A Preliminary Economic Assessment (“PEA”) was prepared on September 7, 2022 on Moneta Gold’s 100% owned Tower Gold project located in Timmins, Ontario by Ausenco Engineering Canada Inc. This project is one of the largest undeveloped gold projects in Canada hosting 4.46 million ounces indicated gold and 8.29 million ounces inferred gold.
The independent study produced the following results:
HIGHLIGHTS OF THE PEA
(All figures are stated in Canadian dollars unless otherwise stated)
- Low capital intensity project, with initial capital ("CAPEX") of $517 million for a 7.0 million tonne per annum (“tpa”) processing plant including mine preproduction, infrastructure (roads, power line and substation, tailings storage facility, ancillary buildings, and site water management structures) and $886 million sustaining capital
- After-tax pay-back of 2.6 years and profitability index (NPV/initial capital) of 2.1
- Robust economics with $1,459 million pre-tax Net Present Value at a 5% discount rate (“NPV5%”), $1,066 million after-tax, and 38.9% pre-tax Internal Rate of Return (“IRR”), 31.7% after-tax; at US$1,600/oz gold and exchange rate of US$0.78/C$
- Highly leveraged to the gold price with after-tax NPV5% of $1,339 million, 37.8% IRR, and 2.2-year payback at spot US$1,700 per ounce gold
- $1,932 million cumulative after-tax cash flow over the life of mine (“LOM”)
- Mine life of 24 years, with average annual gold production of 261,014 oz in years 1 to 11 (192,666 oz for LOM) for 4,581,000 ounces total gold production LOM
- Peak annual gold production of 368,622 ounces
- Average mill head gold grade of 1.28 grams per tonne (“g/t”) gold (“Au”) in years 1 to 11 (0.94 g/t Au for LOM)
- Average mill recovery of 91.3% LOM
- Cash cost of US$910 per ounce and all-in sustaining cost (“AISC”) of US$1,073 per ounce gold
- Opportunities to increase production and expand and improve economics of resources
Table 1: Summary of Projects Economics
| General |
Unit |
LOM Total / Avg. |
| Gold price assumption |
per ounce |
US$1,600 |
| Exchange rate |
($US: $CAD) |
0.78 |
| Mine life |
years |
24 |
| Total waste |
million tonnes |
495 |
| Total overburden |
million tonnes |
237 |
| Total mill feed |
million tonnes |
166 |
| Strip ratio (total) |
waste: mined resource |
4.63 |
| Strip ratio (without overburden) |
waste: mined resource |
3.13 |
| Economics (pre-tax) |
| Net present value (NPV 5%) |
millions |
$1,459 |
| Internal rate of return (IRR) |
% |
38.9% |
| Payback |
years |
2.2 |
| LOM avg. annual cash flow |
millions |
$132 |
| LOM cumulative cash flow |
millions |
$2,579 |
| Economics (after-tax) |
| Net present value (NPV 5%) |
millions |
$1,066 |
| Internal rate of return (IRR) |
% |
31.7% |
| Payback |
years |
2.6 |
| LOM avg. annual cash flow |
millions |
$105 |
| LOM cumulative cash flow |
millions |
$1,932 |
| Profitability index (NPV/initial capital) |
ratio |
2.1 |
| Peak investment |
millions |
$517 |
| Production |
| Mill head grade |
g/t Au |
0.94 |
| Mill head grade (years 1 - 11) |
g/t Au |
1.28 |
| Mill recovery rate (average LOM) |
% |
91.3% |
| Average annual mining rate |
tpd |
19,178 |
| Average annual gold production |
ounces |
192,666 |
| Average annual gold production (years 1 - 11) |
ounces |
261,014 |
| Peak gold production (year 6) |
ounces |
368,622 |
| Total LOM recovered gold |
thousand ounces |
4,581 |
| Operating Costs |
| Mining + Reclaim cost |
$/t mined |
$3.7 |
| Mining + Reclaim cost |
$/t milled |
$20.8 |
| Processing cost |
$/t milled |
$10.1 |
| G&A cost |
$/t milled |
$0.9 |
| Total operating costs |
$/t milled |
$31.8 |
| Refining & transport cost |
$/oz |
$4.7 |
| Royalty NSR (Garrison deposits) |
% |
1.5% |
| Cash costs* |
US$/oz |
$910 |
| AISC** |
US$/oz |
$1,073 |
| Capital Costs |
| Initial capital |
millions |
$517 |
| Sustaining capital |
millions |
$886 |
| Closure costs |
millions |
$78 |
| Salvage value |
millions |
$10 |
Notes
* Cash costs consist of mining costs, processing costs, general & administrative expenses and refining charges and royalties.
** AISC includes cash costs plus sustaining capital, closure cost and salvage value.
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.
SENSITIVITIES
A sensitivity analysis was conducted on the base case pre-tax and after-Tax NPV and IRR of the Project, using the following variables: metal price, initial capex, total operating costs, and foreign exchange. Table 2 summarizes the after-tax sensitivity analysis results at various gold price assumptions.
Table 2: After-Tax Sensitivity Summary
| Gold Price |
$1,350 |
$1,500 |
$1,600 |
$1,700 |
$1,950 |
| (US$/oz) |
|
|
(Base Case) |
|
|
| After-tax NPV(5%), millions |
$385 |
$794 |
$1,066 |
$1,339 |
$2,019 |
| IRR |
15.8% |
25.6% |
31.7% |
37.8% |
52.0% |
| Profitability index |
0.7x |
1.5x |
2.1x |
2.6x |
3.9x |
| Payback (years) |
5.4 |
4.1 |
2.6 |
2.2 |
1.6 |
As shown in Table 3 and Table 4, the sensitivity analysis revealed that the project is most sensitive to changes in gold prices, and foreign exchange and less sensitive to initial capex and operating costs.
Table 3: After-Tax NPV5% Sensitivity
| Gold Price |
After-Tax NPV(5%) |
Initial CAPEX |
Total OPEX |
FX |
| (US$/oz) |
(Base Case) |
(-10%) |
(+10%) |
(-10%) |
(+10%) |
(-10%) |
(+10%) |
| $1,350 |
$385 |
$425 |
$344 |
$623 |
$145 |
$794 |
$48 |
| $1,500 |
$794 |
$833 |
$754 |
$1,032 |
$555 |
$1,248 |
$422 |
| $1,600 |
$1,066 |
$1,106 |
$1,026 |
$1,304 |
$828 |
$1,550 |
$670 |
| $1,700 |
$1,339 |
$1,378 |
$1,299 |
$1,577 |
$1,101 |
$1,853 |
$917 |
| $1,950 |
$2,019 |
$2,059 |
$1,980 |
$2,257 |
$1,781 |
$2,609 |
$1,537 |
| $2,100 |
$2,427 |
$2,467 |
$2,388 |
$2,665 |
$2,189 |
$3,062 |
$1,908 |
Table 4: After-Tax IRR Summary
| Gold Price |
After-Tax IRR |
Initial CAPEX |
Total OPEX |
FX |
| (US$/oz) |
(Base Case) |
(-10%) |
(+10%) |
(-10%) |
(+10%) |
(-10%) |
(+10%) |
| $1,350 |
15.8% |
18.2% |
13.9% |
21.1% |
9.6% |
25.6% |
6.5% |
| $1,500 |
25.6% |
28.9% |
22.9% |
30.3% |
20.5% |
35.8% |
16.8% |
| $1,600 |
31.7% |
35.8% |
28.5% |
36.3% |
27.0% |
42.3% |
22.7% |
| $1,700 |
37.8% |
42.3% |
34.0% |
42.1% |
33.2% |
48.6% |
28.4% |
| $1,950 |
52.0% |
58.0% |
47.1% |
56.0% |
47.9% |
63.9% |
42.0% |
| $2,100 |
60.3% |
67.1% |
54.7% |
64.1% |
56.3% |
72.9% |
49.7% |
Table 5: Mining & Processing Inputs
| Mining & Processing Inputs |
| Mine life - Total |
years |
24 |
| Mining Rate |
|
|
| Open pit* |
tpd |
18,228 |
| Underground** |
tpd |
2,466 |
| Open pit |
|
|
| Total mill feed |
million tonnes |
158.2 |
| Gold grade (diluted) (years 1 - 11) |
g/t |
1.03 |
| Gold grade (diluted) (LOM) |
g/t |
0.81 |
| Total waste |
million tonnes |
495.3 |
| Total overburden |
Million tonnes |
237.2 |
| Total material mined |
million tonnes |
890.7 |
| Strip ratio (total) |
waste: mined resource |
4.63 |
| Strip ratio (without overburden) |
waste: mined resource |
3.13 |
| Underground |
|
|
| Total mill feed |
million tonnes |
8.2 |
| Gold grade (diluted) |
g/t |
3.42 |
| Processing |
|
|
| Feed rate |
tpd |
19,178 |
| Total tonnes processed |
million tonnes |
166.4 |
| Mill head gold grade |
g/t |
0.94 |
| LOM gold recovery |
% |
91.3% |
Notes
* Mineralized material average LOM mining rate
** Mineralized material average peak mining rate
Gold Production Profile
Mine Development Plan – Years 1-11
|
Total |
Total |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
Year 6 |
Year 7 |
Year 8 |
Year 9 |
Year 10 |
Year 11 |
| Tower Gold |
Mill feed (kt) |
77,000 |
7,000 |
7,000 |
7,000 |
7,000 |
7,000 |
7,000 |
7,000 |
7,000 |
7,000 |
7,000 |
7,000 |
| Head grade (g/t Au) |
1.28 |
1.25 |
1.37 |
1.29 |
1.13 |
1.39 |
1.79 |
0.89 |
1.09 |
1.30 |
1.39 |
1.16 |
| Contained gold (koz) |
3,158 |
281 |
309 |
291 |
254 |
312 |
402 |
199 |
245 |
292 |
312 |
261 |
| Recovery (%) |
91.0% |
91.9% |
90.2% |
93.1% |
90.3% |
83.4% |
91.7% |
90.8% |
91.8% |
92.3% |
92.7% |
92.3% |
| Recovered gold (koz) |
2,871 |
258 |
279 |
271 |
230 |
260 |
369 |
181 |
225 |
269 |
289 |
241 |
| Garrison (open pit) |
Mill feed (kt) |
35,508 |
6,956 |
6,600 |
6,100 |
6,100 |
6,082 |
28 |
3,643 |
0 |
0 |
0 |
0 |
| Head grade (g/t Au) |
1.01 |
1.24 |
1.27 |
0.97 |
0.79 |
1.11 |
0.37 |
0.37 |
0.00 |
0.00 |
0.00 |
0.00 |
| Contained gold (koz) |
1,153 |
277 |
270 |
191 |
155 |
217 |
0 |
44 |
0 |
0 |
0 |
0 |
| Recovery (%) |
89.1% |
91.1% |
89.9% |
93.9% |
89.5% |
79.8% |
89.0% |
89.0% |
0.0% |
0.0% |
0.0% |
0.0% |
| Recovered gold (koz) |
1,027 |
254 |
243 |
179 |
138 |
173 |
0 |
39 |
0 |
0 |
0 |
0 |
| Golden Highway (open pit) |
Mill feed (kt) |
33,461 |
0 |
0 |
0 |
0 |
18 |
6,072 |
2,457 |
6,100 |
6,100 |
6,276 |
6,438 |
| Head grade (g/t Au) |
1.05 |
0.00 |
0.00 |
0.00 |
0.00 |
0.89 |
1.55 |
0.81 |
0.78 |
0.98 |
1.10 |
0.92 |
| Contained gold (koz) |
1,127 |
0 |
0 |
0 |
0 |
1 |
303 |
64 |
153 |
193 |
222 |
191 |
| Recovery (%) |
92.3% |
0.0% |
0.0% |
0.0% |
0.0% |
91.8% |
91.7% |
90.9% |
91.8% |
92.7% |
93.1% |
92.5% |
| Recovered gold (koz) |
1,040 |
0 |
0 |
0 |
0 |
0 |
278 |
59 |
140 |
179 |
207 |
177 |
| Golden Highway (underground) |
Mill feed (kt) |
8,031 |
44 |
400 |
900 |
900 |
900 |
900 |
900 |
900 |
900 |
724 |
562 |
| Head grade (g/t Au) |
3.40 |
2.84 |
3.01 |
3.45 |
3.44 |
3.27 |
3.41 |
3.16 |
3.19 |
3.41 |
3.85 |
3.89 |
| Contained gold (koz) |
877 |
4 |
39 |
100 |
99 |
95 |
99 |
92 |
92 |
99 |
90 |
70 |
| Recovery (%) |
91.6% |
91.7% |
91.7% |
91.6% |
91.6% |
91.6% |
91.6% |
91.6% |
91.6% |
91.6% |
91.7% |
91.8% |
| Recovered gold (koz) |
804 |
4 |
35 |
91 |
91 |
87 |
90 |
84 |
84 |
90 |
82 |
65 |
OPPORTUNITIES
The PEA outlined several initiatives that may enhance the Project including:
- Expansion of resources through exploration drilling of additional targets within the remaining 8 km of untested strike length along the Destor-Porcupine Fault Zone corridor
- Expansion of resources from new exploration targets outside of Tower Gold project area
- Expansion of underground resources through additional exploration drilling, notably at Westaway and Garrcon. Currently 12 years of underground mining are proposed
- Increase in production rates from underground to increase mill feed grades
- Review the potential for larger scale bulk tonnage underground mining
- Review the potential to expand of the processing plant to increase through-put
- Infill drilling of open pits to convert waste to resources, notably at 903, Westaway, South West and Windjammer
- Additional cyanidation test-work is recommended for the deposits with the objective of further optimizing process grind size and ideal leaching conditions to minimize capital and operating costs
- Test-work relating to gravity concentration is recommended to more accurately determine the presence of free gold across the deposits and estimate gravity concentration recovery as a function of the mine plan
- Hardness characteristics of the Tower Gold material were conservatively assumed for the purposes of this PEA. Comminution test-work should be performed to verify the assumptions made regarding the rock breakage parameters, which may demonstrate cost reduction opportunities
- Optimization of plant and overall site layouts to further reduce site operational footprint.
NEXT STEPS
The results of the PEA indicate that the proposed Project has the potential to be technically and economically viable using the base case assumptions presented in the tables above. The study also shows several opportunities for project enhancement. The Qualified Persons (“QPs”) consider the PEA results sufficiently reliable and recommend that the Tower Gold project be advanced to the next stage of development through the initiation of a pre-feasibility study (“PFS”). An Environmental Impact Study should be conducted for the Project, while continuing to explore the geological potential of the property. Following the release of this PEA, Moneta will complete the necessary bridging work to commence a pre-feasibility study.
For additional information see the Company’s September 7, 2022 press release here: https://www.monetagold.com/news/press-releases/default.aspx