VANCOUVER, BC–(January 13, 2015) –
- Base case pre-tax IRR of 77% and NPV (5% discount rate) of C$184.3M (after-tax IRR of 59% and NPV of C$113.5M) (1)
- Pre-production capital requirements reduced by C$7.3M from C$69.2M to C$61.9M
- Pre-production period reduced from 24 months to 18 months as a result of existing infrastructure and permits from the acquisition of the Sigma/Lamaque Mill and Mine Complex and the optimized mine plan for the North Zone
- Life of mine (“LOM”) cash cost of C$551 per ounce and all-in sustaining costs of C$731 per ounce
- Updated Preliminary Economic Assessment (the “PEA”) uses the same mineral resource estimate as the previous PEA and does not incorporate drilling completed since April 2013 or any of the Sigma/Lamaque mineral resources obtained in the acquisition noted below
- More than 70,000 meters (“m”) of drilling was completed subsequent to the database cut-off date (April 2013) for the mineral resource estimate used in the PEA
- Resource update incorporating this drilling is currently underway
Sigma-Lamaque Resource Review Completed
- Analysis of the prior resource estimate at Sigma-Lamaque which was acquired in the transaction has now been completed and will be included in the PEA technical report; these resources have not been accounted for in the PEA
(1) The PEA is preliminary in nature and it 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. Mineral resources that are not mineral reserves do not have demonstrated economic viability. There is no certainty that the PEA will be realized.
Integra Gold Corp. (TSX VENTURE: ICG) (“Integra” or the “Company”) is pleased to report the results of a Preliminary Economic Assessment (“PEA”) carried out on the Company’s flagship Lamaque Gold Project (the “Lamaque Project”) in Val-d’Or, Québec, Canada. The PEA was prepared by InnovExplo Inc. (“InnovExplo”) with technical contributions from Amec Foster Wheeler Environment and Infrastructure (“Amec”), Geologica Groupe-Conseil Inc., Geopointcom Inc. and WSP Canada Inc. (“WSP”). The technical report with respect to the PEA will be filed on the Company’s website and SEDAR within 45 days.
Changes from Previous PEA:
The PEA represents an update of the Company’s previous PEA (March 11, 2014) which incorporates the impact of the Company’s acquisition of the neighboring Sigma/Lamaque Mill and Mine Complex. The primary areas impacted with this acquisition are:
- Reduced Operating Costs from C$665 cash cost per ounce to C$551 per ounce (17% reduction), primarily as a result of lower milling costs as the Company is no longer contemplating toll or custom milling its material at third party facilities;
- Reduced Pre-production Capital Expenditures by C$7.3M from C$69.2M to C$61.9M, primarily as a result of utilizing existing surface and underground infrastructure to access the Parallel Zone, thereby eliminating the need for a standalone decline or ramp and associated surface infrastructure. Capital expenditure savings are partially offset by the capital required to refurbish the Sigma Mill;
- Increased Gold Recoveries by 1% at all of the mineralized zones as a result of longer leaching time for planned production based on actual capacity and the flow sheet of the Sigma Mill versus previous toll milling assumptions;
- Reduced Pre-Production Period from 24 months to 18 months, primarily through the use of existing surface and underground infrastructures allowing the Company to reach the Parallel Zone in a shorter time frame;
- Potential for Earlier Development Start-Date as a result of the significant provincial and federal permitting hurdles overcome with the acquisition of the Sigma/Lamaque Mill and Mine Complex. A Federal Environmental Assessment report, also known as an Environmental Impact Study was avoided. Amendments to the existing provincial permits in place at the Sigma/Lamaque Mill and Mine Complex will be sufficient to authorise the production activities in the North Zone (Parallel and Fortune Zones) which simplifies the permitting process. Approximately 80% of the Company’s Lamaque Project (including the Parallel and Fortune Zones) and 100% of the land recently acquired are mining leases, not exploration claims and therefore do not need to be converted into leases.
The updated PEA uses the same mineral resource estimate as the previous PEA and does not incorporate drilling completed since April 2013 or any of the Sigma/Lamaque mineral resources obtained in the acquisition. The increase in recovered ounces in the updated PEA is a result of improved recoveries at the Sigma Mill in comparison to the previously assumed toll milling scenario. An updated mineral resource estimate for the Lamaque Project is underway and is anticipated being completed in Q1 2015.
PEA Summary and Highlights
Link to PEA Summary Presentation and Additional Maps:
The Company has provided a base case scenario (the “Base Case”) using a US$1,175 per ounce gold price and a 1.14 C$ to US$ exchange rate which is equivalent to C$1,340 per Au ounce (January 12, 2015 closing spot price was US$1,233 per ounce and exchange rate was 1.195 equating to C$1,473 per ounce). All currency figures are in Canadian Dollars (C$) unless otherwise stated. The Base Case economic evaluation has a pre-tax internal rate of return (“IRR”) of 77%, payback of capital in 1.3 years and a net present value (“NPV”) of C$184.3M at a discount rate of 5%.
The PEA is preliminary in nature and it 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. Mineral resources that are not mineral reserves do not have demonstrated economic viability. There is no certainty that the PEA will be realized.
“The acquisition of the Sigma Mine and Mill Complex for C$7M in cash and stock was a highly accretive acquisition for the Integra shareholders as demonstrated by the substantial increase in NPV and IRR, and decrease in both capital and operating expenditures in the PEA announced today,” commented Stephen de Jong, President and CEO. “More importantly, however, this acquisition provides Integra with a better defined pathway to development and production, reduces development timelines and reduces development and operating risks at the project as a result of the existing surface and underground infrastructure, mill and tailings facility. Our next near-term milestone is the completion of an updated resource estimate, which will incorporate a substantial amount of new drilling with the objective of increasing the overall resource base and increasing the mine life of the project.”
Base Case Assumptions/Highlights
|Current PEA||Previous PEA|
|Exchange Rate (C$ to US$)||1.14||1.05|
|Average Annual Gold Production (ounces)||109,900||112,400|
|Peak Annual Gold Production (ounces )||141,600||143,300|
|Pre-Production Capital Costs||C$61.9M||C$69.2M|
|LOM Sustaining Capital||C$89.0M||C$66.8M|
|Pre-Production Period (years)||1.5||2.0|
|Mine Life (years)||4.5||4.25|
|Total Cash Cost per Au Ounce *||C$551||C$665|
|All in Sustaining Cost per Au Ounce **||C$731||C$805|
|All in Cost (including pre-production capital)***||C$811||C$859|
|Life of Mine NPV at 5% Discount Rate||$184.3M||$146.0M|
|Internal Rate of Return||77%||51%|
|Payback Period (years)||1.3||1.5|
|Life of Mine NPV at 5% Discount Rate||$113.5M||$88.5M|
|Internal Rate of Return||59%||38%|
|Payback Period (years)||1.6||1.8|
* Total Cash Cost: Direct mining cost, refining and royalties
** All in sustaining cost: Direct mining cost, refining, royalties, sustaining capital, reclamation and salvage
*** All in cost: Direct mining cost, refining, royalties, preproduction and sustaining capital, reclamation and salvage
Base Case Comparison to Spot Gold Price & Current Exchange Rate
|Base Case||Spot Gold Price and Current Exchange Rate (January 12, 2015)|
|Gold Price per ounce||US$1,175||US$1,233|
|Exchange Rate (C$: US$)||1.14||1.195|
|Gold Price per ounce||C$1,340||C$1,473|
|Pre-Tax NPV (5%)||C$184.3M||C$240.0 M|
|Pre-Tax Payback (years)||1.3||1.0|
Production Profile (Diluted Head Grade)
and Projected Cash Flow at US$1,175 per ounce
|Annual Production (oz)||Pre-Tax Net Cash Flow (C$M)|
Pre-Tax NPV (C$M) Sensitivity to Gold Price and Exchange Rate
|Gold Price (US$)|
|C$:US$ Exchange Rate||1.00||43.1||84.7||126.3||167.9||209.5||251.1|
Pre-tax IRR (%) Sensitivity to Gold Price and Exchange Rate
|Gold Price (US$)|
|C$:US$ Exchange Rate||1.00||23%||39%||55%||71%||86%||101%|
The PEA was prepared as an underground mining project based solely on the mineral resources reported by the Company on September 25, 2013. The majority of the gold mineralization is hosted within two deposits, the Triangle Zone and the Parallel Zone, located approximately two kilometers apart. The project will use the existing infrastructure of the Sigma site as the base for operations.
In the proposed development plan in the PEA, the Triangle Zone would be accessed by way of a ramp (the “South Ramp”), or decline, from surface which would be collared approximately 450 m west of the Triangle Zone limit. It should be noted that condemnation drilling completed in late 2014 for the South Ramp intersected multiple high grade zones within the proposed ramp location area. Follow up drilling on these targets will occur in Q1 2015.
Link to Triangle Zone Infrastructure Map:
In the North Zone, access to the Parallel Zone will be achieved through the completion of a 700 m lateral ramp starting from existing Sigma mine underground workings. The existing underground workings are 4.25 m by 4.25 m and are accessed by a fully serviced portal, including ventilation, power and water services, with the entrance in the southeast wall of the Sigma pit. The starting point of the ramp to the Parallel Zone is located underground, approximately 200 m from the portal entry-way in the pit. It is estimated the ramp can be developed and advanced at a rate of 180 m per month.
Link to Parallel Zone Infrastructure Map:
Secondary mineralized zones included within the PEA are the No. 4 Plug, which would be accessed via underground infrastructure from the Triangle Zone (South Zone), and the Fortune Zone, which would be accessed via the Parallel Zone (North Zone) infrastructure.
The pre-production period has decreased from the 2 years in the Company’s previous PEA to 1.5 years as a result of efficiencies realized with the Parallel Zone underground access from Sigma’s existing workings versus the original plan to collar a ramp from surface. The revised PEA contemplates beginning development of the Parallel ramp after an initial 1 month of general underground preparation and construction. The revised mining plan for the Parallel Zone allows for expedited access to larger and higher grade areas of mineralization.
Development of the South Ramp on the Triangle Zone would commence 3 months thereafter, after construction of basic surface infrastructure and the portal, compared to 6 months in the previous PEA. Limited production from both the North and the South Zones would occur during the pre-production stage, accounting for approximately 17,800 ounces throughout the final 9 months of pre-production.
Average annual production after the pre-production stage is 442,400 tonnes at a diluted grade, or head grade, of 8.24 g/t Au for 109,700 Au ounces recovered (average 93.6% recovery).
The utilization of the Sigma Mill is the primary difference from the previous PEA and generates the majority of the economic benefits in this PEA update. Capital cost requirements for refurbishment work and increasing the tailings pond capacity as well as operating costs for transportation and milling were evaluated by independent consulting firms WSP and Amec. This was completed after multiple visits to the Sigma Mill and tailings facilities and using a projected throughput rate of 1,300 tonnes per day.
Pre-Production and Sustaining Capital Costs
The pre-production capital (or “CAPEX”) is estimated at C$61.9M. The mill and tailings facilities have already been constructed and only minor upgrades are required. The Company has the ability to process mineralized material recovered during the 18 months pre-production stage. Revenue generated from this production has been included in forecasted cash flows with peak requirements being C$61.9M. It should be noted that peak requirement is reduced to C$57.7M taking into account credit for mining income tax that are allowable in pre-production. A total of approximately 17,800 ounces (C$23.3M in revenue) are anticipated to be produced during the final 9 months of the pre-production phase.
Pre-production capital costs include surface infrastructure (site preparation, roads, electric and water lines), refurbishment of existing buildings for offices at the Sigma site, surface infrastructure at the South Ramp including a new dry building and a garage, mobile equipment, development and capitalized operating costs, owner costs (closure costs in line with required financial guarantees, Company staff and indirect costs) as summarized in the following tables. Pre-production capital costs are minimal given that there is no need to build a new processing and tailings facility, and that mineralization is close to surface. Additionally, in the case of the Parallel Zone, mineralization is easily accessible by way of existing underground workings at Sigma, further reducing the need for new infrastructure. It was assumed that a down payment of 25% would be paid on mobile equipment with the balance paid over 5 years at a 6% interest rate. Residual value was limited to 25% to 35% depending on the number of years of use.
Pre-production is anticipated to take place over an 18 month period with the majority of capital expenditures attributed to ramp development, mill refurbishment, tailings expansion, development of mineralized zones, and to conduct mining at the proposed mining rate and mill throughput.
Pre-Production Capital Costs Estimate
|Pre-Production Capital Costs||C$M||US$M|
|Surface infrastructure (20% contingency included)||6.7||5.9|
|Mining infrastructure (20% contingency included)||7.6||6.7|
|Mobile equipment (10% contingency included)||11.7||10.3|
|Development and Capitalized Operating Costs (20% contingency included)||38.9||34.1|
|Mill refurbishment (30% contingency included) and tailings||7.5||6.6|
|Owner’s Costs (Integra administration and technical staff, maintenance personnel, expenses associated)||12.7||11.1|
|Offsetting capitalized revenue (17,800 ounces in pre-production)||(23.3)||(20.4)|
The LOM sustaining capital costs are estimated at C$89.0M with most of the expenses associated with development of the main ramps for long-term access to mineralized zones and ventilation raises. Mobile equipment costs are associated with adding new equipment and payment for existing equipment. Mining infrastructure costs are related to ventilation equipment, pumps, compressors and underground electrical installation and material. Owner costs are negative as they take into account salvage value of the various equipment and installations estimated to be C$10.1M.
Sustaining Capital Costs Estimate
|Sustaining Capital Cost||C$M||US$M|
|Surface infrastructure (20% contingency included)||2.0||1.7|
|Mining infrastructure (20% contingency included)||5.0||4.4|
|Mobile equipment (10% contingency included)||19.1||16.8|
|Development (20% contingency included)||63.2||55.5|
|Mill refurbishment (30% contingency included) and tailings||4.6||4.0|
|Salvage value (equipment, modular building)||(10.1)||(8.9)|
|Closure Cost (minus existing financial guarantee for Sigma)||5.2||4.6|
Operating costs are 17% lower compared to the previous PEA. Mining costs are lower by 8% due to the shorter mining schedule in the North Zone and adjustments to mining costs. Milling/transportation costs have been reduced by 41% due to lower transportation costs as a result of a shorter distance to the mill and substantially lower milling costs as a result of the mill acquisition. G&A costs have been reduced by 7% due to a lower cost for energy (use of natural gas instead of propane for air heating), water treatment cost (use of Sigma pond to treat water) and a shorter project life.
Cash Cost Per Ounce and Per Tonne Summary
|Cash Cost Summary||C$/ounce||C$/tonne||* US$/ounce||* US$/tonne|
|Ore transport and milling||110||27||97||24|
|Total Cash Costs||551||137||483||120|
|Sustaining Costs **||180||45||158||39|
|Cash Costs + Sustaining costs||731||181||641||159|
|All in costs ***||811||201||711||176|
*C$:US$ Exchange rate: 1.14
**Sustaining costs: sustaining capital, salvage and reclamation
***All in cost: Direct mining cost, refining, royalties, preproduction and sustaining capital, reclamation and salvage
All-in “per tonne” operating cost data derived from public disclosure from other underground mining operations in the Abitibi belt and elsewhere, when benchmarked against operating costs from the Lamaque Gold Project, show remarkable consistency and similarity.
Processing and Tailings
The LOM average mill throughput rates are expected to be approximately 1,300 tonnes per day based on 340 operation days/year. This includes resource extraction from both the North and South Zones thereby minimizing undue pressure put on any one production area and reducing potential bottlenecks while mining.
The PEA assumes milling requirements for production at Lamaque would be fulfilled by utilizing the Sigma Mill, located approximately 1 km from the Parallel Zone and 2.5 km from the Triangle Zone. The Sigma Mill is 100% owned by the Company and was fully operational as recently as 2012. An estimated C$12.1M will be required over the life of mine for refurbishment of the mill and increasing the existing tailings capacity. C$7.5M of this will be required during the pre-production period and has been included as part of pre-production capital expenditures. During the early stages of production, a capital expenditure of C$1.9M (included in sustaining capital) will be required to complete the mill refurbishment for the proposed throughput of 1,300 tonnes per day, reduced from the grinding circuit’s current capacity of 2,200 tonnes per day. Should the Company require additional milling capacity in the future, the mill can be brought back to its original 2,200 tonnes per day by refurbishing the second ball mill and adding extra leach tank.
During the production period, a milling cost of C$24.94 per tonne has been assumed in the PEA as the result of an independent study completed by WSP. Based on independent quotes, transportation costs for material are estimated to C$2.45 per tonne for a combined milling/transportation cost of C$27.39 per tonne. This resulted in substantial per tonne operating cost savings when compared to the previous PEA which contemplated toll milling and assumed a combined milling/transportation cost of C$45.69 per tonne.
The Company sees significant opportunity in controlling the milling of its own material. As opposed to toll milling, not only does the Company secure capacity for its own future processing needs but also enhances the Company’s future growth opportunities as a result of owning a mill which can be expanded with relative ease, allowing the Company to potentially take advantage of the many other mining opportunities in the region.
The Sigma tailings impoundment area is made up of four separate cells. A recirculation pond and a polishing pond are located to the east of those four cells. Currently, two cells out of four are full. There is sufficient capacity in the remaining two cells for approximately 1.25 years of tailings storage without requiring further raising or expansion of the tailings impoundment based on several deposition scenarios developed by Amec. An estimated 3.3 years of life can be added to the tailings impoundment by raising two cells using tailings as done in the past. The potential expansion of one cell is covered in existing permits. Geotechnical investigation, design, preparation of plans, construction QA/QC and construction costs to cover planned production are included in capital expenses of the PEA.
Additional capacity beyond the current life of the mine, established at 4.5 years, can be achieved by further raising the dykes. The objective of the geotechnical investigation will be to validate such scenario. A new tailings management facility could also be constructed for long term use in an area of undeveloped ground, north of the existing tailings impoundment area. The option of using tailings to backfill stopes as an additional option to extend the tailings deposition capacity will also be evaluated.
To date, the tailings facilities have been maintained with a full time environmental technician providing monitoring before and during the ownership change of the mill. The tailings facilities are deemed to be in good standing with the Ministry of Energy and Natural Resources (“MENR”) and the tailings in place are not acid generating.
Phase 3 metallurgical test work completed in 2014, which was used for the previous PEA, utilized mineralized samples from 4 mineralized zones and simulated flow sheets consistent with those of mills in the immediate area (see Company press release dated February 25, 2014). WSP evaluated the condition of the Sigma Mill, the cost of a complete mill refurbishment and the expected recovery based on applying the data from Phase 1 and 3 metallurgical testing to the Sigma Mill flow sheet. Gold recoveries evaluated by WSP represented an increase of approximately 1% on average across the various mineralized zones when compared to the previous PEA due to longer leach times available at Sigma mill.
Optimized Gold Recovery: Current PEA versus March 2014 PEA
|March 2014 PEA Gold Recovery|
|Parallel Zone||97.4 %||96.7%|
|Triangle Zone||92.5 %||90.2%|
|Fortune Zone||96.1 %||95.0%|
|No. 4 Plug||87.1 %||86.1%|
The PEA assumes that underground mining will be used for all resource extraction. The mineral resource estimate, which includes inferred mineral resources as initially disclosed on September 25, 2013 (database cut-off date of April 24, 2013) was used as the basis of this current PEA. The Company has completed over 70,000 m of drilling since the database cut-off date for the current resource and is working towards an updated resource, which is targeted to be completed in Q1 2015. The updated mineral resource estimate, together with various other on-going studies, will be integrated into a Prefeasibility Study (“PFS”) on the Lamaque Project.
Initial disclosure of the resource assumed a 3 g/t Au cut-off grade diluted to a 2 m minimum true thickness with resource figures also provided using a 5 g/t Au cut-off. For the purpose of the PEA, and accounting for both the proposed mining methods as well as using a price of US$ 1,175 per ounce of gold, the Company used variable cut-off grades of between 4.0 and 5.0 g/t gold for individual stope designs, dependent on each specific resource block.
Mineral Resources at 5 g/t Gold cut-off
|Indicated Mineral Resources||Inferred Mineral Resources|
|Contained Gold Ounces||Tonnes||
|Contained Gold Ounces|
|No. 4 Plug||522,900||8.3||140,280||-||-||-|
Mineral resources are not mineral reserves and have not demonstrated economic viability. All figures are rounded to reflect the relative accuracy of the estimate. All assays have been capped where appropriate.
For the Fortune and Triangle zones, all inferred resources were considered in the mining scenario. Due to the high gold grade of the Parallel Zone inferred resources, which are based on minimal drilling, only 40,900 tonnes at a grade of 9.13 g/t Au of inferred resources were considered. The PEA study did not incorporate the resources identified in the crown pillar.
The Company updated its Lamaque Project mineral resource estimate on January 28, 2014, with the addition of the No. 6 Vein and the Sixteen Zone. These zones have not been included in the PEA and are therefore not discussed here.
Additional Mineral Resource Potential
As of December 31, 2014, the Company had drilled an additional 70,371 m at the Lamaque Project which has not yet been included in any mineral resource estimate calculation or the PEA. Drilling not included in the mineral resource calculation or in the PEA consists of:
- Parallel: 13,351 m in 48 holes
- Triangle (including South Triangle): 32,006 m in 78 holes
- Fortune: 6,025 m in 26 holes
- No. 3 Mine: 4,785 m in 12 holes
- No. 5 Plug: 9,575 m in 30 holes
- New Exploration Targets: 4,629 m in 18 holes
Drilling not included in the existing Parallel Zone and Triangle Zone resource estimates, consisted of both infill and extensional step-out drilling. Previously released results for the Parallel Zone drilling confirmed continuity of the mineralized zones in all cases, which the Company hopes will assist in converting further ounces from the inferred to indicated category.
Infill and extension drilling at the Triangle Zone which began in January 2014 not only confirmed the continuity of mineralized zones but also intersected substantial mineralization well beyond the limits of the existing resource, to the east, west and at depth of the known deposit.
Infill drilling at Fortune confirmed internal continuity of mineralization while closer space drilling should help in converting inferred resources into the indicated category.
Gold mineralization was intersected at both the No. 3 Mine and No. 5 Plug with resource estimation work pending completion of additional drilling and subsequent geological modelling.
An updated mineral resource estimate is expected to be completed during Q1 2015 and will focus on building mineral resources in order to increase the mine life of the Lamaque operations.
When the Company acquired the Sigma/Lamaque Mill and Mine Complex from the receiver appointed to the assets of Century Mining Corporation it acquired all of the mineral resources contained within the associated property, none of which have been included as part of the mine plan in the PEA disclosed today. Upon completion of the acquisition in October 2014, the Company commissioned Micon International Ltd (“Micon”) to conduct a review of the mineral resources in order to qualify them as acceptable by NI 43-101 standards and guidelines. The most recent minerals resource audit was completed on the project in June, 2011 by Micon (the August, 2011 report is available on SEDAR under the Century Mining profile) with a subsequent review completed in 2014. The reviewed resource estimates included following zones on Sigma-Lamaque: Lamaque No. 2 Mine, North Wall Shears, North Wall Dykes, Sigma Polygons, Lamaque Main Mine, and Cross-Over zone. Micon has not recalculated the cut-off grade used in reporting the resource since that time. Nevertheless, Micon considers the 2011 estimate to be valid and representative of the resource present at Sigma-Lamaque Project. Most of the mineralized material (approximately 250,500 tonnes) that was mined by Century Mining Corporation subsequent to the 2011 mineral resource estimate were from areas not contained within that estimate. Only 27,300 tonnes was mined from the resource blocks in the North Wall Shear (Sigma) and North Wall Dyke (Sigma). Further details about the resource estimate, including key assumptions, parameters methods and risks, will be included within the same technical report as the PEA announced today, which will be filed on SEDAR in the next 45 days.
Mineral Resource Estimate for the Sigma-Lamaque Property (as of June 20, 2011)2
2. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the estimated Mineral Resources will be converted into Mineral Reserves. Mineral Resources tonnage and contained metal have been rounded to reflect the accuracy of the estimate, and numbers may not add up due to rounding. The estimate of the mineral resources presented above were reviewed and verified by Tania Ilieva, P.Geo of Micon, who is independent of the Company. For 19,000 ounces in the indicated category and for 6,000 ounces in the inferred category for Lamaque No2 Mine the cut off grade was 2.1 g/t; for the rest of the resource estimate the cut-off grade is 1 g/t gold.
The Lamaque Project is designed as a primarily mechanized underground mine which utilizes both conventional room and pillar and long-hole mining methods. The administration and mine service center would be located at the existing Sigma Mine site on Highway 117, the Trans-Canada Highway. The site is served by a 25 KV power line, natural gas and municipal services. There will be two production centers each with a ramp to access resources.
The North Zone will be developed off of an existing Sigma underground drift approximately 200 m southeast of a portal (the “North Portal”) inside the Sigma open pit. This portal is currently fully serviced with power, water and an operating compressor currently in place. A new 700 m drift will provide access to the Parallel Zone and later to the Fortune Zone. Should the Company outline resources at its No. 5 Plug and No. 3 Mine targets, it is anticipated these zones would also be accessed through the North Portal as well. A new ventilation raise will be developed at the Parallel Zone which will serve also as an emergency egress. Although the PEA has been prepared under the assumption development and mining will be owner operated, the Company has prepared a separate budget for an underground exploration program for the Parallel Zone which will include underground drilling and bulk sampling which could potentially utilize the services of a mine contractor.
The South Ramp will be located approximately 3 km from the Sigma mine site and would reach a vertical depth of 620 m. The South Ramp would access the Triangle Zone and the No. 4 Plug. The South Ramp area would be connected to an existing gravel road 300 m to the south and an internal road will be built from Sigma for material transportation, allowing for two entry points to the site. Infrastructure will be installed directly on the South portal site to serve workers and supervisors.
The mining methods used in the PEA were selected according to vein geometry and common practices for comparable mining operations in the region, an area with an extensive history of underground mining.
For mineralized zones dipping less than 45 degrees, the room and pillar mining method is proposed. Mechanized sub-level development in mineralized zones will be completed at 60 m intervals along the veins, rooms will be 6 m in width and a performance rate of 18 tonnes/man shift was used in the mine plan. Typical stopes will have a height of 2 m and external dilution of 5% (at 0.0 g/t Au) was included with a mining recovery of 85%.
For mineralized zones dipping more than 45 degrees, a long-hole mining method will be used with mechanized sub-level development completed at 18 m intervals along the veins. Typical stopes have a thickness of 3 m and a length of 20 m. An average of 20% (at 0.0 g/t Au) dilution has been applied when stope thickness is greater than 3 m, and 35% for stopes less than 3 m. Mucking will be done longitudinally using remote controlled scoops and the mining recovery is evaluated to be 85%. Rock-fill will be used in some of long-hole stopes for the North Ramp.
Mineralized material and waste will be transported to surface using 30 tonne trucks for the North ramp and 45 tonne trucks for the South ramp. The cost for material handling is estimated to range from C$7.91/tonne to C$11.91/tonne. During the mine life, development would generate approximately 14% of the mineralization tonnage, room and pillar mining 37% and long-hole mining, 49%.
The following table summarizes development and mined tonnes for the Lamaque Project:
|Room and pillar||292,000||468,200||37|
Location and Regional Infrastructure
The Lamaque Project, located within 3 km of the city of Val-d’Or, Québec, a mining community of over 35,000 people, benefits from world-class infrastructure. As important as the physical infrastructure in the Val-d’Or region, is the high level of underground mining expertise readily available in the region. The Company believes its advantageous location has the potential to positively impact the long term viability and attractiveness of employment at the Lamaque Project, given that employees and contractors could work in the community they live in, a rare opportunity in the mining industry. As of December 31, 2014, the Company had received over 250 resumes from interested parties looking for employment in a variety of positions including development, mining, services, geology, engineering and other support roles.
The Lamaque Project is located adjacent to the Trans-Canada Highway, with all services readily available at site. The plan as outlined in the PEA will have minimal impact on the community as there are no homes, businesses, or other infrastructure where the proposed mining will take place.
Since September 2013, the Company has initiated a proactive communication strategy with its stakeholders. With the help of consulting firms such as Amec, Transfert Environnement and TMR Communication, the Company has conducted two phases of information and public consultation with approximately 40 stakeholders reaching more than 400 persons.
In June 2014, a consultation committee was organized to discuss the community impact of the project with an independent moderator chairing each meeting. Site visits to the Lamaque Project and Sigma site and other a similar operations in Québec were organized to present accurate and relevant information about the project and the mining industry to the committee’s 20 members. For each potential impact identified, a specialist retained by the Company presented basic information on the topic, applicable regulations and outlined the impact generated by the project and the mitigating measures that are applicable. Company personnel routinely keep committee members informed about the project’s potential development and convey commitments made by Integra to limit the impact of the Lamaque Project. With seven such meetings completed to date, the impacts generated by the Lamaque Project have thus far been considered to be acceptable by the committee members. It should be noted that the consultation process has also been well received by the community and the Company is committed to ensuring all information about the Lamaque Project is readily available, both at committee meetings and on the Company website.
Environmental and Permitting
No Provincial environmental impact study is required for the project as the provincial daily production threshold is 2,000 tonnes, which surpasses the proposed mine plan. As a result of the Company’s acquisition of the Sigma/Lamaque Mill and Mine Complex, the Federal regulators and the Canadian Environmental Assessment Agency is considering the project as an extension of the Sigma property rather than a new application. As a result, the Company will apply for an amendment to the Environmental Impact Study previously conducted for the Sigma mine and not required to conduct a new study (see press release dated November 13, 2014 for further details).
The development of the North Zone (Parallel and Fortune Zones) will require Provincial authorizations in the form of Certificates of Authorizations (“CA”). They will be obtained through both new applications and modifications and amendments to CAs already in place. New CAs will be required for certain parts of the project, specifically for the development of the South Ramp. As the contemplated development scenario starts with the North Zone, the Company believes it will be able to concurrently put in place any permits required for work in the South, thereby having limited impact on the overall development timeline. At this time the documentation to support the permitting process for an underground exploration program of the South Ramp has been submitted to Provincial authorities. The analysis period is 90 days and complementary information can be requested by the authorities to finalize the analysis in order to obtain a certificate of authorization. To support production at the South Ramp, a new authorization process and a mining lease will be required and work will be done in 2015 to generate the technical information required to obtain the required authorization.
The existing CAs which cover past Sigma operations are at the final stage of transfer from the previous owner. Some modifications to these CAs will be required to support production at the North Zone. Documentation for these transfers is being prepared and will be submitted to Provincial authorities in the coming weeks. LOM reclamation costs for the Sigma site, including the mill and tailings facilities, have been evaluated at C$7.7M. Reclamation costs for the South Ramp were evaluated at C$1.1M. It should be noted that the financial guarantee in place for the project is currently C$2.5M.
Project Economics and Sensitivity
Key economic performance metrics are summarized in the following table on a pre-tax basis. A range of gold prices (US$) are shown for sensitivity purposes only.
Gold Price Sensitivity
|Pre-Tax NPV 5% (C$M)||101.4||148.8||184.3||196.2||243.6||291.0|
|Pre-Tax Payback Period (years)||2.1||1.6||1.3||1.25||1||0.8|
Exchange Rate, Capital Costs, Operating Costs Sensitivity Analysis (Pre-Tax)
|Exchange Rate C$:US$||1.05||185.1||140.4||60%|
Discount Rate versus Base Case Pre-Tax NPV Sensitivity Analysis (Pre-Tax)
Opportunities & Risks
The Company plans to undertake a PFS in 2015 that will build on and optimize the results from the PEA, including exploring the following opportunities to improve the Lamaque Project economics:
- Production outlined in the PEA is limited to a vertical depth of 620 m at the Triangle Zone. A complementary fall 2013 drill program intersected multiple high-grade zones below this level, to depths of up to 1,000 m vertical. The Triangle Zone also remains open to the south, east and west.
- The PEA is based on an April 24, 2013, mineral resource database cut-off date and does not include subsequent drilling, both infill and expansion, of approximately 70,000 m completed to the end of December 2014. In addition to this there are currently 3 drill rigs active on the property and Integra is planning a total drill program of 20,000 m in 2015.
- Production does not include any material being mined from the recently acquired Sigma property. Further work is required to identify resources and develop an economic scenario for mining. Any additional ounces defined as a result of this work will be in addition to the current production profile as milling capacity is not a bottleneck on production.
- The PEA does not include mineral resources from the No. 6 Vein, the Sixteen Zone, the No.3 Mine and the No. 5 Plug.
- Potential for further improvement in gold recoveries based on new metallurgical test work.
Reduction of Pre-Production Capital Expenditures:
- Potential to utilize contract mining in order to reduce up-front capital requirements.
- Evaluate different scenarios for mobile equipment purchase to lower capital costs.
Mine Plan Optimization:
- Underground design optimization will be undertaken with a view to reduce capital requirements and to control / minimize dilution and optimize mineral recoveries, including the evaluation of alternative mining methods to lower the proportion of room and pillar stope mining.
The following risks require mitigation strategies:
- Management of construction/engineering and procurement schedules, costs, and cost containment.
- Operating risks related to recruitment and training of underground workforce, specifically room and pillar miners.
- Permitting risks.
- Crown pillar thickness and stability evaluation through geo-mechanics characterization and stability analysis.
Recommendations and Next Steps:
The following recommendations have been given as the next steps of the Lamaque Project. The Company aims to achieve these objectives in 2015.
1) Incorporate all new drilling into a global project resource estimate
Update our mineral resource estimate on all deposits included in the PEA, and complete a maiden mineral estimate for new zones identified, including the No. 5 Plug and No. 3 Mine. Following on from this, we will subsequently evaluate the impact of these revised resource estimates on the project economics.
The following table presents the actual database cut-off dates for the various zones of the Lamaque Project where a mineral resource estimate is already in place:
|Zone||Database Cut-Off Date|
|Parallel Zone||May 24, 2012|
|Fortune Zone||November 8, 2012|
|No. 4 Plug||March 19, 2013|
|Triangle Zone||April 23, 2013|
The period post the cut-off dates highlighted, represents 20 months of drilling information not currently included in the revised PEA. Since the latest database cut-off date (Triangle Zone – April 24, 2013), a total of 70,371m in 212 holes were completed on the project.
2) Complete a Prefeasibility Study
A PFS should be completed on the project once an updated mineral resource estimate (expected in Q1-2015) has been completed. This study will also need to include:
- Hydrogeology study
- Rock mass characterization and stope design
- Crown pillar stability analysis
- Energy alternative for ore and waste handling
- Deep access to the ore body for Triangle and P4 zones
- Engineering for surface installation
- Engineering for electricity and mechanics installation
- Engineering for water management
- 4th phase of metallurgical study to further improve gold recoveries specifically for the Triangle and No. 4 Plug deposits, and to confirm data for all zones
- Detailed inspection of Sigma Mill equipment
3) Continue exploration and definition drilling at the Lamaque Project
The 2015 drilling program is to include a minimum of 40,000 m of drilling focusing on expanding the overall resource base by:
- continuing to expand the Triangle mineralized zones which are open laterally and at depth,
- completing a definition drill program on the No. 5 Plug and No. 3 Mine targets for which no mineral resource estimates have been completed,
- performing exploration drilling on promising geophysical and geological targets throughout the property.
4) Initiation of exploration work at Sigma-Lamaque
The Company initiated a review of the mineral resources and targets at Sigma in late 2014 with the goal of identifying areas where resources could be rapidly defined in proximity to existing or proposed infrastructure. This evaluation is expected to be completed in mid-2015 with a drilling proposal to follow thereafter.
5) Finalize the consultation and permitting initiatives
Further work is required to ensure all permits are in place for future development and production. In addition to permitting, ongoing consultation work will be required with the various stakeholders of the project.
- Complete CA transfer from the former Sigma operator (60% completed)
- Submit the CA documentation for the new operation (60% completed)
- No Environmental Impact Study is required from provincial or federal authorities
- A mining lease is required for Triangle zone and documentation will required to submit a feasibility study
- A reclamation plan for the South Ramp and the Sigma site will be required as related to future financial guarantees
Information and consultation initiatives
- Finalize the consultation process with stakeholders (85% completed)
- Initiate a follow up committee with stakeholders
- Continue regular information meetings with stakeholders and the local community
6) Commence an underground exploration program to generate a bulk sample at the Parallel Zone
An underground exploration program can be initiated using existing Sigma infrastructure. A twelve month program would generate a bulk sample from the core of the deposit and provide an efficient base from which to conduct definition drilling.
Using contractor cost estimates prepared in November 2014 and the PEA fixed costs, the proposed exploration program is estimated to cost C$16.2M and is expected to generate C$7M in revenue from gold production.
|Sigma Site Improvement||C$1.3|
Integra Corporate Expenses
(Staff Costs, Materials, Energy)
|Transport & Milling||C$1.0|
|Total Estimated Cost||C$16.2|
|Total Estimated Revenue*||C$7.0|
* US$1175 Gold per ounce, 1.14 C$:US$ Exchange Rate
Should the Company elect to conduct the Parallel Zone underground exploration program proposed above, prior to commencing project development, it is estimated that approximately C$13.5 M could be subtracted from the PEA pre-production capital, as the same infrastructure would later be used for production.
The Lamaque Project is under the direct supervision of Hervé Thiboutot, Eng. Senior Vice-President of the Company, and Francois Chabot, Eng. and Operations and Engineering Manager of the Company. Both Mr. Thiboutot and Mr. Chabot are Qualified Persons (“QP”) as defined by National Instrument 43-101.
In addition, each of the individuals listed below are independent QP for the purposes of NI 43-101. All scientific and technical information in this press release in respect of the Lamaque Project or the PEA is based upon information prepared by or under the supervision of those individuals.
For InnovExplo Inc., Sylvie Poirier, Eng. (Mining) and Laurent Roy, Eng. (Mining); for Geologica, Alain-Jean Beauregard, P. Geo. (Geology) and Daniel Gaudreault, Eng. (Geology); for GeoPointcom, Christian D’Amours, P. Geo. (Resources); for Amec Foster Wheeler Environment and Infrastructure, Stéphan Bergeron, Geo., M.Eng. (Environment); for WSP Canada Inc., Marianne Utiger, Eng. (Metallurgy) and for Micon, Tania Ilieva (History).
The Company’s QPs have also reviewed and approved the scientific and technical content of this press release.
Quality Assurance – Quality Control (“QA/QC”)
Thorough QA/QC protocols are followed on the Lamaque Project including insertion of duplicate, blank and standard samples in all drill holes. The core samples are submitted directly to ALS Laboratory Group and Bourlamaque Labs in Val-d’Or for preparation and analysis. Analysis is conducted on 1 assay-ton aliquots. Analysis of Au is performed using fire assay method with atomic absorption finish, with a gravimetric finish completed for samples exceeding 5 g/t Au, or a metallic sieve assay for samples containing visible gold. When available the gravimetric or metallic sieve assay results are used for the reported composite intervals.
Further information about the mineral resource estimate and PEA cited in this news release will be available in an NI 43-101 compliant technical report for the project, including data verification discussions, to be filed on SEDAR within 45 days following this news release.
ON BEHALF OF THE BOARD OF DIRECTORS
Stephen de Jong
CEO & President
Follow us on:
P.O Box 11144, Royal Centre
#2270 -1055 West Georgia Street
Vancouver, BC Canada, V6E 3P3
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer