Preliminary Economic Assessment (2017)

The results of an updated Preliminary Economic Assessment (“2017 PEA”) for the Ann Mason deposit were released on March 10, 2017. The 2017 PEA envisions an open pit and conventional sulphide flotation milling operation with a proposed mill throughput of120,000 tonnes per day (“tpd”).

Approximately 95% of the mineralization constrained within the ultimate PEA pit (“Phase 5”) is classified as either Measured or Indicated resources, with the remaining 5% classified as Inferred resources. The 2017 PEA also includes results of a detailed metallurgical program, completed at SGS in 2016, designed to better characterize the metallurgical processes and recoveries in the 2017 PEA and to support a future Pre-Feasibility study.

The project is expected to yield a base case (“Base Case”), pre-tax, 7.5% net present value ("NPV7.5") of $1,158 million ($770 million post-tax) and an internal rate of return ("IRR") of 15.8% (13.7% post-tax). The foregoing uses assumed copper, molybdenum, gold and silver prices of $3.00/lb, $11/lb, $1,200/oz and $20/oz, respectively. Pre-production development is expected to take three years, followed by 21 years of mine production and four years of reclamation. 

The 2017 PEA is preliminary in nature and includes 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 2015 PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Download the Ann Mason Preliminary Economic Assessment (2017) here

The following tables summarize the highlights and the main economic outputs of the 2017 PEA. The Base Case discounted cash flows are provided both pre-tax and post-tax, and are prepared in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators. The 2017 PEA was completed by AGP Mining Consultants, an independent Canadian-based engineering firm and Amec Foster Wheeler Americas Limited.

ANN MASON 2017 PEA HIGHLIGHTS

Milling rate

120,000 tpd

Mine production

21 years

Strip ratio 
(waste to mineralized material, including pre-strip)

  2:1

Development capital costs 
(including $103 million contingency)

~ $1.35 billion

Average LOM cash costs1,2 
(net of by-product sales)

$1.49/lb copper

Average LOM all-in sustaining costs1,2
(net of by-product sales)

$1.57/lb copper

Net average pre-tax undiscounted cash flow over Years 1 to 21

~ $298 million per year

Net average post-tax undiscounted cash flow over Years 1 to 21

~ $238 million per year

Average copper recovery

92%

LOM average copper concentrate grade

30%

LOM payable copper production

~ 5.1 billion pounds

Average annual payable copper production

~ 241 million pounds

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Notes:

  1. Life of Mine or “LOM” includes 21 years of mine production, followed by four years of reclamation.

The results of the 2015 PEA constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of applicable Canadian securities laws. While these forward-looking statements are based on expectations about future events as at the effective date of the technical report titled “2017 Updated Preliminary Economic Assessment on the Ann Mason Project, Nevada, U.S.A.”, the statements are not a guarantee of the Company’s future performance and are subject to risks, uncertainties, assumptions and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Such risks, uncertainties, factors and assumptions include, without limitation, future metal prices; that the size, grade and continuity of deposits and mineral resource estimates have been interpreted correctly from exploration results; smelter terms; labour rates; consumable costs; royalties and taxation; and equipment pricing. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.

ANN MASON 2017 PEA 
SENSITIVITY OF THE KEY FINANCIAL OUTPUTS (Post-Tax)

Economic Scenario

Cu
($/lb)

Mo
($/lb)

Ag
($/oz)

Au
($/oz)

NPV5%
($ Million)

NPV7.5%
($ Million)

NPV10%
($ Million)

IRR
(%)

Payback
(Years)

Net Average Annual Free Cash Flow
($ Million)

Low Case

2.75

9.00

15.00

1,100

815

339

30

10.3

8.7

189

Base Case

3.00

11.00

20.00

1,200

1,379

770

366

13.7

6.9

238

High Case

3.25

13.00

25.00

1,300

1,928

1,189

694

16.8

5.7

287

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Note: The Base Case metal prices are based on a review of current analyst consensus reports and recent SEDAR filings for similar reports. The 2015 PEA is preliminary in nature and includes 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 2015 PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Last updated: April 2017