TSX:GGD

A Canadian-based gold and silver producer
with properties in Mexico

Parral Tailings Project

Location: Hidalgo del Parral, Chihuahua, Mexico
Status: Commercial Production - Achieved: April 2015
Reserves: 35 Million oz Silver Equivalent (50:1)*
Resource (M&I):
12.6 Million oz Silver Equivalent (71:1)**

 

The 141 hectare Parral Tailings site is host to 21.3 million tonnes of tailings left over from 340 years of mining operations. Located near the heart of the city, the tailings have become a nuisance to residents and an impediment to development. Fortunately, inefficient historic recovery processes left significant amounts of silver and gold in the tailings. GoGold's 2013 pre-feasiblity study defined a reserve of 35 million ounces of silver equivalent (20.3Mt @ 38.4 g/t Ag and 0.31 g/t Au)*. GoGold's heap leach facility was financed and built within 18 months and production began in June 2014. In February 2015, GoGold acquired a nearby tailings property containing an additional 5.77 million tonnes at 49 g/t silver and 0.26 g/t gold for an estimated 12.6 million silver equivalent ounces (Eq71/1)**. Material from the new acquisition will be processed at GoGold's existing heap leach facility.

 

GoGold's Parral operation - expected 5,000 tonnes per day with an expected average annual yield of 1.2 million oz. silver and 11,000 oz. gold.

 

Performance indicators:

Capex - Construction completed for approximately $32.5 million versus our pre-feasibility budget of $35 million.

Head Grade - Average increase of 20% over the original resource block model grade of the Red Hill material of 69 g/t Ag (“grams per tonne”) as determined in the Pre-feasibility study. The average resource grade for the mined areas of the block model from the report is 65 g/t Ag. The plant head grade as determined by the plant is currently averaging 83 g/t Ag. This represents a significant increase in recoverable metal early in the project.

Agglomerate Quality - The agglomerate quality has been good and percolation through the heap is occurring within expectations.

Reagent Consumptions - All reagents to date are well within the forecast consumptions for the material being treated. The cyanide, which is the major consumable, has been well below forecasted consumption which should represent significant savings going forward. The main by-product which is leached along with the silver is copper. The amounts of copper leached have been within the expected range and have not overly impacted cyanide consumption.

Dore Quality - The dore produced has silver with minor amounts of gold, copper and zinc. The quality falls within the assay range accepted by the refineries.

Average Cost per Tonne - Mining and processing has averaged $6.50 - $8.50 per tonne which represents a significant reduction from the pre-feasibility study predicted cost per tonne of $12.

† Source: GoGold PR#17-2014

 

In February 2013, GoGold announced the completion of a Pre-Feasibilty Study on the site. The study defines a reserve of 35 million Silver Equivalent Ounces and a pre-tax internal rate of return (“IRR”) of 80%. The study projects an initial capital cost of $35 million and a life of mine (“LOM”) of 12 years with an average annual production of 1.8 million Silver Equivalent Ounces* (1.2 million ounces of silver and 11,000 ounces of gold). Mine production is planned at 5,000 tonnes per day (“tpd”) on a conventional heap leach with a sustaining capital of $27.5 million over LOM.

San Diego Location Map

The study includes a LOM reserve average silver grade of 38.4 grams per tonne (“g/t”) silver and 0.31 g/t gold and a recovery of 58% for silver and 64% for gold. Cash operating cost for silver of $6.48 an ounce using gold as a by-product credit. This project has a pre-tax IRR of 80%, with pre-tax Net Cash Flow of $230 million and a pre-tax Net Present Value (“NPV”) of $159 million using a 5% discount rate. The study is based on a gold and silver price of US$1,475/oz. gold and US$29/oz. silver. Payback for the project is expected in the first 16 months of production.

The Pre-Feasibility Study was prepared by The MDM Group of South Africa, in accordance with the requirements of Canadian National Instrument 43-101 “Standards of Disclosure for Mineral Projects”. (“NI 43-101”) (*50:1 used for Silver Equivalent Calculation) 

 

Highlights

Technical Report (Full NI 43-101 Technical Report)

  • 37,100,000 oz measured/indicated AgEq50 or 741,000 oz measured/indicated AuEq50
  • 26,400,000 Ounces Silver
  • 214,000 Ounces of Gold
  • Final column leach tests have returned an average leach extraction of 65% for gold and 58% for silver. (Kappes, Cassiday and Associates (KCA) of Reno, Nevada)
  • Overall resource is 21.3 Million tonnes @ 1.08 g/t AuEq50 or 54 g/t AgEq50
  • Good access to grid power, water, roads, accommodation, contract services and skilled labour

 

Parral Pre-feasibility Highlights

Reserves (Silver Equivalent Ounces - 50:1) 35 Million
Pre-tax IRR 80%
Capital Cost $35 Million
Sustaining Capital  $27 Million
Silver Eq Oz. / Per Year 1.8 Million
Cost per Oz. Ag (Au as by-product) $6.48
Net cash flow, pre-tax (LOM) $230 Million
Pre-tax NPV (5% Discount) $159 Million
Payback Period 16 Months
Life of Mine 12 Years

 

Background

On July 30, 2012 GoGold Resources Inc. acquired the rights to the Parral Tailings Project through a merger with Absolute Gold Holdings Inc. The Project comprises 21,300,000 tonnes of dry land tailings deposited in two separate areas referred to as Zones 1 and 2.

Sampling and Drilling

Absolute Gold had previously completed a field campaign at the Project site in 2011‐ 2012 which included pit, channel and trench sampling, auger drilling, density measurements, surveying and metallurgical sampling and testing, for precious metals (gold and silver) delineation and extraction.

Sampling included:

  • 188 trenches
  • 295 vertical channel samples
  • 58 HHD auger holes representing 1072 m of drilling with all holes drilled vertically from the surface to the underlying soil/bedrock

 

Table of Mineral Resource Statement - Parral Tailings Project at AuEq 50 Cut-off of 0.4 g/t

Class/Zone Au(g/t) Ag(g/t) AuEq50(g/t) Tonnes (Mt) Total Au (Kozs) Total Ag(Mozs) AuEq50(Kozs) AgEq50(Kozs)
Zone 1                
Measured 0.37 31.1 0.99 1.7 20.8 1.7 55.8 2790
Indicated 0.38 30.7 0.99 10.2 123.5 10.1 325.7 16285
Sub-Total: 0.37 30.8 0.99 12 144.3 11.9 381.5 19075
Zone 2                
Measured 0.24 46.8 1.17 2.2 17 3.3 83.4 4170
Indicated 0.23 49 1.21 7.1 52.5 11.2 276 13800
Sub-Total: 0.23 48.4 1.2 9.3 69.5 14.5 359.4 17970
Zones 1 & 2              
Measured 0.3 39.9 1.09 4 37.8 5.1 139.2 6960
Indicated 0.32 38.2 1.08 17.3 176.1 21.3 601.7 30085
Total 0.31 38.5 1.08 21.3 213.8 26.4 740.9 37100

Notes to accompany mineral resources:

  1. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
  2. Mineral resources stated at an AuEq 50 cut-off of 0.4 g/t. This is based on an opex estimate of $11.00/t treated, Au price of $1,400/oz and an AuEq recovery of 56%.
  3. The figures in the table may not compute exactly due to rounding.
  4. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.

 

Location and Infrastructure

The Project is within the town limits of Hidalgo del Parral, in the State of Chihuahua, Mexico. The town has a population of approximately 100,000 and can be easily accessed on a well‐maintained paved highway from the city of Chihuahua. There is also an air strip at Parral which can accommodate light aircraft. Parral is situated at an elevation of approximately 1620 m and has an altitude‐moderated semi‐arid climate.

Parral and the surrounding area is well serviced with numerous hotels, restaurants and other services and has a long tradition of mining. There is an ample supply of skilled personnel, equipment suppliers and contractors sufficient for the Project. Potential for electrical power is available from the local grid and water is available from the local water commission. Telephone and cell coverage are excellent as is access to high‐speed Internet. Visiting executives, analysts and exploration crews stay in Parral and make the short trip to site as required.