(CSE: TRG)

Press Release Highlights:

• Projected average annual gold production of 16,000oz + copper concentrate
• Cash operating costs of $648 /oz and AISC of $705 /oz Au, net of copper and silver by-product credit.
• Pre-tax IRR of 120% and post-tax IRR of 85% at $1600 /oz Au.
• Pre-tax annual free cash flow of $15.3M USD ( $19.3M CAD) in peak years

VANCOUVER, BC , Dec. 13, 2021 /CNW/ - Tarachi Gold Corp. (CSE: TRG) (OTCQB: TRGGF) ( Frankfurt : 4RZ) ("Tarachi" or the "Company") is pleased to announce the results of the Preliminary Economic Assessment ("PEA") for the Company's Magistral Mill and Tailings Project ("Magistral" or the "Magistral Project") in Durango, Mexico .

Preliminary Economic Assessment Metrics:

• Initial capital costs of $11.1M USD and after-tax payback in 1.0 years
• Development timeline of 12 months
• Cash operating costs of $648 /oz and AISC of $705 /oz Au, net of copper and silver credits
• Pre-tax IRR of 120% and after-tax IRR of 85% at base case prices of $1600 /oz gold, $22 /oz silver, and $3.40 /lb copper
• Pre-tax annual free cash flow of $15.3M USD ( $19.3M CAD) and post-tax cash flow of $11.3M USD ( $14.3M CAD) during years of full-rate production
• LOM of 3.4 years with total production of 53,900oz Au, 75,800oz Ag and 1.9Mlbs Cu

The PEA was completed by Ausenco Engineering Canada Inc. (Ausenco) and provides an attractive preliminary economic case for the development of the Magistral Project. The PEA is based upon an updated Mineral Resource Estimate, also included in the PEA report, completed by AGP Mining Consultants Inc. (AGP) of Canada . The report outlines a potential low capex, low operating cost, and low environmental impact tailings reprocessing operation that can be brought into production in a 12-month time frame.

The current mine plan incorporates approximately 89% of the Measured and Indicated resources, however management believes additional tonnage may be scavenged from the remaining tailings to provide additional mine life. The Company is also looking to acquire other local tailings materials that could potentially be processed at the Magistral facility and ultimately extend the cash generating life of the asset.

Cameron Tymstra , President and CEO, commented, "We are incredibly pleased with the results of the Magistral PEA. This report confirms our previous expectations for this project in that it has the potential to generate significant free cash flow for Tarachi in a short timeframe with minimal capital investment. This project will allow us to self-fund future exploration programs on our projects in Mexico and help to reduce the risk of future shareholder dilution.

Not only does this represent an opportunity to establish Tarachi as a producer of both gold and copper in Mexico , but to do so while also cleaning up and rehabilitating a legacy tailings site. We will be excavating material that is contaminated with mercury and other metals essentially from the backyard of the Magistral community, removing those metals, and storing the tailings in an engineered and permitted tailings storage facility. Without the need to mine waste or crush and grind the plant feed, we expect to be producing from Magistral with a significantly smaller environmental footprint and lower carbon emission profile per ounce of gold than what is typical of the gold industry.

The addition of a SART (sulphidation, acidification, recycling and thickening) plant into the flowsheet will reduce our operating costs and improve our environmental profile by recycling at least 70% of the cyanide used in leaching while producing a high-grade copper concentrate by-product. With the PEA now complete and a clear pathway to production on the table, we will be fast tracking the development of Magistral in the New Year."

Project Economics

The project's key economic metrics are summarized in Table 1 with additional metrics and assumptions used in the PEA summarized in Table 2.

Readers are cautioned that the PEA is preliminary in nature. 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 and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Table 1 – Key Economic Metrics

Table 2 - Other Project Metrics and Assumptions

Mining

The tailings materials contained in the Mineral Resource Estimate are located adjacent to the existing processing facility at Magistral. Tailings will be mined using a Cat 330D class excavator and two 20-tonne dump trucks to move material to the mill. The average one-way trucking distance is estimated to be only 250m to the mill. Material will be dumped into a 24-hr stockpile and fed into a hopper using a front-end loader. Tailings will be fed into the mill at a rate of 1,000tpd.

Metallurgy and Processing

Metallurgical test work completed earlier in 2021 indicated that 83% of the gold contained in the tailings material can be leached within 12 hours without the need for additional grinding (see press release dated Nov. 2, 2021 ). Total global gold recovery of 80.7% was used for the PEA. The project will be maximizing the use of the existing 1,000tpd leaching facility already on site, which was built in 2018. The existing facility (Figure 1) consists of a ball mill, primary feed thickener, four agitated leach tanks with a capacity to leach 1,000tpd of tailings material for 16 hours at a slurry density of 40%, two stages of counter-current decantation (CCD), tailings cyanide destruction and a Merrill Crowe recovery circuit.

Ausenco has identified several modifications and additions to the existing facility that once implemented are expected to achieve similar gold recoveries to those seen in the PEA metallurgical test work, reduce cyanide consumption, produce a copper concentrate by-product, and improve the quality of the final gold doré.

Plant modifications & additions:

• The existing plant onsite is considered to be in very good condition
• All feed material will pass through the existing, unused ball mill to ensure all tailings feed is sufficiently broken up and slurried prior to leaching. Use of the ball mill is only expected to provide minimal additional particle size reduction.
• The existing primary feed thickener will be re-piped to serve as a third stage of CCD, improving global gold recovery.
• A small SART circuit will be added to the facility. The SART circuit will allow for the recycling of at least 70% of the cyanide consumed in the process, production of a high-grade saleable copper concentrate and ensure the Merrill Crowe circuit can operate efficiently and with significantly lower zinc powder consumption by removing the majority of cyanide-soluble copper prior to zinc addition.

The feed will be processed in the existing plant, by refurbishing the existing equipment and adding new equipment including a SART circuit, gold room and oxygen generation unit. The process includes grinding, leaching, SART and Merrill Crowe to produce two final products (Figure 2). The Merrill Crowe circuit will produce a gold doré and the SART circuit will produce a high-grade Cu-Ag precipitate.

Average feed grade is expected to be 1.87g/t Au, 3.1g/t Ag and 0.17%Cu. Total plant recoveries for gold, silver and copper are estimated to be 80.7%, 68.4% and 46.2%, respectively.

Production

Approximately 89% of the recovered gold is expected to report to the Merrill Crowe precipitate where it will be smelted into doré on site and sold to refiners. The remaining 11% of recovered gold, the majority of the recovered silver and the recovered copper will report to the SART precipitate to be sold as a high-grade (approx. 60% Cu) copper concentrate with gold and silver credits.

Table 3 - Expected Metal Production

Capital Expenditures

Initial Capital

The initial capital of $11.1M will be incurred in Year -1 (year before start of production) for installation of new equipment in the process plant, restart of the existing geomembrane-lined tailings storage facility (TSF) and infrastructure. It also includes project indirect costs, owner's costs, and contingency.

Table 4 - Capital Expenditure Breakdown by Area

Sustaining Capital

A sustaining capital of $2.1M will be spent during the LOM. The sustaining capital includes mining, TSF and water management. Since waste stripping is not required, all mining costs except infrastructure costs will be incurred in Year 1, the same year of production.

Table 5 - Sustaining Capital Expenditure Breakdown by Area

Operating Costs

Mining

Mining is assumed to be completed by the owner with rental equipment. The mining costs are based on local labour rates together with the equipment rentals.

Processing and G&A Costs

Processing costs were developed by Ausenco from first principles. The largest component of the operating costs is anticipated to be the consumption of cyanide, lime and other reagents in the processing plant.

G&A cost estimates were based on a small administration office onsite. The close proximity of the project to the towns of Magistral del Oro (pop. 200) and Santa Maria del Oro (pop. 5,000) subdues the need for an onsite camp. The workforce is expected to be sourced locally from these communities.

Table 6 - Operating Cost Breakdown

In addition to the costs listed in Table 6, the operation will also incur tailings leasing fees on some of the tailings material to be mined, paid when mined on a tonnage basis. These fees are expected to average $4.69 /tonne over the LOM at a gold price of $1600 /oz. The Company has access to the tailings materials included in the Mineral Resource Estimate and mine plan through a combination of ownership and exclusive leasing rights as detailed in Table 7.

Table 7 - Tailings Leasing Fee Schedule

Net of copper and silver credits, the cash operating costs, including leasing fees, are estimated at $648 /oz Au with all-in sustaining costs (AISC) of $705 /oz Au.

Mineral Resource Estimate

The Mineral Resources for the project are reported at a 0.50 g/t Au cut-off grade within a constraining shell.  The mineral resources are summarized in Table 8 and the resource classifications are defined by the CIM Definition Standards on Mineral Resources and Mineral Reserves adopted by CIM Council.  The effective date of the Mineral Resources is 15 November 2021 .

Table 8 - Mineral Resource Estimate for Magistral Tailings

The drill hole database used for the mineral resource estimate consists of 37 drill holes and 178 assays. Bulk density measurements were collected during the drill campaign using only samples with 100% recovery for the calculation. The median bulk density of 1.70 was used for the tailings deposit mineral resource estimate. A block size of 10x10x5m was used to model the deposit. Resource classification parameters for measured, indicated, and inferred resources can be found in Table 9.