LAKEWOOD, Colo., May 30, 2018 /PRNewswire/ -- Pershing Gold
Corporation (NASDAQ:PGLC) (TSX:PGLC) (FWB:7PG1) ("Pershing Gold" or
the "Company"), the emerging Nevada gold producer, today announces the
completion of a positive final Feasibility Study ("FS") on its
Relief Canyon Mine in Pershing County,
Nevada.
Mine Development Associates ("MDA"), Kappes Cassidy &
Associates ("Kappes Cassidy"), of Reno,
NV and Jorgensen Engineering and Technical Services
("Jorgensen Engineering"), of Centennial,
CO, completed the FS for the Company's Relief Canyon gold
mine with an effective date of May 24,
2018. Highlights from the FS include a pre-tax net present
value ("NPV") of $154 million,
a pre-tax internal rate of return ("IRR") of 91% and pre-tax
Net Cash Flow of $204 million.
The NPV, IRR and Net Cash Flow figures assume pre-tax economics
using $1,290 per ounce ("/oz") of
gold ("Au"), $16.75/oz of silver
("Ag") and a 5% discount rate. Further highlights from the FS are
listed below in Table 1 and FS gold price sensitivities are listed
below in Table 2.
"The Feasibility Study validates the previous technical work we
have done at Relief Canyon, confirming it to be a low CAPEX, low
cost, high IRR project," stated Stephen D.
Alfers, Pershing Gold's Chairman and CEO. "Pershing Gold
thanks MDA, Kappes Cassidy, Jorgensen Engineering, and their staff
for their high quality work in assisting with the development of
this Feasibility Study," stated Alfers.
Table 1: Relief
Canyon FS Highlights
|
|
|
|
|
Life of mine
("LOM")
|
5.6 years
|
|
Average LOM
production
|
91,000 oz
Au/year
|
|
Cash Cost
|
$769/oz Au
|
|
AISC
|
$801/oz Au
|
|
Initial
CAPEX
|
$28.2
million
|
|
Sustaining
CAPEX
|
$14.8
million
|
|
Working
Capital
|
$10.2
million
|
|
Pre-tax NPV,
5%
|
$154
million
|
|
Pre-tax
IRR
|
91%
|
|
Pre-tax Net Cash
Flow
|
$204
million
|
|
After-tax NPV,
5%
|
$133
million
|
|
After-tax
IRR
|
87%
|
|
After-tax Net Cash
Flow
|
$176
million
|
|
"We have always believed that the Relief Canyon mine has scale,
because the deposit is open at depth and in three directions.
Recent drilling bears this out, and we expect to add mine life as
we continue infill drilling and exploration," said Alfers.
Operating Cost and CAPEX
The FS demonstrates the
applicability of contract-mining and conveyor
stacking to bring the project into production. The FS estimates
that 509,514 oz Au are expected to be produced with average life of
mine ("LOM") production of 91,000 oz Au/year over the 5.6
year LOM. The FS highlights the low cost nature of this project
with an average cash cost of $769/oz Au and All in Sustaining Cost
("AISC") of $801/oz Au. The
modest capital expense ("CAPEX") nature of this project is
reaffirmed with the estimated FS Initial CAPEX of
$28.2 million. The full FS
will be posted within the next 45 days on the Company's website
at http://www.pershinggold.com/technical-reports and at
www.sedar.com.
Table 2: FS Gold
Price Sensitivity Analysis, Before Tax
|
Gold Price
/ oz Au
|
FS Plan NPV,
5%
|
FS
IRR
|
$1,450
|
$217
million
|
127%
|
$1,400
|
$198
million
|
116%
|
$1,350
|
$178
million
|
104%
|
$1,300
|
$158
million
|
93%
|
$1,290
|
$154
million
|
91%
|
$1,250
|
$138
million
|
82%
|
$1,200
|
$118
million
|
71%
|
$1,150
|
$98
million
|
59%
|
Mining
Contract mining has been identified as the
preferred mining method, and Pershing Gold has worked closely with
several contract mining companies in order to identify the
equipment, method and costs of open pit mining based on detailed
contractor bids. The method of mining will be a drill, blast, load
haul method typical for Nevada
open pit mining. The truck fleet is expected to consist of thirteen
100-ton trucks operating with three 992 loaders. Ore will be hauled
to stockpiles ahead of the primary crusher where it will be blended
and fed to the crusher as required. All of our plans to commence
mining operations are contingent upon obtaining project financing
for Relief Canyon.
Metallurgical Testing
The Relief Canyon ore deposit
contains oxidized and partially oxidized gold mineral resources and
reserves that historical mining experience indicates would be
amenable to cyanide heap-leach processing.
In 2015, 2016 and 2018, Pershing Gold conducted metallurgical
test work on drill core and bulk samples to confirm heap-leach
processing on resources and reserves that have been identified
within the proposed pit. The metallurgical test work was based on
identifying three distinct alterations on cross-section, which have
been named the Main, Lower, and Jasperoid Zones.
Results from column leach testing demonstrate that the major
Relief Canyon ore types contained in the Main, Jasperoid and Lower
Zones, generally would be amenable to heap-leach cyanidation
treatment.
The column-leach and permeability tests also indicate that
agglomeration is required in order to achieve hydraulic
conductivity and a corresponding gold recovery on a consistent
basis. There is also testwork showing that blending low and high
fines content material will aid hydraulic conductivity.
Existing process buildings, office buildings and ponds will be
refurbished for use, additionally reducing capital costs and
decreasing the time needed to advance the project into
production.
The planned processing method is heap-leach cyanidation of
primary crushed ore (80% passing three inch). Crushed ore will be
mixed with eight pounds per ton of cement and agglomerated as it is
transported to the leach pad via overland conveyors. The ore will
then be placed on the pad for leaching utilizing grasshopper
conveyors and a radial stacker. The average gold recovery is
predicted to be 81%.
Permitting
Currently, Pershing Gold has all of
the state and federal permits necessary to start the Phase
I mining and heap-leach processing operations. Pershing Gold is
planning a two-phase permitting and development scenario for the
project. Phase I, which has been approved, is the re-purposing of
previously approved disturbance for expanded mining to a pit bottom
elevation of 5,080 feet, partial backfilling of the Phase I pit to
approximately 20 feet above the historical groundwater elevation to
eliminate a pit lake, expanded exploration operations, full
build-out of the heap-leach pad to accommodate
leaching of the Phase I ore, and construction of a new
waste rock storage facility. Phase II will include additional mine
expansion activities and allow further mining below the water
table. Pershing Gold will use the mine plan in the FS as the
basis for the Phase II permit application, and anticipates it will
submit the Phase II permit applications in the first half of
2018.
Exploration and Development Potential
Pershing has continued to conduct exploration
and development drilling within and adjacent to the current FS
resource model. Fifty core holes have been drilled to date,
primarily in three areas: 1) infill drilling within the North area
along the proposed west edge of the FS reserve pit, 2) extensional
drilling southwest of the North area resource, and 3) twin hole
drilling within the Main zone mineralization southwest of the
historic South pit. Drilling in the first two target areas is meant
to upgrade the resource model, resulting in a potential enlargement
of the FS reserve pit, and also extend the current mineral resource
farther to the west and southwest. The Main zone drilling is
twinning pre-Pershing reverse
circulation drill holes to confirm and provide confidence in the
resource model. Upon completion of the current drill program,
Pershing is planning on updating
the resource model in the third quarter of 2018.
Drill results to date from eight infill holes in the first
target area are on average about 30% higher in gold grade than
predicted within the resource model. It is likely that these
results would have a positive impact and should result in an
enlargement of the current FS pit.
The resource extension drilling southwest of the North area
(seven holes completed to date) have returned favorable results
within the Lower and Jasperoid zones with mineral intercepts of the
same tenor as seen up-dip within the current resource models. These
intercepts are over an area of approximately 700 feet
northeast/southwest and 500 feet northwest/southeast and
mineralization is still open to the west and southwest. Cyanide
solubility testing indicates the material is amenable to standard
heap-leach processing as proposed in the current Feasibility study
and there are plans to follow up with metallurgical testing of
composites from these holes. There is the potential that these
positive drill results, especially if further drilling returns
similar results, could drive further pit expansion.
The third area of drilling is in the Main zone within and
immediately to the west of the current reserve pit. Eight core
holes have been drilled twinning pre-Pershing Main zone reverse
circulation drilling and an additional five core holes were drilled
to infill gaps in the Main zone drill spacing and test the western
extension of Main zone mineralization. The infill drill results
indicate only a minor variation with the predicted resource
estimate grades and there is close match in geology and sample
results between the Pershing and
pre-Pershing drill holes. The
positive Main zone twin drill results serve to verify and provide
increased confidence in the pre-Pershing drilling which forms the basis for
much of the Main zone model and resource estimate. The twin and
extension holes also confirm a previous observation that the
historical drilling may not have been deep enough to fully test
both the base of Main zone mineralization and also the western
extension of mineralization down-dip from the current reserve pit.
Ore grade intercepts in drill holes 516 and 512, holes located
600ft apart along a north-trending strike, and 400ft to 700ft,
respectively, west of the reserve pit, indicate that Main zone
mineralization is present to the west past the current drill
spacing. Mineralization is open between these two holes and also
farther along strike to the north. Drilling is ongoing to determine
the extent of this opportunity for resource and reserve
growth.
About Pershing Gold Corporation
Pershing Gold is an
emerging gold producer whose primary asset is the Relief
Canyon Mine in Pershing County,
Nevada. Relief Canyon includes three historic open-pit mines
and a state-of-the-art, fully permitted and constructed heap-leach
processing facility. Pershing Gold is currently permitted to resume
mining at Relief Canyon under the existing Plan of Operations.
Pershing Gold's landholdings cover approximately 27,000 acres
that include the Relief Canyon Mine asset and lands surrounding the
mine in all directions. This land package provides Pershing Gold
with the opportunity to expand the Relief Canyon Mine deposit and
to explore and make new discoveries on nearby lands.
Pershing Gold is listed on the NASDAQ Global Market and the
Toronto Stock Exchange under the symbol PGLC and on the Frankfurt
Stock Exchange under the symbol 7PG1.
Cautionary Note to United States Investors Regarding
Estimates of Measured, Indicated, and Inferred
Resources
This press release uses the term mineral resource,
which is defined in Canadian Institute of Metallurgy guidelines,
the guidelines widely followed to comply with Canadian National
Instrument 43-101-- Standards of Disclosure for Mineral Projects
("NI 43-101"). We advise U.S. investors that this term is not
recognized by the United States Securities and Exchange Commission
(the "SEC"). The estimation of mineral resources under NI 43-101
involves greater uncertainty as to their existence and economic
feasibility than the estimation of proven and probable reserves
under SEC Industry Guide 7. Mineral resources are not mineral
reserves. Mineral resources that are not mineral reserves do not
have demonstrated economic viability. U.S. investors are cautioned
not to assume that mineral resources will be converted into
reserves.
Pershing is a reporting issuer
in the United States and is
required to discuss mineralization estimates in accordance with US
reporting standards. The references to mineral reserves used in
this press release are in reference to the mining terms defined in
the Canadian Institute of Mining, Metallurgy and Petroleum
Standards, which definitions have been adopted by NI 43-101. The
definitions of proven and probable reserves used in NI 43-101
differ from the definitions in the United
States Securities and Exchange Commission's Industry Guide
7. In the United States, a mineral
reserve is defined as a part of a mineral deposit, which could be
economically and legally extracted or produced at the time the
reserve determination is made. Accordingly, information contained
in this press release containing descriptions of our mineral
deposits in accordance with NI 43-101 may not be comparable to
similar information made public by other U.S. companies under
the United States federal
securities laws and the rules and regulations thereunder. Moreover,
the SEC normally only permits issuers to report mineralization that
does not constitute "reserves" as in-place tonnage and grade
without reference to unit measures. US investors are urged to
consider closely the disclosure in our Form 10-K for the year ended
December 31, 2017 and other SEC
filings. You can review and obtain copies of these filings
from the SEC's website at http://www.sec.gov/edgar.shtml.
Scientific and Technical Data
All scientific and
technical information related to drill and surface samples,
resource estimate, mineral processing, metallurgy and recovery
methods, and mining for the Relief Canyon project has been reviewed
and approved by either Paul Tietz,
Certified Professional Geologist #11720, Neil Prenn, P.E. #7844,
Carl Defilippi, registered member
SME#775870RM, or Mark Jorgensen,
MMSA#01202QP who are each Qualified Persons under the definitions
established by Canadian National Instrument 43-101. Drill core at
Relief Canyon is boxed and sealed at the drill rig and moved to the
Relief Canyon logging and sample preparation facilities by trained
personnel. The core is logged and split down the center using a
typical table-fed circular rock saw. One half of the core is sent
for assay while the other half is returned to the core box and
stored at Relief Canyon in a secure, fenced-off, area. Pershing
Gold quality assurance/quality control (QA/QC) procedures include
the regular use of blanks, standards, and duplicate samples.
Non-GAAP Measures
Cash costs is a non-GAAP financial
measure calculated by the Company as set forth below, and may not
be comparable to similar measures reported by other companies. Cash
costs include all direct and indirect costs that would generate
gold ounces for sale to customers, including mining of mineralized
materials and waste, leaching, processing, refining and
transportation costs, on-site administrative costs and royalties,
net of by-product credits for silver ounces sold. Cash costs do not
include depreciation, depletion, amortization, exploration
expenditures, reclamation and remediation costs, sustaining
capital, financing costs, income taxes, or corporate general and
administrative costs not directly or indirectly related to the
Relief Canyon project. Cash costs are divided by the number of gold
ounces estimated to be produced for the period to arrive at cash
costs per gold ounce produced.
Cost of sales is the most comparable financial measure,
calculated in accordance with GAAP, to cash costs. As compared to
cash costs, cost of sales includes adjustments for changes in
inventory and excludes net revenue from by-product, refining and
transportation costs, which are reported as part of revenue in
accordance with GAAP.
AISC is a non-GAAP financial measure calculated by the Company
as set forth below, and may not be comparable to similar measures
reported by other companies. AISC includes cash costs, as defined
above, plus exploration costs at the Relief Canyon project and
sustaining capital expenditures (including additional leach pads,
permitting and customary improvements to the operations over the
life of the project). AISC are divided by the number of gold ounces
estimated to be produced for the period to arrive at all-in
sustaining costs per gold ounce produced.
Legal Notice and Safe Harbor Statement
This press
release contains "forward-looking statements" within the meaning of
the safe harbor provisions of the U.S. Private Securities
Litigation Reform Act of 1995. All statements, other than
statements of historical fact, including the timing of the release
of the full Feasibility Study and those statements with respect to
the expected project economics for Relief Canyon, such as estimates
of life of mine, total production and average production, cash
costs, AISC, initial CAPEX, sustaining CAPEX, working capital,
pre-tax IRR, pre-tax NPV, net cash flows and recovery rates, the
applicability of contract mining and conveyor stacking, planned
mining methods and plans for vehicles and equipment, gold price
sensitivity analysis, our interpretation of test results, the
timing to obtain necessary permits, plans to update the resource
model, metallurgy and processing expectations, assumptions
regarding available processing methods, plans regarding additional
permitting and phased development of the mine, expectations
regarding the ability to expand the mineral resource through future
exploration or drilling and the anticipated results of further
drilling, and development potential of satellite areas, are
"forward-looking statements." Although the Company's management
believes that such forward-looking statements are reasonable, it
cannot guarantee that such expectations are, or will be, correct.
These forward-looking statements involve a number of risks and
uncertainties, which could cause the Company's future results to
differ materially from those anticipated. Potential risks and
uncertainties include, among others, interpretations or
reinterpretations of geologic information, unfavorable exploration
results, inability to obtain permits required for future
exploration, development or production, general economic conditions
and conditions affecting the industries in which the Company
operates; the uncertainty of regulatory requirements and approvals;
fluctuating mineral and commodity prices, final investment approval
and the ability to obtain necessary financing on acceptable terms
or at all. Additional information regarding the factors that may
cause actual results to differ materially from these
forward-looking statements is available in the Company's filings
with the Securities and Exchange Commission, including the Annual
Report on Form 10-K for the year ended December 31, 2017. The Company assumes no
obligation to update any of the information contained or referenced
in this press release.
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