Goldboro Project

The Goldboro Gold Project (“Goldboro”) is an advanced exploration and development project that forms a strategic part of Anaconda’s strategy for near-term growth.  Goldboro is located on tidewater approximately 185 km northeast of Halifax, Nova Scotia within Nova Scotia’s Eastern Goldfields District. Anaconda acquired the project as part of a merger with 100%-owned subsidiary Orex Exploration Inc. in early 2017. 

Goldboro PEA

On January 17, 2018 Anaconda announced a positive result of an independent Preliminary Economic Assessment study (“PEA”) on the Goldboro Project (see news release dated Jaunary 17, 2018). The PEA provides a base case assessment of developing the Goldboro mineral resource by open pit and underground mining, on site concentration through gravity and flotation circuits and leaching of the concentrate and gold recovery at Anaconda’s Pine Cove Mill in Newfoundland. A NI43-101 Technical Report will be filed on SEDAR within 45 days from January 17, 2018.

Goldboro Project PEA Highlights*

The base case scenario utilizes a long-term gold price of $1,550 and all dollar figures are presented in Canadian dollars unless otherwise noted. Key assumptions and results from the PEA are summarized below:

  • Undiscounted cash flow before income and mining taxes of $189 million;
  • Pre-tax Net Present Value (“NPV”) at a 7% discount rate of $120 million and a pre-tax Internal Rate of Return (“IRR”) of 38% implying a pre-tax payback period of 2.9 years;
  • Total capital expenditures of $89 million, including pre-production capital expenditures of $47 million;
  • Undiscounted cash flow after income and mining taxes of $106 million;
  • After-tax NPV at a discount rate of 7% of $61 million and an after-tax IRR of 26%, implying an after-tax payback period of 3.4 years;
  • Life of mine (“LOM”) of 8.8 years, with 2.4 million tonnes of potential mill feed at an average grade of 5.13 grams per tonne (“g/t”) and recovery rate of 93.6%, resulting in gold production of 375,900 ounces;
  • Mining rate of 600 tonnes per day (“tpd”) of mineralized material at an average open pit grade of 2.99 g/t and underground grade of 6.83 g/t; processing at 800 tpd (600 tpd of run-of-mine high-grade material and re-handle of 200 tpd of stockpiled open pit lower grade material);
  • Average annual gold production of 41,770 ounces with up to 62,000 ounces in year 5;
  • LOM average operating cash cost of $654 per ounce (~US$525 per ounce) and all-in sustaining cash cost of $797 per ounce (~US$640 per ounce) at an 0.80 USD:CAD exchange rate;
  • Potential for up to 200 jobs at the peak of production.

(*) The PEA was prepared in accordance with National Instrument 43-101 (“NI 43-101”) by WSP Consulting of Toronto, Canada (“WSP”).  Readers are cautioned that 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. There is no certainty that results of the PEA will be realized.  Mineral resources that are not mineral reserves do not have demonstrated economic viability.

 

Goldboro PEA

An updated Mineral Resource Estimate was completed by Mercator Geological Services Ltd. (Michael Cullen, P.Geo., Independent Qualified Person) with an effective date of January 1, 2018. The recent Mineral Resource Estimate comprises: an open pit resource including 1,059,00 tonnes of Measured and Indicated Resource at a grade of 3.01 g/t gold (102,500 ounces) and 45,000 tonnes of Inferred Resource at a grade of 2.54 g/t gold (3,700 ounces); and an underground resource including 2,586,000 tonnes of Measured and Indicated Resources at a grade of 5.09 g/t gold (422,900 ounces) and 2,497,000 tonnes of Inferred Resource at a grade of 4.28 g/t gold (343,600 ounces).

Goldboro Mineral Resource Estimate – Effective January 1, 2018

Resource Type

Au Cut-off (g/t)

Category

Tonnes (Rounded)

Au

(g/t)

Troy Ounces (Rounded)

Open Pit

0.50

Measured

397,000

2.88

36,800

Indicated

662,000

3.09

65,800

Measured and Indicated

1,059,000

3.01

102,500

Inferred

45,000

2.54

3,700

Underground

2.00

Measured

22,000

4.7

3,300

Indicated

2,564,000

5.09

419,600

Measured and Indicated

2,586,000

5.09

422,900

Inferred

2,497,000

4.28

343,600

Combined Open Pit and Underground

0.50/2.00

Measured

419,000

2.98

40,100

Indicated

3,226,000

4.68

485,400

Measured and Indicated

3,645,000

4.48

525,400

Inferred

2,542,000

4.25

347,300

 

Deposit Type and Gold Mineralization

The Goldboro Deposit is a turbidite-hosted orogenic gold deposit hosted within a sequence of alternating argillites and greywacke. These deposit types are typically characterized by the formation of gold bearing quartz veins within the argillite units commonly referred to as ribbons.  The ribbons are folded into upright anticlines, and gold is deposited, during fold formation.  Veins, which form during deformation, form in three major geometries commonly referred to as reefs: saddle reefs, leg reefs and spur reefs.  Saddle reefs occur about the apex of the fold and are commonly the dominant vein types within this deposit type such as at the Dufferin deposit.  Leg reefs extend down the limbs of the fold, beyond the saddle reef and are generally parallel with the argillite layers.  Spur reefs are veins that cross between layers and may be in the apex of the fold or on its limbs.

The Goldboro Deposit contains all three types of reefs outlined above, but is also characterized by mineralization within the argillite forming the ribbons.  Many of the gold deposits in Nova Scotia are sometime referred to as saddle reef deposit; these have gold bearing ribbons generally restricted to the hinges of the anticlines.  Because the Goldboro deposit contains saddle, leg and spur reefs and has gold within the Argillite hosting the veins, the Goldboro deposit contains significantly more gold resources than deposits of the similar dimensions that contain gold only in particular types of reefs or only within the quartz veins.

The Goldboro Deposit contains at least 30, stacked, ribbons that vary in thickness from less than a meter up to 20 meters. The ribbons are folded into a tight, gently east-plunging, anticline referred to as the Upper Seal Harbour Anticline. The deposit is divided into three broad zones: the East Goldbrook, Boston-Richardson, and West Goldbrook zones. The East Goldbrook and Boston Richardson zones are separated by a thick (up to 80 metres) greywacke sequence (the Boston-Richardson Marker) with the East Goldbrook zone above the greywacke and the Boston Richardson below. The West Goldbrook is separated from the Boston Richardson by a fault zone but is generally the continuation of the Boston Richardson zone on the west side of the fault.  The trace of this Upper Seal Harbour anticline crosses the property and is found near the Dolliver Mountain several kilometers to the west of the Goldboro Deposit demonstrating that the structure which hosts gold continues for several kilometers.

The Meguma Terrane

The Goldboro Deposit is hosted within the Goldenville Group of rocks within the Meguma Terrane of Nova Scotia.  The Goldenville group consists of a sequence of siltstones and sandstones approximately 6.7 km thick.  It is separated from the overlying Halifax Group which contains more shale and is 11.8 km thick (Sangster and Smith, 2007).  The entire Meguma Terrane is pervasively folded into kilometre-scale, east-west or northeast-southwest trending, upright folds that can be traced for many kilometers across Nova Scotia.  The Upper Seal Harbour anticline is one of these folds.  At numerous locations in the eastern Meguma Terrane gold deposition is associated with these structures and this forms the Eastern Gold Fields of Nova Scotia.

Gold was discovered in Nova Scotia in 1861 and a reported 1.2 million oz. were mined sporadically from multiple small-scale operations before 1968 (Table 1).  This included mining at Goldboro between 1893 to 1912 when approximately 414,887 short tonnes of gold ore was mined at an average grade of 6.7 g/t gold.  A total of 54,871 ounces of gold was produced from the Boston-Richardson Mine.

Historic gold production from various districts in Nova Scotia (Sangster and Smith, 2007)

Gold District

Years Active

Ounces

Grams

Goldenville

1862-1941

209,383

6,511,821

Caribou

1869-1968

91,336

2,840,543

Oldham

1862-1946

85,178

2,649,020

Waverly

1862-1940

72,567

2,256,821

Montague

1863-1940

65,197

2,027,624

Upper Seal Harbour

1893-1958

57,846

1,799,001

Renfrew

1862-1958

51,596

1,604,620

North Brookfield

1887-1936

43,148

1,341,887

Wine Harbour

1862-1939

42,347

1,316,976

Salmon River (Dufferin)

1881-1939

41,805

1,300,148

Isaacs Harbour

1862-1958

39,694

1,234,493

Lower Seal Harbour

1894-1949

34,188

1,063,253

Molega

1888-1950

33,460

1,040,612

Mount Uniacke

1867-1941

27,737

862,621

Tangier

1862-1919

26,287

817,510

Moose River*

 1888-1939

25,917

806,025

Forest Hill

1895-1957

25,102

780,685

Fifteen Mile Stream

1879-1941

21,220

659,930

South Uniacke

1888-1948

20,762

645,701

Lake Catcha

1887-1961

17,962

558,603

Other

 

165,889

5,159,154

Total

 

1,198,619

37,277,048

 

There is no record of commercial production from the Meguma deposits from the period 1980 to present.  Recent “mining” activity in the Meguma since the early 1980s has focused mainly on advanced underground exploration and bulk samples of varying sizes.  The largest of these was collected from the Forest Hill deposit with 95,000 tonnes processed at an average grade of 6.7 g/t Au.  Recent trial mining is being conducted at the Dufferin Mine and the Moose River mine opened in October of 2017.

Comparison with the Victoria Gold Fields of Australia

The Victoria Gold Fields of Victoria, Australia, have produced tens of millions of ounces of gold since 1851 and the area has striking geological similarities with the Meguma Terrane of Nova Scotia.  The Victoria Goldfields are hosted in Cambro-Ordovician sand and siltstones as are the Eastern Goldfield of Nova Scotia.  Both areas are deformed into a series of upright to reclined, tight to open folds with variable, but generally shallow, plunges.  And both areas are intruded by Devonian intrusions.  Gold mineralization occurs in the same structural setting within the folds and have similar styles and associations.  The age of mineralization within the Victoria Goldfields is thought to be near 440 Ma and between 376 and 408 Ma within the Eastern Gold District of Nova Scotia. The geological similarities between these two areas are commonly used to indicate the potential for the Meguma Terrane of Nova Scotia to host significantly more gold than has yet to be discovered.

2017 Exploration Results

During 2017 Anaconda completed a seven-hole (BR-17-01 to 07), 1,822-metre, diamond drill program that tested the Boston Richardson and East Goldbrook Zones. Drilling was completed to collect samples for metallurgical test work on the Goldboro mineralization (holes BR-17-01 to 05) and to test the down dip extension of the East Goldbrook Zone and the down-plunge continuity of the Boston Richardson Zone (BR-17-06 and 07).

Multiple occurrences of visible gold were observed in BR-17-06 and BR-17-17-7, and assays with high-grade tenor were observed in all 7 holes. Assay highlights from the program include:

  • 2513.20 g/t over 0.5 m within 485.07 g/t over 2.6 m (33.1 to 35.7 m) and 33.26 g/t over 1.0 m (110.0 to 111.0 m) in hole BR-17-04;
  • 7.85 g/t over 3.7 m within 3.22 g/t over 11.4 m (169.2 to 180.6 m) in hole BR-17-02;
  • 9.77 g/t over 2.3 m within 2.33 g/t over 13.4 m (17.4 to 30.8 m) in hole BR-17-03;
  • 16.96 g/t over 1.0 m within 3.96 g/t over 5.5 m (115.5 to 121 m) in hole BR-17-05;
  • 5.56 g/t over 1.2 m within 1.35 g/t over 10.0 m (25.0 to 35.0 m) and 13.00 g/t over 0.5 m within 3.65 g/t over 2.0 m (53.5 to 55.5 m) in hole BR-17-01;

Highlight assays from 2017 diamond drilling.

Drillhole

From (m)

To (m)

Interval (m)

Au g/t

Visible Gold

BR-17-01

25

35

10

1.35

 

including

25

26.2

1.2

5.56

 

and

39

40.7

1.7

0.86

 

and

53.5

55.5

2

3.66

 

including

55

55.5

0.5

13

 

and

64.3

67.4

3.1

1.27

v.g.

BR-17-02

50

53.5

3.5

2.77

 

including

50

51

1

6.56

 

and

60

67.9

7.9

1.59

 

including

61

62

1

8.3

 

and

77.5

79.4

1.9

0.77

 

and

83.4

84

0.6

2.64

 

and

90

92

2

3.28

 

and

169.2

180.6

11.4

3.22

v.g.

including

176.9

180.6

3.7

7.85

v.g.

and

190.6

191.3

0.7

1.3

 

and

192.5

192.9

0.4

1.39

 

BR-17-03

17.4

30.8

13.4

2.33

 

including

25.5

29.8

4.3

5.97

 

including

27.5

29.8

2.3

9.77

 

 

35

37

2

2.6

 

and

44.4

61

16.6

1.11

v.g.

including

44.4

57.3

12.9

1.31

v.g.

including

55.2

57.3

2.1

3.75

 

BR-17-04

33.1

35.7

2.6

485.07

v.g.

including

33.1

33.6

0.5

2513.2

v.g.

and

64.5

65.2

0.7

1.6

 

and

67.4

69.2

1.8

1.41

 

and

75.7

76.2

0.5

1.35

 

and

79.4

82.4

3

2.87

 

including

79.4

80.9

1.5

5.18

 

and

110

111

1

33.26

v.g.

and

118

118.5

0.5

1.7

 

and

125.3

125.8

0.5

1.58

 

and

132.4

133

0.6

0.15

v.g.

and

144.8

145.5

0.7

2.14

 

BR-17-05

24.6

25.7

1.1

5.52

v.g.

and

33.5

34.7

1.2

2.84

 

and

46.2

47.8

1.6

1.25

 

and

52.4

53.5

1.1

1.09

 

and

65.9

73.2

7.3

1.23

v.g.

and

68.7

73.2

4.5

1.25

v.g.

including

71.6

73.2

1.6

2.65

 

and

95.2

95.7

0.5

2.42

 

and

100

104.5

4.5

3.39

 

including

100

103

3

4.78

 

including

100

101.5

1.5

8.95

 

and

107.6

108.1

0.5

0.77

v.g.

and

115.5

121

5.5

3.96

 

including

115.5

116.5

1

16.96

 

and

131

132.3

1.3

6.64

v.g.

including

131.5

131.9

0.4

20.6

v.g.

 

Goldboro Development

A composite metallurgical sample was collected from all assay samples greater than 0.5 g/t from drill holes BR-17-01 to 05. A total 139 samples were used to create a 324 kg composite sample. Preliminary development of a process flowsheet has defined overall gold recoveries in the range of 95.1% to 95.3% by gravity separation, flotation and cyanide leaching of both gravity and flotation concentrates.

The test program and preliminary process design for the recovery of gold was conducted by Thibault & Associates Inc. of Fredericton, New Brunswick. Pre-concentration by gravity separation and flotation was investigated for a potential reduction in throughput tonnage for downstream cyanide leaching. At a grind size of 80% passing 110 micron, the recovery of gold to the gravity concentrate was 46.4% to 62.1% at a concentrate grade of 4,255 g/t Au to 4,587 g/t Au. Flotation of the gravity separation tails using a standard reagent scheme for flotation produced a mass yield of 5.8% to 6.7% at a concentrate grade of 22.3 g/t Au to 24.3 g/t Au.  The combined recovery of gold by gravity and flotation pre-concentration was 96.6% to 97.8%.

Gold in the gravity and flotation concentrates was amenable to cyanide leaching. Intensive cyanide leaching tests on gravity concentrates defined a gold extraction of 99.5% over 48 hours. Cyanide leaching of the flotation concentrate had a gold extraction in the range of 96.6% to 97.3% over 48 hours for a regrind of 80% passing 18.1 and 12.8 micron, respectively. The overall gold recovery based on a process flowsheet including gravity, flotation, flotation concentrate regrind, cyanide leach of flotation concentrates and intensive cyanide leaching of gravity concentrates was 95.1% to 95.3%.

Anaconda has been completing geotechnical, hydrogeological, baseline environmental studies and community and aboriginal consultations since acquiring the project. Additionally, Anaconda is currently undertaking a 6,000 metre infill and exploration diamond drilling program that will continue through Q2 2018.

 

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