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Mirado South Zone Open Pit PEA
In January 2018, Orefinders announced the results of its Preliminary Economic Assessment for the South Zone Open Pit part of the Mirado Gold Mine located to the southeast of Kirkland Lake, Ontario. Further details available on our news release of January 15, 2018.
This PEA considers only production from a specific area which encompasses approximately five percent of Orefinders’ Mirado Project. The Mineral Resource contemplated within this PEA for mining is within the South Zone’s open pit, and is near surface mineralization which can be economically mined within a relatively short time frame and without the use of an on-site processing or tailings facility. The Company intends to use the free cash flow from this operation to develop what it sees as the true upside potential on the broader Mirado Project as well as other assets it owns.
This PEA’s economics indicate an after-tax internal rate of return (“IRR”) for the project of 158% and a pre-tax undiscounted Net Present Value (“NPV”) of $30.8 million and a $20.5 million after-tax NPV at a 5% discount rate. Payback on capital is reported at 7 months. Average gold price used is US$1,300 per ounce and an exchange rate of 1.00 USD =0.76 CAD.
The initial preproduction expenditure is estimated at $2.4 million to achieve first production from the open pit. The project life is three years, after approximately six months of open pit pre-stripping. The Life of Mine (“LOM”) cash operating cost is US$941 per ounce of gold, and the LOM all-in sustaining cost is US$969 per ounce of gold.
The Project is considered economically viable with the current Mineral Resource Estimate of 559,000 tonnes at an average grade of 2.61 g/t gold for 46,900 ounces of Indicated Mineral Resource and additional Inferred Mineral Resource of 382,000 tonnes at an average grade of 2.66 g/t gold for 32,700 ounces, based on a cut-off grade of 1.0 g/t gold.
An Environmental Baseline Study (EBS) is currently underway (see news release dated September 17th, 2013), under the management of Story Environmental Inc. Surface and ground water testing/monitoring and benthic sampling has begun on the property. A weather station has also been installed on site as well as an air quality monitoring station.
Location and Land
The Mirado gold project is located 35 km southeast of the gold mining Town of Kirkland Lake in northeastern Ontario. The entire Mirado property encompasses 5,800 acres. The focus of the Mirado Gold Project consists of 12 contiguous patented claims, with surface and mining rights, owned 100% by Orefinders.
Surrounding the core patented claims, Orefinders has optioned and/or staked 37 additional contiguous claims covering approximately 10 km of prospective strike length. This includes Orefinders 100% owned MZ property which forms the western extension of the Mirado Mine’s in pit resource.
The Mirado gold project is situated within the Abitibi Gold District which has historically produced more than 200 million ounces of gold over the past century, with more than 100 million ounces of gold in current reserves. The prolific Kirkland Lake mining camp is located in eastern Ontario close to the Quebec border and has historically produced 50 million ounces of gold. Much of the historical Kirkland Lake gold production has taken place along or near a major regional geological fault structure known as the Larder Lake-Cadillac Fault (LLCF).
A regional geological map indicates the location of the Mirado property in relation to all of the major gold deposits located along or near the LLCF. Mirado property is favorably located near the top of an Achaean intermediate to felsic, fragmental calc-alkaline volcanic sequence known as the Skead Assemblage. Gold mineralization is structurally controlled and has been identified along NW-SE trending shear zones. North-South brittle structures have also been recognized on the property as being favourable for gold mineralization. A regional northwest trending fault defines the upper contact of the Skead Assemblage with ultramafic to mafic metavolcanic rocks of the McElroy Assemblage. This faulted contact is situated on the northern half of the property.
3D Interpretation of Mirado Orebody
3D Fly-By Video of Mirado Orebody
Mirado Exploration Potential
Numerous other zones of interest beyond scope of PEA:
North Zone (MNZ): high priority drill target situated in a very favourable geological environment where a sizeable gold and polymetallic deposit can be developed.
South Zone at Depth (MSZD) and MZ Zone: High value drill targets identified from trenching at MZ (21.8 g/t Gold over 4.80 metres).
Gold Hill: grab sampling identified vein system at surface—100m along strike and returned up to 26.8 g/t Gold; veins are open at depth and along strike.
Bank: New discovery on surface with narrow high-grade polymetallic vein traced for over 30 metres in length, averaging 4.8 g/t Gold up to 80 cm wide.
Charest Syenite and Nipissing Shear Zone: intrusion with gold-rich quartz veins—grab samples returned 14.8 g/t, 10.6 g/t and 1.98 g/t Gold; syenite intrusive bodies are well known in the Abitibi to host large gold deposits. Nipissing shear contact is highly deformed, altered and mineralized over 6km strike.
History of Mirado
Gold on the Mirado Gold Property was first discovered in the early 1920’s and later mined by underground methods to a depth of 500′ in the 1940’s. Since then several exploration programs, diamond drilling campaigns, and underground and open pit mining activities have taken place. Over 40,000m of drilling completed by several companies including Mirado Nickel Mines, Broulan Reef, Amax Minerals Exploration, and Golden Shield Resources Inc (Golden Shield). The previous work can be reviewed in historic reports available on the Ontario government website, which includes an environmental base line study, bulk sampling, stockpiling of open pit and underground material and metallurgical test-work programs. Dynatec Mining Ltd. was contracted by Golden Shield in 1986 for underground and open pit operations. Much of the Mirado south zone was pre-stripped and an open pit was mined to a depth of 30m. The material removed from the pit was stockpiles on the Mirado property where is remains today.
Metallurgical test-work was undertaken under the supervision of A. S. Hayden of EH Associates in 1986. Settling and filtration tests were conducted and test slurries were prepared by Lakefield Research. A study of three alternative metallurgical processes was undertaken, including (1) selective flotation with cyanidation of concentrate; (2) direct cyanidation of ore with Merrill- Crowe recovery; and (3) direct cyanidation of ore, with carbon in pulp gold recovery. Gold recoveries up to 95% were realized. In addition to amalgamation and flotation test-work metallurgical recovery studies, ore microscopy and mineralogical studies were completed, and the Bond Work Index was determined to be favorable due to the general lack of quartz veins in the Mirado gold mineralization.
First Nations communication is important to Orefinders with regard to the future development of the Mirado Property.