Paramount Gold Nevada Corp. (NYSE American: PZG) (“Paramount” or
the “Company”) today filed its S-K 1300 Technical Report Summary on
the Feasibility Study (“FS” or the “Study”) for its 100% owned,
proposed high-grade gold mine, to be located at Grassy Mountain in
Malheur County, Oregon (the “Project”). S-K 1300 is a new SEC
requirement for US mining projects which allows the disclosure of
Mineral Reserves and Resources.
The Project is in advanced stages of permitting,
with the county permit in hand, and all baseline data reports
approved by Oregon State regulators. The Project is in the final
stages of the review process with both State and Federal
regulators.
"The new Technical Report Summary strengthens
the case for our project’s superior economic performance despite
increases to both the operating and capital costs due to global
inflationary pressures,” stated Rachel Goldman, the Company’s CEO.
“This is further confirmation of the value of our project in the
current environment as we conclude the permitting process,” she
added.
The proposed underground mine plan envisions a
small surface footprint and is expected to generate substantial
cash-flows over the life of mine. The mine plan was developed using
a drift and fill underhand mining methodology. A cut-off grade of
0.1 oz/ton (3.43 g/T) gold equivalent was used to define economic
stopes. Ore processing from the upper portion of the mine is
expected to commence concurrently with the completion of the
processing plant and infrastructure. Following ramp up, the mine is
expected to produce an average of 1,300 to 1,400 tons per day, 4
days a week, which would provide enough material for the 750 ton
per day mill and an enclosed Carbon in Leach (“CIL”) processing
plant to operate at full capacity for 7 days a week.
This Study encompasses new vendor quotes
reflecting the current inflationary environment. Of utmost
importance, this Study incorporates all modifications requested by
State and Federal regulators in the completeness reviews of both
the Consolidated Permit Application and the Plan of Operation,
which have now been finalized.
The highlights of the S-K 1300 Technical Report
Summary on the Feasibility Study in the base case scenario are as
follows:
- Initial 8-year mine life producing
362,000 ounces of gold and 425,000 ounces silver;
- Annual average production of 47,000
ounces of gold and 55,000 ounces of silver;
- Mill head grade of 0.19 oz/ton (6.5
g/T) gold and 0.28 oz/ton (9.6 g/T) of silver;
- After-tax IRR of 22.5% and NPV5% of
$114.1M
- Life of mine cash costs of $681 and
AISC of $815 per ounce of gold;
- Initial CapEx of $136.2M, including
$13.5M of estimated contingencies, $36.1M of sustaining CapEx and
$12.4M closure costs for a 750 tpd mine and milling operation;
- Average gold and silver recoveries
of 92.8% and 73.5% respectively; and
- After-tax payback of 3.3
years.
The FS was completed by a group of industry
leading consulting firms led by: Ausenco Engineering Canada Inc.
(“Ausenco”), who managed the overall study and were responsible for
processing and infrastructure design, oversaw metallurgical testing
and completed the economic analysis; RESPEC Company LLC (“RESPEC”),
who updated the mineral resource estimate; Arrowhead Underground
LLC (“Arrowhead”), who completed the mine planning and reserves
estimation; Golder Associates (“Golder”), who designed the tailings
storage facility; and SLR International, who oversaw all
environmental and reclamation aspects of the Feasibility Study.
S-K 1300 is a new requirement that requires
Securities Exchange Commission ("SEC") registrants with material
mining operations including those in the exploration and
development stage to provide certain disclosures about its mining
activities in its SEC filings.
Mineral Resources (Exclusive of Mineral
Reserves)
US Units |
|
|
|
|
|
Classification |
Tons(000’s) |
Au(oz/ton) |
Ag(oz/ton) |
Au(ounces) |
Ag(ounces) |
Measured |
21,153 |
0.017 |
0.072 |
363,000 |
1,529,000 |
Indicated |
12,902 |
0.030 |
0.115 |
392,000 |
1,480,000 |
Measured + Indicated |
34,055 |
0.022 |
0.088 |
755,000 |
3,009,000 |
Inferred |
1,151 |
0.037 |
0.109 |
42,000 |
126,000 |
Metric Units |
|
|
|
|
|
Classification |
Tonnes(000’s) |
Au(g/T) |
Ag(g/T) |
Au(ounces) |
Ag(ounces) |
Measured |
19,190 |
0.583 |
2.469 |
363,000 |
1,529,000 |
Indicated |
11,705 |
1.029 |
3.943 |
392,000 |
1,480,000 |
Measured + Indicated |
30,894 |
0.754 |
3.017 |
755,000 |
3,009,000 |
Inferred |
1,044 |
1.269 |
3.737 |
42,000 |
126,000 |
- Mineral Resources estimates are reported exclusive of mineral
reserves, are current as of June 30, 2022, and are reported using
the definitions in S-K 1300.
- The Qualified Person firm responsible for the mineral resource
estimate is RESPEC.
- Assumed metal prices for 2022 estimated Mineral Resources were
US$1,750 per ounce of gold and US$22.00 per ounce of silver, unless
otherwise noted.
Mineral Resources potentially amenable to open
pit mining methods are reported using a gold price of US$1,750/oz,
a silver price of US$22/oz, a throughput rate of 5,000 tons/day,
assumed metallurgical recoveries of 80% for Au and 60% for Ag,
mining costs of US$2.50/ton mined, processing costs of US$13.00/ton
processed, general and administrative costs of $2.22/ton processed,
and refining costs of $5.00/oz Au and $0.50/oz Ag produced. Mineral
Resources potentially amenable to underground mining methods are
reported using a gold price of US$1,750/oz, a silver price of
US$22/oz, a throughput rate of 5,000 tons/day, assumed
metallurgical recoveries of 95% gold equivalent, mining costs of
US$90/ton mined, processing costs of US$30/ton processed, general
and administrative costs of US$15.00/ton processed, and refining
costs of US$5.00/oz gold equivalent produced.
The in-pit resources were then tabulated by the
application of a gold-equivalent cut-off of 0.011 oz/ton (0.38
g/T), and resources potentially amenable to underground mining
methods were estimated by applying a gold-equivalent cut-off of
0.085 oz/ton (2.915 g/T) to blocks lying immediately outside of the
optimized pit that could reasonably be accessed from the resource
pit. The gold-equivalent grades were determined using a silver to
gold ratio of a 106 to 1. Processing is assumed to consist of
crushing and milling followed by a CIL recovery process resulting
in the production of a doré bar on site.
Mineral Reserves
US Units |
|
|
|
|
|
Classification |
Tons |
Au(oz/ton) |
Ag(oz/ton) |
Au(ounces) |
Ag(ounces) |
Proven |
259,600 |
0.181 |
0.264 |
47,000 |
68,000 |
Probable |
1,651,900 |
0.202 |
0.294 |
333,000 |
486,000 |
Total Reserves |
1,911,400 |
0.199 |
0.290 |
380,000 |
554,000 |
Metric Units |
|
|
|
|
|
Classification |
Tonnes |
Au(g/T) |
Ag(g/T) |
Au(ounces) |
Ag(ounces) |
Proven |
235,508 |
6.206 |
9.051 |
47,000 |
68,000 |
Probable |
1,498,594 |
6.926 |
10.080 |
333,000 |
486,000 |
Total Reserves |
1,734,011 |
6.823 |
9.943 |
380,000 |
554,000 |
- Mineral reserves are reported exclusive of mineral resource
estimates, are current as of June 30, 2022, and are reported using
the definitions in S-K 1300
- The Qualified Person firm responsible for the mineral reserves
estimate is Arrowhead Underground LLC.
Assumed cut-off grade to report reserves was 0.1
oz/ton of gold equivalent. An underground mining scenario is
assumed using mechanized cut-and-fill methods, which, following
ramp-up, is expected to produce 1,300–1,400 tons/day, four days a
week. This mining rate would provide sufficient material for the
750 ton/day mill and processing plant to operate at full capacity
for seven days a week.
The Proven and Probable Mineral Reserves for
Grassy Mountain were estimated by first calculating an economic
cut-off grade of 0.1 AuEq oz/ton (3.43 g/T) for mining underground
stopes, then using the cut-off grade to design stope shapes
centered on Measured and Indicated Mineral Resource blocks with
gold grades greater than or equal to the cut-off grade. All
Inferred material was considered to be waste with no value or metal
content. Internal and external dilution and mining recoveries (ore
loss) were estimated and applied as modifying factors based on the
total tonnage of material inside of the final designs.
Economic Analysis
Based on the assumptions and parameters
presented, the FS shows positive economics with a 3.3-year payback
period supported by a pre-tax NPV5% of $134.9 M and pre-tax IRR of
24.22%, and after-tax NPV5% of $114.1 M and after-tax IRR of
22.54%. The initial CapEx is at $136.2 M, with undiscounted LOM
revenue of $641.8 M, sustaining CapEx of $36.1 M, all-in OpEx of
$244 M, and closure costs of $12.4 M. The breakeven gold price is
approximately $1,255 per ounce of gold.
The following table illustrates the
sensitivities that a variety of gold price environments have on
both the NPV and IRR:
|
Base Case |
Upside Case |
Lower Case |
Gold Price ($/oz) |
1,750 |
1,900 |
1,590 |
Silver
Price ($/oz) |
22 |
24 |
20 |
Cash Operating Cost Per Au Ounce |
$ 681 |
$681 |
$ 681 |
Total Cost Per Ounce Au (AISC) |
$ 815 |
$815 |
$ 815 |
After-tax Internal Rate of Return |
23% |
27 % |
18 % |
After-tax Net Present Value (5%) |
$ 114 M |
$ 146 M |
$ 80 M |
After-tax Net Present Value (8%) |
$ 84 M |
$ 111 M |
$ 54 M |
After-tax Net Present Value (10%) |
$ 67 M |
$ 91 M |
$ 39 M |
Payback from start of production (years) |
3.3 |
2.9 |
3.9 |
The economic analysis was performed using the
following assumptions:
- Gold price of US$1,750/oz, silver
price of US$22/oz (rounded three-year trailing average price (LME)
as of June 30, 2022);
- Construction period of 18 months
beginning March 1, 2024;
- All construction costs are
capitalized;
- Commercial production starting
(effectively) on September 1, 2025;
- LOM of 7.8 years;
- Cost estimates in constant Q3 2022 USD
with no inflation or escalation;
- Capital costs funded with 100% equity
(no financing costs assumed);
- All cash flows discounted at a 5%
discount rate, to the start of construction;
- Metal is assumed to be sold in the
same year it is produced;
- No contractual arrangements for
refining currently exist;
- Closure costs of $12.4 M;
- 1.5% NSR royalty, resulting in
approximately $9.6 M in undiscounted royalty payments over the
LOM;
- US Federal corporate income tax rate
of 21%; Oregon tax rate of 7.6% for net proceeds of more than
$1 M; giving total undiscounted tax payments of $30.9 M
over the LOM.
Qualified Person DisclosureThe metallurgical
analysis, process design development of the process plant capital
and operating cost estimates and financial modeling were supervised
and reviewed by a Qualified Person at Ausenco, who are independent
of Paramount Gold Nevada Corp.
The mineral reserve estimate was prepared by a Qualified Person
at Arrowhead who are independent of Paramount Gold Nevada.
The mineral resource estimate was completed and reviewed by a
Qualified Person at MDA, a division of RESPEC, who are independent
of Paramount Gold Nevada Corp.
All the above-named Companies have reviewed and approved this
news release.
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About Paramount Gold Nevada
Corp.Paramount Gold Nevada Corp. is a U.S. based precious
metals exploration and development company. Paramount’s strategy is
to create shareholder value through exploring and developing its
mineral properties and to realize this value for its shareholders
in three ways: by selling its assets to established producers;
entering joint ventures with producers for construction and
operation; or constructing and operating mines for its own
account.
Paramount holds a 100% interest in four gold
projects: Grassy Mountain; Frost; Sleeper and Bald Peak.
The Grassy Mountain Gold Project consists of
approximately 8,200 acres located on private and BLM land in
Malheur County, Oregon. The Grassy Mountain Gold Project contains a
gold-silver deposit (100% located on private land) for which
results of a positive Feasibility Study have been released and key
permitting milestones accomplished.
Frost is comprised of 84 unpatented lode claims
covering approximately 1,730 acres located 12 miles southwest of
the Company’s proposed high-grade, underground Grassy Mountain gold
mine in Malheur County, Oregon (“Grassy”). An initial drill program
is ongoing.
The Sleeper Gold Project is located in Northern
Nevada, the world’s premier mining jurisdiction. The Sleeper Gold
Project, which includes the former producing Sleeper mine, totals
2,474 unpatented mining claims (approximately 44,917 acres).
The newly acquired Bald Peak Project in Nevada,
consists of approximately 2,260 acres.
About Ausenco
Ausenco is globally recognised for providing
consulting, project delivery, and asset operations services to the
international mining sector including high performance gold
processing and infrastructure projects. Ausenco has a 30-year track
record in delivering specialized end-to-end solutions which are
proven to lower capital and operating costs, reduce construction
time and improve plant efficiencies.
Cautionary Note to U.S. Investors
Paramount is subject to the reporting
requirements of the Securities Exchange Act of 1934 and this filing
and other U.S. reporting requirements are governed by Subpart 1300
of Regulation S-K promulgated by the SEC. Additionally, Paramount
is subject to certain reporting requirements under applicable
Canadian securities laws with respect to our material mineral
properties under National Instrument 43-101 Standards of Disclosure
for Mineral Projects (NI 43-101). We caution investors that certain
terms used under Canadian reporting requirements and definitions of
NI 43-101 to describe mineralization may not be classified as a
“reserve” unless the determination has been made that the
mineralization could be economically and legally produced or
extracted at the time the reserve determination is made. Therefore,
investors are cautioned not to assume that all or any part of the
mineralized material contained at any of our material projects will
ever be converted to Subpart 1300 of Regulation S-K compliant
reserves.
Safe Harbor for Forward-Looking Statements
This release and related documents may include
"forward-looking statements" and “forward-looking information”
(collectively, “forward-looking statements”) pursuant to applicable
United States and Canadian securities laws. Paramount’s future
expectations, beliefs, goals, plans or prospects constitute
forward-looking statements within the meaning of the United States
Private Securities Litigation Reform Act of 1995 and other
applicable securities laws. Words such as "believes," "plans,"
"anticipates," "expects," "estimates" and similar expressions are
intended to identify forward-looking statements, although these
words may not be present in all forward-looking statements.
Forward-looking statements included in this news release include,
without limitation, statements with respect to the use of proceeds
from the Offerings. Forward-looking statements are based on the
reasonable assumptions, estimates, analyses and opinions of
management made in light of its experience and its perception of
trends, current conditions and expected developments, as well as
other factors that management believes to be relevant and
reasonable in the circumstances at the date that such statements
are made, but which may prove to be incorrect. Management believes
that the assumptions and expectations reflected in such
forward-looking statements are reasonable. Assumptions have been
made regarding, among other things: the conclusions made in the
feasibility study for the Grassy Mountain Gold Project (the “FS”);
the quantity and grade of resources included in resource estimates;
the accuracy and achievability of projections included in the FS;
Paramount’s ability to carry on exploration and development
activities, including construction; the timely receipt of required
approvals and permits; the price of silver, gold and other metals;
prices for key mining supplies, including labor costs and
consumables, remaining consistent with current expectations; work
meeting expectations and being consistent with estimates and plant,
equipment and processes operating as anticipated. There are a
number of important factors that could cause actual results or
events to differ materially from those indicated by such
forward-looking statements, including, but not limited to:
uncertainties involving interpretation of drilling results;
environmental matters; the ability to obtain required permitting;
equipment breakdown or disruptions; additional financing
requirements; the completion of a definitive feasibility study for
the Grassy Mountain Gold Project; discrepancies between actual and
estimated mineral reserves and mineral resources, between actual
and estimated development and operating costs and between estimated
and actual production; the global epidemics, pandemics, or other
public health crises, including the novel coronavirus (COVID-19)
global health pandemic, and the spread of other viruses or
pathogens and the other factors described in Paramount’s
disclosures as filed with the SEC and the Ontario, British Columbia
and Alberta Securities Commissions.
Except as required by applicable law, Paramount
disclaims any intention or obligation to update any forward-looking
statements as a result of developments occurring after the date of
this document.
Paramount Gold Nevada Corp. Rachel
Goldman, Chief Executive OfficerChristos
Theodossiou, Director of Corporate
Communications844-488-2233Twitter:
@ParamountNV
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