The PEA is preliminary in nature and 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. There is no certainty that the PEA results will be realized. The PEA is not a preliminary feasibility study or feasibility study. The PEA has been completed to a level of accuracy of +35% to -10%.
Economic Analysis
The PEA calculates a base case pre-tax net present value at a 5% discount rate ("NPV5%") of $741 million, a pre-tax internal rate return ("IRR") of 33.9% and an average pre-tax cash flow from operations of $189 million per year. Table 1 summarizes the key economic results of the PEA. The base case was calculated at a gold price of $1,450. The three-year historical gold price, as of January 1, 2013, was approximately $1,490/oz Au.
The following operational parameters and costs were used in the PEA:
Processing Rate (tonne per day) 80,000 Gold Recoveries 79.5% Mining Costs ($/tonne mined) $1.43 Processing Costs ($/tonne) $2.56 G&A Costs ($/tonne processed) $0.53
Mining and Processing
Projected total gold production over a potential 10-year mine life is 2.7 million ounces at an average operating cash cost of $652/oz Au. The gold is produced from heap leaching 261 million resource tonnes with an average grade of 0.40 grams per tonne gold ("g/t Au"). An average life of mine strip ratio of 1.6 to 1 (waste to resource) was calculated. Table 2 summarizes a potential mining schedule base on this mine life.
Conventional open pit mining methods have been considered in mining the Cerro Maricunga deposit. The PEA considers utilizing a fleet of 16 haul trucks (Komatsu 9300E - 290 tonne), five diesel shovels (Komatsu PC5500 - 38 yard), five production drills (Sandvik DR460 - 10 5/8 inch) and various ancillary equipment. No additional production fleet equipment is considered during the mine life. The preliminary open pit design incorporates 10 metre ("m") high benches with 40 metre wide main haul roads at a maximum grade of 10% and pit walls at an average 42 degree angle.
The PEA envisions that oxide mineralization will be trucked to a primary gyratory crusher facility, with a minimum capacity of 4,200 tonne per hour, located to the immediate west of the Lynx Zone where it will be crushed to 165 mm. The primary crushed material will then be conveyed approximately 3.4 kilometres ("km") to feed three secondary cone crushers and three tertiary cone crushers. The final crushed product, measuring (P80) 19 mm, will be conveyed 2.8 km to the heap leach pads.
Table 2 - Conceptual Mining and Processing Schedule---------------------------------------------------------------------------- Resource Waste Grade ProductionYear ('000 tonnes) ('000 tonnes) Strip Ratio (g/t gold) (oz Au)---------------------------------------------------------------------------------------------------------------------------------------------------------1 6,624 4,776 0.7 0.38 -----------------------------------------------------------------------------1 22,576 27,874 1.2 0.44 318,500----------------------------------------------------------------------------2 29,200 55,350 1.9 0.41 309,100----------------------------------------------------------------------------3 29,200 55,350 1.9 0.41 305,200----------------------------------------------------------------------------4 29,200 55,350 1.9 0.40 296,600----------------------------------------------------------------------------5 29,200 55,350 1.9 0.35 260,900----------------------------------------------------------------------------6 29,200 55,273 1.9 0.36 268,700----------------------------------------------------------------------------7 29,200 49,929 1.7 0.38 282,600----------------------------------------------------------------------------8 26,759 41,040 1.5 0.40 269,700----------------------------------------------------------------------------9 20,685 18,615 0.9 0.47 247,400----------------------------------------------------------------------------10 8,537 3,132 0.4 0.58 129,000----------------------------------------------------------------------------11 742 118 0.2 0.66 12,800--------------------------------------------------------------------------------------------------------------------------------------------------------Totals 261,123 422,157 1.6 0.40 2,700,500----------------------------------------------------------------------------
