Vancouver B.C. October 10, 2017: TNR Gold Corp. (TSX-V: TNR) (“TNR” or the “Company”) advises that McEwen Mining Inc. (NYSE:MUX, TSX:MUX) (“McEwen Mining”) has issued a news release “Copper Shines Brightly for McEwen Mining – Enhanced Economics of Los Azules” dated September 7, 2017 in relation to the Los Azules Copper Project in San Juan Province, Argentina. TNR holds a 0.36% Net Smelter Returns Royalty (“NSR”) on the Los Azules project.
The news release issued by McEwen Mining summarizes the results of a new Preliminary Economic Assessment (PEA) on its wholly-owned Los Azules Copper Project. In its press release, McEwen Mining states, “The 2017 PEA is a substantial revision of the previous 2013 PEA and contemplates an enhanced implementation strategy resulting in improved economics while reducing execution risk. It envisions an owner-operated mine and conventional concentrator (flotation circuit) producing a copper concentrate for export.”
$2.2 Billion After-Tax NPV@8% and IRR of 20.1%
3.6 Year Payback at $3.00/lb. Copper and 36 Year Mine Life
415 Million lbs. Average Annual Copper Production For The First 10 Years
$1.11/lb. Copper Average Cash Production Cost (C1) For First 10 Years
“Los Azules is a giant porphyry copper deposit that offers tremendous potential to generate wealth for McEwen Mining shareowners and other stakeholders,” said Rob McEwen, Chairman and Chief Owner. “Our next steps are to advance permitting and prefeasibility/feasibility studies to move Los Azules towards production.”
“We would like to congratulate McEwen Mining on a significant increase in the new resource estimations for copper, gold and silver at Los Azules Copper project, important upgraded quality of these resources in all categories and reported enhanced economics overall for the project,” commented Kirill Klip, Executive Chairman of TNR. “The PEA provided by McEwen Mining demonstrates a robust, high margin, rapid pay-back and long-life potential economics for the project and it will affect positively the potential implied valuation of TNR Gold’s royalty holding.”
The McEwen Mining news release reports that the PEA study used commodity price assumptions of $3.00/lb copper, $1,300/oz gold, and $17/oz silver, resulting in an after-tax Net Present Value (NPV) of $2.2 billion (discounted at 8%) and an Internal Rate of Return (IRR) of 20.1%.
McEwen Mining also stated, “The project economics for Los Azules contemplates two years of permitting, drilling, and feasibility studies; followed by a three year project implementation phase for production of the first copper concentrates. The economic values presented in the 2017 PEA are after-tax financial outcomes at the point of commencing the project implementation phase. The key financial results are summarized in Table 1 and Figure 1.
Table 1: After-tax Financial Results
|Unit||2017 PEA Result|
|Initial CAPEX||$ millions||2,363|
|Phase 2 CAPEX||$ millions||278|
|C1 Costs1 (first 10 years)||$/lb.||1.11|
|C1 Costs1 (Life-of-mine)||$/lb.||1.28|
1C1 cash costs include at-mine cash operating costs, treatment and refining charges, mine reclamation and closure costs, and copper concentrate transportation.
Mineral Resource Estimate
The estimated mineral resources for the Los Azules deposit are shown in Table 2. Mineral resources are determined using a base case cut-off grade of 0.20% copper, which is based on projected technical and economic parameters.
Table 2: Estimate of Mineral Resources for Los Azules Deposit (0.20% Cu Cut-Off)
|Average Grade||Contained Metal|
Cu = copper, Au = gold, Mo = molybdenum, Ag = silver
The mineral resource estimate for Los Azules was prepared utilizing three-dimensional block models based on geostatistical applications. The mineral resources are estimated using ordinary kriging with a nominal block size of 20 m x 20 m x 15 m. To ensure the reported resource exhibits reasonable prospects for economic extraction, the mineral resource is limited within a pit shell generated around copper grades in blocks classified in the Indicated and Inferred categories. Generalized technical and economic parameters include a copper price of $2.75/lb., site operating costs of $1.70/t for mining, $5.00/t for processing and $1.00/t for general and administration, a pit slope of 34° and 90% metallurgical recovery.
The life-of-mine (LOM) ore tonnage is estimated to be 1,488 million tonnes of concentrator feed and 1,510 million tonnes of waste stripping. The stripping ratio, including stockpile re-handling, is projected at 1.05 (tonnes of waste per tonne of sulfide ore milled). Excluding the three-year preproduction period, the mine life is estimated at 36 years.
The concentrator feed during the first five years of operation is predicted to have a higher average grade of 0.73% copper. These grades are approximately double the average grades in the later years of mining (after Year 20). In the first five years of mining, 93% of this initial mill feed is presently classified as Indicated mineralized material and the remaining 7% is Inferred mineralized material.
The 2017 PEA is preliminary in nature. The mine plan and economic model include the use of Inferred resources. Inferred resources are conceptual in nature and are considered to be too speculative to be used in an economic analysis except as allowed for by Canadian Securities Administrators’ National Instrument 43-101 (NI 43-101) in PEA studies. There is no guarantee that Inferred resources can be converted to Indicated or Measured resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability. As such, there is no guarantee the project economics described herein will be achieved.
Preliminary metallurgical test work has been conducted intermittently since 2008 to determine how the mineralized material responds to flotation as a means of recovering payable copper metal. Results have consistently proved favorable and flotation has been adopted as the processing option of choice.
The Los Azules concentrator will produce copper concentrate as a final product. The process flowsheet has been modeled on the Antapaccay copper concentrator (Glencore – Peru) due to similarities in ore properties and process plant altitudes. Some minor design changes, in equipment sizing only, have been incorporated based on operating experience at Antapaccay. The plant has been designed for average daily throughput of 80,000 tpd. The concentrator would be constructed on-site and would employ one comminution circuit consisting of a primary crusher, stockpile feed conveyor, reclaim conveyor, one SAG mill, two pebble crushers and two ball mills. The comminution circuit would be followed by flotation, thickening and filtration circuits, a Tailings Storage Facility (TSF) and concentrate storage. LOM recovery of copper to concentrate is expected to be 91% at a concentrate grade of 30% Cu.
It is planned to expand the capacity of the plant to 120,000 tpd by Year 5 through the installation of additional comminution and flotation capacity. Gold and silver are recoverable to the copper concentrate. No other metals have been identified that would yield by-product credits, nor that have significant amounts of penalty elements.
A key desired outcome of this study was to provide a project capital estimate with a reasonable level of accuracy. A summary of the initial capital estimate is provided in Table 3.
Table 3: Capital Cost Estimate
|Mine Pre-stripping Cost||$193|
|Surface Scope (Concentrator, Power Line, Tailings, etc.)||$979|
|Total Direct Cost||$1,387|
|Total Indirect Costs||$508|
|Total Initial Capital Cost||$2,363|
This updated PEA for the Los Azules project has a total operating cost of $15.4 billion over the life of the mine. Table 4 displays the operating cost summary.
Table 4: Operating Cost Estimate
|$/t Mill Feed||$/t Cu||$/lb. Cu|
|Au & Ag Credits||(2,449)||(1.65)||(444)||(0.20)|
A list of the qualified persons responsible for the report that is the basis for the disclosure in this news release is provided in Table 5.
Table 5: Summary of Qualified Persons
|Responsible Person||Company||Primary Areas of Responsibility|
|D. Brown, C. P. Eng||McEwen||Mining, Project Infrastructure, Geology|
|M. Bunyard, C. Eng, FAusIMM||Hatch Ltd||Metallurgical, Process Plant|
|B. Davis, FAusIMM||BD Resource Consulting, Inc.||Sampling, Data Verification, Resource Estimates|
|J. Duff, P. Geol||McEwen||Geology, Exploration|
|R. Duinker, P. Eng, MBA||Hatch Ltd||Financial Analysis|
|J. Farrell, P. Eng||Hatch Ltd||Environmental|
|W. Rose, P. E.||WLR Consulting Inc.||Mining|
|K. Seddon, CPEng||ATC Williams||Tailings|
|R. Sim, P. Geo||SIM Geological Inc.||Drilling, Resource Estimates|
The Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) technical report containing the results of the updated PEA, with the effective date of September 1, 2017, will be filed on SEDAR and the McEwen Mining website within 45 days.
McEwen Mining’s press releases and website material appear to be prepared by Qualified Persons and the procedures, methodology and key assumptions disclosed therein are those adopted and consistently applied in the mining industry, but no Qualified Person engaged by TNR Gold Corp. has done sufficient work to analyze, interpret, classify or verify McEwen Mining’s information to determine the current mineral reserve or resource or other information referred to in their press releases. Accordingly, the reader is cautioned in placing any reliance on the disclosures therein.”
Details regarding the manner in which the PEA was calculated will be available under the profile of McEwen Mining at SEDAR http://www.sedar.com.
TNR’s strategy with the Los Azules royalty holdings is to attract a strong financial partner and sell a portion of the NSR to eliminate the long-term debt of the Company.
Jonathan Findlay, Geological Consultant of the Company and a “Qualified Person” for the purposes of NI 43-101, has reviewed and approved the scientific and technical information contained in this news release.
ABOUT TNR GOLD Corp.
TNR Gold Corp. is working to become an energy metals royalty company. Over the past twenty-two years, TNR, through its lead generator business model, has been successful in generating high quality exploration projects around the globe. With the Company’s expertise, resources and industry network, it identified the potential of the Los Azules copper project in Argentina and now holds a 0.36% NSR on the prospect.
TNR is also a major shareholder of International Lithium Corp. (“ILC”), with current holdings of approximately 12% of the outstanding shares of ILC. ILC holds interests in lithium projects in Argentina, Ireland and Canada.
TNR retains a 1.8% NSR on the Mariana property in Argentina. ILC maintains a right to repurchase 1.0% of the NSR on the Mariana property of which 0.9% relates to the Company’s NSR interest. The Company would receive $900,000 on execution of the repurchase. The project is currently being advanced in a joint venture between ILC and GFL International Co. Ltd., a wholly-owned subsidiary of Jiangxi Ganfeng Lithium Co. Ltd. (“Ganfeng Lithium”).
At its core, TNR provides significant exposure to gold and copper through its holdings in Alaska (the Shotgun gold porphyry project) and Argentina, and is committed to continued generation of in-demand projects, while diversifying its markets and building shareholder value.
On behalf of the Board of Directors,
For further information concerning this news release please contact +1 604-700-8912
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Statement Regarding Forward-Looking Information
Except for statements of historical fact, this news release contains certain “forward-looking information” within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as “plan”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “will”, “could” and other similar words, or statements that certain events or conditions “may” or “could” occur, although not all forward-looking statements contain these identifying words. Specifically, forward-looking statements in this news release include, but are not limited to, statements made in relation to: TNR’s corporate objectives, changes in share capital, market conditions for energy commodities, the results of McEwan Mining’s PEA, and improvements in the financial performance of the Company. Such forward-looking information is based on a number of assumptions and subject to a variety of risks and uncertainties, including but not limited to those discussed in the sections entitled “Risks” and “Forward-Looking Statements” in the Company’s interim and annual Management’s Discussion and Analysis which are available under the Company’s profile on www.sedar.com. While management believes that the assumptions made and reflected in this news release are reasonable, should one or more of the risks, uncertainties or other factors materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking information. In particular, there can be no assurance that: TNR will be repay its loans or complete any further royalty acquisitions or sales; debt or other financing will be available to TNR; or that TNR will be able to achieve any of its corporate objectives. Given these uncertainties, readers are cautioned that forward-looking statements included herein are not guarantees of future performance, and such forward-looking statements should not be unduly relied on.
In formulating the forward-looking statements contained herein, management has assumed that business and economic conditions affecting TNR and its royalty partners, McEwen Mining Inc. and International Lithium Corp. or its joint venture partner, Ganfeng Lithium will continue substantially in the ordinary course, including without limitation with respect to general industry conditions, general levels of economic activity and regulations. These assumptions, although considered reasonable by management at the time of preparation, may prove to be incorrect.
Forward-looking information herein and all subsequent written and oral forward-looking information are based on estimates and opinions of management on the dates they are made and are expressly qualified in their entirety by this cautionary statement. Except as required by law, the Company assumes no obligation to update forward-looking information should circumstances or management’s estimates or opinions change.