TSX-V ARTG
LAST $4.74 CAD (-0.04)
SPOT GOLD
LAST $1789.56 USD (-2.01)
TSX-V ARTG
LAST 4.74
CHANGE -0.04

The Blackwater Project will comprise the construction, operation, and closure of an open pit gold and silver mine and ore processing facilities commencing with a nominal milling rate of ~16,500 t/d (6.0Mtpa).  The ore processing facilities will be expanded to ~24,700 tonnes per day (“tpd”) (9.0Mtpa) in year 5 with full Phase 2 expansion to ~33,000 tpd (12Mtpa) in year 6 with an expansion to 41,100 tpd (15Mtpa) in year 10 and a final expansion to achieve 55,000 t/d (20 Mtpa) starting in year 11 of operation.  A combined gravity circuit and whole ore leach will be used for recovering gold and silver.

The proposed mine plan involves mining 334 Mt of ore, 586 Mt of waste rock and 87 Mt of overburden.  Conventional open pit mining methods will be used, initially targeting high-grade, near-surface ore for processing, with lower-grade material being stockpiled for processing at the end of the mine life.

Most of the waste material sourced from the pit will be used for construction of TSF or placed in the TSF itself.  Overburden and non potentially acid generating waste rock not required for construction will be placed in stockpiles between the open pit and the TSF.  Potentially acid generating waste rock, together with tailings, will be deposited into the TSF that will be located to the north-northwest of the open pit.

In addition to the site infrastructure, it is assumed that a 135 km, 230 kV transmission line will be constructed from the BC Hydro Glenannan substation near Endako, B.C. to the site to supply power to the Project.

At closure, all buildings will be removed, disturbed lands rehabilitated, and the property returned to otherwise functional use according to future approved reclamation plans and accepted practices at the time of closure. The estimated closure costs of C$175 million (discounted to year 22) represents management’s investment in environmental stewardship and increased ownership of its various ESG initiatives.

Mining

Mining will be based on conventional open pit methods (drill-blast-load-haul), which are suited to the Project location and local site requirements.  Open pit operations are anticipated to run for 17 years, excluding 15–18 months of pre-production mining.  Following mining operations, stockpiled low-grade material will be processed for an additional five years, resulting in a total LOM of 22 years.  The open pit will be developed with a series of pushbacks.  The first stage will target suitable overburden and waste rock for construction whilst exposing near-surface, high-grade material.  The second phase will target higher-grade, lower-strip-ratio ore providing mill feed over the initial years of the Project.  The remaining stages expand the pit to the north targeting progressively deeper ore.  LOM activities are summarized in Appendix A.

Owner-managed mining and fleet maintenance operations are planned for 365 days/year, with two 12-hour shifts planned per day.  Initially, mining will be undertaken using 400 t class hydraulic shovels and 190 t payload class haul trucks.  As production requirements increase, the load-and-haul fleet will be expanded with 600 t class hydraulic shovels and 230 t payload class haul trucks.  The initial drill and loading fleet is planned to be diesel drive, with expansion fleet requirements being electric drive.  The mine equipment fleet is planned to be purchased via various lease arrangements.

Metallurgy & Process

The process flowsheet was designed based on historical test work and more recent test work carried out in 2019 for New Gold. Some additional test work was completed to support carbon loading, rheological parameters and cyanide destruction assumptions.

The 2019 test program included three larger composites for optimization test work and 48 samples covering the deposit to establish the variability of the ore to the chosen flow sheet.

The mineralogy indicated that the sulphur content is mainly associated with pyrite, pyrrhotite and sphalerite.   The comminution test work included semi-autogenous grind mill comminution on the new drill core, Bond rod mill work index, Bond ball mill work index and abrasion index tests. The results indicate the material is hard with results ranging from 11.8 -24.6 kWh/t and the 75th percentile of the samples tested was 21.1 kWh/t for the variability samples.   A correlation between gold extraction and head grade was not observed.  The variability composite results averaged 93.7% total gold extraction with gravity gold recovery of 34.2%.

Based on the test results, a gold doré can be produced with a primary grind size of 80% passing

150 μm followed by gravity concentration, two-hour pre-oxidation, a 24 hour cyanide leach at an initial cyanide concentration of 500 ppm and a pH of 10.5, and a carbon-in-leach (“CIL”) adsorption, desorption and refining process. The recovery of gold and silver is expected to be 93% and 65% respectively.

The initial design daily throughput is ~16,500 tonnes per day, with an availability of 70% used in designing the crushing circuit and 92% for the design of the rest of the plant.

Economic Results

Capital Cost Estimate

The Study outlines an initial capital cost estimate of $645 million for Phase 1 (6.0 Mtpa), expansion capital of $347 million for the Phase 2 expansion to 12.0 Mtpa, expansion capital of $374 million for the Phase 3 expansion to 20.0 M tpa.  Sustaining capital over the life of mine is estimated at $831 million while closure costs are estimated at $133 million, net of proceeds from equipment salvage values.  The FS factors a 15% contingency into all capital cost estimates with the exception of reclamation costs.

The biggest drivers associated with the estimated expansion capital costs are onsite infrastructure (C$43 million), modular expansion of the process plant (C$456 million), mining costs (C$63 million) and tailings management (C$137 million).  Sustaining capital is estimated to average C$57 million per year for years 1-5, C$50 million per year in phase 2 and C$37 million per year in phase 3.  Mobile fleet lease payments and mining support activities (C$430 million) and tailings management (C$271 million) are the primary drivers of sustaining capital costs. 

Operating Costs

Operating Cost Estimate

Blackwater Initial Capital Costs

*Mining costs includes stockpile re-handle, LOM mining costs exclude pre-stripping

The operating cost estimates for the Project in Phase 1 is C$29.18/t, with economies of scale driving down costs to C$25.09/t milled in Phase 2, C$17.45/t milled in Phase 3 and C$10.36/t milled in Phase 4. Over the LOM, the Project has estimated average operating costs of C$17.96/t milled.

All-in Sustaining Cash Costs per ounce (“AISC”)

The Study outlines robust economics for the Blackwater Project during all four proposed stages with:

  • Average annual production of 321,000 ounces of gold at an AISC of C$732/oz in Stage 1;
  • increasing to 381,000 ounces of gold per year at an AISC of C$884/oz in stage 2;
  • increasing to 438,000 ounces of gold per year at AISC of C$824/oz in stage 3; and
  • reducing to 176,000 ounces of gold per year at an AISC of C$1,069/oz in stage 4, when mining operations cease and lower-grade stockpiles are processed. 

In the calculation of AISC, the cost of mining low-grade ore in Phase 1, Phase 2 and Phase 3 of operations are included in AISC in the year that they are mined with a rehandling charge applied to the AISC when low-grade stockpiles are processed in Phase 4. The AISC in Phase 4 is also impacted by the inclusion of LOM closure.  Over the LOM, the Study estimates an AISC of C$850/oz (or US$672/oz) on production of 7.45 million ounces of gold, which places the Project in the bottom quartile of the global cost curve for gold project (source: World Gold Council).

Selling Costs, Royalties and Taxes

Selling Costs

  • Payable factor (Au) of 99.9%
  • Payable factor (Ag) of 95.0%
  • Refining, treatment, transport, and insurance charges of $3/oz.