The Pine Cove Mine & Mill

The Pine Cove Mine and Mill, including nearby Port Rousse, forms the hub of the Company’s operation on the Island of Newfoundland.  The Pine Cove Mine and Mill is located 4.5 kilometres northeast of the community of Baie Verte, NL.

A total of 2,511,000 tonnes of ore and 118,028 ounces of gold have been mined and produced from the Pine Cove Mine since commencement of mining in 2011. Anaconda expects to complete mining in the main pit at Pine Cove in the later part of the first quarter of 2018, and will commence planning for small pushbacks of the main pit in 2018. As at December 31, 2017, the Company maintained an ore stockpile of 145,000 tonnes, which will be processed over the first two quarters of 2018 as the mine operation transitions to the Stog'er Tight deposit.

Mining was carried out by standard open pit methods a contract miner. The plant site includes a 1280 tonnes per day (“tpd”) grinding and flotation mill with concentrate leaching (1280 tpd at 95% availability, operating 365 days per year), crusher and conveyors, ore stockpile, shops, warehouse, administration, water supply, sewage, on site diesel generated power, fuel storage, and other ancillary structures and roads. Final product is a gold doré bar which is shipped to a refiner in Ottawa for further processing and final assay. The Company’s metal merchant then sells gold having a purity of 99.995% on the open markets. All the ore mined from Pine Cove Pit and Stog’er Tight Pit are processed at Pine Cove Mill.

Upon completion of mining in the main Pine Cove Pit, the Company plans to convert the open pit into a 7 million-tonne in-pit storage facility, which will allow for the deposition of tailings into the facility in the first quarter of 2018. The conversion of the pit to a tailings facility has received approval from the Newfoundland and Labrador Department of Natural Resources.

The Pine Cove gold deposit was discovered in June 1987 by South Coast Resources Ltd.  In 2003, Anaconda acquired an option from then-owner New Island Resources Ltd. to earn up to a 60% interest in the Pine Cove Project. A successful bulk sample and a positive NI 43-101-compliant Technical Report lead to production in 2008. The mill was subsequently reconfigured and a flotation circuit to produce a gold-pyrite concentrate was added. Commercial production was achieved in September 2011, enabling Anaconda to earn its 60% interest. In January 2011, Anaconda acquired New Island’s remaining 40% interest.

Gold mineralization at Pine Cove is hosted within quartz veined and albite, sericite, rutile and pyrite altered mafic volcanic and intrusive rocks of the Venom’s Bight formation.  The orebody is located in the immediate hanging wall of the Scrape Thrust a 2nd order fault splay off the nearby Baie Verte-Brompton Line.  The deposit is bounded by a distinct maroon argillite horizon of the Bobby Cove formation and the Pasture Pond Thrust in its immediate hanging wall.  The deposit dips gently to the north and is east-west striking.

Since 2007, 11,799.58 m of drilling in 74 holes has been completed. Exploration drilling has been largely concentrated on three areas with potential to expand the Pine Cove deposit; 1) the down-dip extension of the Pine Cove mine, 2) the Northwestern Extension, and 3) the Pine Cove Pond area. Detailed mapping of the Pine Cove pit area in 2013 and 2015 produced a revised geometrical, structural and stratigraphic interpretation for the Northwestern Extension involving thrust-fault-displaced repetition of the main Pine Cove ore body.

Mineral Resources and Reserves

The 2007 to 2015 diamond drilling and the revised geological interpretations formed the basis for the revised NI 43-101 compliant resource estimate for the Pine Cove Deposit released on October 22, 2015. The 2015 resource estimate, prepared by AMC Consultants, includes an indicated mineral resource of 1,560,000 tonnes grading 1.67 g/t Au for a total of 83,690 ounces and an inferred mineral resource of 208,700 tonnes grading 1.57 g/t Au for a total of 10,570 ounces, both using a cut-off grade of 0.7 g/t Au.

The estimated probable reserves as of the 2015 NI 43-101 report in the Pine Cove pit were approximately 858,800 tonnes of ore at a diluted grade of 1.46 g/t Au. These reserves are included within the Mineral Resource and are not in addition to the Mineral Resource.  Anaconda is in the process of updating the reportable mineral resource and mineral reserve statement for the Pine Cove Mine.

 

2015 Pine Cove Mineral Resource^

Category

Cut-off

Tonnes
(kt)

Au
(g/t)

Ounces

Indicated

0.7

1,560

1.67

83,690

Inferred

0.7

208.7

1.57

10,570


*numbers are rounded

 

2015 Stog’er Tight Mineral Resource^

Category

Cut-off

Tonnes
(kt)

Au
(g/t)

Ounces

Indicated

0.8

204.1

3.59

23,540

Inferred

0.8

252.1

3.27

26,460

 

*numbers are rounded

 

The table below estimates probable reserves remaining in the Pine Cove pit of approximately 858,800 tonnes of ore at a diluted grade of 1.46 g/t of gold. These reserves are included within the Mineral Resource and are not in addition to the Mineral Resource.

 

Pine Cove Mineral Reserves as of October 22, 2015^

Category

Cut-Off (g/t)

Tonnes

Grade Au (g/t)

Ounces of gold

Probable

0.7

  858,800

        1.46

40,400

       
 

 

Mineral Reserve estimate was derived by utilizing the ultimate pit shell design created using Surpac 6.6 and running a reserve report between this shell and the most recent topographic surface available at the effective date of this report, created by Anaconda. The block model used for the Pine Cove Reserve report was the gold grade block model produced by AMC in October of 2015. Probable Mineral Reserves are estimated at the internal cut-off grade of 0.70 g/t Au and gold price of $1,400/oz (CAD) using only Indicated Mineral Resource blocks. Proven reserves were not reported, as the block model prepared by AMC that was used for reserve reporting did not contain measured blocks.

The internal cut-off grade of 0.70 g/t Au was derived from Anaconda’s mining, processing, and general administration costs and process recovery. This internal cut-off grade is the minimum ore grade required to process the ore economically. The table below shows some of the key assumptions and costs used in the ultimate pit optimization process and Mineral Reserve estimate. The costs and the selling price estimates are equal to the budgeted costs and revenues for the current fiscal year, which are in line with actual costs and revenues achieved year to date.

 

Pine Cove Mineral Reserves^

Key Assumptions and Costs

Mining Cost (per tonne)

$3.94

Processing Cost (per tonne)

$19.18

G & A Cost (per tonne)

$8.34

Gold Price (CAD/oz)

$1,400.00

 

 

^ NI 43-101 Technical Report, Mineral Resource and Mineral Reserve Update on The Pine Cove Mine and Mineral Resource Estimate on The Stog’er Tight Deposit, Point Rousse Project, Baie Verte, Newfoundland And Labrador, Canada. Prepared By: David Copeland, P.Geo., and Catherine Pitman, P.Geo.  (Independent Qualified Persons); and David T. W. Evans, P.Geo., Paul McNeill, P.Geo., and Gordana Slepcev, P.Eng. (Qualified Persons). Effective Date: October 22, 2015. Published: December 5, 2015

 


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