The Elder mine and Tagami Property is conveniently located 10 kilometres northwest of the mining community of Rouyn-Noranda, Quebec, and is 100% owned by Abcourt. The Property comprises 36 contiguous claims, a mining concession and two mining leases. There are royalties of 2% to 3% NSR payable on different parts of the Property.
The surface plant includes an office, a service building, a hoist room and a shaft building. The mine is serviced to a depth of 794 meters (2,606 feet) by two shafts and several drifts on 16 levels. All mining equipment and required facilities are in place.
Between 1984 and 1989, a total of $23 M was spent on this property by the Aunore Resources Inc – Nova Beaucage Mines Limited joint venture. The surface plant was installed and the necessary equipments were purchased. The mine was dewatered, 4,268 meters (14,000 feet) of old drifts were rehabilitated, the shaft was deepened 15 meters (50 feet), new stations were established on three upper levels, in no 2 shaft, that is the 4th, 5th and 6th levels, an ore pass and a waste pass system with loading pockets was established, 142 surface and 75 underground diamond drill holes were drilled, approximately 2,134 meters (7,000 feet) of new drifts were excavated, ventilation raises were driven and a few stopes were started. Approximately 13,200 metric tonnes of ore with a grade of 0.198 oz/mt of gold were extracted. Following a drop in the price of gold, the mine was closed and almost all mining equipment was sold, except important pieces of equipment like the hoist, compressors and the electrical distribution system.
From 1995 to 2013, several surface drilling programs were completed and results obtained were used to revise the 43-101 resources. The revision of resources was completed by Mr. Jean-Pierre Bérubé, P. Eng. Mr. Bérubé is a Qualified Person under Regulation 43-101. Based on these resources, a preliminary economic assessment report (PEA) was prepared to determine if additional exploration work was needed to increase resources before considering mine development before production. The PEA prepared by Roche Ltd., Consulting Group (Roche) and independent consultants indicated that enough resources were available to continue with our exploration and valuation work.
Commercial operations at the Elder mine started in January 2016. For results obtained since the start of commercial operations, please refer to the Company’s management’s discussion and analysis and financial reports filed on SEDAR and available on the Investors Relations section.
On October 31, 2018, Abcourt filed on SEDAR an update report of resources on the Elder mine and Tagami Property prepared by Mr. Jean-Pierre Bérubé according to Regulation 43-101.
Cross-section of the Elder mine.
At the Elder mine, the No. 1 vein is the main vein. It extends over a strike distance of about 650 meters, from surface to the bottom of the mine. The dip is 22o to the South. It is accompanied by vein #3 and #6 with the same strike and dip. There are also veins No.2 and No.2A, from the 4th level to surface, with the same strike and a dip of 40o S and vein No.4 with a North-South direction and a dip of 22o to the East. See the cross-section above.
Vein #7 is indicated in one hole with marginal values. Additional drilling will be done to assess the economic potential of this structure.
Table of Resources and Parameters Used
As of May 31, 2018, mineral resources in the measured and indicated categories were as follows:
|CATEGORIES||MEASURED||INDICATED||MEASURED + INDICATED||GOLD|
|(metric)||(g/t Au)||(metric)||(g/t Au)||(metric)||(g/t Au)||(Oz)|
The total measured and indicated resources for Elder and Tagami is 638,083 tonnes with a grade of 6,38 g/t.
In addition, the inferred resources total 547,746 tonnes with a grade of 5.48 g/t Au.
The technical parameters used for the calculation of the measured and indicated resources and the inferred resources were:
- Density: 2.70 t/m3, minimum thickness: 1.8 m
- Lower cutting grade = 3.45 g/t Au
- Higher cutting grade = 31.1 g/t Au
UPDATE OF PRELIMINARY ECONOMIC ANALYSIS PREPARED BY ROCHE, CONSULTING-GROUP (2012)
Resources with a reasonable prospect for eventual economic extraction
|MINERAL RESOURCES MEASURED AND INDICATED||RECOVERABLE RESOURCES 85%||40% DILUTION||RESOURCES AS DESCRIBED ABOVE|
|(metric)||(g/t Au)||(metric)||(g/t Au)||(metric)||(g/t Au)||(metric)||(g/t Au)|
Here is the CIM definition of resources:
“A Mineral Resource is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade or quality, continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling.”
A preliminary economical analysis was prepared according to the net present value method. This method is built on the basis of a constant dollar. There is no provision for inflation nor for taxes to pay. The mine is presently in exploitation, without debt. The internal rate of return was not used as the mine is operating and there is no initial investment. This update was prepared by Renaud Hinse, mining engineer. As resources did not increase by 100% or more, it was not necessary to have an independent person.
The hypothesis used are indicated in the table below. The sensitivity analysis is made for variations in the price of gold of plus and minus 10%.
|Price||$US / ounce||1,230|
|Exchange Rate||Cdn / US||1.30|
|Discount Rate||Annual %||8|
The cost of royalties is already incorporated into operating costs.
|Recoverable measured and indicated resources||Tonnes||551,953|
|Annual rate of extraction||Tonnes / year||130,000|
|Life of mine||Years||4.25|
|Grade of mineralization||g/t Au||4.51|
|Gold recovery in mill||%||97|
|Net recoverable value||$ Cdn/t||224.74|
|Annual gold production||Ounces||18,300|
|Ongoing capital costs||$ Cdn/t||19.19|
|Total operating costs per tonne||$ Cdn/t||191.24|
|Gold refining||$ Cdn/oz||1.31|
Financial model and results
A summary of the technical hypothesis is given in the table above. A total revenue at the mine of $124 M is expected, that is $224.74 per tonne. Ongoing capital expenditures, necessary in the course of mining, is estimated at $10.6 M, that is $19.19 per tonne of recoverable measured and indicated resources.
Operating costs are $191.24 per tonne for a total of $105.4 M, including $6.89 per tonne of royalties for a total of $3.8 M. A working capital of about $2.5 M is necessary to cover about one month of operation costs, but this amount was already available on June 30, 2018.
The financial analysis shows a net cash flow of $7.9 M before taxes and $4.1 M after taxes. The net present value, discounted at 8%, is $6.5 M before taxes and $3.5 M after taxes.
Summary of project evaluation
|DESCRIPTION||EVALUATION BASE $ CDN|
|Total mine revenue||124,000,000|
|Ongoing capital expenditures||10,600,000|
|Total operating expenses including royalties||105,600,000|
|Net cash flow before taxes||7,900,000|
|Net cash flow after taxes||4,200,000|
Quality Control and Assurance
In its operations, Abcourt applies a procedure for the three methods of sampling used: drill core (series D), chips (series F) and broken muck (series M), to reconcile grade with the ounces produced at the Sleeping Giant mill. The lab is directed by a chief analyst with adequate experience in this domain. This lab maintains an internal quality control program. Assay results of blanks, duplicates and standards appear regularly (3/24) on assay reports.
Check assays done for 15 chip samples (F) and 10 muck samples (M) done by an accredited laboratory (ALS-Chemex) indicate that the assay results from both laboratories have a very good coefficient of correlation (R2=0.975) for sample M18465.