Liberty Gold Announces Positive Preliminary Economic Assessment for the Goldstrike Oxide Gold Deposit, Great Basin, USA

Post-tax NPV5% of US$129.5 million, IRR of 29.4%, and Initial Capex of US$113.2 million

VANCOUVER, British Columbia, July 10, 2018 (GLOBE NEWSWIRE) —  Liberty Gold Corp. (TSX:LGD) (“Liberty Gold” or the “Company”) is pleased to announce the results of a Preliminary Economic Assessment (“PEA”) at its Goldstrike oxide gold property, Utah.  The PEA utilizes the maiden resource estimate completed in February 2018 (see news release dated February 8, 2018), and provides a strong, base-case economic scenario upon which to expand the scope and scale of the project with ongoing drilling.  The PEA confirms a low capital intensity, low operating cost, open-pit, run-of-mine, heap-leach operation, with a 7.5 year mine life and highly attractive economics. 

“This positive PEA marks a solid milestone for the Goldstrike project and for Liberty Gold,” stated Cal Everett, President and CEO of Liberty Gold. “Importantly, it is based on a high degree of confidence in the deposit geometry because it is backed up by over 1,700 drill holes with 75% of the resource in the indicated category. There is a high level of certainty in the metallurgical assumptions, as they are consistent with historical recoveries obtained from 209,000 ounces of historical production between 1988 and 1994. The PEA does not include any potential benefits from by-product silver production or from processing residual gold remaining in the historical heap leach pads, which are currently being drill-tested.  A gold cut-off grade of 0.20 grams per tonne (“g/t”) was selected for this study, in contrast to 0.25 g/t used in the original resource estimate.  The lower cut-off improves the economics of the project, delivers a lower strip ratio, produces more ounces, and extends the mine life. We see this project as scalable in terms of both size and throughput through future additions to the resource base, moving us closer to our goal of becoming a 100,000+ ounce per year producer.”

PEA Highlights

The base case assumes a gold price of US$1,300/ounce (“oz”).  All figures are stated in U.S. Dollars (“$”) unless otherwise noted. The Technical Report pursuant to National Instrument (“NI”) 43-101 guidelines for the Preliminary Economic Assessment will be filed on SEDAR within 45 days.

  • After-tax Net Present Value at a 5% discount rate (“NPV5%”) and Internal Rate of Return (“IRR”) of $129.5 million and 29.4% respectively with a 2.3 year payback of initial capital (pre-tax NPV5% and IRR of $176.2 million and 34.8% respectively)
  • Mine life of 7.5 years with a 2 year pre-production period
  • Life of mine (“LOM”) head grade of 0.48 g/t gold
  • Low LOM Strip Ratio of 1.2:1
  • Total amount of gold recovered is estimated at 713,000 oz
  • Average annual gold production of approximately 95,000 oz
  • Peak annual gold production of approximately 117,000 oz
  • LOM direct operating cash cost1 is estimated at $642/oz of gold recovered
  • All-in sustaining cost or AISC2 is estimated at $793/oz of gold recovered
  • Pre-production capital cost estimated at $113.2 million, using an owner-operator approach
  • LOM sustaining capital costs estimated at $61.6 million, plus $20.0 million for closure costs

 1 Cash cost includes mining cost, mine-level G&A, leaching and refining cost

 2 All-in sustaining cost (AISC) includes adjusted cash cost per ounce, sustaining capital and closure costs. This is a non-GAAP performance measure; please see “Non-GAAP Measures and Other Financial Measures” below.

The PEA was prepared by SRK Consulting (Canada) Inc., of Vancouver, British Columbia (“SRK”), Golder Associates Inc. of Reno, Nevada (“Golder”), Kappes Cassiday and Associates of Reno, Nevada (“Kappes”), Advantage Geoservices of Osoyoos, British Columbia and GL Simmons Consulting LLC of Larkspur, Colorado.

The PEA is preliminary in nature and includes inferred mineral resources that are too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that PEA results will be realized. Mineral resources are not mineral reserves and do not have demonstrated economic viability.

PEA Overview

Goldstrike hosts disseminated gold mineralization similar to deposits on the Carlin Trend, with strong oxidation in most areas.

The PEA envisions recovery of gold and silver from the Goldstrike mineralized material using a run of mine (“ROM”) heap-leach circuit.  The ROM material will be leached with a dilute cyanide solution, and the leached gold will be recovered from solution using a carbon adsorption circuit followed by electrowinning and refining in a furnace to produce doré bars.

Important project metrics are presented in the following tables.

Assumptions
Gold Price $1300/oz
Production Profile
Total Tonnes of Mineralized Material Mined and Processed 59.3 million tonnes
Total Tonnes Waste Mined 70.6 million tonnes
Head Grade 0.48 g/t
Mine Life 7.5 years
Tonnes per Day Mineralized Material Mined 22,500 tonnes per day
Strip Ratio (Waste:Mineralized Material) 1.2:1
Average Gold Recovery 78%
Total Gold Ounces Mined 915,516 oz
Total Gold Ounces Recovered 713,000 oz
Average Annual Gold Production 95,000 oz
Peak Annual Gold Production 117,855 oz
Unit Operating Costs
LOM Average Cash Cost1 $642/oz
LOM Average Adjusted Cash Cost2 $675/oz
LOM Cash Cost plus Sustaining Cost (AISC)3 $793/oz
Project Economics
Royalties (estimate; royalties differ slightly by location and gold price) 2.50%
Pre-tax NPV5%/ After-Tax NPV5% $176.2 million/$129.5 million
Pre-tax IRR/ After-Tax IRR 34.8%/29.4%
Undiscounted Operating Pre-Tax Cash Flow/After-Tax Cash Flow $259.3 million/$195.5 million
After-Tax Payback Period 2.3 years

1Includes mining cost, mine-level G&A, leaching and refining cost
2Includes the above plus royalties
3Includes the above plus sustaining and closure costs

       
Capital Requirements Units Initial LOM
Mining Capital $ million $23.50 $61.30
Total Infrastructure Capital $ million $31.40 $35.10
Total Processing Capital $ million $48.30 $68.40
Closure Costs $ million $0.00 $20.00
Owners Costs $ million $10.00 $10.00
Total Capital Costs $ million $113.20 $194.80

Mining

The PEA Study utilizes open pit mining with mine planning based on economic pit shells generated by mine planning software.  Mine production is planned at 22,500 tonnes per day or 8.2 million tonnes per year of leach feed (mineralized) material.  With an average waste to leach feed material strip ratio of 1.2 to 1, the average mining rate is approximately 50,000 tonnes per day of leach feed and waste material.  The open pit mining at Goldstrike was designed utilizing an owner-operated, conventional mine fleet of front end loaders and trucks.

Parameter Units LOM2 1 2 3 4 5 6 7 8 9
Total Leach Material Mt1 59.3 6.9 8.2 8.2 8.2 8.2 8.2 8.2 3.1 0.0
Gold Grade g/t 0.48 0.60 0.57 0.45 0.43 0.46 0.48 0.44 0.35 0.00
Contained Gold oz 915,516 132,899 151,769 120,079 114,051 120,316 125,926 115,976 34,499 0
Total Waste Mt 70.5 8.0 11.4 11.5 13.0 12.0 11.5 2.5 0.7 0.0
Total Material Moved Mt 129.9 14.9 19.7 19.7 21.2 20.2 19.7 10.7 3.8 0.0
Gold Produced oz 713,004 87,876 117,855 97,463 88,650 92,447 97,234 90,742 36,427 4,309

1million tonnes
2numbers may not add due to rounding

Processing

The PEA Study assumes processing of run-of-mine (without crushing) leach feed material by truck stacking onto a single heap leach pad in nine metre vertical lifts.  Gold and silver will be extracted via conventional heap leaching and will be recovered from the pregnant solution using a carbon adsorption circuit.  The gold and silver will then be stripped from carbon using a desorption process followed by electrowinning to produce a precipitate sludge.  The sludge is then roughly refined on site in a furnace to produce doré bars, which are shipped to a refinery.

Operating Costs

Operating costs are based on the mining and processing scenario outlined above.  Mining costs are relatively well known in the Great Basin, where a large number of similar operations are in existence.

Operating Costs LOM ($million) $/oz $/tonne
Mine Operating Cost1 $272.1 $392.16 $4.59
Leach Operating Costs $117.5 $169.37 $1.98
Water Supply $3.5 $5.01 $0.06
Road and Infrastructure Maintenance $17.0 $24.50 $0.29
Site G&A $35.2 $50.73 $0.59
Total $445.3 $641.77 $7.51

1Includes extraction of both mineralized material and waste rock

PEA Sensitivities

The PEA examines the effect on NPV5% of up to a 40% increase or decrease in capital (Capex) and operating (Opex) expenditures. NPV5% is strongly influenced by the price of gold. 

The following tables show the change in NPV5% over a range of Opex, Capex and gold prices. The base case is shaded grey.

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NPV5% in $M Operating Cost
  -40.0 %   -20.0 %   0.0 %   20.0 %   40.0 %
Capital Cost -40.0 % $ 288.2   $ 236.0   $ 183.7   $ 131.4   $ 79.1  
-20.0 % $ 261.3   $ 209.0   $ 156.6   $ 104.3   $ 51.9  
0.0 % $ 234.2   $ 181.9   $ 129.5   $ 77.1   $ 24.5  
20.0 % $ 207.1   $ 154.7   $ 102.3   $ 49.6   ($ 3.5 )
40.0 % $ 180.0   $ 127.4   $ 74.8   $ 21.9   ($ 32.0 )
NPV5% in $M Gold Price/oz
$ 900   $ 1,100   $ 1,300 $ 1,500 $ 1,700  
Capital Cost -40.0 % $ 21.4   $ 102.6   $ 183.7 $ 264.7 $ 344.8  
-20.0 % ($ 6.5 ) $ 75.5   $ 156.6 $ 237.7 $ 318.7  
0.0 % ($ 35.2 ) $ 48.1   $ 129.5 $ 210.6 $ 291.7  
20.0 % ($ 67.7 ) $ 20.4   $ 102.3 $ 183.5 $ 264.6  
40.0 % ($ 101.4 ) ($ 7.8 ) $ 74.8 $ 156.4 $ 237.5  
NPV5% in $M Gold Price/oz
$ 900   $ 1,100   $ 1,300 $ 1,500 $ 1,700  
Operating Cost -40.0 % $ 71.7   $ 153.1   $ 234.2 $ 315.3 $ 396.3  
-20.0 % $ 18.9   $ 100.7   $ 181.9 $
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