Sandspring reports preliminary economic assessment of Toroparu project

The Toroparu Project has been re-scoped to include the Sona Hill satellite deposit, modification of the Project’s processing strategy to start with gold-only production from a Carbon-in-Leach circuit (CIL) for the initial ten years, followed by an expansion of the Project in year 11 to add flotation processing capacity and the streaming agreement with Wheaton Precious Metals International. This PEA Report summarises the results of the re-scoping at base case metal prices of US$1300 gold (Au), US$16.00 silver (Ag), US$3.00 copper (Cu). A 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 categorised as mineral reserves, and there is no certainty that the preliminary economic assessment will be realised.

The PEA documentation of mining production quantities will replace the 2013 Pre-feasibility Study (the 2013 PFS).

Statement of Mineral Reserves

The PEA is based on exploitation of measured, indicated and inferred mineral resources while the 2013 PFS is based on the exploitation of proven and probable mineral reserves.

Inferred resources from the Mineral Resource Estimate comprise 5% of the resources used in the production schedule reported in the PEA. The conclusions and results of the PEA replace the conclusions and results from the 2013 PFS. Key aspects and findings from this PEA study include:

• 4.5 million oz Au production, with 3.64 Million oz produced in Au doré bars, over 24 year Life of Mine (LoM) – up from 3.7 million oz from the 2013 PFS 1.476 million oz (moz) Au Doré over 10 year initial phase.
• 2.148 million oz Au Doré and 876 000 oz Au in concentrate produced at 217 000 ozs/year during 14 Year Second Phase 1 The company and Wheaton Precious Metals International Ltd. (Wheaton) entered into an agreement (Wheaton PMPA) in 2013 which was amended in 2015. The Wheaton PMPA is available on http://www.sedar.com and www.sandspringresources.com. US$1.25 Billion After-Tax Free Cash Flow (with Wheaton PMPA).
• US$378 million Pre-Production Capex – down from US$501 million in Pre-feasibility US$272 Million Pre-production financing required with Wheaton PMPA US$232 Million Phase 2 expansion financed from internal cash flow payback period of 2.92 years.
• The project, with Wheaton’s participation, generates an 18.16% after tax IRR at a US$1250/oz Au price, 24.2% at US$1400/oz of Au, and 27.68% at US$1500/oz of Au, indicating that project returns are both robust at historic Au prices and positively leveraged to higher Au prices.

Pursuant to the Wheaton PMPA, Wheaton and the company agreed that the company will sell and Wheaton will buy 10% of the payable Au and 50% of the payable Ag (as those terms are defined in the Wheaton PMPA) from the production at the Toroparu Project. In consideration for such sale, Wheaton has agreed to pay certain upfront deposit amounts according to a schedule set out in the Wheaton PMPA as Project Costs, as defined in the Wheaton PMPA, are incurred for initial construction of the Project.

In the process of building the economic model for the PEA, the company has estimated revised upfront payments from Wheaton. While the company believes that the estimates are reasonable, it should be noted that Wheaton has not participated with Sandspring in the calculation of the estimates nor has Wheaton agreed with or approved of the revised estimated payments.

Doré Only Initial Phase

Under the PEA, during the initial 10 years of production (the Initial Phase), Au doré, with a Ag by-product, will be recovered from a CIL process instead of recovering Au and Cu from a Au bearing Cu concentrate as described in the 2013 PFS. Gold Production Increase - Life of Mine. During the Initial Phase, the re-scoped production schedule estimates an average production rate of 175 000 oz of Au over the first five years and total production of 1.476 million oz of Au over ten years.

Gold and by-product silver are produced from an 11.5 000 tpd (4.2 million tpy) CIL process circuit fed with cumulative mill head grades that range from 1.67 g/t to 1.2 g/t Au during this Initial Phase.

 

An expansion phase begins in year eleven of production and averages 217,000 ozs Au per year through year 24, producing an additional 3.040 million oz of Au. Processing throughput is increased in the Expansion Phase to 23 kt/d (8.4 million tpy) with the addition of a parallel 11.5 kt/d flotation circuit. The PEA base case indicates that the cost of the Expansion Phase can be financed from internally generated cash flows.

 

The PEA estimates a life of mine (LoM) production of 4.5 million oz of Au, 4.46 million oz payable Ag and 124.7 million lb of payable Cu as by-products.

 

Read the article online at: https://www.globalminingreview.com/finance-business/05062019/sandspring-reports-preliminary-economic-assessment-of-toroparu-project/