Canada NewsWire
VANCOUVER, BC , Feb. 22, 2022 /CNW/ - Bluestone Resources Inc. (TSXV: BSR) (OTCQB: BBSRF) ("Bluestone" or the "Company") is pleased to announce the results of the Feasibility Study (the " FS " or the " Study ") for the Cerro Blanco Gold Project (the " Project "). The Study demonstrates a robust, rapid pay-back, high-grade operation at a first quartile all-in sustaining cost (" AISC ").
Jack Lundin , President and CEO, commented, "The Feasibility Study highlights some of the best economics for a gold project seen in recent studies and is a major milestone on the path to the development of the Cerro Blanco mine, providing a blueprint for the detailed engineering phase and construction of the Project. Sustainable environmental management is a key aspect incorporated into the design of the Project, including a modern dry stack filtered tailings facility and water treatment plant. Our corporate strategy aligns with our philosophy of responsible development prioritizing local training and hiring to maximize opportunities and benefits for our local stakeholders. Advancing the Cerro Blanco Project represents a tremendous opportunity to our many stakeholder groups including the local Guatemalan communities, government partners, and our shareholders."
Feasibility Study Highlights
The Feasibility Study was prepared in accordance with National Instrument 43-101 ("
NI 43-101
") standards. Unless otherwise indicated, all dollar amounts are stated in U.S dollars ("
$
"). The base case was completed at a gold price of
$1,600
/oz and a silver price of
$20
/oz.
- Life of mine (" LOM ") production of approximately 2.6 million ounces of gold and 10.6 million ounces of silver over an initial 14-year mine life.
- Peak production of 347,000 ounces and average annual production of 241,000 ounces gold over the first ten years of operation.
- Average life of mine AISC of $629 /oz (net of credits).
- Average annual free cash flow of $228 million per year during the first 10 years and life of mine total free cash flow of $2.350 billion .
- Net present value (" NPV5% ") of $1.047 billion after-tax.
- After-tax internal rate of return (" IRR ") of 30%.
- Initial capital of $572 million with an after-tax payback period of 2.2 years.
- Proven & Probable Reserves of 2.8 million ounces of gold and 12.6 million ounces of silver (53.9 million tonnes at 1.6 g/t Au and 7.3 g/t Ag).
- At spot gold and silver prices ( $1,897 /oz & $23.94 /oz), the NPV5% increases to $1.563 billion and the IRR to 40% with a payback of 1.7 years.
Jack Lundin , President and CEO, added, "The Study confirms Cerro Blanco as an exceptional open pit development opportunity. In the first four years of production, the mill feed grades will average 2.5 g/t gold and the open pit mine will produce approximately 300,000 oz gold per year. With all-in sustaining costs at $629 /oz and over 2.6 million ounces to be produced over the life of the mine, the low-cost, robust nature of the deposit will generate significant free cash flow, making Cerro Blanco a rare development opportunity in the gold space today."
Cerro Blanco Feasibility Study Details
Bluestone engaged a consortium of independent consultants, led by G Mining Services, a specialized mining consultancy firm that provides a wide range of services to mining projects from greenfield to operating mines. The Feasibility Study was supported by additional leading consultants with expertise in various fields, including Kirkham Geosystems Ltd., NewFields, ERM, and Stantec Inc.
The Feasibility Study evaluates recovery of gold and silver from an open pit operation and a 4.0 Mtpa conventional process plant that will include crushing, grinding, and agitated leaching followed by a carbon-in-pulp recovery process to produce doré bars .
Table 1 – Summary of the Economic Metrics of the Cerro Blanco Feasibility Study
|
Gold price (base case) |
$1,600/oz |
|
Silver price (base case) |
$20.00/oz |
|
Exchange rate (Quetzal to US Dollar) |
7.69:1 |
|
Exchange rate (CAD to US Dollar) |
0.76:1 |
|
Peak annual gold production |
347,000 ounces |
|
Average annual gold production (years 1-4) |
297,000 ounces |
|
Average annual gold production (LOM) |
197,000 ounces |
|
Total gold production (LOM) |
2,645,000 ounces |
|
Strip Ratio (w:o) |
2.7 : 1 |
|
Average gold head grade |
1.64 g/t |
|
Average silver head grade |
7.27 g/t |
|
Average gold recovery |
93.0% |
|
Average silver recovery |
84.3% |
|
Nominal Plant Throughput |
4.0 Mtpa |
|
Mine life |
13.7 years |
|
Operating costs |
Mining – $2.53/tonne mined ($10.42/tonne milled)
|
|
Total operating costs |
$29.55/tonne milled |
|
Cash costs (LOM net of credits) |
$560/oz Au |
|
All-in Sustaining Cash Costs (LOM net of credits)* |
$629/oz Au |
|
Initial capital (including contingency) |
$572 M |
|
Sustaining capital, including closure costs |
$178 M |
|
Average annual after-tax free cash flow |
$308 M per year (years 1-4) |
|
Total production after-tax free cash flow |
$2,350 M |
|
NPV 5% (pre-tax) |
$1,265 M |
|
IRR (pre-tax) |
37% |
|
NPV 5% (after-tax) |
$1,047 M (base case) |
|
IRR (after-tax) |
30% (base case) |
|
* Cash costs per payable ounce of gold, Operating Costs per tonne processed, and AISC per payable ounce of gold sold are non-GAAP financial measures. Please see "Cautionary Note Regarding Non-GAAP Measures. All in Sustaining Cash Costs (net credits) = (operating costs + offsite costs + royalties + sustaining and closure capital – value of payable silver ounces) / payable gold ounces. |
Table 2 – Economic Sensitivities, Leverage to Gold Price
|
Gold price ($/oz) |
$1,400 |
$1,550 |
$1,600 |
$1,800 |
$2,000 |
|
After-tax NPV 5% ($M) |
712 |
964 |
1,047 |
1,377 |
1,706 |
|
After-tax IRR |
23.4% |
28.6% |
30.2% |
36.3% |
42.1% |
|
After-tax Payback |
2.6 |
2.3 |
2.2 |
1.9 |
1.6 |
Deposit Geology and Mineral Resource
Cerro Blanco is a classic hot springs-related low-sulphidation epithermal gold-silver deposit comprising high-grade vein and low-grade disseminated mineralization. The high-grade mineralization is hosted mainly in Mita sedimentary and volcanic rocks as two upward-flaring vein swarms (North and South Zones) that converge downwards into basal feeder veins where drilling has demonstrated significant widths of high-grade mineralization, e.g., 15.5 meters 21.4 g/t Au and 52.0 g/t Ag (hole CB20-420). Bonanza gold grades are associated with ginguro banding (quartz and silver sulphides) and carbonate replacement textures. Sulphide contents are low, typically <3% by volume. Low-grade disseminated and veinlet mineralization in wall rocks around the high-grade veins is well documented in drilling since discovery of the deposit, with grades typically ranging from 0.3 to 3.0 g/t Au.
The Mita rocks are overlain by the Salinas unit, a sub-horizontal sequence of volcanogenic sediments and sinter horizons approximately 100 meters thick that form the low-lying hill at the Project. The overlying Salinas cap rocks are host to low-grade disseminated mineralization associated with silicified conglomerates and rhyolite intrusion breccias.
In profile, the inverted wedge-shape of the high-grade veins (upward flaring arrays) and their low-grade halos overlain by mineralized Salinas cap rocks to surface render the deposit amenable to exploitation by surface mining methods with a low strip ratio.
The mineral resource has a footprint of 800 x 400 meters between elevations of 525 meters and 200 meters above sea level. The mineral resource estimate is the result of 141,969 meters of drilling by Bluestone and previous operators (1,256 drill holes and channel samples by Bluestone) with the majority of meters drilled after the completion of the current EIA. The 3.4 kilometers of underground adits that were developed by previous owners allowed underground mapping, channel sampling, and over 30,000 meters of underground drilling that was critical to Bluestone's current understanding and validation of the Cerro Blanco geological model. The mineral resource estimate is based on a scenario that considers open pit mining methods and therefore required improved geological models of the lithologic units. These broad mineralized lithologies are host to the high-grade veins that have been the focus of the potential underground mining scenario. The resulting domain models and estimation strategy was designed to accurately represent the grade distribution.
Table 3 – Cerro Blanco Mineral Resource Estimate at a 0.4 g/t Au Cut-Off
|
Resource Category |
Tonnes
|
Au Grade
|
Ag Grade
|
Contained Au
|
Contained Ag
|
|
Measured |
40,947 |
1.8 |
7.9 |
2,382 |
10,387 |
|
Indicated |
22,595 |
1.0 |
4.2 |
706 |
3,058 |
|
Measured and Indicated |
63,542 |
1.5 |
6.6 |
3,089 |
13,445 |
|
Inferred |
1,672 |
0.6 |
2.1 |
31 |
112 |
|
|
|
|
|
|
|
|
Below Pit (Indicated)* |
189 |
5.7 |
13.4 |
35 |
82 |
|
Stockpile (Measured) |
30 |
5.4 |
22.6 |
5 |
22 |
|
* Resources identified below the pit shell that are amenable to underground mining (3.5 g/t cut off applied).
The mineral resource statement is subject to the following:
|
The mineral resource estimate for Cerro Blanco was prepared to industry standards and best practices by Garth Kirkham , P.Geo., an Independent Qualified Person for the purposes of NI 43-101. The mineral resource was estimated using commercial mine modelling and geostatistical software. The deposit was segregated into multiple estimation domains based on geologic models for each of the mineralized veins and the Salinas and Mita host lithologies, including sinter units. The mineral resource was estimated using ordinary kriging interpolation for the continuous vein domains and the Salinas and Mita host units.
Mining
Mining is to be carried out using conventional open pit techniques with hydraulic shovels, wheel loaders, and mining trucks in a bulk mining approach on an owner operated basis. The majority of the loading in the pit will be done by two hydraulic shovels matched with a fleet of 90-tonne capacity haul trucks. Mining is planned to be done in several phases. The objective of pit phasing is to improve the economics of the Project by feeding the mill with higher grade material during the earlier years and/or delaying waste stripping until later years. Initial phases are designed to have a lower strip ratio than the subsequent phases. The initial life of the Project is 14 years with upside potential through regional exploration and identification of satellite pits. The Company believes there are additional opportunities to further extend the mine life by exploration. Historical drilling has identified mineralization along strike north of the existing Resources, including 2.2 g/t gold over 57.0 meters.
Mine planning and scheduling were engineered to feed 4.0 Mt per year of mill feed to the process plant at an average strip ratio of 2.7 and an average LOM cost of $2.53 /t mined. A total of 53.9 Mt of mill feed averaging 1.6 g/t gold and 7.3 g/t silver (1.7 g/t Au Eq.), will be processed over the LOM from the pit area. Mill feed will be trucked to a primary crusher located to the east of the pit. Waste totalling 145.4 Mt will be placed in a waste storage facility. Open-pit mining dilution has been estimated with a dilution skin of 0.5 meters resulting in 6.7% dilution at a grade of 0.2 g/t gold and 2.3 g/t silver.
A pit stability study was undertaken to determine the pit slope design parameters, including inter-ramp angles ranging from 42° to 56° and 10-meter benches.
The Feasibility Study outlines an average production profile of 197,000 ounces of gold over the 14-year mine life with a peak production profile of 347,000 ounces of gold per year. Mining will occur over a 10-year period with an additional 4 years of production from stockpiled ore. Mill feed grade averages 2.0 g/t gold over the first 10 years.
Figure 1 – Production Profile and Mill Feed Grade (Au g/t)
Table 4 – Production Profile
|
|
Y1 |
Y2 |
Y3 |
Y4 |
Y5 |
Y6 |
Y7 |
Y8 |
Y9 |
Y10 |
Y11 |
Y12 |
Y13 |
Y14 |
|
Ore Milled
|
4,000 |
4,000 |
4,011 |
4,000 |
4,000 |
4,000 |
4,011 |
4,000 |
4,000 |
4,000 |
4,011 |
4,000 |
4,000 |
755 |
|
Gold Grade
|
2.87 |
1.95 |
2.83 |
2.16 |
1.14 |
1.52 |
1.75 |
2.07 |
2.04 |
1.73 |
0.56 |
0.56 |
0.56 |
0.56 |
|
Silver Grade
|
14.55 |
11.75 |
13.88 |
9.81 |
6.29 |
7.36 |
6.08 |
5.32 |
5.02 |
4.96 |
3.66 |
3.66 |
3.66 |
3.66 |
|
Gold
|
94.2% |
93.9% |
94.2% |
93.9% |
92.6% |
93.4% |
92.6% |
93.1% |
93.6% |
92.9% |
88.5% |
88.5% |
88.5% |
88.5% |
|
Gold
|
347 |
235 |
344 |
261 |
135 |
183 |
209 |
248 |
245 |
207 |
63 |
63 |
63 |
12 |
Mineral Reserves presented by class are shown in the following table. The mill feed head grade averages 2.0 g/t gold over the first 10 years of mining, excluding the processing of the low grade stockpile at the end of the mine life.
Table 5 – Cerro Blanco Mineral Reserve Statement
|
Mill Feed Material |
Tonnes
|
Au Grade g/t |
Ag Grade
|
Contained
|
Contained Ag
|
|
Proven |
37,618 |
1.89 |
8.34 |
2,286 |
10,084 |
|
Probable |
16,279 |
1.07 |
4.81 |
560 |
2,518 |
|
Proven & Probable |
53,896 |
1.64 |
7.27 |
2,846 |
12,602 |
|
The mineral reserve statement is subject to the following:
|
Processing
The process plant design is built on conventional industry standard unit operations. The Feasibility Study is based on treating 4.0 million tonnes of ore per year at an average feed grade of 1.6 g/t gold and 7.3 g/t silver through a conventional Leach-CIP process plant to produce doré bars. The overall process flowsheet includes a single-stage jaw crusher, SAG and ball mill grinding, atmospheric pre-oxidation, cyanide leach, carbon adsorption via carbon-in-pulp (CIP), carbon elution, and gold recovery circuits. Tailings will be treated and dewatered to produce a filtered tailings product.
Figure 2 – Cerro Blanco Process Flowsheet
Additional metallurgical testing programs were carried out as part of the Feasibility Study to support the development of the flowsheet. The additional testing focused on different lithologies and composite samples to test variability and characterization of ore zones, grind size, leach extraction, and filtration. Based on recent and historical metallurgical test work, the estimated overall recoveries are 93.0% for gold and 84.3% for silver.
Filtered tailings will be placed in a "dry stack" tailings storage facility, eliminating the need and risks associated with the construction and operation of a traditional slurry tailings impoundment.
Capital & Operating Costs
The Feasibility Study contemplates a 25-month capital development and construction timeline that includes a 5-month commissioning period. Total initial capital cost during this period is estimated at
$572 million
with LOM capital estimated at
$750 million
including closure costs.
The Feasibility Study provides a blueprint for development and will provide a basis for project financing. The CAPEX and OPEX are established from first principles to reflect a self-perform construction strategy.
Contingency has been applied to the estimate on an area and discipline basis, variances ranged from -5% to +35% depending on the area and level of quotation and then applying a Monte Carlo simulation analysis.
Table 6 – Cerro Blanco Capital Cost Estimate
|
Capital Cost Estimate ($M) |
Initial Capital ($M) |
Sustaining Capital ($M) |
Life of Mine ($M) |
|
Infrastructure |
$39.6 |
$11.1 |
$50.8 |
|
Power & Electrical |
×
|