PEA Summary

Preliminary Economic Assessment (PEA) Summary

The PEA was initiated in late 2017 by MTB and contributed to by several consultants that have extensive expertise in their respective fields. Further details on the contributors can be found in the Qualified Persons section of this news release.

All amounts are in United States dollars unless otherwise specified. Base case economics are based on a gold price of $1,300 per ounce, copper price of $3.25 per pound, molybdenum price of $11.00 per pound and a silver price of $19.00 per ounce. The effective date of the PEA is June 26, 2018, and a technical report relating to the PEA will be filed on SEDAR within 45 days of this news release.

The PEA’s highlights include the following estimates:

  • Life of mine (“LOM”) average payable production of 373 koz gold and 43 Mlbs copper
  • 16 year mine life
  • 40 ktpd processing operation from years 1-5, with an expansion to 80 ktpd in year 6
  • LOM processed grades of 0.69 grams per tonne (“g/t”) gold and 0.12% copper
  • LOM revenue mix of 76.5% gold, 22.0% copper and 1.5% molybdenum plus silver
  • Post-tax net present value of $920 million at a 5% discount rate
  • Post-tax internal rate of return of 15.0%
  • Initial capital costs including working capital of $831 million
  • Expansion capital including working capital of $406 million
  • Average cash operating costs of $523/oz and all-in sustaining costs of $569/oz, net of by-product credit

Table 1: Summary of Cangrejos Economic Results by Gold and Copper Price

Percentage of Base Case Prices

90%

100%

110%

Gold Price (per oz)

$1,170

$1,300

$1,430

Copper Price (per lb)

$2.93

$3.25

$3.58

Pre-Tax NPV (5%)

$974M

$1,549M

$2,124M

Pre-Tax IRR

14.6%

19.2%

23.3%

Post-Tax NPV (5%)

$528M

$920M

$1,305M

Post-Tax IRR

11.1%

15.0%

18.4%


Table 2: Cangrejos Life of Mine Capital Expenditure Estimate Breakdown

Initial Capital ($M)

Process Plant & Infrastructure

$277

Equipment (Mining and Ancillary Facilities)

$100

Pre-production Mine Development

$87

Dry Stack Tailings Storage Facility

$79

Other Direct and Indirect Costs

$106

Sub Total

$651

Contingency (13% weighted average) (1)

$89

Freight Duty and Taxes (12% VAT on certain items) (2)

$78

Working Capital

$13

Total Initial Capital

$831

Expansion Capital ($M)

Process Plant Expansion Capital

$260

Mine Expansion Capital

$49

Sub Total

$309

Contingency (17% weighted average) (1)

$52

Freight Duty and Taxes (12% VAT on certain items) (2)

$39

Additional Working Capital

$6

Total Expansion Capital

$406

Sustaining Capital and Closure Costs ($M)

Life of Mine Sustaining Capital

$230

Average Annual Life of Mine Sustaining Capital

$14

Net Closure Costs (Closure, Severance and Salvage)

$41

Note: Totals may not add up due to rounding.

(1) The contingency allowance was developed on an area by area assessment of estimate confidence. The assessment weighed scope, quantification, and pricing factors to assign a contingency amount to each area.
(2) Value Added Tax (“VAT”) is recoverable on 12% of the export value once the Project is in production. VAT of $67 million was calculated on initial capital, with an additional $33 million on expansion capital.


Table 3: Summary of Cangrejos Operating Cost Estimates and Cash Costs

Average Operating Costs

Years 1-5

LOM

Mining Costs per Tonne Mined

$2.50

$2.14

Per Tonne Milled

Mining Costs

$6.36

$4.48

Processing Costs

$7.23

$7.09

Tailings Management

$0.75

$0.75

General, Administrative, Environmental and Site Costs

$0.90

$0.76

Total Operating Costs

$15.24

$13.09

Average Net Cash Costs per Ounce(1)

Years 1-5

LOM

Operating Costs

$865

$843

By-Product Credits

($329)

($400)

Government 5% NSR Royalty

$77

$80

C1 Cash Cost Net of By-products

$612

$523

Sustaining Capital and Net Closure Costs

$70

$45

All-in Sustaining Net Cash Cost

$682

$569

Average Gold Equivalent Cash Costs per Ounce(2)

Years 1-5

LOM

Operating Costs

$690

$645

Government 5% NSR Royalty

$61

$61

C1 Gold Equivalent Cash Cost

$751

$706

Sustaining Capital and Net Closure Costs

$56

$35

All-in Sustaining Gold Equivalent Cash Cost

$807

$741

Note: Totals may not add up due to rounding. By-products and equivalents calculated using $1,300 per ounce gold, $3.25 per pound copper, $11.00 per pound molybdenum and $19.00 per ounce silver.

Net Cash Cost: (Operating costs including transportation and refining costs + Royalties – By-product credits) / Payable Au oz.
Gold Equivalent Cash Cost: (Operating costs including transportation and refining costs + Royalties) / Payable Au Eq oz.
All-in Sustaining Cash Cost: Adds sustaining capital and closure costs to the Net Cash Cost and Gold Equivalent Cash Cost.
(1) Average annual Year 1-5 production of 270 koz and 25 Mlbs copper.
(2) Average annual Year 1-5 gold equivalent production of 338 koz and average LOM gold equivalent production of 488 koz.


Table 4: Mined and Processed Material Summary

Grade

Contained Metal

Processed Material Type

Tonnes

(Mt)

Au

(g/t)

Cu

(%)

Ag

(g/t)

Mo

(ppm)

Au

(Moz)

Cu

(Mlbs)

Ag

(Moz)

Mo

(Mlbs)

Oxide Material

14.5

0.67

0.10

0.61

24

0.3

32

0.3

1

Sulphide Material

324.0

0.69

0.12

0.59

27

7.2

867

6.2

19

Total Processed

338.5

0.69

0.12

0.59

26

7.5

898

6.4

20

Waste Material

379.7

Total Mined

718.2

Strip Ratio

1.12

Note: Totals may not add up due to rounding.


Table 5: Processing Schedule

Years 1-5

Years 6-16

LOM

Avg. Processed Tonnes (Mt)

13.7

24.5

21.2

Avg. Gold Grade (g/t)

0.79

0.67

0.69

Avg. Copper Grade (%)

0.11

0.12

0.12

Avg. Silver Grade (g/t)

0.57

0.60

0.59

Avg. Molybdenum Grade (ppm)

33

25

26


Table 6: Selected Metallurgical Recoveries Summary

Sulphide Material – 96% of Processed Material

Au

Cu

Ag

Mo

Gravity Concentrate

37%

-

9%

-

Copper Concentrate

45%

82%

69%

Molybdenum Concentrate

-

-

-

50%

Total Recovery

82%

82%

78%

50%

Oxide Material – 4% of Processed Material

Au

Cu

Ag

Mo

Gravity Concentrate

-

-

-

-

Copper Concentrate

65%

50%

50%

Molybdenum Concentrate

-

-

-

50%

Total Recovery

65%

50%

50%

50%

Qualified Person

Leo Hathaway, P.Geo, a "qualified person" within the definition of that term in NI 43-101, has reviewed and approved the scientific and technical information contained on this page.