The Sugar Zone Property is located in northern Ontario, approximately 68 km east of the Hemlo area gold mines, 30 km north of White River which is on the Trans-Canada Highway 17.
The Sugar Zone Mine entered commercial production in 2019 and has an anticipated mine life of approximately 13 years at current production levels. The mine is currently producing from the Sugar Zone North and South areas. Development is underway to the Middle Zone, which will open up a whole new mining area, expected by mid-2021.
Highlights of 1,200 tpd Feasibility Study Include:
- Low-cost expansion: $21 million in expansion capital to grow throughput from 800 tpd to 1,200 tpd in Q1 2023.
- 58% increase in annual gold production: Increased throughput is expected to drive gold production to 102,000 ounces by 2023 and deliver sustainable annual gold production of 98,700 ounces from 2023 to 2027.
- Attractive cost profile: AISC1 is expected to decline to an average of US$1,025 per ounce from 2023 to 2027.
- 166% increase in Mine Free Cash Flow2: Annual Mine Free Cash Flow is expected to increase from $36 million in 2021 to $96 million by 2023.
- Short expansion timeframe: Consistent production improvements are expected through to 2023 when 1,200 tpd steady-state is achieved.
- After-tax IRR3 of 89%: Reflects significant incremental cash flow improvement over 800 tpd scenario
- NPV5% of $417 million (pre-tax) and $332 million (post-tax): Adds considerable value to Harte Gold’s net asset value.
- AISC is a non-IFRS measure and reported at the project level. Excludes corporate G&A.
- Defined as operating cash flow net of capital, tax and First Nations NPI, excludes corporate and hedge payments.
- IRR calculated on a differential project level, after-tax cash flow between 1,200 tpd expansion and operating at a steady state of 800 tpd.
About Sugar Zone Mine
The Sugar Zone Mine is a high-grade underground gold mine that entered commercial production in 2019. Based on current mineral reserves, the Sugar Zone Mine has a mine life of approximately 13 years based on rated rated processing of 800 tpd.
The Company is exploring an expansion scenario to increase mine and mill throughput by 50%, from 800 tpd to 1,200 tpd. Previous studies determined that the Sugar Zone Mine could support 1,200 tpd based on the current Mineral Resource Estimate. The Company expects to deliver a Feasibility Study in the fourth quarter of 2020.
The Sugar Zone Property is comprised of 309 patented and leased claims covering 79,355 hectares.
The Mineral Resource Estimate was derived from applying Au grade cut-off values to the block model and reporting the resulting tonnes and grade for potentially underground mineable areas. Based on a gold price of US$1,250/oz, process recovery of 96%, an exchange rate of US$0.80=CAD$1.00, a 3.0 g/t Au cut-off grade was utilized.
The Sugar Zone Property is located in the Dayohessarah Greenstone Belt of late Archean (ca. 2.7 Ga) age that is part of the Abitibi-Wawa Subprovince of the Superior Province. The belt is approximately 36 km in length and varies in width from 1.5 to 5.5 km. Principal lithologies in the belt are moderately to highly deformed metamorphosed volcanics, volcanoclastics and sediments that have been enclosed and intruded by tonalitic to granodioritic quartz-porphyry plutons.
In the Sugar Zone Gold Deposit (“Sugar Zone” or “Deposit”), gold mineralization occurs in quartz veins, quartz stringers and quartz flooded zones predominantly associated with narrow porphyry sills, porphyry contact zones, hydrothermally altered mafic metavolcanics and, rarely in weakly altered mafic metavolcanics. The mineralization occurs in three parallel zones, the Upper, Lower and Footwall Subzones, that range in thickness from 1.5 to 10 m, strike at 140° and dip between -65° and -75° to the west. The three subzones are separated by 20 to 30 m of non-mineralized metavolcanics. The Sugar Deformation Zone is a high strain deformation zone associated with the mineralization with a northwest trend and dips west at 65° to 75°. The mineralization has been defined for over 1.5 km strike length and to a vertical depth of over 1,200 m and remains open along strike and at depth. Fine to coarse-grained specks and blebs of visible gold are common in the Sugar Zone quartz veins, usually occurring within marginal, laminated or refractured portions of the veins. Quartz veins and silicified rocks also contain varying amounts of pyrrhotite, pyrite, chalcopyrite, galena, sphalerite, molybdenite and arsenopyrite.
The Sugar Zone Mine is accessible via a ramp system. The primary mining method is longitudinal retreat stoping. Typically, four sublevels are combined to form a mining block and within each mining block a bottom-up stoping sequence will be used.
The process plant produces a gold dore bar and bagged gold concentrate thgrough gravity concentration and flotation circuits, respectively. The process plant has a rated throughput capacity of 800 tonnes per day.
Reserves and Resources
The Mineral Resource Estimate was derived from applying Au grade cut-off values to the block model and reporting the resulting tonnes and grade for potentially underground mineable areas. Based on a gold price of US$1,250/oz, process recovery of 96%, an exchange rate of US$0.80=CAD$1.00, a 3.0 g/t Au cut-off grade(1-5) was utilized.
Mineral Resource Estimate
|Tonnes kt||Grade g/t Au||Ounces Au Koz|
Probable Mineral Reserve as of December 31, 2020
|Tonnes k/t||Grade g/t Au||Ounces Au Koz|
The Mineral Resource estimate presented in the following table is dated September 30, 2020, and the Mineral Resource ounces are inclusive of Mineral Reserve ounces. The Mineral Resource estimate was prepared using Leapfrog software for the wireframing and grade estimation. The wireframes were created in Leapfrog Geo using the vein modeling tool, guided by the geological interpretation corresponding to each domain. The grade was estimated by ordinary kriging or inverse distance squared using a 2D estimation approach. The Mineral Resource estimate does not include any external dilution.Notes to the Mineral Resource estimate:
- The stated Mineral Resources comply with the requirements of National Instrument 43-101 – Standards of Disclosure for Mineral Projects ("NI 43-101") and are classified in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum's "CIM Definition Standards – For Mineral Resources and Mineral Reserves" (the “CIM Definition Standards”).
- Mineral Resources, which are not Mineral Reserves, do not have demonstrated economic viability.
- The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
- The Inferred Mineral Resource in this estimate has a lower level of confidence than that applied to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of the Inferred Mineral Resource could be upgraded to an Indicated Mineral Resource with continued exploration.
- The Mineral Resource estimate was prepared by Mr. Vincent Cardin-Tremblay (P.Geo), former VP Geological Services for the Company. Mr. Cardin-Tremblay is a QP as defined by NI 43-101.
- Mineral Resources have been estimated as of September 30, 2020 using a gold price assumption of US$1,600 per ounce Au.
- A resource cut-off grade of 3.0 g/t Au has been estimated based on operating cost projections and applicable metallurgical recovery. The cut-off grade was used in combination with a minimum mining width factor of 1.8m to define the resource.
- Numbers may not add due to rounding.
- The stated Mineral Reserves comply with the requirements of NI 43-101 and are classified in accordance with the CIM Definition Standards. Mineral Reserve estimates reflect the Company's reasonable expectation that all necessary permits and approvals will be obtained and maintained.
- Mineral Reserves are the economic portion of the Indicated Mineral Resources. Mineral Reserve estimates include mining dilution at grades assumed to be zero.
- The 2020 Mineral Reserve estimate was prepared under the supervision of Mr. Chris McCann (P.Eng), Director of Technical Services for the Company. Mr. McCann is a QP as defined by NI 43-101.
- The Mineral Reserves were estimated as of December 31, 2020 using a gold price assumption of US$1,450 per ounce Au.
- A mining cut-off grade of 5.0 g/t Au has been estimated based on operating cost projections, sustaining capital development cost, mining dilution and recovery, royalty payment requirements and applicable metallurgical recovery.
- Numbers may not add due to rounding.