PEA Summary

Preliminary Economic Assessment (PEA) Summary

The PEA, initiated in late 2019 was produced by a team of independent consultants that possess 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 were calculated using a gold price of $1,400 per ounce, copper price of $2.75 per pound, molybdenum price of $9.00 per pound and a silver price of $16.00 per ounce. The effective date of the PEA is June 8, 2020 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 annual payable production of 366 thousand ounces gold
  • LOM average annual payable by-product production of 46 Mlbs copper
  • 25 year mine life
  • 40 ktpd processing operation from years 1-5, with an expansion to 80 ktpd in year 6
  • After-tax NPV (5%) and IRR of $1.6 billion and 16.2%
  • After-tax NPV (5%) and IRR of $2.5 billion and 21.7% using $1,680 per ounce gold (see Table 1)
  • Average cash operating costs of $545/oz and all-in sustaining costs of $604/oz, net of by-product credits
  • LOM processed grades of 0.56 grams per tonne (“g/t”) gold and 0.10% copper
  • LOM revenue mix of 78.9% gold, 19.4% copper and 1.7% molybdenum plus silver
  • Initial capital costs including working capital and refundable Value Added Tax (“VAT”), of $1,000 million
  • Expansion capital to double throughput including working capital of $454 million

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

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

Percentage of Base Case Prices 80% 100% 120%
Gold Price (per oz) $1,120 $1,400 $1,680
Copper Price (per lb) $2.20 $2.75 $3.30
Pre-Tax NPV (5%) ($M) $960 $2,555 $4,150
Pre-Tax IRR 11.8% 20.2% 27.0%
Post-Tax NPV (5%) ($M) $451 $1,571 $2,519
Post-Tax IRR 8.7% 16.2% 21.7%

Table 2: Comparison to 2018 PEA

Assumption / Value June 2018 PEA June 2020 PEA Comments
Gold Price US$1,300/oz US$1,400/oz
Copper Price US$3.25/lb US$2.75/lb
Post-Tax NPV (5%) $920 million $1,571 million
Post-Tax IRR 15.0% 16.2%
Processed Tonnes 339 Mt 640 Mt Increases with expanded Cangrejos and addition of Gran Bestia.
Processed Gold Grade Yr 1-5 0.79 g/t Au 0.76 g/t Au
Processed Copper Grade Yr 1-5 0.11% Cu 0.14% Cu
Processed Gold Grade LOM 0.69 g/t Au 0.56 g/t Au Reduced due to lower average grade at Gran Bestia later in the mine life.
Processed Copper Grade LOM 0.12% Cu 0.10% Cu
Contained Gold LOM 7.5 Moz 11.4 Moz
Contained Copper LOM 0.9 Blbs 1.5 Blbs
Average Annual Gold Production 373 koz 366 koz
Average Annual Copper Production 43 Mlbs 46 Mlbs
Mine Life 16 years 25 years
Initial Capital Costs $831 million $1,000 million Capital increases are driven by the addition of a CIL plant, tailings filtration and tailings / mineralized rock conveying costs.
Expansion Capital Costs $401 million $454 million
Sustaining Capital $230 million $445 million
Ecuadorian NSR Royalty 5.0% 3.0%

Table 3: Cangrejos Life of Mine Capital Expenditure Estimate Breakdown

Initial Capital ($M)
Process Plant, Infrastructure & Dry Stack Tailings Storage Facility $429
Equipment (Mining and Ancillary Facilities) $158
Pre-production Mine Development $27
Other Direct and Indirect Costs $168
Sub Total $781
Contingency (14% weighted average) (1) $108
Working Capital, Freight Duty and Taxes (12% VAT on certain items) (2) $111
Total Initial Capital $1,000
Expansion Capital ($M)
Process Plant Expansion Capital $348
Contingency (17% weighted average) (1) $58
Working Capital, Freight Duty and Taxes (12% VAT on certain items) (2) $49
Total Expansion Capital $454
Sustaining Capital and Closure Costs ($M)
Life of Mine Sustaining Capital $445
Average Annual Life of Mine Sustaining Capital $18
Net Closure Costs (Closure, Severance and Salvage) $97

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 considered scope, quantification, and pricing factors to assign a contingency amount to each area.
(2) VAT on initial capital is recoverable in year one. Other VAT is recoverable on 12% of the export value once the Project is in production. VAT of $85 million was calculated on initial capital, with an additional $37 million on expansion capital.

Table 4: Summary of Cangrejos Operating Cost Estimates and Cash Costs

Average Operating Costs Years 1-5 Years 6-25 LOM
Mining Costs per Tonne Mined $2.00 $1.85 $1.88
Per Tonne Milled
Mining Costs $7.72 $3.54 $3.99
Processing and Tailings Management Costs $6.80 $6.51 $6.54
General, Administrative, Environmental and Site Costs $1.37 $0.71 $0.78
Total Operating Costs $15.90 $10.76 $11.31
Average Net Cash Costs per Ounce(1) Years 1-5 Years 6-25 LOM
Operating Costs $816 $787 $791
Refining and Transport $67 $79 $77
By-Product Credits ($345) ($380) ($375)
Government 3% NSR Royalty $50 $51 $51
C1 Cash Cost Net of By-products $589 $537 $545
Sustaining Capital and Net Closure Costs $120 $49 $59
All-in Sustaining Net Cash Cost $709 $586 $604
Average Gold Equivalent Cash Costs per Ounce(2) Years 1-5 Years 6-25 LOM
Operating Costs $655 $619 $624
Refining and Transport $54 $62 $61
Government 3% NSR Royalty $40 $40 $40
C1 Gold Equivalent Cash Cost $749 $721 $725
Sustaining Capital and Net Closure Costs $96 $39 $47
All-in Sustaining Gold Equivalent Cash Cost $845 $760 $772

Note: Totals may not add up due to rounding. By-products and equivalents calculated using $1,400 per ounce gold, $2,75 per pound copper, $9.00 per pound molybdenum and $16.00 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 267 koz and 31 Mlbs copper. Average annual Year 6-25 production of 391 koz and 50 Mlbs copper.
(2) Average annual Year 1-5 gold equivalent production of 333 koz, average annual Year 6-25 gold equivalent production of 497 koz and average LOM gold equivalent production of 464 koz.

Mining and Processing Facility

The PEA contemplates large-scale open pit mining using a 100% owner operated equipment fleet. Five mining phases were designed for Cangrejos and two mining phases were designed for Gran Bestia, both using a technique that optimizes present value by using a declining cut-off grade over the mine life.

Gran Bestia material begins to enter the mine production schedule in Year 5, however the majority of the Gran Bestia economic mineralization (88%) is mined in the last nine years of the production schedule.

Table 5: 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)
Saprolite & Saprock 14 0.60 0.08 2.27 5.2 0.27 24 1.02 0.16
Partially Oxidized 22 0.56 0.09 0.76 16.5 0.40 42 0.53 0.80
Fresh Rock 604 0.55 0.11 0.63 20.4 10.77 1,404 12.29 27.20
Total Processed 640 0.56 0.10 0.67 20.0 11.44 1,479 13.75 28.25
Waste Material 728
Total Mined 1,368
Strip Ratio 1.14

Note: Totals may not add up due to rounding.

Table 6: Processing Schedule

Years 1-5 Years 6-25 LOM
Avg. Processed Tonnes (Mt/a) 14 29 26
Avg. Gold Grade (g/t) 0.76 0.53 0.56
Avg. Copper Grade (%) 0.14 0.10 0.10
Avg. Silver Grade (g/t) 0.74 0.66 0.67
Avg. Molybdenum Grade (ppm) 25.3 19.4 20.0


For more detailed information please view the full news release for Jun 9, 2020: Click Here

Qualified Persons

The scientific and technical information contained in this news release pertaining to the Project has been reviewed, verified and approved by the following Qualified Persons as defined by NI 43-101: Robert Sim, P.Geo. (Mineral Resource), of SIM Geological Inc. (who has also verified the sampling, analytical, and test data underlying the disclosed Mineral Resource estimate); Joseph McNaughton, P.E. (Mining), of Independent Mining Consultants, Inc.; Robert Michel, SME Registered Member (Economic Analysis and Infrastructure) of Robert Michel Enterprises; Nelson King, SME Registered Member (Metallurgy); Kathleen Altman, P.E., PHD (Process) Scott Elfen, P.E. (Waste Rock and Tailings Management Facilities and Site Infrastructure) of Ausenco Limited, Norm Norrish, P.E. of Wiley & Norrish (Pit Slope Design) and Larry Breckenridge, P.E. (Hydrology, Hydrogeology, Geochemistry, and Infrastructure) of Global Resource Engineering, Ltd. All of the Qualified Persons are independent of Lumina.

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.

Cautionary Note

A preliminary economic assessment is preliminary in nature, 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 preliminary economic assessment will be realized. Mineral resources are not mineral reserves and do not have demonstrated economic viability.