Feasibility Study Summary

Highlights:

• Open pit mine with run of mine (“ROM”) grade of 4.46 grams per tonne (“gpt”) Au, life of mine (“LOM”)
• On-site crushing and sorting plant producing 700 tonnes per day (“tpd”) of mill feed grading 6.76 gpt Au
• Mineral processing at Maritime’s 700 tpd gold circuit at the Nugget Pond mill facility
• LOM payable gold production of 247,000 oz, averaging 50,000 ounces annually
• $102.8M after tax net present value (“NPV”) (5% discount) with 48.1% internal rate of return (“IRR”), 1.7 year payback at US$1,750/oz base case gold price (three year trailing average)
• $75.0M estimated initial capital cost with $4.9M in net sustaining capital
• US$912/oz gold all-in sustaining cost (“AISC”)
• Several near-mine exploration opportunities to grow resources and extend mine life

Hammerdown Feasibility Study

Table 1. Study Results

1. Refer to “Non-IFRS Financial Measures” below.
2. Payback is defined as achieving cumulative positive free cashflow after all cash costs and capital costs, including sustaining capital costs and is calculated from the start of production.
3. Excludes initial working capital requirements.
4. $0.77 US$/C$ exchange rate.

Mining

The Feasibility Study contemplates open pit mining from the Hammerdown deposit, including the higher grade narrow Hammerdown veins and the thicker, lower grade Wisteria zone.  The Hammerdown mine is designed as a conventional truck and shovel open pit operation with one year of pre-production stripping and five years of subsequent mining.  ROM ore from Hammerdown would be sent to the on-site crushing and ore sorting plant to produce the mill feed product that would be hauled to the Company’s gold circuit at the Nugget Pond mill for final processing. Current mineral resources contained within the Orion deposit have not been considered as part of the Hammerdown Feasibility Study and remain subject to ongoing exploration, environmental and technical studies. 

A total of 1.895 million tonnes of ROM ore is scheduled to be mined from the Hammerdown pit with a diluted grade averaging 4.46 gpt Au.  A total of 38.5 million tonnes of non-acid generating waste rock will also be produced and stored in a waste rock stockpile to the south of the open pit.

The open pit has been designed and scheduled to maximize project rate of return. Pit slope optimization has been undertaken based on geotechnical data collected between 2019 and 2021. Hammerdown’s open pit development consists of three phases of pushbacks with overburden thickness averaging under 2-metres (“m”).  Mining will be completed by conventional drill / blast / load / haul methods on 5-meter benches in ore and 10-m benches in waste where practical. Waste loading and haulage will be handled by 7-m3 hydraulic excavators and 55-tonne payload haul trucks.  Ore loading and hauling will be handled by a fleet of 4-m3 hydraulic excavators with a 7-m3 front end loader as backup and 38-tonne payload articulated haul trucks. 

Grade control in the open pit is a key part of the mining process and will be accomplished through a combination of 5 metre bench heights, 50,000 m of close spaced diamond drilling (15 m centres, 10 m vertically) to identify and report vein orientations and grades to the mine planners, selective excavation under GPS control, and mine geological control.  The ore sorting process is integrated to remove dilution taken with the narrow veins during the mining process.

Mineral Processing

As a brownfields gold project, Hammerdown has a history of high gold recoveries through an industry standard carbon-in-pulp leaching circuit at the Nugget Pond mill.  Between 2000-2004 Richmont Mines processed 291,400 tonnes of ore grading 15.8 gpt Au from Hammerdown at Nugget Pond. Recoveries averaged 97% with a total of 143,000 ounces of gold produced during this time.  In 2021 Maritime acquired the gold circuit at Nugget Pond from a subsidiary of Rambler Metals and Mining PLC (see press release dated April 13, 2021). 

The Feasibility Study’s approach to mineral processing includes a crushing and ore sorting stage at the Hammerdown mine site to remove dilution and concentrate the ROM ore into a high-grade feed product for the mill.  This product would be hauled 140 km to the Nugget Pond mill for final mineral processing including grinding, thickening, carbon in pulp leaching, refining to doré bars and disposal of tailings. 

The crushing and sorting plant at Hammerdown is designed for 1,200 tpd of ROM feed with an ultimate capacity of 1,800 tpd, providing significant over-capacity to allow operating flexibility.  ROM feed would go through primary and secondary crushing stages to produce a 50mm minus product.  A three-deck screening plant would convey the fine fraction (minus 12mm) to the ore storage building and two separate coarse size fractions to two ore sorters operating in parallel.  Sorter No.1 would receive a 12-25mm size fraction and sorter No. 2 would receive the 25-50mm size fraction.  X-ray transmission (“XRT”) sorting with compressed air would be used to concentrate the ore containing sulphides, separating it from the inert waste rock dilution taken during the mining process.  The sorting process has been designed to operate without the use of water, relying on X-ray sensing and compressed air to separate the ore from the waste.  Sorted product material would be conveyed to a final tertiary crushing stage to reduce the product to 12mm minus and stockpiled in the ore storage building.  Sorted reject material would be stockpiled and back hauled to a storage pile for long term closure.  Metallurgical test work supporting the design of the plant was completed on several bulk samples of Hammerdown mineralization at two different manufacturer’s facilities.  On average, a crushing and sorting rejection rate of 40% is expected with gold recovery of 95.0%. 

At the Nugget Pond mill, the sorted product from Hammerdown is planned to be processed at a rate of 700 tpd.  Highway haulage trucks carrying 30 tonne payloads will offload at Nugget Pond via an automated truck unloader that will convey the material to a covered stockpile.  Reclaim feeders will transfer the fine ore to the grinding circuit, consisting of a 10.5’ x 21’ x 1,000 hp ball mill and a 450 hp vertical grinding mill to achieve a final P80 grind size of 50 microns.  Post grinding the slurry would proceed through the existing carbon in pulp leach (“CIP”) circuit to produce gold doré bars and a tailings product that would be deposited in the existing tailings management area.  Gold recovery through the Nugget Pond gold circuit is estimated to be 95.5%.  All metallurgical test work was conducted at Blue Coast Labs under the direction of Canenco Consulting Inc.

Operating and Capital Costs

Capital costs have a basis of estimate at Class 3 (FEL3) with a stated -15%/+30% accuracy (after the Association for the Advancement of Cost Engineering International) and are stated in Q2 2022 Canadian dollars.

Capital cost contingency has been allocated on scopes of work. The combined contingency for all scopes of work is equivalent to 20% of direct costs, excluding mining equipment and pre-stripping.  More than 82% of equipment costs, bulk materials and labour rates are estimated with budget quotes from vendors. The remaining 18% of costs are estimated from consultant databases on precedent projects, or from factoring such items as freight and construction indirect costs from supply pricing.

Mine equipment is assumed to be acquired through a combination of leasing for most production and support equipment, rentals for pioneering drills, and purchase of some support equipment.

The initial capital cost, including contingency, is estimated at $75.0M and net LOM sustaining capital cost is estimated at $4.9M, net of closure costs and salvage values for major equipment, for a total capital cost of $80.0M.

Table 2. Capital Costs

Mine operating costs, including pre-stripping, are estimated at $4.31/t moved with a strip ratio of 20.3 (waste:ore) over the LOM.

Processing and tailings storage related costs are estimated at $48.06/t processed.  General and administration costs are estimated at $12.04/t processed.  Diesel costs are estimated at $1.53 per litre and power at $0.085 per kWh (net charge for generated power).

Overall LOM Cash Costs are estimated at US$897 per payable ounce of gold.  The LOM All-In Sustaining Costs are estimated at US$912 per payable ounce of gold.

Table 3. Operating Costs

Infrastructure and Facilities

At the Hammerdown mine site, the main structure will be the crushing and ore sorting plant.   Other structures have been planned to site operational requirements and will include an administration complex, security gatehouse, explosive storage facility, truck scales, a warehouse, and a mine equipment maintenance shop.  Site geotechnical investigations have been performed to support the engineering effort for site infrastructure design.  Power will be supplied to the Hammerdown site by a new 570 m long utility line connection to the existing 25 kV grid at Route 391, operated by Newfoundland and Labrador Hydro.  The entrance to the Hammerdown site is located a short distance from Route 391 via the Shoal Pond forest access road.  A new 2 km bypass road is envisioned to ensure safe passage for the general public, rerouting light vehicle and other traffic away from the Hammerdown mine area.

At the Nugget Pond mill, the main facilities will be the material handling system and covered ore stockpile ahead of the grinding and CIP circuits.  An existing, operational, and fully permitted tailings storage facility is present and will be operated under a custom processing agreement with Rambler Mining and Metals Canada Limited.  Power is supplied by an existing line connection to the provincial power grid.  An existing 10 km access road connects Nugget Pond to provincial Highway 414.  Upgrades to the access road have been incorporated into the Feasibility Study to address widening and culvert replacements in certain areas.

Environment, Regulatory and Socioeconomics

In July 2020, the Hammerdown Project was registered as per the requirements of the Newfoundland and Labrador Environmental Assessment Act.  In May of 2021, the Government of Newfoundland and Labrador (the “NL Government”) approved the Project and issued a release from Environmental Assessment (“EA”).  As an environmentally stable brownfield site that was previously closed and rehabilitated in 2004, Hammerdown continues to present favourable characteristics in support of future development.  Comprehensive geochemical studies of waste rock have concluded that all waste material is stable and inert, posing no challenges throughout planned operations or future closure.  The site contains no fish habitat or fish populations, and proposed development requires minimal diversions of ephemeral drainage features only.  Also, within and surrounding its small two-square km footprint, the proposed Hammerdown Project contains no species at risk.

Ore processing for the Hammerdown Project will be performed at the Nugget Pond mill site, approximately 140 km from the Hammerdown Project site.  The gold leach circuit and tailings facilities at Nugget Pond are fully permitted, and these permits will be updated to acknowledge processing requirements for Hammerdown feed.  Sorting technology proposed for the Hammerdown Project removes waste rock from the run of mine feed, reducing green house gas emissions from ore transport by approximately 40% (19,000 T) throughout the LOM.

Future permitting in support of the start of construction at Hammerdown will focus on the completion and submission of both the Project Development Plan, and the Rehabilitation and Closure Plan.  Provincial regulatory approval is required for these two LOM plans prior to the start of construction.  Submission of both plans will follow the completion of the Feasibility Study technical report, and approvals are expected in Q4 2022.  

Maritime anticipates significant socioeconomic benefits for both the communities within the Project region, and the Province.  The Project will contribute over $64.4 million in direct federal and provincial taxation benefits over the LOM with an additional operational expenditure forecasted at over $278.7 million.  Approximately 1,000 person years of direct employment will be generated for operations, in addition to local contract opportunities for ore transport and other operational support services. Maritime has previously received provincial government approval for its Employment and Benefits Agreement and its Gender Equity and Diversity Plan for the Hammerdown Project.

Project Economics

At the base case gold price (US$1,750 per ounce Au and a $0.77 US$/C$ exchange rate), the Project generates an after-tax NPV5% of $102.8M and an after-tax IRR of 48.1%. Payback on initial capital is 1.7 years.

LOM after-tax FCF is estimated at $129.7M on an undiscounted basis. Average after-tax FCF while mining Hammerdown is estimated at $41.4M per annum.

Table 4. Gold Price Sensitivity

Further Project Opportunities

Several opportunities exist to extend the mine life and improve Project economics:

• Orion deposit: The Orion deposit remains open at depth and along strike.  Diamond drilling in 2021 intersected mineralization similar to the Wisteria zone at Hammerdown with 4.8 gpt Au over 13.6 m, including 7.0 gpt Au over 8.1 m in drill hole BB-20-133 (see the Company’s press release dated January 19, 2021).  Further drilling is planned at Orion with the goal of extending the deposit and firm up Measured and Indicated mineral resources that could extend the mine life. Additional environmental baseline and technical studies will be conducted to support a project registration for an EA with the province.
• Orion / Hammerdown trend: A 5 km magnetic low trend between the Orion and Hammerdown deposits was identified by Maritime’s exploration team.  New discoveries have been made at Orion North and in Area 22, both along this trend.  Most recently a new zone of gold mineralization similar to Hammerdown’s Wisteria zone was intersected only 300 m south of Hammerdown in Area 22 with 0.76 gpt Au over 30.2 m at a depth of 90 m below surface in drill hole DC-22-02 (see the Company’s press release dated June 22, 2022).  This trend has been unexplored by previous operators and where drilling did occur, the core was not sampled completely.  Maritime anticipates there is excellent potential to increase the mine life by focusing exploration efforts along this trend.
• Capital costs with used equipment:  Several pieces of major equipment including the mine fleet, crushing plant and grinding mills may be sourced on the used equipment market.  This could potentially reduce the capital costs and lead time to receive this equipment.
• Reagent and fuel pricing: The recent global challenges with inflation and the supply chain for fuel and reagents has resulted in a dramatic rise in pricing.  Any improvements in these situations are anticipated to lower these costs, subsequently lowering the project operating costs.   Diesel fuel and reagents for mineral processing are two of the major operating costs for the project.