The PEA summarized in this news release is intended to provide an initial review of the Company's Springpole Gold Project's potential and is preliminary in nature. The PEA 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 based on these mineral resources will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
The PEA is based on the project's most recent Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101") compliant mineral resource estimate that includes an Indicated Mineral Resource of 128.2 million tonnes grading 1.07 g/t gold and 5.7 g/t silver and an Inferred Mineral Resource of 25.7 million tonnes grading 0.83 g/t gold and 3.2 g/t silver at a cutoff grade of 0.4 g/t gold. This estimate is set out in an independent technical report, entitled "Mineral Resource Update for the Springpole Project, NW Ontario, Canada" (the "Technical Report"), dated November 30, 2012 with an effective date of September 19, 2012, which was prepared for Gold Canyon by Dr. Gilles Arseneau (P.Geo.), associate consultant with SRK Consulting (Canada) Inc., an independent Qualified Person as defined by NI 43-101. The Technical Report is available through the Internet under the Company's profile on the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com and on the Company's website at www.goldcanyon.ca.
The project is located in northwestern Ontario, Canada approximately 110 kilometers (km) northeast of Red Lake. A net smelter royalty (NSR) of 3% has been applied in the PEA; although, various royalty agreements allow for the royalty to be incrementally bought-down.
The construction phase of the project is scheduled for two years at an initial capital expense of US$438 million. Construction will include: project infrastructure, dike construction and dewatering activities, open pit development, procurement of mining and milling equipment, and mill construction. Dike construction and dewatering costs are estimated at US$53 million (US$37.7 million initial and US$15.3 million sustaining) and include cofferdam construction, dewatering, dredging of sediments, and fish compensation measures. Geotechnical drilling, bathymetry reports, and topographical surveys assisted in the cost estimation of the dike construction activities.
The pit was designed using Whittle Pit Optimization software that maximizes pit NPV based on various input parameters. Pit slopes utilized in Whittle varied from 35 to 50 degrees and produced an overall strip ratio of 1.7. The pit has three stages of development, with Stage 1 being the starter pit, which has higher than average grade. Material grading better than the internal net smelter return (NSR) cut-off grade of $13.67/t (approximately 0.41 g/t Au equivalent) was considered for open-pit mining and delivery to the mill.
The PEA assumes mining an average of 50,000 tonnes of material (mineralized and waste) per day from the open-pit. The forecast mine life is 11 years, during which time 72.4 million tonnes of mineralized material will be delivered to the mill and 120.8 million tonnes of waste rock will be deposited in the waste disposal facility.
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