Alacer Gold (ASR-T) Sept 13, '16 is pleased to announce positive results from the Prefeasibility Study (“PFS”) establishing a maiden resource and reserve for the 50%1 owned Gediktepe Project (formerly known as Dursunbey) in Western Turkey.
Rod Antal, Alacer’s President & Chief Executive Officer, stated, “We are excited to announce the significant milestone achieved at Gediktepe. The PFS demonstrates that Gediktepe is an economic and technically viable project and establishes it as a valuable part of our portfolio of mining assets.
It is an outstanding result and a credit to our partner, Lidya Mining, and to our team who have converted a grassroots exploration target into a discovery and advanced it to a PFS study, all in the span of just four years. Not only does this achievement illustrate our ability to capture and convert value from exploration, it also demonstrates the great prospectivity in Turkey.
The Gediktepe project has moved into a detailed study phase where we will complete basic engineering and more technical studies. Permitting and some site preparations will be undertaken concurrent with these detailed studies. During this period, the various options for development of Gediktepe will be assessed.”
Key Highlights
(all currency in US dollars and all metrics on a 100% basis)
The Gediktepe Project is located in Balikesir Province, about 370 km west of Ankara and 190 km to the south of Istanbul. Gediktepe will be owned on a 50%/50% basis with our joint venture partner, Lidya Mining, upon completion of the claw back right exercised by Alacer. The estimated claw back cost is $7.1 million at June 30, 2016. Lidya Mining is the operator of Gediktepe.
Gediktepe is a polymetallic orebody that contains economic values for gold, silver, copper and zinc. The sulfide deposit is overlain with oxide ore containing gold and silver which is amenable to heap leaching. Gediktepe will be an open pit mine and the oxide ore will be processed first, providing cash flow for the development and subsequent processing of the more prevalent sulfide ore. The sulfide ore contains gold, silver, copper and zinc and will be processed through a multi-stage flotation circuit producing two marketable concentrates.
Overall Project Economics
Total payable metals of 400,000 ounces of gold, 8 million ounces of silver, 315 million pounds of copper and 780 million pounds of zinc
Life-of-mine (“LoM”) production over 12 years of 1.8 million ounces on a Gold Equivalent Ounce2 (“AuEq”) basis
Pre-production capital expenditure of $120 million
An additional $126 million in project capital required for the sulfide ore flotation plant and related infrastructure
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1 Gediktepe will be owned on a 50%/50% basis with our joint venture partner, Lidya Mining, upon completion of the claw back right exercised by Alacer.
2 Gold Equivalent Ounce (AuEq) is a non-IFRS measure with no standardized definition under IFRS which converts non-gold production into gold equivalent ounces. Calculation of AuEq converts payable metals into revenue using metal prices of $1,250 per ounce for
gold, $18.25 per ounce for silver, $2.75 per pound for copper, $1.00 per pound for zinc, and then the total revenue is divided by the gold price of $1,250 per ounce.
Project after-tax net present value at 5% (“NPV”) is $475 million
Project after-tax, unlevered internal rate of return (“IRR”) of 47%
Project payback achieved in 2.5 years from start of production
After-tax free cash flow of $745 million generated over the LoM
LoM average costs on a AuEq basis:
Total Cash Costs3 of $613 per ounce AuEq
All-in Sustaining Costs2 of $625 per ounce AuEq
All-in Costs2 of $759 per ounce AuEq
Oxide Ore Overview
Oxide ore processing of 3,000 tonnes per day for over three years at a conventional heap leach facility
LoM oxide ore production of 300,000 ounces AuEq (250,000 ounces of gold and 3.6 million ounces of silver)
Oxide Proven and Probable Reserves of 3.2 million tonnes with an average gold grade of 2.95 gpt and an average silver grade of 77.7 gpt
Oxide Measured and Indicated Resources4 of 3.8 million tonnes with an average gold grade of 2.60 gpt (320,000 ounces gold contained) and an average silver grade of 69.0 gpt (8.5 million ounces silver contained)
Oxide capital expenditure of $111 million
Oxide LoM average costs on a AuEq basis:
Total Cash Costs2 of $387 per ounce AuEq
All-in Sustaining Costs2 of $387 per ounce AuEq
All-in Costs2 of $763 per ounce AuEq
Sulfide Ore Overview
Sulfide processing of 6,500 tonnes per day over a 10-year period utilizing two 4 stage flotation circuits to produce a copper concentrate and a zinc concentrate
LoM sulfide production of 700 million pounds on a Copper Equivalent5 (“CuEq”) basis (315 million pounds of copper, 780 million pounds of zinc, 150,000 ounces of gold and 4.6 million ounces of silver)
Sulfide Proven and Probable Reserves of 21.7 million tonnes of ore grading 0.99% copper, 2.35% zinc, 0.93 gpt gold and 35.3 gpt silver
Sulfide Measured and Indicated Resources3 of 32.2 million tonnes with average grades of 0.90% copper (642 million pounds copper contained), 1.93% zinc (1,370 million pounds zinc contained), 0.77 gpt gold (800,000 ounces gold contained) and 29.5 gpt silver (30.5 million ounces silver contained)
Sulfide capital expenditure of $135 million which includes $9 million in pre-production capital, $104 million spent during the first two years of production and $22 million in sustaining capital
Sulfide LoM average costs on a CuEq basis:
Total Cash Costs2 of $1.45 per pound CuEq
All-in Sustaining Costs2 of $1.48 per pound CuEq
All-in Costs2 of $1.67 per pound CuEq
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3 Total Cash Costs, All-in Sustaining Costs, and All-in Costs are non-IFRS financial performance measures with no standardized definitions under IFRS. For further information and a detailed reconciliation, please see the “Non-IFRS Measures” section of the Corporation’s MD&A for the three months ended June 30, 2016.
4 Mineral Resources are inclusive of Mineral Reserves.
5 Copper Equivalent (CuEq) is a non-IFRS measure with no standardized definition under IFRS which converts non-copper production into copper equivalent pounds. Calculation of CuEq converts payable metals into revenue using metal prices of $1,250 per ounce for gold, $18.25 per ounce for silver, $2.75 per pound for copper, $1.00 per pound for zinc, and then the total revenue is divided by the copper price of $2.75 per pound.
An updated National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”) compliant Technical Report on the Gediktepe Project has been filed on www.sedar.com and on the Australian Securities Exchange simultaneously with this announcement.
Gediktepe Overview
http://www.globenewswire.com/NewsRoom/AttachmentNg/884bffe5-3088-4836-a8fa-b6a8f5c20c8d
The Gediktepe deposit was discovered in April 2013 with the second drill hole (DRD-002) intersecting 26.5m at 7.9g/t gold and 77g/t silver from surface6. Oxide mineralization is enriched in gold and silver, whereas sulfide mineralization includes gold, silver, copper and zinc. The deposit continues to be open at depth and along strike.
Production and Cost Summary
Gediktepe will be an open pit mine and is well serviced being close to existing infrastructure and connects to the national power grid. Production at Gediktepe will start with the processing of oxide ores using a conventional heap leach and Merrill Crowe process (gold and silver precipitation by zinc). The Merrill Crowe plant recovers more silver than a carbon adsorption process and is appropriate for this deposit due to the high silver content in the oxide ores. Average life-of mine recoveries for the oxide ore is 83% for gold and 45% for silver.
Production will transition from oxide processing to sulfide processing in year 3 of the operation. Sulfide ore processing will be via two 4 stage flotation circuits, one for copper recovery and one for zinc recovery. The flotation circuits will produce concentrates that will be shipped offsite for processing through copper and zinc smelters. Metallurgical tests for the sulfide flotation of Gediktepe ores yielded recoveries in copper concentrate of 69% for copper, 17% for gold and 12% for silver and recoveries in zinc concentrate of 82% for zinc, 16% for gold and 22% for silver.
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6 See Alacer announcements “Alacer Announces Exploration Results in Turkey”, dated September 14, 2014 and February 24, 2014, on the Corporation’s website at www.alacergold.com, on SEDAR at www.sedar.com or on ASX at www.asx.com.au.
The following is a LoM production profile on an AuEq basis.
http://www.globenewswire.com/NewsRoom/AttachmentNg/3485c879-7cbf-421b-a51d-58b2a884aad7
The table below provides a summary of the estimated capital costs for the Gediktepe Project.
| Project Area | US$ millions (100%) | | Oxide Processing Facility | | Plant | $ | 46 | | | Infrastructure | $ | 35 | | | Geotechnical and Project Engineering | $ | 7 | | | Private Land Purchase | $ | 2 | | | Pre-Production Mining | $ | 3 | | | Contingency | $ | 18 | | | Oxide Capital | $ | 111 | | | Sulfide Processing Facility | | Plant | $ | 81 | | | Infrastructure | $ | 30 | | | Contingency | $ | 24 | | | Sulfide Capital | $ | 135 | | | TOTAL PROJECT CAPITAL | $ | 246 | |
Rounding differences will occur
Project capital outlined above does not include reclamation costs that total $23 million and occur in years five and thirteen.
| Unit Cost Metrics (Life-of-Mine Average) | | Mining | per tonne mined | $ | 1.45 | | | Oxide Ore Processing | per tonne oxide processed | $ | 9.51 | | | Sulfide Ore Processing | per tonne sulfide processed | $ | 11.88 | | | Site Support Costs | per tonne total processed | $ | 7.45 | | | Offsite Costs | per tonne total processed | $ | 15.71 | |
Financial Summary
The economic analysis was predicated on the capital and operating costs summarized above and are based on the following parameters and are estimated in fourth quarter 2015 US$:
Gold price of $1,250 per ounce;
Silver price of $18.25 per ounce;
Copper price of $2.75 per pound;
Zinc price of $1.00 per pound; and
US$/Turkish Lira exchange rate: 3.0.
The project remains economically feasible over the entire range of the sensitivity analysis. Financial results appear to be most sensitive to metal prices and least sensitive to changes in operating cost. Spider graphs depicting the results on project NPV and IRR by varying the OPEX, CAPEX and metal price inputs are provided below.
http://www.globenewswire.com/NewsRoom/AttachmentNg/fde3ac54-ba74-44cc-9cfb-f396e8e462b4
The following is a sensitivity table of discount rates used to calculate after tax NPV.
| Discount Rate | NPV (US$M) | | | 5.0 | % | $ | 475 | | | | 7.5 | % | $ | 382 | | | | 10.0 | % | $ | 309 | |
Permitting
The Environmental Impact Assessment (“EIA”) permit was received in July 2016. With receipt of the EIA, work has now commenced on securing the additional necessary Forestry permits before a construction decision can be made.
Next Steps
The PFS has demonstrated that the Gediktepe Project is technically and financially feasible. The Project will now move into a detailed study phase where technical work will continue to advance along with basic engineering. During this next phase, necessary land use permits will be secured and financing options will be considered. A key component of this phase will be the creation of the development schedule including key milestones.
Maiden Mineral Resource and Mineral Reserve Estimates
The appendices to this announcement provide information on the data, assumptions and methodologies underlying these estimates. Further information is provided in the Technical Report on the Gediktepe Project filed simultaneously with this announcement.
The updated Mineral Reserves referenced in this press release have been subjected to a PFS in which open pit designs and a mine production schedule were developed. The PFS contemplates oxide ore processing by heap leach and sulfide ore processing by flotation. The PFS finds that the recovery of metals is technically and financially feasible, generating positive returns on plant and infrastructure investments.
Mineral Resources for the Gediktepe Deposit (As of June 1, 2016) (100% Basis)
| | Head Grades | Contained Metal | Material Type
Classification | NSR Cutoff
$/t | Tonnages
ktonnes | Au
gm/t | Ag
gm/t | Cu
% | Zn
% | Au
koz | Ag
koz | Cu
klb | Zn
klb | | Oxides | | | | | | | | | | | | | | Measured | $ | 11.70 | | 1,722 | 2.645 | 66.5 | 0.12 | 0.16 | 146.4 | 3,680 | | | | Indicated | $ | 11.70 | | 2,110 | 2.561 | 71.0 | 0.18 | 0.35 | 173.7 | 4,817 | | | | Meas+Ind. | $ | 11.70 | | 3,832 | 2.599 | 69.0 | 0.15 | 0.26 | 320.2 | 8,497 | | | | | | | | | | | | | | | | | | Inferred | $ | 11.70 | | 213 | 1.574 | 63.1 | 0.13 | 0.17 | 10.8 | 432 | | | | Sulfides | | | | | | | | | | | | | | Measured | $ | 15.67 | | 12,027 | 0.777 | 28.5 | 1.00 | 1.89 | 300.4 | 11,030 | 263,824 | 501,133 | | Indicated | $ | 15.67 | | 20,180 | 0.773 | 30.1 | 0.85 | 1.95 | 501.5 | 19,506 | 378,158 | 867,540 | | Meas+Ind. | $ | 15.67 | | 32,207 | 0.774 | 29.5 | 0.90 | 1.93 | 802.0 | 30,536 | 641,982 | 1,368,673 | | | | | | | | | | | | | | | | Inferred | $ | 15.67 | | 1,685 | 0.807 | 31.7 | 0.98 | 1.80 | 43.7 | 1,719 | 36,256 | 66,866 | | Oxides+Sulfides | | | | | | | | | | | | Measured | 11.70/15.67 | 13,749 | 1.011 | 33.3 | 0.89 | 1.67 | 446.9 | 14,710 | 263,824 | 501,133 | | Indicated | 11.70/15.67 | 22,290 | 0.942 | 33.9 | 0.79 | 1.80 | 675.3 | 24,323 | 378,158 | 867,540 | | Meas+Ind. | 11.70/15.67 | 36,039 | 0.968 | 33.7 | 0.82 | 1.75 | 1,122.1 | 39,033 | 641,982 | 1,368,673 | | | | | | | | | | | | | | Inferred | 11.70/15.67 | 1,898 | 0.893 | 35.3 | 0.88 | 1.62 | 54.5 | 2,151 | 36,256 | 66,866 |
Note: Mineral Resources are inclusive of Mineral Reserves. Mineral Resources are shown on a 100% basis, of which Alacer will own 50%. The key assumptions, parameters, and methods used to estimate the Mineral Resources and Mineral Reserves are provided in the appendices to this announcement and the NI 43-101 Technical Report filed simultaneously with this announcement. We are not aware of any new information or data that materially affects the information included in this announcement and that all material assumptions and technical parameters underpinning the estimates in the announcement continue to apply and have not materially changed. Rounding differences will occur.
| Mineral Reserves for the Gediktepe Deposit (As of June 1, 2016) (100% Basis) | | | | | | | | | | | | | | | Cutoff | Oxide Mineral Reserves | Payable Metal | | Classification | NSR | Oxide | Gold | Silver | Copper | Zinc | Gold | Silver | Copper | Zinc | | | $/Tonne | Ktonnes | gm/t | gm/t | % | % | Kozs | Kozs | Mlbs | Mlbs | | Proven | 15.16 | 1,456 | 2.98 | 74.7 | 0.12 | 0.17 | 118.0 | 1,541.4 | | | | Probable | 15.16 | 1,767 | 2.93 | 80.3 | 0.18 | 0.35 | 133.6 | 2,010.9 | | | | | | | | | | | | | | | | Proven+Probable | 15.16 | 3,223 | 2.95 | 77.7 | 0.15 | 0.27 | 251.6 | 3,552.3 | | | | | | | | | | | | | | | | | Cutoff | Sulfide Mineral Reserves | Payable Metal | | Classification | NSR | Sulfide | Gold | Silver | Copper | Zinc | Gold | Silver | Copper | Zinc | | | $/Tonne | Ktonnes | gm/t | gm/t | % | % | Kozs | Kozs | Mlbs | Mlbs | | Proven | 14.55 | 10,425 | 0.84 | 31.0 | 1.04 | 2.05 | 64.3 | 1,924.6 | 160.2 | 326.6 | | Probable | 14.55 | 11,267 | 1.00 | 39.3 | 0.93 | 2.63 | 83.4 | 2,724.8 | 154.6 | 452.6 | | | | | | | | | | | | | | Proven+Probable | 14.55 | 21,692 | 0.93 | 35.3 | 0.99 | 2.35 | 147.7 | 4,649.4 | 314.8 | 779.2 | | | | | | | | | | | | | | | Cutoff | TOTAL MINERAL RESERVES | Payable Metal | | Classification | NSR | Total | Gold | Silver | Copper | Zinc | Gold | Silver | Copper | Zinc | | | $/Tonne | Ktonnes | gm/t | gm/t | % | % | Kozs | Kozs | Mlbs | Mlbs | | Proven | 15.16/14.55 | 11,881 | 1.11 | 36.3 | 0.93 | 1.82 | 182.3 | 3,466.0 | 160.2 | 326.6 | | Probable | 15.16/14.55 | 13,034 | 1.26 | 44.9 | 0.83 | 2.32 | 217.0 | 4,735.6 | 154.6 | 452.6 | | | | | | | | | | | | | | Proven+Probable | 15.16/14.55 | 24,915 | 1.19 | 40.8 | 0.88 | 2.08 | 399.3 | 8,201.7 | 314.8 | 779.2 |
Note: Mineral Reserves are shown on a 100% basis, of which Alacer will own 50%. The Mineral Reserves methodology, cut-off grades, and the key assumptions, parameters, and methods used to estimate the Mineral Resources and Mineral Reserves are provided in the appendices to this announcement and the NI 43-101 Technical Report filed simultaneously with this announcement. We are not aware of any new information or data that materially affects the information included in this announcement and that all material assumptions and technical parameters underpinning the estimates in this announcement to apply and have not materially changed. Rounding differences will occur.
About Alacer
Alacer is a leading intermediate gold mining company, with an 80% interest in the world-class Çöpler Gold Mine in Turkey operated by Anagold Madencilik Sanayi ve Ticaret A.S. (“Anagold”), and the remaining 20% owned by Lidya Madencilik Sanayi ve Ticaret A.S. (“Lidya”). The Corporation’s primary focus is to leverage its cornerstone Çöpler Mine and strong balance sheet to maximize portfolio value, maximize free cash flow, minimize project risk and, therefore, create maximum value for shareholders.
The Çöpler Mine is located in east-central Turkey in the Erzincan Province, approximately 700 miles southeast from Istanbul, Turkey and 340 miles east from Ankara, Turkey’s capital city.
Alacer is actively pursuing initiatives to enhance value beyond the current mine plan:
Çöpler Oxide Production Optimization – expansion of the existing heap leach pad to 58 million tonnes continues to advance. All required land use permits for the Heap Leach Pad Phase 4 (“HLP4”) expansion have been received. The Corporation continues to evaluate opportunities to optimize and extend oxide production beyond the current reserves, including a new heap leach pad site to the west of the Çöpler Mine.
Çöpler Sulfide Project – the Sulfide Project will deliver long-term growth with robust financial returns and adds over 20 years of production at Çöpler. The Sulfide Project will bring Çöpler’s remaining life- of-mine gold production to 4 million ounces at All-in Sustaining Costs3 averaging $645 per ounce. The Environmental Impact Assessment and all required land use permits for construction have been approved. Detailed information regarding the Çöpler Sulfide Project can be found in the Technical Report dated June 9, 2016 entitled “Technical Report on the Çöpler Mine and Çöpler Sulfide Expansion Project” (“the Updated Technical Report”) available on SEDAR at www.sedar.com and on the Corporation’s website.
The Corporation continues to pursue opportunities to further expand its current operating base and to become a sustainable multi-mine producer with a focus on Turkey. The systematic and focused exploration efforts in the Çöpler District, as well as in other regions of Turkey are progressing. Çakmaktepe Southeast, Çakmaktepe East, Çakmaktepe North and Bayramdere are the main focus in the Çöpler District, which are shallow, oxide targets with favorable metallurgy and have the potential to add oxide production within the next two years. In the region, Gediktepe Project has advanced with a maiden resource and reserve released in third quarter 2016 and development options are being evaluated.
Alacer is a Canadian corporation incorporated in the Yukon Territory with its primary listing on the Toronto Stock Exchange. The Corporation also has a secondary listing on the Australian Securities Exchange where CDIs trade.
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