Confirms near term production potential in
Post-Tax IRR 81%, NPV
The modifications provided include the addition of post-tax financial analysis (previously only pre-tax was reported) and the addition of an independent metallurgical qualified person review, which resulted in the previously assumed recoveries increasing from 70% to 75% with multi-phase crushing.
The Sandman Scoping Phase 2 Study has identified a stand-alone, low pre-production capital
The Scoping Phase 2 Study focused on mining gold mineralized material within optimized pit shells in two phases: Phase 1 mines all mineralized material within the pit shell above the water table and is dry (refer Phase 1 Study1), followed by Phase 2 which is focused on mineralized material below the water table and within the pit shell, and is wet, after completion of additional monitoring, permitting and dewatering efforts paid for by mine cashflow from Phase 1.
The Phase 1 and Phase 2 approach is designed to preserve initial pre-production capital during the Phase 1 mining process. The benefit of this two-phase approach is to enable further definition of the existing Mineral Resources, discover additional Mineral Resources, and enable sufficient time to conduct the below water table mine studies and permitting, all paid from the Phase 1 revenues. The proposed model has the potential to deliver strong organic growth with minimal initial dilution to existing shareholders.
Pre-Tax Results | Post-Tax Results (2) | |
IRR | 102% | 81% |
Cash Flow (Undiscounted) | ||
Cash Flow 6% Discount Rate | ||
Payback (Years) | 1.1 | 1.3 |
The Study highlights :
- Production rate average of 2.2 Mtpa for a 9-year operation
- 35,000-40,000 ounces of gold per annum produced from conventional heap leach, average 38,000 ounces per year
- At
US$1,800 /oz gold price:- IRR of 81% (post-tax)
- NPV 6%
US$121M (post-tax) - Payback period of 1.3 years (post-tax)
- Average grade 0.73g/t gold
- LOM low strip ratio of 2.2:1
- Phase 1 Initial pre-production Capital
$31.5M and Phase 2 Capital,US$19.7M paid by Phase 1 mining revenues. Total LOM capitalUS$51.3M , including pre-production working capitalUS$4.5M - LOM Operating cost of
US$20.85 per tonne (post tax) - All in Sustaining Cost (AISC) of
$1,337 (post-tax) per ounce
This Scoping Phase 2 Study focused on the efficient extraction of all mineralized material within an optimized pit shell in a sequence that facilitates effective use of initial pre-production capital and a more rapid mine commissioning. This Scoping Phase 2 Study is a Preliminary Economic Assessment PEA (PEA), under NI 43-101 requirements.
Gold Bull CEO,
Sandman provides Gold Bull with a low-cost and moderate mine life start-up with the opportunity to grow the asset via additional exploration using mine revenues. This is a practical approach to epithermal gold mining and has historically produced longer life assets.
In our Phase 1 PEA we only examined the oxide material located above the water table (5yrs), to enable a rapid timeline for mine commissioning and limited the initial pre-production capital. This Phase 2 scoping study focussed on extending the mine life from 5 years to 9 years while utilizing mine cashflow for Phase 2 development. The intent is to be mining, developing, and discovering additional ounces at the project utilizing mining cashflow and avoid shareholder dilution. Excellent exploration potential exists at Sandman and not all deposits are closed off.
Three gold resources at Sandman remain open, therefore this PEA is the most conservative base case done using only our pit constrained ounces at a gold price of
Economic analysis is provided in Table 1 and compares Pre-Tax and Post-Tax analysis.
Metric | Pre-Tax | Post-Tax | ||||
Economic Analysis | ||||||
Internal Rate of Return (IRR) | 102% | 81% | ||||
NPV @ 6% | USD | USD | ||||
Average Annual Cashflow | USD | USD | ||||
Undiscounted Cumulative Cashflow | USD | USD | ||||
Pay-Back Period | 1.1 | years | 1.3 | years | ||
Gold Price Assumption | per ounce | per ounce | ||||
All-in Sustaining Cost | per ounce | per ounce | ||||
Capital Costs | ||||||
Initial Capital | USD | USD | ||||
Working Capital (included in above) | USD | USD | ||||
LOM Sustaining Capital | USD | USD | ||||
Total LOM Capital | USD | USD | ||||
Contingency (Included in Total) | USD | USD | ||||
Operating Costs (Average LOM) | ||||||
Mining | per ore tonne | per ore tonne | ||||
Processing & Support | per ore tonne | per ore tonne | ||||
General & Administration (G&A) | per ore tonne | per ore tonne | ||||
Other Costs | per ore tonne | per ore tonne | ||||
Total Operating Cost | per ore tonne | per ore tonne | ||||
Production Data | ||||||
Life of Mine | 9 | years | 9 | years | ||
Annual Processing Rate | 2,157,667 | tonnes per annum | 2,157,667 | tonnes per annum | ||
Total Tonnes Processed | 19,419,000 | tonnes | 19,419,000 | tonnes | ||
0.73 | g/t Au | 0.73 | g/t Au | |||
Contained Gold | 455,000 | ounces | 455,000 | ounces | ||
Metallurgical Recovery | 75% | 75% | ||||
Average Annual Gold Production | 37,917 | ounces per annum | 37,917 | ounces per annum | ||
Total Gold Produced | 341,250 | ounces | 341,250 | ounces | ||
LOM Strip Ratio | 2.2 | : 1 | 2.2 | : 1 |
Table 1. Scoping Study economic analysis summary of
STUDY HIGHLIGHTS
The Study has demonstrated potential for positive financial metrics for the
This PEA Phase 2 Study investigated an expansion to the previously announced Phase 1 five-year mine plan of above water table mineralized material processed onsite via conventional Heap Leach processing AND includes the Phase 2 plan to mine the mineralized material below the water table after Phase 1 is finalized and after the necessary permitting and dewatering efforts have been completed. Gold Bull considers Sandman to be technically low risk, given the low strip ratio due to gold at surface and the majority of Mineral Resource classified as Indicated. Both Scoping Studies were completed to an overall +/- 30% accuracy using the key parameters and assumptions set out in Tables 1 and 2.
The calculations in this Phase 2 Study focus on the full project (prior Phase 1 plus this Phase 2) mining scenario. The Phase 1 mine scenario targeted low initial pre-production capital and near-term cash flow to then later fund Phase 2 below water table oxide mine dewatering studies and development. The strategy is to preserve initial pre-production cashflow and pay for future studies when producing revenue from the asset. The deferred work includes below water table permitting & dewatering, additional metallurgical optimization studies for product processing and infill resource to reserve drilling.
The Sandman Project Phase 2 Scoping Study includes Life of Mine (LOM) plan and reports a post-tax IRR of 81%, post-tax NPV6% of
The Project is based on 455,000 gold ounces contained within the pit shells, with a head grade of 0.73 g/t gold spread across four known gold deposits. The four gold resources (see Figure 3: North Hill,
Metric | Pre-Tax | Post-Tax | ||||
Economic Analysis | ||||||
Internal Rate of Return (IRR) | 102% | 81% | ||||
NPV @ 6% | USD | USD | ||||
Average Annual Cashflow | USD | USD | ||||
Undiscounted Cumulative Cashflow | USD | USD | ||||
Pay-Back Period | 1.1 | years | 1.3 | years | ||
Gold Price Assumption | per ounce | per ounce | ||||
All-in Sustaining Cost | per ounce | per ounce | ||||
Capital Costs | ||||||
USD | USD | |||||
Working Capital (included in above) | USD | USD | ||||
USD | USD | |||||
USD | USD | |||||
Contingency (Included in Total) | USD | USD | ||||
Operating Costs (Average LOM) | ||||||
Mining | per ore tonne | per ore tonne | ||||
Processing & Support | per ore tonne | per ore tonne | ||||
General & Administration (G&A) | per ore tonne | per ore tonne | ||||
Other Costs | per ore tonne | per ore tonne | ||||
Total Operating Cost | per ore tonne | per ore tonne | ||||
Production Data | ||||||
Life of Mine | 9 | years | 9 | years | ||
Annual Processing Rate | 2,157,667 | tonnes per annum | 2,157,667 | tonnes per annum | ||
Total Tonnes Processed | 19,419,000 | tonnes | 19,419,000 | tonnes | ||
0.73 | g/t Au | 0.73 | g/t Au | |||
Contained Gold | 455,000 | ounces | 455,000 | ounces | ||
Metallurgical Recovery | 75% | 75% | ||||
Average Annual Gold Production | 37,917 | ounces per annum | 37,917 | ounces per annum | ||
Total Gold Produced | 341,250 | ounces | 341,250 | ounces | ||
LOM Strip Ratio | 2.2 | : 1 | 2.2 | : 1 |
Table 2. Scoping Study economic analysis summary of
Figure 1.
Figure 2.
Figure 3. Sandman Scoping Study proposed mine design. This has not changed from the prior Phase 1 study.
EXECUTIVE SUMMARY
The mine proposal includes an onsite multi-stage crushing plant, which is mobile and will move progressively from each pit location, with separate dumps and two localized leach pads. The first leach pad will be constructed for North Hill and
Economics are based upon contract mining, crushing and heap leach as the main processing method. It is planned to load the gold onto activated carbon and then transport the loaded carbon to off-site stripping and refining plants for final gold doré recovery. A simplified mining schedule is anticipated to produce 35,000-40,000 ounces of gold per annum.
Given the North Hill and
Table 3. Sandman Project Scoping Study mine factors applied to the economic evaluation
Comments
- This scenario includes all material within an optimized pit shell
- Recoveries assumed at 75% for heap leaching. Opportunity exists to optimize recoveries after further metallurgical test work is completed
- Optimized pit shells were applied, not a refined pit design
- Future opportunity exists to increase mine production, as this schedule assumes dayshift-only mining to meet the planned material movement requirements
- Cashflow model includes a 1.2% Royalty
Capital Categories
- Contingency added to capital to cover unknown/unrecognized categories
- Working capital is sufficient to cover 2 months of operating costs
- Capital estimates are based on current quotes and/or information from previous projects (within the past two years) and inflated to 2023 levels
- Engineering Procurement Construction Management (EPCM)
- Earthworks – roads, stockpiles, and yard construction
- Crushing/stacking equipment, multi-stage crushing for 6-8Kt per day, cost estimate includes installation and commissioning, entire system to be mobile and follow mining from pit to pit
- Leach pad and ponds, 5-8Kt per day, cost estimate includes installation and commissioning. Initial pad built near North Hill and
Silica Ridge with a second pad built near Southeast Pediment andAbel Knoll in year 3. - Carbon columns, cost estimate includes installation and commissioning. One set of columns for the initial leach pad and second set to be constructed for the second leach pad
- Sustaining capital includes temporary construction facilities, construction services, supplies, quality control, survey support, construction equipment and safety
- Sample preparation conducted on site with off site gold analysis
- Infrastructure includes portable office, warehouse/parts storage, and a workshop
- Initial purchase or lease of water rights necessary to operate the mine
- Option to purchase additional surface rights included
Operational Categories
- Mining contractor mobilisation for 12-15 equipment units, office space and other resources.
- Contract mining comprises:
- Drilling
- Blasting
- In-pit loading
- Waste haulage to near-pit waste rock stockpile
- Product feed haulage to near-pit stockpile location (for feed to crusher)
- Loader feed into a portable (movable) crusher
- Loading of crushed material into trucks
- Truck haulage to heap leach pad
- Roads/dumps/stockpile maintenance
- Company shall maintain small workforce for project management, administration, SHE permitting-training-compliance, general labor, crushing/heap leach operations, supply chain etc.
- Contractor demobilization at the end of the project life
- Centralised location for diesel, gasoline, lubes, and oils
- Power Generation and Distribution with mobile generators for crushing, pumping and other infrastructure requirements, includes a back-up generator, power poles, transformers for on-site distribution
- Further studies for alternative power solutions are needed as this scenario uses diesel generators
- Water supply and distribution, water well construction and extraction, pumping and piping to supply water for the project. Water usage 3,900 gallons per minute with make-up water consumption rate of 285 gallons per minute
- Additional environmental and hydrogeological baseline studies are required
- Initial purchase or lease of water rights necessary to operate the mine
- Indirect owners’ costs include temporary construction facilities, construction services, supplies, quality control, survey support, construction equipment, safety etc.
Operating Costs
An operating cost estimate has been calculated at
Functional Area | Post-tax Cost per Tonne Processed (US$) | |
Mining | ||
Processing | ||
G&A | ||
Other Costs (Royalty, Taxes, etc.) | ||
Total Site Operating Cost1 | $20.85 |
Table 4.
Basis for Economic calculations (tonnage/grades)
The Company announced its Mineral Resource Estimate on
- Indicated Mineral Resource of 18,550kt @ 0.73g/t gold for 433kozs of gold
- Inferred Mineral Resource of 3,246kt @ 0.58g/t gold for 61kozs of gold
The Scoping Studies are preliminary in nature, include a small amount of 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 Scoping Studies will be realized.
A further grade model was created for the Phase 2 Scoping Study to include the 2021 and 2022 drill results and estimate an above water table tonnage and grade model. This was applied to the Scoping Phase 2 Study pit optimization work and the resulting tonnes and grade used In the Phase 2 Study are summarised in Table 5. The water table surface was conservatively defined by first intercept of water in the exploration drill holes. Detailed hydrogeological studies accurately defining the water table are yet to be conducted and will be included in future Studies.
Table 5. Scoping Study tonnes and grade depicting 455K oz contained gold within the pit optimisation
Mining Methods
Pre-production stripping is expected to be minimal as mineralized material is located at or near surface on hill tops where mining is anticipated to begin at the North Hill and
Open pit mining is currently envisaged to be by diesel-powered equipment, utilizing a combination of one rotary blasthole rig drilling blastholes, one 8m3 front-end loader (or similar size excavator), and five to six, 70-tonne capacity trucks to handle mineralized material and waste. The mining fleet has sufficient capacity to move up to approximately 6.0Mtpa of total material on a dayshift-only schedule. Support equipment comprising a grader, track dozer(s) and water truck will aid in the mining. Mineralized material will be hauled to the crushing area for stockpiling before being rehandled later for primary crushing. Initially, waste rock will be stored in the waste rock dumps close to the pit to reduce haulage costs. As space and design allows, waste will be backfilled into the pit to reduce haulage costs and surface disturbance.
Haul roads are contemplated to be 9-10m widths for one-way traffic and 18-20m widths for two-way traffic. The final location of the ramps is expected to be optimized to reduce the overall pit slopes and to aid in efficient haulage to various stockpile locations. The pit is considered dry in Phase 1 and wet in Phase 2.
The mine plan was designed to deliver ~2.2Mt of mineralized material per year to the processing facility. The mine plan was based on efficient extraction of mineralized material above the water table in Phase 1 and started at the North Hill deposit (predicted higher-grade and low strip ratio) and then working the deposits in a southerly direction without regard to majority Indicated, and minority Inferred, Mineral Resource categories. Phase 2 mining will continue below the water table also starting at North Hill and working in a southerly direction towards
The total estimated mining workforce is 55-60 people, comprising a team of 22 Gold Bull personnel and 30-35 mining contractors (20 production operators, 8 maintenance techs, 5 supervisory staff).
Period | Mineralized Material | Gold Grade | Contained Gold | Total Waste | Total Material | Strip Ratio |
tonnes | g/t | ounces | tonnes | tonnes | w:o | |
Year 1 | 1,633,000 | 0.82 | 42,857 | 3,120,000 | 4,753,000 | 1.9 |
Year 2 | 2,306,000 | 0.77 | 57,143 | 3,833,000 | 6,139,000 | 1.7 |
Year 3 | 2,685,000 | 0.66 | 57,143 | 2,799,000 | 5,484,000 | 1.0 |
Year 4 | 2,247,000 | 0.79 | 57,143 | 3,077,000 | 5,324,000 | 1.4 |
Year 5 | 2,844,000 | 0.57 | 51,714 | 5,371,000 | 8,215,000 | 1.9 |
Year 6 | 3,195,000 | 0.56 | 57,143 | 7,564,000 | 10,759,000 | 2.4 |
Year 7 | 2,042,000 | 0.87 | 57,143 | 7,678,000 | 9,720,000 | 3.8 |
Year 8 | 1,887,000 | 0.94 | 57,143 | 6,608,000 | 8,495,000 | 3.5 |
Year 9 | 580,000 | 0.94 | 17,571 | 2,031,000 | 2,611,000 | 3.5 |
Totals | 19,419,000 | 0.73 | 455,000 | 42,081,000 | 61,500,000 | 2.2 |
Table 6.
Recovery Methods
Precious metal recovery from this Scoping Phase 2 Study is through conventional heap leaching and adsorption, desorption, regeneration (ADR) technology for metal extraction from crushed product using industry standard equipment. Processing will involve mineralized material passing through multiple stages of crushing, which will allow for haulage transport and end-dump stacking of the mineralized material onto a heap leach pad. The processing facilities accommodate a leachable tonnage of approximately 19.4Mt of product at a gold grade of 0.73g/t and a process rate of 5,900tpd or 2.2Mtpa. The heap leach pad facilities have been located and designed with expandability for a LOM production increase.
Mineralized material will be delivered to the crushing plant from the open pit and placed in the stockpile adjacent to the crushing plant. The mineralized material will be fed to the crushing plant using a front-end loader and will be crushed and then transported to the heap leach pad via haul trucks. The mineralized material will be stacked onto the heap using industry standard end-dumping and dozer pushing and then leached with a weak cyanide solution to extract the precious metal values. The gold will then be recovered from the pregnant solution in the carbon columns by adsorbing the dissolved gold onto activated carbon, which will be bagged and transported off-site to an external facility to extract gold from the loaded carbon. The stripped carbon will be returned from the external treatment facility to site for continuous reuse in the process plant. The doré will be sent to a contract refiner for final refining.
Mineral Processing
Historical metallurgical test work has been completed over several stages, predominantly from the
Historically, relatively extensive bottle roll leach programs were conducted while only limited column leach tests were completed for three of the four deposits. Further test work is required to adequately determine the optimal processing circuit and resulting gold recoveries for the gold mineralization at Sandman. At this stage it is considered likely that a conventional three-stage crush followed by heap leach processing could achieve gold recoveries of 75%. Additional work is required to confirm the crush size and gold recoveries from heap leaching.
Sensitivity Analysis
High level sensitivity analysis of the
Figure 4. Sandman sensitivity analysis evaluating gold price, capital costs and operating costs both Pre-Tax and Post-Tax analysis.
Figure 5. Sandman sensitivity analysis is most sensitive to the gold price
Table 7. Gold price impact on Post-Tax NPV 6% and IRR.
Table 8.
NEXT STEPS
Further drilling and metallurgical, geotechnical and hydrogeological studies are required for inclusion in a Preliminary Feasibility Study and for use in mine permitting.
Baseline hydrogeological, cultural, and biological surveys have previously been conducted at Sandman, however, may need to be updated for mine permitting. Additional technical and design optimization studies will also be required for inclusion in a Preliminary Feasibility Study. Infill resource and reserve drilling is required ahead of the mine schedule.
Optional additional exploration is warranted and recommended to expand the current mineral resource base.
CAUTIONARY STATEMENT
This Scoping Study is a preliminary technical and economic study investigating the potential viability of commissioning and running a gold mine at the
The Scoping Study in this announcement is based on technical and economic assumptions and assessments which could be further refined and evaluated in a preliminary feasibility study. If the Company were to attempt to bring the
The Scoping Study is based on material assumptions outlined in this announcement. These include assumptions about the availability of funding and other parameters. While the Company considers all the material assumptions are based on reasonable grounds, there is no certainty they will prove to be correct or that the range of outcomes indicated in this Scoping Study announcement can be achieved or realised. There are no assurances that the
To achieve the potential mine development outcomes indicated in the Phase 1 and Phase 2 Scoping Study, significant funding is required as well as further drilling and metallurgical, hydrogeological, and environmental assessments and permits received prior to confirming mining can take place. The Study has focussed only on Phase 1 initial oxide mining of mineralized material above the water table, then Phase 2 mining of material below the water table, using conventional heap leach processing. Investors should note there is no certainty that the Company will be able to raise the required funding when needed, however the Company has concluded that it has a reasonable basis for providing the forward-looking statements included in this announcement and believes that it has a “reasonable basis” to expect it will be able to fund the gold development project upon receiving satisfactory and favourable results for further metallurgical, hydrogeological and environmental studies and permits enabling economic ore extraction. Further studies are required to confirm the proposed mine scenario and confirm assumptions made in this Scoping Study.
It is also possible that such funding may only be available on terms that may be dilutive, or otherwise affect the value of the Company’s existing shares. It is also possible that the Company could pursue other strategies to provide alternative funding options including project finance.
Given the uncertainties involved for the metallurgical, hydrogeological and environmental assessments and permits, investors should not make any investment decision based solely on the results of the Scoping Studies and assume a mine will be developed, however every effort will be made by the Company to progress towards mine development.
ABOUT SANDMAN
In
QUALIFIED PERSON
The technical information in this news release has been reviewed and approved by Mr.
Mr.
Mr.
ABOUT
Gold Bull’s mission is to grow into a US focused mid-tier gold development Company via rapidly discovering, developing and acquiring additional ounces. The Company’s exploration hub is based in
Gold Bull’s core asset is the
Gold Bull is driven by its core values and purpose which includes a commitment to safety, communication & transparency, environmental responsibility, community, and integrity.
President and CEO,
For further information regarding
Cautionary Note Regarding Forward-Looking Statements
Neither the
This news release contains certain statements that may be deemed “forward-looking statements” with respect to the Company within the meaning of applicable securities laws. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”, “projects”, “potential”, “indicates”, “opportunity”, “possible” and similar expressions, or that events or conditions “will”, “would”, “may”, “could” or “should” occur. Although Gold Bull believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance, are subject to risks and uncertainties, and actual results or realities may differ materially from those in the forward-looking statements. Such material risks and uncertainties include, but are not limited to, the Company’s ability to raise sufficient capital to fund its planned activities at the
_________________
1 announced
2 applied Federal Income Tax, NV Excise Tax, Net Proceeds Tax
3 Note both Southeast Pediment and
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Figure 1
Sandman Project location map of Northern Nevada relative to the surrounding operating gold mines and mineral resources. Reference to the nearby projects is for information purposes only and there are no assurances the Company will achieve the same results.
Figure 2
Sandman Project location relative to infrastructure and nearby regional mine servicing town of Winnemucca, Nevada . The project is located on Jungo Road 20 -30 kms from Winnemucca .
Figure 3
Sandman Scoping Study proposed mine design. This has not changed from the prior Phase 1 study.
Table 3
Sandman Project Scoping Study mine factors applied to the economic evaluation
Table 5
Scoping Study tonnes and grade depicting 455K oz contained gold within the pit optimisation
Figure 4
Sandman sensitivity analysis evaluating gold price, capital costs and operating costs both Pre-Tax and Post-Tax analysis.
Figure 5
Sandman sensitivity analysis is most sensitive to the gold price
Table 7
Gold price impact on Post-Tax NPV 6% and IRR.
Table 8
January 2021 NI 43-101 Sandman Gold Resource Estimate. Full report available: Sandman-NI-43-101_2021-01-20.pdf (goldbull.ca) Please note that the Sandman 2021 NI 43-101 Resource Estimate does not include drilling conducted by Gold Bull in 2021 and 2022.
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