Northern Vertex Mining Corp. (the "Company") (TSX VENTURE:NEE) announces the
results of a preliminary economic assessment ("PEA") for its Moss Mine
Gold-Silver Project, Mohave County Arizona, USA. The PEA is based on the
recently announced updated resource estimate and is contained in a NI 43-101
(Disclosure Standards for Mineral Projects) compliant technical report
co-authored by CDM Smith, Inc. ("CDM") and Metal Mining Consultants Inc. ("MMC")
dated March 13, 2013 (the "Technical Report").
Northern Vertex has the right to earn a 70% interest in the Moss Gold-Silver
Property from Patriot Gold Corp. by spending $8 million and preparing a
feasibility study. The Company has spent $5.6 million to date. Subsequent to the
Northern Vertex earn-in, funding of the project by the participants will be on a
70:30 proportional basis.
Preliminary Economic Assessment Highlights:
This PEA evaluates the economics of open pit mining and heap leach processing
for the Moss Mine Gold-Silver Project. All figures are in USD unless otherwise
stated, are based on a gold price of $1,500/oz and are on a 100% basis.
Highlights are as follows:
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HIGHLIGHTS
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Mine life 5 yrs, 5000 tpd, 42,000 AuEq oz/yr
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Pre-tax IRR of 117.9%
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Pre-tax payback of 15 months
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Pre-tax NPV @5% $110 million
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Capital expenditures $26.6 million
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Capital / average annual oz AuEq production $633/oz
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Cash Costs/oz AuEq $490/oz
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Dick Whittington, President and CEO Northern Vertex Mining Corp, commented, "The
results from this Preliminary Economic Assessment are positive and show the
potential economics associated with the Moss Mine Gold-Silver Project. A Pilot
Plant operations phase (Phase I) is recommended by the Technical Report and will
precede operations (Phase II). If the Pilot Plant is successful and lab
metallurgy is proven in the field, we can assess the feasibility of moving
forward with operations subject to required financing. We believe that there
continues to be upside in maximizing results from the in-field operations, from
possible pit expansions as a result of the mine exploration programs and of
course, possible Mine Life Extension or Expansion (Phase III). We look forward
to advancing the project towards mine operations and to creating both
shareholder value and stakeholder value in the Bullhead City Region".
Key PEA Parameters and Conclusions:
The Company's 3 Phase Mine Development Plan, as outlined in previous news
releases, is designed to move the project forward from conceptual design and
laboratory test work to on-site pilot plant testing (Pilot Plant - Phase I) and
then onto operations (Phase II). Phase II is independent from Pilot Plant -
Phase I, and will only proceed if Phase I is successful. Phase III is conceptual
only, will depend on the success of Phase II, and so is not included in the PEA.
Phase III would involve mine life extension and or expansion.
A summary of the key parameters and results of the PEA follow.
Operations Scope:
Pilot Plant - Phase I
-- Designed to in-field test the economic and technical viability of heap
leach processing
-- Includes pilot-scale open pit mining and heap leach processing of an
aggregate of approximately 90,000 tonnes of mineralized rock
-- All activities would be confined to patented property
-- Low strip ratio 0.79:1
-- Mined zone approximately 500 feet in length
-- Both higher grade and lower grade material will be tested in Pilot Plant
- Phase I
-- Production rate of 1000 tonnes of mineralized rock / day
-- Mining and processing activities to be performed by contractors
Operations - Phase II
-- Will proceed upon determination of successful results from Pilot Plant -
Phase I
-- Would include mining and processing of approximately 6.13 million tonnes
(of measured and indicated resources- see below) of mineralized rock
-- Open pit mining methods and heap leach processing
-- Low strip ratio 1.6:1
-- All activities would be confined to patented property
-- Pit depth ranges from 30 feet to 575 feet
-- Production and processing activities are expected to be 5,000 tonnes of
mineralized rock / day
-- Mining activities to be performed by contractors and processing
activities to be performed by Northern Vertex
Resources:
New National Instrument 43-101 Technical Report on Resources:
This Technical Report estimates the NI 43-101 compliant Mineral Resources at the
Moss Mine Project. The updated resource estimate was prepared by Dr. Stewart D.
Redwood, FIMM, and Scott Wilson of MMC and was outlined in the News Release
dated March 12, 2013. The summarized resource estimate in the table below
includes 12.6 million tonnes (AuEq of 1.03 g/t) of measured resources and 9.98
million tonnes (AuEq of 0.73 g/t) of indicated resources (aggregate average:
22,589,000 tonnes at 0.90 AuEq g/t) for total measured and indicated AuEq oz of
653,600 (537,000 Au oz and 5,830,000 Ag oz). It is important to note that
mineral resources described herein are not mineral reserves and, as such, do not
have demonstrated economic viability.
Metal Mining Consultants Inc. ("MMC") Summarized Resource Estimate
For Moss Mine Gold-Silver Project at a 0.3 g/t Au Cut-off
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Grade
---------------------
AuEq Au Ag
Resource Au ---------------------
Category Eq(i)(oz) Au (oz) Ag (oz) Tonnes (gpt) (gpt) (gpt)
---------------------------------------------------------------------------
Measured 418,760 345,000 3,688,000 12,611,000 1.03 0.85 9.10
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Indicated 234,840 192,000 2,142,000 9,978,000 0.73 0.60 6.68
---------------------------------------------------------------------------
M+I 653,600 537,000 5,830,000 22,589,000 0.90 0.74 8.03
---------------------------------------------------------------------------
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Inferred 82,020 66,000 801,000 3,957,000 0.64 0.57 6.65
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-- Gold equivalency is based on a silver:gold ratio of 50:1 and assumes
100% recovery of all metals.
-- Mineral Resources are not Mineral Reserves and do not have demonstrated
economic viability. There is no certainty that all or any part of the
Mineral Resources estimated will be converted into Mineral Reserves
estimates.
-- Mineral resource tonnage and contained metal have been rounded to
reflect the accuracy of the estimate and numbers may not add due to
rounding.
-- Resources were based on 36,805 meters of drilling in 658 exploration
drill holes and 530 meters of channel sampling. There were a total of
7,677- five meter composite samples used in the estimation of gold and
silver. MMC used Inverse Power Distance (ID3) as the preferred
estimation technique for the Moss Project.
-- MMC capped gold assays, prior to compositing 5 meter samples, at 17
grams per tonne and silver at 140 grams per tonne in order to limit the
effect of high grade outlier grades in the estimation of mineral
resources.
-- MMC applied Industry Standards in the selection of the drill hole and
assay information gathered from historic and current exploration
programs in its determination of Measured Mineral Resources, Indicated
Resources and Inferred Resources.
Resource Estimates Used for Economic Assessments in the PEA:
Resources used in the economic assessment for the Moss Mine Gold-Silver Project
Pilot Plant - Phase I and operations - Phase II are as follows:
Moss Mine Project Measured and Indicated Resources Estimate for Pilot Plant
Operations - Phase I
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Au Oz Grade Grade
Class for Phase I Tonnes Equiv Au g/t Au Oz Ag g/t Ag Oz
---------------------------------------------------------------------------
Pilot Plant Operations - Phase
I Measured .3 - 1.0 g/t 49,301 1,245 0.664 1,052 6.08 9,636
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Pilot Plant Operations - Phase
I Indicated .3 - 1.0 g/t 0 - 0.000 0 - 0
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Pilot Plant Operations - Phase
I Measured and Indicated .3 -
1.0 g/t 49,301 1,245 0.664 1,052 6.08 9,636
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Pilot Plant Operations - Phase
I Measured greater than 1.0
g/t 108,013 9,091 2.226 7,732 19.57 67,969
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Pilot Plant Operations - Phase
I Indicated greater than 1.0
g/t 149 6 1.046 5 5.21 25
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Pilot Plant Operations - Phase
I Measured and Indicated
greater than 1.0 g/t 108,162 9,097 2.225 7,737 19.55 67,995
---------------------------------------------------------------------------
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(i) Equivalency based on 1 oz Au = 50 oz Ag
Moss Mine Project Measured and Indicated Resources Estimate for operations -
Phase II
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Au Oz Grade Grade
Class for Phase II Tonnes Equiv Au g/t Au Oz Ag g/t Ag Oz
---------------------------------------------------------------------------
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Operations - Phase II
Measured .3 g/t
cutoff 5,063,232 218,467 1.114 181,349 11.40 1,855,914
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Operations - Phase II
Indicated .3 g/t
cutoff 1,074,207 36,675 0.863 29,821 9.92 342,670
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Operations - Phase II
Measured and
Indicated .3 g/t
cutoff 6,137,439 255,142 1.070 211,170 11.14 2,198,584
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(i) Equivalency based on 1 oz Au = 50 oz Ag
Moss Mine Project Inferred Resource and Waste Material Estimates for Pilot Plant
Operations - Phase I and operations - Phase II
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Au Oz Grade Grade
Class for Phase I Tonnes Equiv Au g/t Au Oz Ag g/t Ag Oz
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Pilot Plant Operations -
Phase I Inferred Resource .3
- 1.0 g/t 0 0 0 0 0 0
---------------------------------------------------------------------------
Pilot Plant Operations -
Phase I Inferred Resource
greater than 1.0 g/t 0 0 0 0 0 0
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Au Oz Grade Grade
Class for Phase II Tonnes Equiv Au g/t Au Oz Ag g/t Ag Oz
---------------------------------------------------------------------------
Operations - Phase II
Inferred Resource .3 g/t
cutoff 13,134 491 0.933 394 11.53 4,868
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Waste - Phase I and Phase II
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Pilot Plant Operations -
Phase I Waste 3,712
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Operations - Phase II Waste 9,843,357
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(i) Equivalency based on 1 oz Au = 50 oz Ag
Resource Estimates for Phase III - Mine Life Expansion / Extension:
The anticipated operating period for Phase I is 15 months and for Phase II is 5
years, including development and construction. Phase II will only proceed upon
the successful completion of Phase I.
Pilot Plant - Phase I and operations - Phase II measured and indicated resources
encompass 265,000 of the total 654,000 ounces gold equivalent of global
resources estimated by MMC. The remaining resources (389,000 ounces gold
equivalent) appear to be generally located beneath and west of operations -
Phase II resources and would be available for mining at a later date. For
further details on both tonnes and grade of Au and Ag separately, please see
previous tables.
It should be noted that the Phase I and Phase II resources described are
physically constrained to that which can be reasonably extracted by limiting
mining and related facilities to patented - or private - land. The conceptual
Phase III mine plan would be pursued without the physical constraint of limiting
operations to patented land and will require normal course approvals from
various US governmental departments and mining authorities.
Based on development of the initial resource solids containing the Phase I and
Phase II resource, the mining extraction recovery rate of the in-situ resource
is anticipated to be 100 percent.
As mentioned above, upon the completion of Phase II, 389,000 oz AuEq will
remain. Extending mining and processing operations onto unpatented land by
mining along strike and to depth has the potential to extend the life of the
mine. This will be the subject of further investigation concurrent with Phase II
operations. This investigation will incorporate permitting, technical, economic,
and financial elements into one or more pre-feasibility and/or feasibility
studies.
Metallurgy:
Overall metallurgical data shows that ore from the Moss Mine Gold-Silver Project
is readily amenable to agglomeration - heap leach cyanidation processing. Column
test recoveries obtained from the bulk samples, finely crushed using rolls
crushers and agglomerated using cement as a binder, ranged from 75% to 84.6% for
gold and from 61.3% to 76.6% for silver. Recovery percentages are summarized in
the table below:
McClelland Leach Test Recovery Results
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Au Recovery Ag Recovery
Test Feed Size (%) (%)
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1X Rolls HG Composite P85-1/4" 75 69
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1X Rolls HG Column Test P85-1/4" 75.3 61.3
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2X Rolls HG Composite P95-1/4" 84 76
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2X Rolls HG Column Test P95-1/4" 84.6 76.6
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Gold extraction was still progressing when column leach tests were terminated
for purposes of completing the PEA and is expected to increase further with a
longer leach cycle. Preliminary data from an ongoing column leach test indicate
that the low grade mineralization will be amenable to agglomeration/heap leach
cyanidation processing after rolls crushing to a 95%-1/4" feed size. Use of
industrial scale high pressure grinding rolls (HPGR) has the potential to
improve liberation and yield higher recoveries.
The favorable results from the labatory metallurgical testing provide the basis
for proceeding with the proposed field testing Pilot Plant - Phase I.
Metallurgical data from the Pilot Plant program will be collected and analyzed
for use in the design of operations - Phase II. Both higher grade and lower
grade mineralized rock is expected to be tested in the Pilot Plant. Although
positive results have been obtained to date, additional metallurgical test work
will be required. Consequently, recoveries used in the PEA have been scaled back
to 75% for Au and to 55% for Ag.
Exploration:
The Preliminary Economic Assessment recommends a continued exploration program
to further delineate the mineralization at the Moss Gold-Silver Project. The
limits of mineralization are still open at depth and to the west. The
recommended drilling program includes additional drilling of 2,200 meters and
associated costs are outlined in the table below:
Estimated Costs for Continued Exploration and Drilling Program
--------------------------------------------------
Drilling $286,000
--------------------------------------------------
Labor $65,000
--------------------------------------------------
Assaying $150,000
--------------------------------------------------
Core Studies $10,000
--------------------------------------------------
Administration $51,000
--------------------------------------------------
Total $562,000
--------------------------------------------------
Production and Economic Criteria:
The key Production and Economic Criteria outlined in the PEA are as follows:
---------------------------------------------------------------------------
Project Element Phase II (1)
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Resource (6)
---------------------------------------------------------------------------
M&I Resource (tonnes) 6,137,439
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M&I Resource (gram Au/tonne) 1.07
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M&I Resource (gram Ag/tonne) 11.14
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M&I Silver : Gold ratio 10.4:1
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M&I Resource (AuEq oz)(2) 255,100
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Strip Ratio (waste/resource)(1)(5) 1.6:1
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Production
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Mine Life (years) (7) 5
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Tonnes / day (nominal) 5,000
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Total tonnes processed 6,218,036
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Gold Recovery (%) 75%
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Silver Recovery (%) 55%
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Total oz. Recovered (Au) 145,465
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Total oz. Recovered (Ag) 1,107,516
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Total oz. Recovered (AuEq)(2) 167,616
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Costs
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Average Annual Production oz AuEq 42,000
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Mining $5.69
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Processing $3.67
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Power $2.92
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G+A $0.97
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Cost / tonne $13.25
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Financial (6)
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Estimated Capital (US $) $26,618,000
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Capital / Total Recovered AuEq oz (US $/oz)(2) $158
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Capital / Avg Annual Production AuEq oz $633
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Cash Cost / Recovered AuEq oz (US $/oz)(2)(4) $490
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Net Present Value (NPV), 5%(3) $109,762,415
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Discounted Cash Flow Rate of Return (DCF/ROR)(3) 117.9%
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Payback Period (years)(3) 1.25
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(1) Will only proceed if Phase I is successful
(2) Equivalency based on 1 oz Au = 50 oz Ag
(3) NPV, DCF/ROR, and payback are calculated based on $1500/oz. Au on a
pre-tax and pre-royalty basis
(4) Operations and Maintenance (O&M) costs (includes G+A)
(5) Excludes stockpiled mineralized rock
(6) The reader is cautioned that mineral resources described herein are not
mineral reserves, and, as such, do not have demonstrated economic viability
(7) Mine life for operations - Phase II is based on mineable resources on
patented land only and has not been established using economic cut-off
criteria.
Sensitivity Analysis:
The following table shows the variances to the Net Present Value (NPV) and
Internal Rate of Return (IRR) from the base case of $1500 gold and $30/oz
silver.
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Prices IRR NPV @5%
---------------------------------------------------------------------------
Gold $1300/oz
Silver $26/oz 88% $82 million
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Gold $1500/oz
Silver $30/oz 117.9% $110 million
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Gold $1700/oz
Silver $34/oz 150% $137 million
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Various other sensitivities have been carried out assessing the effects of:
-- An increase in capital cost by $10 million
-- An increase in operating costs by 20%
-- An increase in gold and silver recovery rates to match higher recovery
rates in lab results
-- An increase in costs of diesel fuel for power production by $1 per
gallon
-- A decrease in capital equipment costs by 25% by way of using used
equipment instead of new
-- An increase in pit slope from 55 degrees to 65 degrees
-- A decrease in delay of NSR receipts from 25% to 10%
The results are attached as Appendix 1 and indicate the robust nature of the
Moss Mine Gold-Silver Project.
About Northern Vertex:
Northern Vertex Mining Corp. is a Canadian based exploration and mining company
focused on the reactivation of the Moss Mine Gold-Silver Project located in NW
Arizona, USA. The Company has an experienced management team with a strong
background in all aspects of acquisition, exploration, development, operations
and financing of mining projects worldwide. The Moss Mine Gold-Silver Project is
a potential heap leach, open pit project being advanced under a three phase
business plan, specifically designed to ensure that technical, economic,
permitting and funding requirements are met prior to each phase proceeding. The
Company is focused on working effectively and respectfully with our stakeholders
in the vicinity of the historical Moss Mine and enhancing the capacity of the
local communities in the area.
Qualified Persons:
The Technical Report and Preliminary Economic Assessment for the Moss Mine
Gold-Silver Project was prepared by CDM Smith, Inc. and Metal Mining
Consultants, Inc. and incorporates the work of a number of industry consultants
all of which are Qualified Persons (as defined by National Instrument 43-101)
who are independent of Northern Vertex Mining Corp. Each of the consultants has
reviewed and approved this news release. A list of the Qualified Persons
associated with the above Technical Report and Preliminary Economic Assessment
are shown in the table below.
----------------------------------------------------------------------------
Qualified Person
----------------------------------------------------------------------------
Scott Wilson, CPG
----------------------------------------------------------------------------
Stewart Redwood, FIMM
----------------------------------------------------------------------------
Brian Antonioli, PE
----------------------------------------------------------------------------
John Gormley, PE, Ph D
----------------------------------------------------------------------------
John Brower, CPG, Ph D
----------------------------------------------------------------------------
Jack McPartland, CPG, Ph D
----------------------------------------------------------------------------
The foregoing technical information contained in this news release has also been
reviewed and verified by Mr. Colin McKenzie, General Manager of Exploration for
Northern Vertex and a Qualified Person ("QP") for the purpose of National
Instrument 43-101 (Disclosure Standards for Mineral Projects).
ON BEHALF OF THE BOARD OF DIRECTORS
J.R.H. (Dick) Whittington, President & CEO
Cautionary Note About Forward Looking Information
This news release contains statements about our future business and planned
activities. These are "forward-looking" because we have used what we know and
expect today to make a statement about the future. Forward-looking statements
including but are not limited to comments regarding the timing and content of
upcoming work and analyses. Forward-looking statements usually include words
such as may, intend, plan, expect, anticipate, believe or other similar words.
We believe the expectations reflected in these forward-looking statements are
reasonable. However, actual events and results could be substantially different
because of the risks and uncertainties associated with our business or events
that happen after the date of this news release. You should not place undue
reliance on forward-looking statements. As a general policy, we do not update
forward-looking statements except as required by securities laws and
regulations.
Cautionary Note to U.S. Investors:
This news release uses the terms "Measured", "Indicated", and "Inferred"
resources. U.S. investors are advised that while such terms are recognized and
required by Canadian regulations, the United States Securities and Exchange
Commission does not recognize them. "Inferred Mineral Resources" have a great
amount of uncertainty as to their existence, and as to their economic and legal
feasibility. It cannot be assumed that all or any part of an Inferred Mineral
Resource will ever be upgraded to a higher category. Under Canadian rules,
estimates of Inferred Mineral Resources may not form the basis of feasibility or
other economic studies. U.S. investors are cautioned not to assume that all or
any part of Measured or Indicated Mineral Resources will ever be converted into
Mineral Reserves. U.S. Investors are also cautioned not to assume that all or
any part of a Mineral Resource is economically or legally mineable.
Appendix 1
Sensitivity Economics for operations - Phase II (Pre-Tax):
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NPV, 5%
Cost Component Variation DCF/ROR $(000,000)
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Base Case: Gold = $1500/oz; 117.9% $110
Base Case: Silver = $30/oz)
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Table 3: Increase in gold Gold = $1700/oz 150.0% $137
and silver prices Silver = $34/oz
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Table 4: Decrease in gold Gold = $1300/oz 88.0% $82
and silver prices Silver = $26/oz
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Table 5: Increase in Increase = $10,000,000 82.2% $101
capital cost
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Table 6: Increase in Cash Increase = 20% 97.3% $96
(O&M) cost
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Table 7: Increase in gold Gold recovery = 84.6%; 157.5% $143
and silver recovery Silver Recovery = 76.6% 157.5%
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Table 8: Increase in Diesel increase by 112.2% $106
diesel price $1/gallon to $4.75/gallon
Electrical cost increase to
$3.622/tonne
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Table 9: Used equipment Decrease = 25% 137.2% $112
option: generators, Decrease capital cost =
heavy equipment, $3,300,000
crushing plant, and
conveyor systems rather
than newequipment
(base case)
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Table 10: Increase in pit Decrease in strip ratio to 121.1% $113
slope from average 55 1.25:1
degrees to average 65 Decrease in waste rock cost
degrees by $3.3 million
Increase in recovered gold
equivalent by about 4,600
oz. due to wider pit or $7
million
Increase in slope rock
bolting by $7.6 million
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Table 11: Decrease in Decrease to 10% from 25% 142.4% $111
delay of NSR receipts the amount of revenue
delayed until following
year
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(1) Table number corresponds to tables contained in Appendix L.
FOR FURTHER INFORMATION PLEASE CONTACT:
Northern Vertex Mining Corp.
Investor Relations
604-601-3656 or 1-855-633-8798
www.northernvertex.com
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