TMAC Resources (TMR-T) Jan 14, '15 is pleased to provide guidance for 2016 and an update on its 100% owned Hope Bay Project, located in Nunavut, Canada.
As a result of the work TMAC accomplished on the Hope Bay Project in 2015 and the new detailed planning and budgeting relating to the period 2016 to 2018 the "Path to Production" budget (as described in TMAC's management discussion and analysis of the financial condition and results of operations of TMAC for the period ended September 30, 2015 and covering the period from January 1, 2015 to December 31, 2016) has been updated using operational results achieved in 2015 and more detailed engineering to reflect an improved tactical mine development plan (the "Tactical Plan") for the period from January 1, 2016 to December 31, 2018. The Tactical Plan contains several changes in scope from the Pre-Feasibility Study issued in May 2015, with an effective date of March 31, 2015, (the "PFS"), including:
increased underground development in 2016
larger low-grade stockpile for mill commissioning
55,600 ounces of gold (at 15.2 g/t) in high-grade stockpile for mill start up, 30,200 ounces greater than the PFS
smoothing and de-risking production ramp up
increase in gold ounces produced in 2017
surface and underground drilling to potentially extend Doris reserves below current reserves
These changes in scope will provide the mill with significant high-grade feed at start up, and a smooth production ramp up to 1,000 tonnes per day in 2017 and to 2,000 tonnes per day in 2018. To accomplish this increased scope of work and related operational de-risking of the Hope Bay Project's start-up, the Tactical Plan budget is expected to be $325 million.
During 2015, TMAC secured equity financing for gross proceeds of $199 million and debt financing of up to US$120 million, maturing on December 31, 2018 (the "Debt Facility") for in excess of $365 million at the current US$/C$ exchange rate, providing a $40 million cushion for the Company to achieve production at the Hope Bay Project, beginning with Doris, by the end of 2016. At December 31, 2015 TMAC had $62.8 million comprising $44.1 million of unrestricted cash and $18.7 million of restricted cash set aside as collateral for the letters of credit.
Dr. Catharine Farrow, Chief Executive Officer, stated, "We are pleased with our progress in moving the Hope Bay Project to production, and delighted that the Project remains on schedule for first production in late 2016. Our work with Gekko Systems of Australia continues to go smoothly. We remain on track for the processing plant to be shipped and installed during the third and fourth quarters of 2016. In addition, the surface and underground work we completed in 2015 and the detailed planning for the pre and post start of production period have enabled us to identify an opportunity to more than double our lateral development and tonnes of ore and waste mined compared with the Path to Production. This will enable TMAC to smooth out its production profile as we initiate processing plant commissioning late this year, achieve steady state production at 1,000 tonnes per day in 2017, and ramp up to 2,000 tonnes per day early in 2018. This will facilitate a smooth and robust pay-back of our debt commitments through to the end of 2018, which is a focus of TMAC management." Dr. Farrow went on to say, "TMAC is unique in that we will have fifteen months of mine development and stope testing before we go into production. This will facilitate a heightened understanding of how the Doris orebody will respond to both longhole and drift and fill mining techniques, and to have a high number of fully developed workplaces when we initiate the commissioning of the processing plant late this year. In addition, we expect to have a 55,600 ounce high-grade gold stockpile when we start the processing plant. All of these factors, together with our funding, are designed to take us to production with what is expected to be a comfortable operational cushion."
Table 1 shows the expected expenditures detailed in the original Path to Production, which TMAC is now halfway through, compared with the Tactical Plan. The changes in scope are noted above and highlighted by the advancement of mine development from 2017 into 2016. Increased costs to install plant equipment and complete site earthworks have been covered by the contingency. In addition, increased costs for permitting, preproduction costs and additional exploration are also captured. As with the Path to Production, the Tactical Plan includes corporate general and administrative costs as well as exploration expenses.
Table 1: Comparison of Path to Production to Tactical Plan expenditures.
January 1, 2015 - December 31, 2016
| Principal Purpose | Path to Production | Tactical Plan | Contingency
Allocated | Change in Scope | | Hope Bay Project Development Directs | ($ million) | ($ million) | ($ million) | ($ million) | | | | | | | | | Mine Equipment Purchase | 18 | 18 | - | - | | | Mine Development | 4 | 9 | - | 5 | | | Surface Equipment Purchase | 4 | 4 | - | - | | | Process Equipment | 78 | 90 | 12 | - | | | Infrastructure | 16 | 24 | 8 | - | | Sub-Total Directs: | 120 | 145 | 20 | 5 | | | Indirect Costs | 20 | 20 | - | - | | | Capitalized Pre-Production
Operating Costs | 39 | 54 | - | 15 | | Sub-Total Directs and Indirect Costs | 179 | 219 | 20 | 20 | | | Contingency - 15% | 27 | - | (27) | - | | Hope Bay Project Development Sub-Total | 206 | 219 | (7) | 20 | | | Collateral for
letters of credit | 26 | 26 | - | - | | | Corporate, exploration, permitting
and general expenditures
related to
the Hope Bay Project | 58 | 80 | 7 | 15 | | Total | 290 | 325 | 0 | 35 | | | | | | |
Doris Underground
The opportunity to advance mine development to support sustained operations at 1,000 tonnes per day earlier in 2017, and to accumulate an ore stockpile sufficient to support ramp up to 2,000 tonnes per day by 2018, has been identified as the optimal way to commence production at Doris. Ongoing pre-production and development mining reached full planned staffing levels in late October 2015 and ground conditions and productivities remain excellent. The following table sets forth a comparison of what was expected with the Path to Production and what is forecast with the change in scope captured in the Tactical Plan.
Table 2: Comparison of Path to Production to Tactical Plan production metrics.
Pre-production period 2015 - 2016
| | | | | | Development | Path to Production | Tactical Plan | Scope Change | | Ore (tonnes) | 59,400 | 98,000 | +65 | % | | Waste (tonnes) | 52,000 | 197,000 | +279 | % | | Total | 111,400 | 295,000 | +256 | % | | Estimated Stockpile - Dec 31, 2016 (1) | | | | | | Ore | 59,400 | 110,700 | +86 | % | | Gold (contained ounces) | 25,400 | 55,600 | +119 | % |
(1) Estimated stockpile on surface includes 12,700 tonnes of ore containing an estimated 7,600 ounces of gold previously brought to surface prior to TMAC by Newmont in 2011.
To achieve this higher production, mining operations will continue to use contract employees with TMAC owned equipment starting at an average advance rate of 13 metres per day until receipt of the 2016 sealift equipment, whereupon the rate is planned to increase to 20 metres per day. Development through 2016 is expected to achieve 2,055 metres of ramp and stope access drifts at an average cost of approximately $5,600/metre and 3,600 metres of lateral development at an average cost of approximately $5,100 per metre to provide 1,000 tonnes per day of production from Doris. In 2015, TMAC completed 877 metres of development. Mine development productivity during 2015 averaged 0.4 metres per man shift ("m/m-s"), including all costs for technical and supervisory staff and scheduled maintenance, compared with the PFS assumption of 0.25 m/m-s at full production. Direct productivity achieved was 0.7 m/m-s indicating the potential for improvement once multiple headings are active with similar levels of technical and supervisory personnel and scheduled maintenance.
The metres per day of mining development rates as scheduled in the PFS for 2016 had been constrained either by the capacity of the mobile equipment fleet or by the number of mining faces. The Tactical Plan brings development of Doris North forward into 2016 and Doris Central and Connector development forward into 2017 in order to facilitate reaching steady state production in future years.
Exploration
The exploration and geoscience budget for 2016 totals $10.8 million. The 2016 exploration drilling program comprises surface and underground diamond drilling targeting both near-term (one to three year) production areas and longer-term expansion of resources at Doris. The main objectives are to facilitate detailed stope design within certain areas of the current Doris mine plan and to potentially add significant high-grade gold ounces to the Doris Mineral Resource base.
A total of 12,000 metres of underground diamond drilling are budgeted for 2016, with 6,000 metres focused on infill drilling and 6,000 metres focused on resource expansion. Surface diamond drilling will be focused on resource expansion and exploration in the southern portion of the Doris trend in the Doris Connector and Central zone areas with 8,000 metres of drilling planned.
Underground Drilling
The underground diamond drilling program has two objectives; infill drilling on the Doris North zone to facilitate detailed stope design and near to mid-term production (one to three years); and, definition and expansion drilling on the high-grade Doris North Extension zone, below the diabase dyke.
Production support drilling consists of two components. First, 5,000 metres are planned for infill drilling within the current Doris North Indicated Mineral Resource. This drilling will improve TMAC's understanding of grade distribution and assist in detailed stope design. An additional 1,000 metres of underground drilling is budgeted for short-term production. These are short holes, drilled as required, to enable short-term production decisions.
The second aim of the underground drilling program is to add high-grade gold ounces to the Doris resource base. Drilling results in 2015 were successful in refining the Doris North Extension geological model and intersecting significant high-grade mineralization. The Doris North Extension zone is interpreted to be the northern extension of the Doris North hinge structure, beneath the diabase dyke (see Figure 3 below). Drilling above the dyke during 2015 helped to define the north-west striking offsetting faults in the area and provided a better understanding of the geometry of the gold mineralized zone below the dyke. The 2015 drilling followed up on the high-grade historical and 2013 TMAC drilling in this area. The Doris North Extension zone has the potential to host significant high-grade gold ounces and add to the Doris resource base, potentially extending the mine life at Doris. An exploration drift is required to provide underground drilling platforms to adequately drill the Doris North Extension zone. Approximately 300 metres of underground development is budgeted and included within the 2016 mine development plan. The budget contemplates 6,000 metres of underground drilling from this underground platform. The exploration drift is scheduled to be completed in March and drilling will commence shortly thereafter.
Surface Drilling
The 2016 surface drilling program is focused on building on the success of the 2014 drilling program within the Doris Connector and Doris Central zones. Inferred Mineral Resources within the Doris Connector zone will be drilled to upgrade to the Indicated Mineral Resource classification and potential inclusion in the Doris Mineral Reserves. In addition to upgrading known resources, several holes will test exploration targets to the south along the Doris trend. High potential exploration targets also exist along the eastern margins of the Doris trend, where historical drilling intersected significant gold mineralization that has not previously been followed up on and is not accounted for in the current Mineral Resource base. All proposed surface drilling will be from ice platforms on Doris Lake and is expected to be completed in the first quarter of 2016.
Conference Attendance
January 20 - January 22, 2016
Catharine Farrow, Chief Executive Officer, will present at the CIBC 19th Annual Whistler Institutional Investor Conference on Wednesday, January 20, 2016 at 2:50 pm MT to be held in Whistler, BC, Canada.
January 26 - 27, 2016
Catharine Farrow, Chief Executive Officer, will present at the TD Securities' 2016 Mining Conference January 26 - 27, 2016 on Tuesday, January 26, 2016 during the Keynote High Grade Gold Lunch at 12:30 pm ET to be held in Toronto, ON, Canada.
Common Shares
As at December 31, 2015, the Company had 77,621,037 Common Shares issued and outstanding, 2,770,944 common share purchase options issued at a weighted average of $5.27 per Common Share, nil restricted shares issued and outstanding, and 1,900,000 share purchase warrants issued with an exercise price of $7.50 per share, totalling 82,291,181 Common Shares outstanding on a fully-diluted basis.
*Figure 1 illustrates the planned development of Doris through 2016. Figure 2 shows the planned development from 2015 through to the end of 2018.
ABOUT TMAC
TMAC holds a 100% interest in the Hope Bay Project located in Nunavut, Canada. TMAC is a fully financed, gold development company. During 2015, TMAC significantly de-risked the Hope Bay Project financially by securing equity and debt financing for gross proceeds of over $365 million providing full funding for the Company to achieve its plans for production, beginning with Doris, by the end of 2016. The Company has a board of directors with depth of experience and market credibility and an exploration and development team with an extensive track record of developing high-grade, profitable underground mines.
SCIENTIFIC AND TECHNICAL INFORMATION
Information of a scientific or technical nature in respect of the Hope Bay Project, other than new information related to Doris mine development, is based upon the technical report for the Hope Bay Project dated May 28, 2015, entitled "Technical Report On The Hope Bay Project, Nunavut, Canada", which has an effective date of March 31, 2015, as filed on TMAC's profile at www.sedar.com. Scientific and technical information related to Doris mine development was prepared by, and all other scientific and technical information contained in this document was reviewed and approved by David King, P.Geo., the Vice President, Exploration and Geoscience of TMAC, and Paul Christman, P.Eng., the Manager of Mining of TMAC, each of whom is a "qualified person" as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Projects.
SOURCE TMAC Resources Inc.
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For further information please contact:
TMAC Resources Inc.
Catharine Farrow
Chief Executive Officer
416-628-0216
Ann Wilkinson
Vice President, Investor Relations
416-628-0216
www.tmacresources.com
Renmark Financial Communications Inc.
Daniel Gordon
dgordon@renmarkfinancial.com
Tel: (416) 644-2020 or (514) 939-3989
www.renmarkfinancial.com |
