Benchmark Announces Positive Preliminary Economic Assessment for the Lawyers Gold-Silver Project with Robust +30% IRR, C$ 921m Pre-Tax NPV5% and 2.1 Year Payback

Date/time : 2022-08-16 07:00 AM
Symbol :

BNCH

Company : Benchmark Metals Inc.
Price : 0.61
Market cap : 126,253,746
O/S : 206,973,354
Exchange :

TSXV

Industry :

Other Industrial Metals & Mining

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Benchmark Announces Positive Preliminary Economic Assessment for the Lawyers Gold-Silver Project with Robust +30% IRR, C$ 921m Pre-Tax NPV5% and 2.1 Year Payback

Vancouver, British Columbia--(Newsfile Corp. - August 16, 2022) - Benchmark Metals Inc. (TSXV: BNCH) (OTCQX: BNCHF) (WKN: A2JM2X) (the "Company" or "Benchmark") is pleased to report the completion of a Preliminary Economic Assessment ("PEA") on the Lawyers Gold-Silver Project (the "Project") located within a road accessible region of the prolific Golden Horseshoe area of north-central British Columbia, Canada. The PEA presents a robust open pit mining operation with attractive economics at base case gold and silver prices.

PEA Highlights:

  • Robust financial metrics in a desirable location
    • Pre-tax NPV5% of C$ 921M, IRR 30.5%, and 2.1-year payback
    • Pre-tax Net Operating Income of C$ 2,140M
    • Base case metal price parameters of US$ 1,735 per ounce of gold and US$ 21.75 per ounce of silver
    • After-tax NPV5% of C$ 577M, IRR 23.5%, and 2.7-year payback
  • Capital light development
    • Initial capital of C$ 493M (including C$ 72.8M in contingency)
    • Life of Mine capital of C$ 632M
    • Strong 1.9:1 Initial Capex to Pre-tax NPV5% ratio
    • Minimal pre-strip limited to TSF starter dam construction
  • Long mine life with exceptional expansion opportunity
    • Total resource production of 46.3 M tonnes over 12-year mine life
    • Average annual production of 169k AuEq ounces
    • LOM production 2.02M payable AuEq ounces
    • Average AuEq Head Grade of 1.47 g/t
    • Average gold recovery of 92.4%
  • Low AISC (net of by-products)* of US$ 824/Au oz

*All-In Sustaining Costs (Net of By-Products) are calculated for the purpose of the Study as the sum of all operating costs (mining, processing, site administration and refining), reclamation and sustaining capital, minus the revenue from Ag, all divided by the gold ounces sold to arrive at the per ounce Au figure.

John Williamson, CEO, commented, "The PEA clearly demonstrates the low cost and robust return of the Lawyer's Gold-Silver Project even when stress tested with considerable contingency in the base case. We continue on a straightforward pathway to advancement. We continue to test new targets on the large prospective land package to add value to a project that is simple, low risk with a high-grade near surface open-pit resource, combined with proximity to existing infrastructure, making it one of the best candidates to become British Colombia's next precious metal mine."

PEA Overview

The PEA considers a conventional truck and shovel open-pit mining operation, with common equipment sizing, covering the Cliff Creek ("CC"), Dukes Ridge (included in CC), and AGB pits, feeding a 10,600 tonnes per day industry standard processing plant with two-stage crushing, grinding, whole-ore leach and a Merrill Crowe recovery circuit, with production of gold-silver doré bullion on site. The PEA is based on an update of the mineral resource estimate announced by the Company on June 11, 2022 press release. The PEA was prepared by JDS Energy and Mining Inc. ("JDS") of Vancouver, British Columbia, Canada.

Ian Harris, VP Engineering, commented, "The PEA confirmed the current project development timelines, with industry standard open-pit mining methods, processing flowsheet, design criteria, and compact footprint. Multiple target high-grade resource areas have been identified near but outside the pit limits. There is a significant opportunity to upgrade the already robust project through adding underground mining to production scheduling. These evaluations that represent a considerable upside opportunity will be incorporated into detailed mine planning of the feasibility study."

The full PEA will be filed on SEDAR at www.sedar.com and Benchmark's website www.benchmarkmetals.com within 45 days of the issuance of this news release.

PEA Economic Results

Project Economics
Royalties % of NSR 0.5
Pre-Tax:
NPV5% C$ million 921
IRR % 30.5
Payback period years 2.1
Post-Tax:
NPV5% C$ million 577
IRR % 23.5
Payback period years 2.7

 

Pre-Tax Sensitivities

NPV5% Sensitivity Analysis
Au Price
1,5001,6001,7001,7351,8001,9002,000
Ag Price19.00$493.1$646.4$799.8$853.4$953.1$1,106.4$1,259.8
20.00$517.6$670.9$824.3$877.9$977.6$1,130.9$1,284.3
21.00$542.1$695.4$848.8$902.4$1,002.1$1,155.4$1,308.8
21.75$560.5$713.8$867.1$920.8$1,020.5$1,173.8$1,327.1
22.00$566.6$719.9$873.2$926.9$1,026.6$1,179.9$1,333.2
23.00$591.1$744.4$897.7$951.4$1,051.1$1,204.4$1,357.7
24.00$615.6$768.9$922.2$975.9$1,075.6$1,228.9$1,382.2
 
IRR (%) Sensitivity Analysis
Au Price
1,5001,6001,7001,7351,8001,9002,000
Ag Price19.0019.7%23.7%27.4%28.7%31.0%34.5%37.9%
20.0020.4%24.3%28.1%29.4%31.7%35.1%38.5%
21.0021.1%25.0%28.7%30.0%32.3%35.8%39.1%
21.7521.6%25.5%29.2%30.5%32.8%36.2%39.6%
22.0021.8%25.7%29.4%30.7%33.0%36.4%39.7%
23.0022.5%26.4%30.1%31.3%33.6%37.0%40.3%
24.0023.2%27.0%30.7%32.0%34.2%37.7%40.9%

 

After-Tax Sensitivities

NPV5% Sensitivity Analysis
Au Price
1,5001,6001,7001,7351,8001,9002,000
Ag Price19.00$301.8$401.0$499.3$533.6$597.3$695.2$792.8
20.00$317.8$416.7$515.0$549.3$613.0$710.8$808.5
21.00$333.8$432.5$530.7$565.0$628.6$726.4$824.1
21.75$345.6$444.3$542.4$576.8$640.4$738.1$835.8
22.00$349.6$448.2$546.4$580.7$644.3$742.0$839.7
23.00$365.5$463.9$562.1$596.3$659.9$757.7$855.3
24.00$381.3$479.7$577.7$612.0$675.6$773.3$870.9
 








IRR (%) Sensitivity Analysis
Au Price
1,5001,6001,7001,7351,8001,9002,000
Ag Price19.0015.3%18.3%21.2%22.1%23.9%26.5%29.0%
20.0015.8%18.8%21.6%22.6%24.4%27.0%29.5%
21.0016.3%19.3%22.1%23.1%24.8%27.4%29.9%
21.7516.7%19.7%22.5%23.5%25.2%27.8%30.3%
22.0016.8%19.8%22.6%23.6%25.3%27.9%30.4%
23.0017.4%20.3%23.1%24.0%25.8%28.3%30.8%
24.0017.9%20.8%23.6%24.5%26.2%28.8%31.3%

 

PEA Recommendations and Opportunities

The PEA has been presented with surface mining only. However, there is a strong opportunity to enhance the Base Case economics with supplemental feed from underground operations. The mineralized zones are sub-vertical, which makes them amenable to preferred low-cost mining methods, such as sub-level open stoping. They are also reasonably thick, at 4 to 15 m, and thus could be mined at moderate production rates, as opposed to the low throughput one would expect from narrow-vein operations.

Underground stopes would either be accessed from multiple portals driven in the pit walls or by a dedicated ramp driven beneath the pit (see Figure 1), for potential stope shapes above a 2.0 g/t AuEq cut-off.

Cannot view this image? Visit: https://images.newsfilecorp.com/files/6169/133940_394e232354b1c8a7_001.jpg
 
Figure 1: Potential Stope Shapes Adjacent to and Below Cliffs Creek Pit
 
To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/6169/133940_394e232354b1c8a7_001full.jpg

If proven to be economic in future stages of study, the stopes could be used either to extend operational mine life with underground operations conducted after the open pit mine has been exhausted or, more likely, mined in conjunction with open pit operations to provide higher grade supplemental feed.

An integrated surface and underground mine schedule will be evaluated in the next stage of study.

PEA Parameters and Assumptions

Assumptions

The main parameters and results of the PEA are summarized in the following table:

Assumptions:
Gold price US$/ounce $1,735
Silver price US$/ounce $21.75
Production Profile:
Mine life years 12
Total tonnes milled million tonnes 46.3
Diluted gold grade g/t 1.23
Diluted silver grade g/t 23.73
Mill throughput t/day 10,600
Gold recovery - AGB% 92.1
Silver recovery - AGB% 60.0
Gold recovery - Cliffs Creek% 92.5
Silver recovery - Cliffs Creek% 83.0
Recovered gold million ounces 1.696
Recovered silver million ounces 26.695
Average annual payable gold ounces/year 141,000
Average annual payable silver ounces/year 2,202,000

 

Operating Costs

The PEA is based on assumed life of mine operating costs by activity area, as shown in the table below.

Operating CostsC$/tonne ProcessedC$M LOM
Mining 25.28 1,170.3
Processing 17.32 801.6
G&A 5.19 240.2
Total Cash Cost 47.78 2,212.1

 
*Numbers may not add due to rounding

Mineral Resource

The PEA is based on the resource estimate prepared by P&E Mining Consultants Inc., and APEX Geoscience Ltd., and reported by Benchmark Metals on June 11, 2022, which is summarized in the table below:

Total Pit and Out of Pit Constrained Mineral Resource Estimate @ 0.4 g/t and 1.5 g/t AuEq Cut-Off
ClassificationTonnesAu*Ag*AuEqAu*Ag*AuEq
kg/tg/tg/tk ozM ozkoz
Measured & Indicated67,3761.1622.881.452,52149.63,141
Inferred4,8732.2036.102.653455.7415

 

Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. The estimates of Measured, Indicated and Inferred mineral resources assumed metal prices of US$1,750/oz Au and US$20/oz Ag, 0.78 US$:CDN$ FX, with process recoveries of 90% Au and 83% Ag. A C$14.50/t process cost and C$5/t G&A cost were used. The Au:Ag ratio was 80:1. The constraining pit optimization parameters were C$3.15/t mineralized and waste material mining cost and 50° pit slopes with a 0.30 g/t AuEq cut-off.

*The tonnage, gold equivalent ounces and grades are unchanged from the numbers reported by Benchmark Metals on June 11, 2022. The ounces and grades for gold and silver have been updated to correct errors in the original table provided in the June 11, 2022 news release.

Capital Cost

The PEA is based on a capital cost summary, in accordance with AACE Class 5 guidelines with an estimated accuracy of +/- 50%, which is shown in the table below:

Capital ItemPre-Production
(C$ million)
Sustaining
(C$ million)
Total
(C$ million)