East Africa Metals Announces Positive Results of Three PEA Studies for Gold Projects in Ethiopia
Separate Preliminary Economic Assessment studies (“PEAs”) have been received for the Company’s 100% owned
The key technical and base case pre-tax and post-tax metrics for each project are presented below:
PARAMETER(3) | PROJECT | ||||||||||
Units | Mato Bula | Da Tambuk | Terakimti (1) | ||||||||
Mine Plan | Tonnes | 3,335,000 | 650,000 | 1,086,000 | |||||||
Grade | Gold | g/t | 3.0 | 4.9 | 3.1 | ||||||
Copper | % | 0.26 | % | N/A | N/A | ||||||
Silver | g/t | 0.70 | 2.3 | 22.9 | |||||||
Metal Recoveries | Gold | % | 86.4 | % | 93.0 | % | 65.0 | % | |||
Copper | % | 87.4 | % | N/A | N/A | ||||||
Silver | % | 50.0 | % | 50.0 | % | 30.0 | % | ||||
Recovered Metals | Gold | Ozs | 278,000 | 95,000 | 71,000 | ||||||
Copper | Lbs (x000) | 13,353 | N/A | N/A | |||||||
Silver | Ozs | 38,300 | 24,000 | 229,000 | |||||||
Au Eq(4) | Ozs | 305,000 | 95,000 | 74,000 | |||||||
Capital Cost | US$(x000) | $ | 54,200 | $ | 34,030 | $ | 17,180 | ||||
Sustaining Capital | US$(x000) | $ | 5,600 | $ | 8,030 | $ | 1,720 | ||||
Operating Cost | Site - C1 | US$/tonne | $ | 47.53 | $ | 61.85 | $ | 34.10 | |||
Metal Prices | |||||||||||
Gold Price | US$/oz | $ | 1,325 | $ | 1,325 | $ | 1,325 | ||||
Copper Price | US$/lb | $ | 3.00 | N/A | N/A | ||||||
Silver Price | US$/oz | $ | 17.00 | $ | 17.00 | $ | 17.00 | ||||
PRE-TAX | |||||||||||
Cash Flow | US$(x000) | $ | 139,710 | $ | 31,160 | $ | 29,360 | ||||
NPV @8% | US$(x000) | $ | 83,820 | $ | 20,670 | $ | 19,470 | ||||
IRR | % | 34.1 | % | 37.8 | % | 37.4 | % | ||||
POST-TAX | |||||||||||
Cash Flow | LOM | US$ (x000) | $ | 97,700 | $ | 20,615 | $ | 20,890 | |||
NPV @8% | US$ (x000) | $ | 56,660 | $ | 13,020 | $ | 13,180 | ||||
IRR | % | 28.4 | % | 28.6 | % | 30.1 | % | ||||
OTHER METRICS | |||||||||||
Payback | Years | 3.0 | 1.9 | 2.4 | |||||||
C1 Op Cost | US$/oz Au | $ | 412 | $ | 420 | $ | 465 | ||||
AISC | US$/oz Au | $ | 620 | $ | 642 | $ | 649 |
Notes:
(1) Metrics are presented for 100% attributable to Terakimti operation. Metrics attributable to
(2) Cash Flows presented are not discounted.
(3) Values may not reconcile to others disclosures within the news release due to rounding.
(4) Au Equivalent ozs = Au ozs + Cu lbs*0.0023 + Ag ozs *0.0128
METAL PRICE SENSITIVITIES - POST TAX
PARAMETER(2) | Units | Base Case | Lowest Case |
5 Year Ave | Long Term | ||||||||
Metals Prices | |||||||||||||
Gold Price | US$/oz | $ | 1,325 | $ | 1,200 | $ | 1,250 | $ | 1,379 | ||||
Copper Price | US$/lb | $ | 3.00 | $ | 2.50 | $ | 2.75 | $ | 3.25 | ||||
Silver Price | US$/oz | $ | 17.00 | $ | 17.00 | $ | 17.00 | $ | 17.00 | ||||
MATO BULA – Gold, Copper and Silver | |||||||||||||
Cash Flow(1) | US$(x000) | $ | 97,700 | $ | 75,050 | $ | 84,325 | $ | 107,340 | ||||
NPV @ 8% | US$(x000) | $ | 56,660 | $ | 39,460 | $ | 46,490 | $ | 63,980 | ||||
IRR | % | 28.4 | % | 22.5 | % | 25.0 | % | 30.8 | % | ||||
Payback | Years | 3.0 | 3.7 | 3.4 | 1.8 | ||||||||
DA TAMBUK – Gold and Silver | |||||||||||||
Cash Flow(1) | US$(x000) | $ | 20,615 | $ | 12,600 | $ | 15,805 | $ | 24,080 | ||||
NPV @ 8% | US$(x000) | $ | 13,020 | $ | 6,060 | $ | 8,840 | $ | 16,025 | ||||
IRR | % | 28.6 | % | 17.7 | % | 22.1 | % | 33.2 | % | ||||
Pay back | Years | 1.9 | 3.2 | 3.1 | 1.7 | ||||||||
TERAKIMTI – Gold and Silver | |||||||||||||
Cash Flow(1) | US$(x000) | $ | 20,890 | $ | 15,130 | $ | 17,430 | $ | 23,380 | ||||
NPV @ 8% | US$(x000) | $ | 13,180 | $ | 8,340 | $ | 10,280 | $ | 15,275 | ||||
IRR | % | 30.1 | % | 21.9 | % | 25.2 | % | 33.7 | % | ||||
Payback | Years | 2.4 | 2.8 | 2.6 | 2.3 |
(1) Cash Flows presented are not discounted.
(2) Values may not reconcile to others disclosures within the news release due to rounding.
Each of the PEA studies has been completed by Tetra Tech’s mining and process engineering team in
- Adyabo Project Mineral Resource Estimate,
David Thomas , P. Geo. (Effective Date:May 31, 2016 ),East Africa news releaseJune 14, 2016 . - Updated Terakimti Oxide Mineral Resource Estimate at a 0.5 g/t Gold Equivalent Cut-Off,
David Thomas , P. Geo. (Effective Date:October 18, 2015 ),East Africa news releaseOctober 27, 2015 - Terakimti Mineral Resource Estimate David Thomas, P. Geo., Effective Date:
January 17, 2014 ,East Africa news releaseJanuary 27, 2014 .
Metallurgical test work for the Mato Bula Gold Copper and Da Tambuk Gold projects has been completed by
Technical Report and Cautionary Statement NI 43-101:
Each of the PEAs were prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101"). Each of the Technical Reports will be filed by the Company with SEDAR within 45 days of this release.
Readers are cautioned that a PEA is preliminary in nature. These PEAs include Indicated and Inferred mineral resources. Inferred mineral resources 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 PEA results will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Additional Project Information
All three projects are located within 10 km of existing paved highways and the National power grid, and approximately 35 km from the town of Shire, which has an airport and extensive services. The Mato Bula and Da Tambuk projects are located 5 km apart and offer the opportunity to share access road and power line construction costs. The Terakimti gold project is approximately 15 km from Mato Bula and Da Tambuk.
- Post-tax NPV of
US$ 56.6M for base case usingUS$1,325 /oz Au,US$3.00 /lb copper andUS$17.00 /oz silver, at an 8% discount rate. - Payback of pre-production capital in 3 years from start of production.
- C1 cash operating cost of
US$412 /oz Au including all on-site costs and AISC cost ofUS$620 /oz Au calculated with all on-site and off-site costs, TCRC charges, sustaining costs and net of by-product credits. - Average annual metal production of approximately 34,750 ozs gold, 1.67 million pounds copper and 4,780 ozs silver.
- Pre-production capital cost of
US$54.2M million including contingency of 38% on direct costs and 26% on total of direct and indirect costs. - Open pit mining utilizing drill blast, trucks and shovels, waste stripping ratio of 9/1.
- Processing rate of 1,400 t/day using conventional crush/grind comminution, gravity concentration and flotation to produce a copper-gold concentrate. In addition a gold bearing pyrite concentrate will be produced and treated off-site by
Carbon in Leach (“CIL”) technology. - Life-of-mine metal recoveries of 86.4% for gold, 87.4% for copper, and 50% for silver.
- Concentrate grades average approximately 132 g/t gold, 25.5% copper and 28 g/t silver.
- Minimum 8 year mine life, based on proposed open pit depth of 190 metres.
- Significant potential exists to extend mine life as drilling has identified mineralization along strike and to 370 metres down dip.
- Post-tax NPV of
US$13.0 M and IRR of 28.6% for base case usingUS$1,325 /oz Au andUS$17.00 /oz silver, at 8% discount rate. - Payback of pre-production capital in 1.9 years from start of production.
- C1 cash operating cost of
US$420 /oz Au including all on-site costs and AISC cost ofUS$642 /oz Au calculated with all on-site and off-site costs, TCRC charges, sustaining costs and net of by-product credits. - Average metal production of approximately 24,000 ozs gold per year and 6,000 ozs silver per year.
- Pre-production capital cost of approximately
US$34.1 M including contingency of 36% on direct costs and 26% total of direct and indirect costs. - Underground trackless mining utilizing ramp access, cut and fill and open stope mining.
- Processing rate of 550 tonnes per day using crush/grind comminution, gravity concentration and CIL technology.
- Average life-of-mine metal recoveries of 93% for gold and 50% for silver.
- Minimum 4 year mine life based on mining plan depth to 200 metres below surface.
- Excellent potential to extend mine life as drilling has intersected significant mineralization to 260 metres down dip.
Terakimti Gold Heap Leach project
- Post-tax NPV of
US$13.2 M and IRR of 30.1% for base case usingUS$1,325 /oz Au andUS$17 /oz silver, at an 8% discount rate. - Payback of pre-production capital in 2.4 years from start of production.
- C1 cash operating cost of
US$465 /oz Au including all on-site costs and AISC cost ofUS$649 /oz Au calculated with all on-site and off-site costs, sustaining costs and net of by-product credits. - Average metal production of approximately 17,800 ozs gold per year and 57,250 ozs silver per year.
- Pre-production capital cost of approximately
US$17.2 M including contingency of 25% on direct costs 19% on total of direct and indirect costs. - Open pit mining utilizing drill blast, shovels and trucks with waste stripping ratio of 3.8/1
- Processing rate of 715 tonnes per day using two stage crushing, heap leaching and
Merrill Crowe technology. - Average life-of-mine metal recoveries of 65% for gold and 30% for silver.
- 4 year mine life.
- In addition to heap leaching of the gold oxide zone, potential exists to develop supergene gold, copper, and primary sulphide copper, gold, and zinc resources underlying the gold oxide zone.
Environmental and Social Impact Assessment
Independent Environmental and Social Impact Assessment studies (“ESIA”) have been completed for the project areas by
Mining Licences
Risk and Opportunities
As with all mining projects, a number of opportunities and risks exist which may affect the outcome of one or all of the projects. Known opportunities and risks pertaining to all of the projects are identified immediately below, followed by a statement of opportunities and risks specific to each of the projects.
Opportunities for all Projects:
- Potential exists to optimize metal recoveries and reduce reagent consumptions in the processing circuits.
- Process equipment costs are based on North American supply and assessment of other equipment markets should be conducted to evaluate this cost reduction opportunity.
- The close proximity of the Mato Bula and Da Tambuk projects creates an opportunity for combining of project resources, such as power supply, road access, water sources, administration and technical departments, which could reduce costs. Certain general facilities and services may possibly be shared with the Terakimti project as well.
Risks for all Projects:
- Volatility of commodity prices.
- Unforeseeable escalation of capital or operating costs.
- Political stability, security and social opposition.
- Unforeseen future changes in host country regulations that may have a direct impact on production and economics of the projects including and not limited to environment aspects and taxes.
- Inherent geological risk and uncertainty.
- Sourcing of skilled employees for mining and processing plant operation/QAQC control.
- Metallurgical performance of the processing plant may be different than projections based on test work completed to date.
- Potential sources of water supply for operations must be confirmed and may vary from the assumptions made in the studies.
- The engineering assumptions and results presented in the PEA’s may vary from actual conditions.
- Abnormally high precipitation events during the wet season may cause flooding in the minesite areas and/or restrict access to the project sites.
Project Specific Opportunities and Risks – Mato Bula
Opportunities:
- An updated resource estimate for Mato Bula is in development which will incorporate results of infill and exploration drilling completed in 2017. The results are expected to increase the level of confidence in the existing mineral resource estimates and identify additional areas of mineralization outside the current resource and mine plan.
- Drilling completed to date has identified significant gold copper and zinc mineralization extending laterally and to depth, which upon future technical and economic assessment may serve to extend the life of the proposed mining operation.
- The open pit scenario results in a high waste stripping ratio. Additional mine planning optimization, including assessment of underground mining may offer the potential to improve project economics.
- Due to the close locations of Mato Bula and Da Tambuk, opportunities may exist for combining access, infrastructure and certain processing facilities to the benefit of both projects.
Risks:
- Unforeseeable geotechnical conditions requiring shallower pit slopes than expected.
- Higher strip ratios than planned.
- Metallurgical test work completed to date is preliminary. Additional metallurgical test work is required to better understand the metallurgical performance.
Project Specific Opportunities and Risks – Da Tambuk
Opportunities:
- An updated resource estimate for Da Tambuk is in development which will incorporate results of infill drilling completed in 2017. The results are expected to increase the level of confidence in the existing resource.
- Drilling completed to date has identified significant gold mineralization extending laterally and to at least 260 metres down dip depth, which upon future technical and economic assessment may serve to extend the life of the proposed mining operation.
- The mine plan is based predominantly on the use of cut and fill mining, with limited use of sublevel stoping. Improved understanding of ground conditions obtained in a dedicated geotechnical program, could provide justification for increased application of sublevel stoping, which would lower mining costs.
- Due to the close locations of Mato Bula and Da Tambuk, opportunities may exist for combining infrastructure and certain processing facilities to the benefit of both projects.
Risks:
- Insufficient availability of skilled underground miners. Skills development and training, as well as hiring of expatriate workers are expected to be a key aspect of the operations.
- Geotechnical conditions and rock quality parameters in the underground mine may be different than anticipated.
- Metallurgical test work completed to date is preliminary. Additional metallurgical test work is required to better understand the metallurgical performance.
- More underground dilution than planned.
- Excessive ground water ingress into the underground mine.
Project Specific Opportunities and Risks – Terakimti
Opportunities:
- Heap leach gold recoveries of over 70% were achieved in column leach test work. Potential exists that ultimate gold recovery may exceed the project of 65% applied for the PEA.
Risks:
- Heap leach permeability and metal extractions may not be as projected based on test work.
- Pit slope instability more than projected.
- Higher strip ratios than planned.
The Tigray area of
Management Discussion
Management is extremely pleased with the results of the PEAs which clearly support the Company’s commitment to developing its Ethiopian mining projects. The immediate objectives will focus on the development of the Terakimti Gold heap leach project, sourcing development financing for each of the projects, and securing the formal approval of the Mato Bula and Da Tambuk mining licence applications currently in the review process with the MoMPNG.
Upon receipt of the pending mining licences the Company plans to move forward with additional engineering and development of the Mato Bula and Da Tambuk projects. In addition, the Company plans to continue its assessment of the Terakimti supergene and primary sulphide resources extending below the gold oxide zone. Drilling completed to date has identified a significant copper-gold-zinc resource as previously reported by the company (see
Qualified Persons
This news release has been reviewed and approved by the below noted Qualified Persons. The Qualified Persons have reviewed or verified the information for which they are individually responsible, including scientific, technical and economic information underlying the information or opinions contained herein.
More information on the Company can be viewed at the Company’s website: www.eastafricametals.com
On behalf of the Board of Directors:
For further information contact:
Telephone +1 (604) 488-0822
Email investors@eastafricametals.com
Website www.eastafricametals.com
Cautionary Statement Regarding Forward-Looking Information
This news release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "anticipate", "believe", "plan", "expect", "intend", "estimate", "forecast", "project", "budget", "schedule", "may", "will", "could", "might", "should" or variations of such words or similar words or expressions. Forward-looking information is based on reasonable assumptions that have been made by
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Source: East Africa Metals Inc.