporting the PEA will be prepared in accordance with NI 43-101 and will be filed on SEDAR within 45 days of this press release.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This news release includes certain "Forward–Looking Statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward–looking information" under applicable Canadian securities laws. When used in this news release, the words "anticipate", "believe", "estimate", "expect", "target", "plan", "forecast", "may", "would", "could", "schedule" and similar words or expressions, identify forward–looking statements or information. These forward–looking statements or information relate to, among other things: future exploration programs, development of mining assets, acquisition of additional resources, future production, future cash flows, and the completion of drill holes; and receipt of assay results.
Forward–looking statements and forward–looking information relating to any future mineral production, liquidity, timing of completion of reports and studies, enhanced value and capital markets profile of Tarachi, future growth potential for Tarachi and its business, and future exploration plans are based on management's reasonable assumptions, estimates, expectations, analyses and opinions, which are based on management's experience and perception of trends, current conditions and expected developments, and other factors that management believes are relevant and reasonable in the circumstances, but which may prove to be incorrect. Assumptions have been made regarding, among other things, the price of silver, gold and other metals; no escalation in the severity of the COVID-19 pandemic; costs of exploration and development; the estimated costs of development of exploration projects; Tarachi's ability to operate in a safe and effective manner and its ability to obtain financing on reasonable terms.
These statements reflect Tarachi's respective current views with respect to future events and are necessarily based upon a number of other assumptions and estimates that, while considered reasonable by management, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors, both known and unknown, could cause actual results, performance or achievements to be materially different from the results, performance or achievements that are or may be expressed or implied by such forward–looking statements or forward-looking information and Tarachi has made assumptions and estimates based on or related to many of these factors. Such factors include, without limitation: the Company's dependence on one mineral project; precious metals price volatility; risks associated with the conduct of the Company's mining activities in
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