PEA Summary

The PEA considers open pit and underground mining at both the Hammerdown and Orion deposits with pre-concentration of the mineralized material through a sorting plant and haulage to an offsite mill for gold doré production.  The mine will be contractor operated with the Company providing technical oversight plus management of the sorting and process plant at the Nugget Pond mill gold circuit operations.  The sorting plant is designed to produce 700 tpd of product feed that would be processed at the Nugget Pond mill gold circuit.  A mine life of 9 years is expected for the Project.  The PEA leverages Hammerdown’s extensive existing infrastructure including all-weather access roads, 3,700 metres of underground development and grid power within 2 km of the Project site. The PEA is derived from the Company’s  updated resource estimate (February 29, 2020) outlined in the Technical Report.  The effective date of the PEA is February 29, 2020.  

The  PEA was prepared through the collaboration of the following firms: WSP Canada Inc. (Sudbury, ON) (“WSP”), AGP Mining Consultants Inc. (Toronto, ON) (“AGP”), Halyard (Toronto, ON), Canenco Consulting Corp.. (Vancouver, BC), SRK Consulting UK (Cardiff, UK), and GEMTEC Consulting Engineers and Scientists (St. John’s, NL). These firms provided Mineral Resource estimates, mine design and cost estimates for mine operations, process facilities, major equipment selection, waste rock and tailings storage, reclamation, permitting, and operating and capital expenditures.
 

• After-tax NPV5% of $111.3M and 50.5% IRR (pre-tax NPV5% $191.8M and 75.4% IRR) at base case gold price of US$1,375/oz Au
• At US$1,500/oz gold the Project returns after-tax NPV5% of $154.1M and 65.1% IRR (pre-tax NPV5% $261.7M and 95.6% IRR)
• LOM total gold production of 521,500 oz, averaging 57,900 oz annually
• Average annual gold production of 69,500 oz in the first 5 years
• LOM cash costs of US$802.55/oz Au and LOM All-in sustaining costs (“AISC”) of US$938.80/oz Au
• Pre-production capital expenditures of $57.2M
• After-tax payback period of 1.5 years with base case pricing

The foregoing PEA highlights are based on the following: 

1. Exchange Rate (US$/C$) of $0.75
2. Cash costs are inclusive of mining costs, processing costs, on-site general and administrative (“G&A”) costs, treatment and refining charges and royalties
3. AISC includes cash costs plus estimated corporate G&A, sustaining capital and closure costs

*Cautionary Statement: The reader is advised that the PEA summarized in this press release is preliminary in nature and is intended to provide only an initial, high-level review of the Project potential and design options. Readers are encouraged to read the PEA in its entirety, including all qualifications and assumptions. The PEA is intended to be read as a whole, and sections should not be read or relied upon out of context. The PEA mine plan and economic model include numerous assumptions and the use of Inferred Resources. Inferred Resources are considered to be too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves and to be used in an economic analysis except as allowed for by NI 43-101 in PEA studies. There is no guarantee that Inferred Resources can be converted to Indicated or Measured Resources, and as such, there is no guarantee the Combined Project economics described herein will be achieved. The PEA will replace the 2017 pre-feasibility study technical report.