Hasbrouck Project Pre-feasibility Study
The 2016 pre-feasibility study was prepared by a team of Qualified Persons headed by Mine Development Associates (MDA) of Reno, Nevada, and presents a technically simple -forward and economically robust project in a safe jurisdiction.
The Hasbrouck Project consists of the Hasbrouck and the Three Hills deposits and surrounding land package, located near Tonopah, Nevada. All dollar values presented are in U.S. dollars and are on a 100% project basis. Highlights include:
- 594,000 recoverable gold-equivalent ounces
- 74,000 gold-equivalent ounces annually for eight years
- $661 Adjusted Operating Cost per ounce
- $709 All-In Sustaining Cost per ounce
- US$200 million NPV (5%) and a 74% IRR, after-tax, at $1,600 gold
- US$47 million initial capital
- Good exploration potential proximal to the Three Hills permitted pit
- Fully permitted Three Hills Mine, shovel-ready
The Company has a 75% interest in the Hasbrouck Project with the remaining 25% owned by Waterton Precious Metals Fund II Cayman, LP. Waterton’s 25% interest is fully participating and Waterton must contribute to capital or be diluted, and has no back-in or other pre-emptive rights.
The Hasbrouck Project: comprised of the Three Hills and Hasbrouck deposits
(Click to enlarge)
The Hasbrouck Project is one of very few shovel-ready, high-margin gold projects in Nevada. The deposits are all-oxide with low strip-ratios, minimal pre-strip, and no environmental or cultural factors which might impede permitting and operations. Both Mineral Resource and metallurgy have been well-studied and are at a high level of reliability. Excellent infrastructure exists nearby in the form of the town of Tonopah, grid electricity, paved highways, and multiple water sources. The Phase-1 Three Hills Mine is fully permitted, and permitting work is underway for the Phase-2 Hasbrouck Mine. For further information on permitting at Three Hills please refer to the Company’s November 27, 2015 news release.
The 2016 PFS projects US$47 initial capital which will be used to build out the Phase-1 Three Hills Mine. Capital for the Phase-2 Hasbrouck Mine will come from free cash flow generated by operations at Three Hills. Six million tons of ore per year will be mined to produce 74,000 gold-equivalent ounces per year for eight years. Adjusted Operating Costs are projected at $661 per gold ounce, with All-in Sustaining Costs at $709 per gold ounce, both net of silver by-product credits.
The Three Hills and Hasbrouck deposits are 8 kilometers apart and located within a large land position hosting multiple near-surface and at-surface gold intercepts. Known gold intercepts are located proximal to current Mineral Resources; these are not included in the Mineral Resource model. These intercepts present exploration targets having the potential to increase and extend known Mineral Resources.
The 2016 PFS assumes Phase-1 production for two years at the Three Hills Mine followed by Phase-2 production for six years at the Hasbrouck Mine. Life-of-mine production is projected to be 594,000 gold-equivalent ounces. Stripping ratio is estimated at 1:1, and head-grade is estimated at 0.6 g/t gold (0.017 opt gold) while gold recovery from heap leaching is estimated at 76%.
A Carbon-In-Columns (“CIC”) plant will be installed at the Three Hills Mine. Loaded carbon will be sent off-site for stripping by a contractor. An Adsorption-Desorption-Recovery plant (ADR) complete with CIC plant will be installed at the Hasbrouck Mine, necessary because of the greater amount of silver in that deposit.
The Hasbrouck Project Updated Pre-feasibility Study
Mine Development Associates*, September 1, 2016 – in US dollars, based on 100% of the project (1)
| Units | Three Hills Mine |
Hasbrouck Mine |
Total Hasbrouck Project |
|
| PRODUCTION STATISTICS | ||||
| Head-grade | Au opt (Au g/t) | 0.018 (0.62) | 0.017 (0.57) | 0.017 (0.58) |
| Ore | million tons | 10 | 36 | 45 |
| Stripping Ratio | waste:ore | 0.9 | 1.1 | 1.1 |
| Annual Ore Processed | million tons | 5 | 6 | 6 |
| Processing Rate | tons per day | 15,000 | 17,500 | 15,986 |
| Gold Grade | Au opt (Au g/t) | 0.018 (0.62) | 0.017 (0.57) | 0.017 (0.58) |
| Silver Grade | Ag opt (Ag g/t) | NA | 0.30 (10.2) | 0.23 (8.0) |
| Contained Gold | koz | 175 | 588 | 762 |
| Contained Silver | koz | NA | 10,569 | 10,569 |
| Contained Gold-equivalent (1) | koz | 175 | 610 | 784 |
| Gold Recovery | % | 81.5% | 74.0% | 75.7% |
| Silver Recovery | % | 11.0% | 11.0% | |
| Recoverable Gold | koz | 142 | 435 | 577 |
| Recoverable Silver | koz | NA | 1,163 | 1,163 |
| Recoverable Gold-equivalent ($1,275/$18.21) |
koz | 142 | 452 | 594 |
| Average Annual Gold Production | koz | 69 | 71 | 71 |
| Average Annual Silver Production(2) | koz | NA | 194 | 194 |
| Average Annual Gold-equivalent Production | koz | 69 | 74 | 74 |
| Gold Price | US$/oz | $1,275 | $1,275 | $1,275 |
| Silver Price | US$/oz | $18 | $18 | $18 |
| CAPITAL | ||||
| Initial Capital | US$ million | $47 | ||
| Growth Capital | US$ million | $83 | ||
| Sustaining Capital | US$ million | $13 | ||
| Life of Mine Capital | US$ million | $143 | ||
| Contingency (included) | US$ million | $6 | $15 | $21 |
| Contingency (included) | % | 14% | 19% | 17% |
| OPERATING COST | ||||
| Adjusted Operating Cost per Ton of Ore (3) | US$/ton ore | $7.40 | $8.71 | $8.43 |
| Mining | US$/ton ore | $3.18 | $3.74 | $3.62 |
| Processing | US$/ton ore | $2.55 | $3.93 | $3.63 |
| G&A | US$/ton ore | $0.44 | $0.46 | $0.46 |
| Other (4) | US$/ton ore | $1.23 | $0.58 | $0.72 |
| Adjusted Operating Cost per Ounce(3) | US$/oz Au net of by-products | $502 | $714 | $661 |
| All-In Sustaining Cost per Ounce (5) | US$/oz Au net of by-products | $510 | $774 | $709 |
| Life of Mine | year | 1.7 | 7.1 | 8.8 |
| PROJECT ECONOMICS | ||||
| NPV (5%) - after tax | US$ million | $120 | ||
| IRR - after tax | % | 43% | ||
| Payback Period | year | 3.1 |
Notes:
(1) Gold-equivalent calculations are made using the ratio of recovered silver / gold and metal prices
(2) Silver production is averaged over the Hasbrouck mine life only
(3) World Gold Council - Adjusted Operating Costs include:
On-site mining and G&A, royalties and production taxes, permitting and community cost related to current operations, 3rd party smelting, refining and transport costs, stock-piles and inventory write-downs, site-based non-cash remuneration, operational stripping costs and by-product credits
(4) Other category includes royalties, production taxes, permitting, refining, and by-product credit
(5) World Gold Council All-in Sustaining Costs includes:
Adjusted Operating Costs (above) plus corporate G&A, reclamation & remediation—accretion & amortization, expenditures sustaining exploration and study costs, capital exploration, capitalized stripping and sustaining capital
(6) World Gold Council All-In Cost includes:
All-In Sustaining Costs (above) plus community, permitting, and reclamation and remediation costs not related to current operations and non-sustaining exploration and study costs, capital exploration, capitalized stripping and capital expenditure
(7) Project economics are presented for 100% of the project which is jointly owned by WKM (75%) and Waterton Precious Metals Fund(25%)
Three Hills section showing gold domains and geology
(Click to enlarge)
Hasbrouck section showing gold domains and geology
(Click to enlarge)
After-Tax Sensitivity to Gold Price
| Gold Price | IRR | NPV 5% | NPV 5% | NPV 5% | NPV 5% |
| 100% Project | WKM 75% | WKM 75% | Waterton 25% | ||
| US$ | US$M | US$M | CDN$M* | CDN$M* | |
| $1,200 | 35% | $92 | $69 | $94 | $31 |
| $1,400 | 56% | $165 | $124 | $168 | $56 |
| $1,600 | 74% | $232 | $174 | $237 | $79 |
| $1,800 | 92% | $295 | $221 | $301 | $100 |
| $2,000 | 109% | $356 | $267 | $363 | $121 |
Notes:
* Exchange rate C$1.36 = US$1.00
Hasbrouck Project Mineral Reserves
Proven and Probable Mineral Reserves total 45.3 million tons containing 762,000 ounces gold and 10.6 million ounces silver:
| Hasbrouck Project Mineral Reserves, June 3, 2015, Mine Development Associates (1, 2) | ||||||
| Ore (k tons) |
Grade (opt) |
Gold (k oz) |
Silver (opt) |
Silver (k oz) |
||
| Three Hills Mine | ||||||
| 0.005 opt Au cutoff |
Proven | - | - | - | - | - |
| Probable | 9,653 | 0.018 | 175 | - | - | |
| P&P | 9,653 | 0.018 | 175 | - | - | |
| Hasbrouck Mine | ||||||
| Variable (3) | Proven | 6,242 | 0.020 | 127 | 0.410 | 2,562 |
| Probable | 29,374 | 0.016 | 461 | 0.273 | 8,007 | |
| P&P | 35,617 | 0.017 | 588 | 0.297 | 10,569 | |
| Total Hasbrouck Project | ||||||
| Variable (3) | Proven | 6,242 | 0.020 | 127 | 0.410 | 2,562 |
| Probable | 39,028 | 0.016 | 635 | 0.205 | 8,007 | |
| P&P | 45,270 | 0.017 | 762 | 0.233 | 10,569 | |
Notes:
- The estimation and classification of Proven and Probable Reserves have been prepared by Thomas L. Dyer, P.E., of Mine Development Associates following CIM standards
- Reserves are estimated based on $1,225/oz gold and $17.50/oz silver
- Cutoff grades used for Reserves are: Three Hills 0.005 oz Au/ton, Hasbrouck Upper Siebert 0.008 oz Au/ton, and Hasbrouck Lower Siebert 0.007 oz Au/ton
Hasbrouck Project Mineral Resources
Mineral Resources are reported inclusive of Mineral Reserves.
Hasbrouck Deposit Reported Mineral Resources* November 3, 2014,
Mine Development Associates (0.006oz AuEq/ton Cutoff)
| Class | Ore (tons) | Gold (opt) | Gold (oz) | Silver (opt) | Silver (oz) |
| Measured | 8,261,000 | 0.017 | 143,000 | 0.357 | 2,949,000 |
| Indicated | 45,924,000 | 0.013 | 595,000 | 0.243 | 11,147,000 |
| M+I | 54,185,000 | 0.014 | 738,000 | 0.26 | 14,096,000 |
| Inferred | 11,772,000 | 0.009 | 104,000 | 0.191 | 2,249,000 |
Notes: oz AuEq/ton = oz Au/ton + (oz Ag/ton x 0.000417)
Three Hills Deposit Reported Mineral Resources* August 4, 2014,
Mine Development Associates (0.005oz Au/ton Cutoff)
| Class | Tons | oz Au/ton | oz Au |
| Indicated | 10,897,000 | 0.017 | 189,000 |
| Inferred | 2,568,000 | 0.013 | 32,000 |
Notes:
1. CIM definitions are followed for classification of Mineral Resources
2. Mineral Resources are estimated using a gold price of $1,300 per ounce and a silver price of $22 per ounce
3. Totals may not represent the sum of the parts due to rounding
4. The Mineral Resources have been prepared by Paul Tietz, C.P.G of Mine Development Associates in conformity with CIM “Estimation of Mineral Resource and Mineral Reserves Best Practices” guidelines and are reported in accordance with the Canadian Securities Administrators NI43-101. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. There is no certainty that all Mineral Resources will be converted into Mineral Reserves
Outlook
West Vault will continue permitting work on Phase-2 Hasbrouck Mine to further de-risk the project, and will make a construction decision at Three Hills Mine when market conditions dictate. West Vault will engage with its major shareholders on a potential construction decision.
The reader is cautioned that a production decision might be made on the 2016 PFS and that the Company may proceed to production without completion of a feasibility study. There is an increased risk associated with making a production decision based on a pre-feasibility study.
Authors and Qualified Persons Statement
The 2016 PFS was prepared in conformance with NI 43-101 by Mine Development Associates (MDA). Technical work, analysis and findings were completed by Thomas L. Dyer, P.E. and Paul Tietz, C.P.G. of MDA, with contributions by Herb Osborne, Metallurgical Eng., SME, of H.C. Osborne & Associates (metallurgy), Ryan Baker, P.E., of Newfields (civil and heap leach) and Carl Defilippi, SME, of Kappes Cassiday & Associates (process design). Each person is a "Qualified Person" under NI 43-101 and has reviewed and approved the information in this news release relevant to the portion of the 2016 PFS for which they are responsible. MDA has reviewed and verified the data disclosed in this news release to conform to CIM “Estimation of Mineral Resource and Mineral Reserves Best Practices” guidelines and to NI 43-101. West Vault will file an NI 43-101 technical report in support of the technical disclosures made in this news release on SEDAR within 45 days.
Sandy McVey, P.Eng., Chief Operating Officer for West Vault, and a non-independent Qualified Person as defined by NI 43-101, has also reviewed the foregoing information and has verified the data.
Sample Preparation, Analyses, and Security
It is MDA’s opinion that the sampling, assaying, and security procedures used at Three Hills and Hasbrouck deposits follow industry standard procedures, and are adequate for the estimation of the current Mineral Resources and Mineral Reserves.
Data Verification
MDA completed audits of the database, performed a site visit, reviewed QAQC data and confirmed historic assays. After performing their review, they consider the assay data to be adequate for the estimation of the current Mineral Resources and Mineral Reserves.