VANCOUVER, Oct. 11, 2017 /CNW/ - Eros Resources
Corp. (TSX.V: ERC) ("Eros" or the
"Company") hereby provides the results of a Preliminary
Economic Assessment ("PEA") on its 100% owned Bell Mountain
gold project (the "Bell Mountain Property" or the
"Project") in Churchill
County, Nevada. The PEA provides a base case
assessment of the current status of the Project notwithstanding the
Bureau of Land Management ("BLM") September 1, 2016 notice that the US Navy had
applied to expand the Fallon Range Training Facility and withdraw
604,789 acres of public land, an area that includes the entire Bell
Mountain Property. As a result, the BLM has segregated the proposed
expansion area for a two-year period such that no entry or work can
be conducted on existing mining claims therein (including the Bell
Mountain Property) while an environmental impact statement
("EIS") respecting the expansion proposal is completed by
the US Navy. The withdrawal will require ratification by the US
Congress, who are expected to make a final decision following the
completion of the EIS and upon receiving a recommendation from the
Secretary of the Interior.
"The PEA was compiled to provide an assessment of the Project as
it stands today. The restriction placed on Eros to explore and
advance the Project has prevented us from attempting to expand and
upgrade the resource base and further enhance the potential
economics of the Project. Nonetheless, the results of the
study clearly indicate continued investment into the Bell Mountain
Property is justified," stated Ron
Stewart, President and CEO of Eros.
PEA Highlights
The base case PEA economics assumed a gold price of $1,300/oz and a silver price of $17.50/oz. All currencies are stated in US
dollars.
- Pre-Tax Net Present Value ("NPV") @ 5% and Internal Rate
of Return ("IRR") of $17.6
million and 41.4%, respectively with a payback period of
~1.7 years;
- After-Tax Net Present Value @ 5% and IRR of $9.3 million and 24.7%, respectively with a
payback period of ~2.7 years;
- Pre-production capital cost estimated at $18.5 million including a $1.7 million contingency;
- Life of Mine ("LOM") production of 60,056 ounces of gold
and 408,498 ounces of silver over a 4.0 year mine-life; and
- LOM cash cost of US$759/oz, net
of by-product silver credits and including royalty payments
totalling $2.56 million.
The PEA was prepared by Welsh Hagen Associates ("WHA") of
Reno, Nevada in accordance with
National Instrument 43-101 Standards of Disclosure for Mineral
Projects ("NI 43-101"). The study is being summarized
into a technical report entitled "NI 43-101 Technical Report on the
Bell Mountain Project Preliminary Economic Assessment, Churchill County, Nevada, USA" (the
"Technical Report"), to be filed on SEDAR in accordance with
NI 43-101 within 45 days.
The reader is cautioned that the PEA is preliminary in nature
and includes some 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. There is no certainty that the PEA will be realized.
There is no certainty that the inferred mineral resources will be
converted to the indicated or measured categories, or that the
potential measured or indicated resources would be converted to the
proven or probable mineral reserve categories. Mineral resources
that are not mineral reserves do not have demonstrated economic
viability.
The estimates of mineral resources in the PEA and the mineral
resource statement may be materially affected by environmental,
permitting, legal, title, taxation, socio-political, marketing, or
other relevant issues. The PEA recommends that the Project be
advanced to a feasibility level for a total estimated cost of
$1,787,500. The scope of work
recommended includes additional exploration and infill drilling,
water well maintenance, metallurgical testing, engineering and
environmental studies.
Mineral Resource
The mineral resource estimate was prepared by Zachary J. Black, SME-RM, with Hard Rock
Consulting ("HRC"). The Project is subdivided into four (4)
individual areas known as Spurr, Varga, Sphinx and East Ridge. Each
modelled area was divided into three domains: country rock,
stockwork and vein. HRC estimated the mineral resource using an
ordinary krige algorithm. In order to meet the test of
'reasonable prospects for economic extraction,' HRC constructed a
Lerchs-Grossmann pit shell based on $1,300/oz gold and $17.50/oz silver. Resources were assigned
measured, indicated and inferred classifications based on the
confidence of the estimate, domain of the geologic model and
proximity to drill holes.
Resource Statement for the Bell Mountain Project,
Churchill County, Nevada
Table image located at:
https://www.erosresourcescorp.com/site/assets/files/1370/resource_statement_bell_mountain.jpg
Note: Open pit optimization was used to determine potentially
mineable tonnage. Measured, Indicated and Inferred mineral
classification was determined according to CIM Standards. Mineral
resources, which are not mineral reserves, do not have demonstrated
economic viability. The 2017 Measured, Indicated and Inferred
resource is constrained within a $1,300/oz Au and $17.50/oz Ag
Lerchs-Grossman Pit shell. The base case estimate applies a
AuEq cutoff grade of 0.005 oz/t for Varga and 0.004 oz/t for all
other areas based on the estimated operating costs. Metallurgical
recoveries used for the cutoff calculations were 83.7% on gold and
29.6% on silver for Spurr, 68.6% on gold and 12.8% on silver for
Varga and 80% on gold and 10% on silver for Sphinx and East
Ridge.
Capital Costs
Capital costs were developed based on scaling costs from similar
facilities for production rates and from design assumptions
including a contractor operated mining fleet. The estimated life of
mine capital cost for the base case is summarized below.
Estimated Life of Mine Capital Costs
|
|
|
|
|
|
|
Cost in
US$
|
Mining
|
|
|
|
|
Haul Roads
|
|
$
|
97,380
|
Process
|
|
|
|
|
Mobilization and Site
Preparation
|
|
$
|
273,708
|
|
Earthworks
|
|
$
|
661,388
|
|
Heap Leach
Pad
|
|
$
|
3,912,475
|
|
Solution Collection /
Distribution System
|
|
$
|
191,194
|
|
Process
Ponds
|
|
$
|
611,450
|
|
Crushing
Circuit
|
|
$
|
3,706,642
|
|
Carbon
Plant
|
|
$
|
779,698
|
|
Buildings (Shop,
warehouse, lab, offices)
|
|
$
|
460,000
|
|
Concrete
|
|
$
|
150,000
|
|
Miscellaneous
Facility Elements
|
|
$
|
1,110,400
|
|
Mine Site Mobile
Fleet
|
|
$
|
1,950,000
|
Indirect
|
|
|
|
|
|
Engineering,
Procurement, Construction Management
|
|
$
|
250,000
|
|
Owner
Costs
|
|
$
|
2,667,000
|
|
Contingency
|
10%
|
$
|
1,682,133
|
Total
|
$
|
18,503,468
|
Operating and Reclamation Costs
Operating cost assumptions were based on similar scale surface
mining operations using heap leach processing in northern
Nevada. Reclamation cost is
consistent with the projected scale of the mining operation.
Operating and reclamation cost assumptions per ton of material
processed are summarized as follows:
Estimated Operating and Reclamation
Costs
Category
|
US$ per Ton
Processed
|
Mining
Cost
|
$
2.30
|
Processing
Cost
|
$
4.15
|
G&A
Cost
|
$
0.80
|
Reclamation
Cost
|
$
0.25
|
Total
|
$
7.50
|
Processing and Metallurgical Recovery
The deposits of the Bell Mountain Property (Spurr, Varga, Sphinx
and East Ridge) generally are quite amenable to processing by heap
leaching. Metallurgical recoveries used were 83.7% on gold and
29.6% on silver for Spurr, 68.6% on gold and 12.8% on silver for
Varga and 80% on gold and 10% on silver for Sphinx and East Ridge.
Additional metallurgical testing will be required to confirm the
leaching characterization of the mineralization and will provide
information for the heap design, project operation plans and
insight into leach cycles.
Mine Plan
The PEA assumed a contractor operated, conventional open pit
mine, with drill and blast rock breakage and truck and loader
materials handling. The mine production schedule was based on an
average of 5,000 tons / day delivered to the crusher and then
placed on the heap leach pad as crushed mineralized material.
Mineral resources within the pits volumes were evaluated and
scheduled. The average cutoff grade for the mine life of the
conceptual mining project is 0.004 Au opt for the Spurr, Sphinx and
East Ridge deposits, and 0.005 Au opt for the Varga. A
detailed conceptual mine schedule is summarized by year as
follows.
Conceptual Mine Schedule
|
|
|
|
|
|
|
Item
|
Units
|
Year
1
|
Year
2
|
Year
3
|
Year
4
|
Totals
|
Total Mineralized
Material
|
Tons
|
000's
|
1,500.0
|
1,500.0
|
1,500.0
|
406.6
|
4,906.6
|
Au
Equivalent
|
Grade
|
AuEq opt
|
0.020
|
0.017
|
0.015
|
0.024
|
0.018
|
Contained oz Au
Equivalent1
|
Oz AuEq
|
000's
|
29.3
|
25.6
|
22.5
|
9.6
|
87.0
|
Waste Rock
|
Tons
|
000's
|
966.9
|
564.1
|
1,236.7
|
990.8
|
3,758.6
|
Total
Mined
|
Tons
|
000's
|
2,466.9
|
2,064.1
|
2,736.7
|
1,397.5
|
8,665.2
|
1 Gold Equivalent (AuEq) = Au +
(Ag/AuEq Factor) where AuEq Factor = (Au Rec/Ag Rec) x ($1,300/oz
gold/$17.50/oz silver)
|
Project Economics
A gold price of $1,300/oz and a
silver price of $17.50/oz were chosen
for the base case economic evaluation based roughly on the 3-year
trailing London Gold Fix prices in combination with the current
gold and silver prices at the effective date of the PEA. The
economic evaluation base case is considered realistic and meets the
test of reasonable prospect for eventual economic extraction. The
base case economic results for the metal price assumptions are
shown as follows
Cash Flow Summary
|
Pre-tax
|
After Tax
|
IRR
|
41.4%
|
24.7%
|
NPV @ 5% Discount
Rate (US$m)
|
$17.64
|
$9.31
|
Average Annual Cash
Flow (US$m)
|
$10.22
|
$7.87
|
Average Operating
Margin
|
$170.11/oz
Au
|
$131.09/oz
Au
|
Payback
Period
|
~1.7 years
|
~2.7 years
|
Qualified Persons and NI 43-101 Disclosure
John Welsh, P.E., Douglas Willis
(CPG) and Carl Nesbitt (SME-RM)
representing Welsh Hagen Associates, Zachary Black (SME-RM) representing Hard Rock
Consulting, LLC, and Walter Martin
(CPG) representing Stantec Consulting Services Inc., the Qualified
Persons, as defined under NI 43-101, responsible for the
preparation of the Technical Report, have reviewed the contents of
this press release for accuracy of the technical and economic
information presented. The Technical Report, with an anticipated
effective date of October 9, 2017
will be prepared by Welsh Hagen Associates, an independent
geological consulting firm located in Reno, Nevada, USA. This report will be
available on SEDAR (www.sedar.com) within 45 days.
The technical contents of this news release have also been
reviewed and approved by Ronald
Stewart, P.Geo. a Qualified Person as defined by NI
43-101.
About Eros
Eros Resources Corp. is a Canadian public company focused on the
exploration and development of resource projects in North America. Eros has as its prime business
objective the identification, acquisition and exploration of
advanced resource projects with a North American focus. A secondary
focus of the Company is to make strategic investments with a global
focus and a diverse commodity base. The Company's expertise in the
resource sector supports the selection of these strategic
investments.
On behalf of the Board of Directors of
Eros Resources Corp.,
Ron Stewart
President & CEO
Cautionary note regarding forward-looking
statements
Certain statements made and information
contained herein may constitute "forward looking information" and
"forward looking statements" within the meaning of applicable
Canadian and United States
securities legislation, including, among other things, this press
release includes references to mineral resources and future
potential forecast economics of extracting those
resources. These statements and information are based on facts
currently available to the Company and there is no assurance that
actual results will meet management's expectations. Forward-looking
statements and information may be identified by such terms as
"anticipates", "believes", "targets", "estimates", "plans",
"expects", "may", "will", "could" or "would". Forward-looking
statements and information contained herein are based on certain
factors and assumptions regarding, among other things, there is no
certainty that any portion of the resources will be confirmed with
greater certainty, if confirmed, there is no certainty that it will
be commercially viable to extract any portion of the resource,
there is no certainty that access to the resource area will be
re-established, and if access to the resource area is blocked for
an extended period of time, or permanently, there is no certainty
that any compensation will be received by the Company.
Forward-looking information involves known and unknown risks,
uncertainties and other factors that may cause actual results or
events to differ materially from those expressed or implied by such
forward-looking information, including the re-establishment of
physical access to the property, the availability of adequate and
secure sources of funding to construct the extraction facilities
required to extract the mineral resources, prevailing commodity
prices, the receipt of regulatory approvals, environmental risks
and the performance of personnel. While the Company considers
its assumptions to be reasonable as of the date hereof,
forward-looking statements and information are not guarantees of
future performance and readers should not place undue importance on
such statements as actual events and results may differ materially
from those described herein. The Company does not undertake to
update any forward-looking statements or information except as may
be required by applicable securities laws.
Neither TSX Venture Exchange nor the
Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy
or accuracy of this release.
SOURCE Eros Resources Corp.