LUNA GOLD CORPORATION ANNOUNCES POSITIVE PRE-FEASIBILITY STUDY RESULTS ON AURIZONA GOLD PROJECT AND PROPOSED SHARE CONSOLIDATION
HIGHLIGHTS INCLUDE:
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AFTER-TAX NPV5% OF $201 MILLION AND IRR OF 34% AT$1,250/OZ
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AFTER-TAX NPV5% OF $256 MILLION AND IRR OF 41% AT$1,350/OZ
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LOW INITIAL CAPITAL OF $146 MILLION INCLUDING NEW MINE FLEET
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AVERAGE PRODUCTION OF APPROXIMATELY 150,000 OUNCES PER ANNUM IN YEARS 1 TO 5
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LOW AISC OF $708/OZ, CASH COSTS OF $606/OZ
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PROVEN AND PROBABLE MINERAL RESERVES OF 969,000 OUNCES OF GOLD CONTAINED IN
18.6 MILLION TONNES AT 1.62 G/T GOLD
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STUDY CONFIRMS THE VIABILITY OF A MINE RESTART PLAN WITH AN UPGRADED 8,000 TONNES PER DAY CRUSHING AND GRINDING CIRCUIT TO TREAT ALL ORE TYPES
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FEASIBILITY STUDY UNDERWAY WITH COMPLETION TARGETED FOR Q1 2017
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FIRST GOLD POUR TARGETED FOR THE SECOND HALF OF 2018
(All amounts in US dollars, unless otherwise indicated)
September 12, 2016
Vancouver, British Columbia - Luna Gold Corp. (TSX-LGC), ("Luna" or the "Company"), is pleased to announce the results of its pre-feasibility study (PFS) prepared in accordance with National Instrument 43-101 (NI-43-101) on its 100% owned Aurizona gold mine (Project) located in northeastern Brazil. The PFS indicates that the Project represents a robust, rapid pay-back, high margin, simple open pit mining project that demonstrates strong returns in the current gold price environment. The financial results of the study yielded an after-tax internal rate of return (IRR) of 34% and a net present value (NPV) of $201 million based on a base case gold price of $1,250 per ounce and a discount rate of 5% (at $1,350 per ouncegold price the IRR is 41% and the NPV5% is$256 million).
With the completion of the PFS, Luna has restated its Proven and Probable Mineral Reserves for the mine at 969,000 ounces of gold contained in 18.6 million tonnes of ore at a diluted grade of 1.62 grams per tonne (g/t) of gold. This has been underpinned by the re-evaluation of the Mineral Resources at Aurizona following the comprehensive 2015 drilling program, which included 15,000 metres of oriented core drilling, 3,000 metres of RC drilling and re-logging of historic core. The extensive technical work provides a strong basis for the new project and processing flow sheet to treat all ore types. As a result, the combined Measured and Indicated Mineral Resources are now at 1.6 million ounces of gold (inclusive of reserves) contained in 29.9 million tonnes at a grade of 1.67 g/t gold.
Initial capital expenditure to fund construction and commissioning is estimated at a modest $146 million due to Aurizona's ability to leverage significant existing infrastructure in place at the brownfields mine site. Life of mine (LOM) sustaining capital is estimated to be $47 million. The all-in sustaining cost (AISC) is projected to be an attractive $708 per ounce over the life of the project and the current Mineral Reserves support a 6.5 year mine life with excellent potential to increase the Mineral Reserves and Resources and extend the mine life. Procurement and construction of the new components and equipment for the restart of the mine are expected to take 18 months.
Christian Milau, CEO, stated, "We are very pleased with the results of this pre-feasibility which provides a solid basis for continuing with the development and implementation of the Aurizona Mine restart plan. With so much of the necessary infrastructure already in place, Aurizona compares favourably to its peers given the initial capital is significantly less than many similar size projects. Further, exploration to date has outlined numerous high-priority, near-mine exploration targets that highlight the potential to significantly extend the mine life."
David Laing, COO, added, "This pre-feasibility study is a culmination of the extensive work done thus far to get the Aurizona Mine back into production in the second half of 2018. The 2015 drilling and metallurgical testwork programs have been instrumental in developing a strong technical foundation and have tremendously advanced our understanding of the geology, alteration, weathering, structure and, metallurgy, and their controls on gold mineralization, processing and recoveries."
The Aurizona Mine comprises a brownfield open pit mine, gold processing plant and property containing the Piaba and Boa Esperança gold deposits and numerous exploration targets located in Maranhão State in northeastern Brazil. This PFS provides the compilation of the engineering and geological studies that incorporated the results from the extensive drilling program conducted in 2015.
Pre-Feasibility Study Highlights:
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1.60 M ounces of gold (Measured and Indicated Mineral Resources) contained in 29.9 M tonnes at an average diluted grade of 1.67 g/t of gold.
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969,000 ounces of gold (Proven and Probable Mineral Reserves) contained in 18.6 M tonnes with an average diluted grade of 1.62 g/t gold
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Metallurgical recovery of 91%
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Process plant capacity of 8,000 tonnes per day
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Average production of approximately 150,000 ounces of gold per annum for years 1 to 5
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Overall strip ratio of 6.2:1 (tonnes, waste:ore)
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New crushing circuit comprising an apron feeder, primary jaw crusher and related material handling equipment
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New grinding circuit comprising an 8.5 m diameter SAG mill, a 5.5 m diameter ball mill and pebble crusher
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Conventional gravity concentration with an intensive leach reactor and a leach/carbon in pulp (CIP) cyanidation process in plant for the gravity tailings
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Improved gold recovery system through the addition of three leach tanks
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Improvement to the carbon desorption and recovery circuits through
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Pressurized elution vessel
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Completing and commissioning the carbon regeneration kiln
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Improving the electrical and instrumentation systems
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Raises to the tailings dam
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Modest initial capital of $146 million including new mine fleet
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Sustaining capital of $47 million
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Operating costs of $2.05 per tonne mined, $11.00 per tonne processed and G&A (including selling costs) of $3.50 per tonne processed
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Cash operating costs of $606 per ounce
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Low AISC of $708 per ounce PFS Economic Assumptions
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Gold price of $1,250 per ounce was used for the base case
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Brazilian Real to US dollar exchange rate of 3.5:1 PFS Project Economics
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After tax NPV5% of $201 million and pre-tax NPV5% of $220 million at $1,250 per ounce gold price (at $1,350 per ounce gold price the NPV's are $256 million and $286 million, respectively)
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IRR of 34% on an after-tax basis and 35% on a pre-tax basis at $1,250 per ounce gold price (at
$1,350 per ounce gold price the IRR's are 41% and 43%, respectively)
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$347 million in after-tax cash flow during the first five years of production
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Total project cash flow of $296 million (NPV at 0% discount rate), including construction capex
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EBITDA of $558 million for the life of mine
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Payback of 2.6 years
The following table illustrates the sensitivity of the Project to fluctuations in the gold price and foreign exchange.
Aurizona Mine Sensitivity to Gold Price
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Gold Price (US$/oz)
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$1,000
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$1,150
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$1,250
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$1,350
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$1,500
|
|
After tax NPV (5%)
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$58 M
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$145 M
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$201 M
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$256 M
|
$341 M
|
|
After tax IRR
|
14%
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26%
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34%
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41%
|
51%
|
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Payback period (years)
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4.5
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3.0
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2.6
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2.3
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1.7
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Aurizona Mine Sensitivity to Brazilian Real:US Dollar Exchange Rate
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Foreign exchange (BRL/US$)
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3.0:1
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3.25:1
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3.5:1
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3.75:1
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4.0:1
|
|
After tax NPV (5%)
|
$140 M
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$173 M
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$201 M
|
$225 M
|
$246 M
|
|
After tax IRR
|
23 %
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29 %
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34%
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38 %
|
43 %
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The following tables detail the capital and operating costs.
Aurizona Mine Capital Cost Estimate (Including duties and taxes)
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Initial Capital
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Sustaining Capital
|
|
Comminution Circuit
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$41 M
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TSF Raises
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$14 M
|
|
Plant Upgrade Repairs, Reagents and Services
|
$24 M
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Mining
|
$25 M
|
|
EPCM Costs
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$7 M
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Owner's Costs
|
$5 M
|
|
Mining Costs
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$41 M
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Closure Costs
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$3 M
|
|
Tailings Dam Costs
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$3 M
|
|
Owners Costs
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$17 M
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Brazil Care and Maintenance Costs
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$13 M
|
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Total Initial Capital
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$146 M
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Total Sustaining Capital
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$47 M
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Aurizona Mine Operating Cost Estimate
(Including non-recoverable taxes and excluding recoverable taxes)
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Onsite Operating Costs
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Cost Per Ounce
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Cost Per Tonne Processed
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Cost Per Tonne Mined
|
|
Mining
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$301
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$14.3
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$2.05
|
|
Processing
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$232
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$11.0
|
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G&A (including selling costs)
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$72
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$3.5
|
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Total
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$606
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$28.8
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