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Golden Summit

Golden Summit Project 2016
 

The Golden Summit Property is located a 30 minute drive from the city of Fairbanks, the second largest city in Alaska (population of the greater Fairbanks area is approximately 100,000). Fairbanks serves as a major population and supply center for the interior region of Alaska

Early History

Freegold acquired an interest in Golden Summit in mid-1991 and conducted exploration including geologic mapping, soil sampling, trenching, rock sampling, geophysical surveys, core, reverse circulation, and rotary air blast drilling on the project. Drilling completed by Freegold on the Project between 1991 and 2009 totaled 26,902 metres of core and reverse circulation in 214 holes and 26,640 metres of rotary air blast drilling in 2,028 holes before a comprehensive property compilation was completed in 2010. This compilation identified the potential to delineate a resource in the Dolphin area. A ground-based geophysical survey on the Dolphin area was also undertaken which indicated that the alteration in the Dolphin Area is well defined by a low resistivity feature. This resistivity survey in conjunction with soil geochemistry provided the guidance for resource definition and expansion in the Dolphin area. In 2011 exploration focused on resource definition commenced.


Access to Golden Summit

Timeline of Resource Delineation At Golden Summit

  • 2011

    • 1st NI 43-101 compliant Mineral Resource was calculated using previous drilling completed in the Dolphin area (77 drill holes 11,802m) Using a 0.3 g/t cut-off grade, Indicated mineral resources totalling 7,790,000 tonnes grading 0.695 g/t (174,000 ounces) and Inferred mineral resources totaling 27,010,000 tonnes grading 0.606 g/t (526,000 ounces) were estimated.
    • 29 holes (6,329.5 meters) in the Dolphin area and 18 holes (3,509.9 metres) in the Cleary Hill area were drilled.
    • Updated NI 43-101 is released in December using a 0.3 g/t cut-off resulted in an increase in the Indicated mineral resource category to 17,270,000 tonnes at 0.62 g/t (341,000 contained ounces) and 64,440,000 tonnes at 0.55 g/t (1,135,000 contained ounces) in the Inferred mineral resource category.
  • 2012

    • A further 55 holes were drilled (16,602.6 meters).
    • October 2012, an updated NI 43-101 resource expanded the Dolphin Resource to encompass the eastern portion of the Cleary Hill area. Using a 0.3 g/t cut-off the indicated mineral resource category increased to 73,580,000 tonnes at 0.67 g/t (1,683,000 contained ounces) and the inferred mineral resource category to 223,300,000 tonnes at 0.62 g/t (4,437,000 contained ounces).
  • 2013

    • An additional thirteen holes (5,138 meters) were drilled and an updated NI 43-101 compliant gold resource was calculated for the Dolphin/Cleary area based on the ten holes completed during the winter drill program, of which eight were incorporated into the Resource. Using a 0.3 g/t cut-off this resulted in an increase in the Indicated mineral resource category to 79,800,000 tonnes at 0.66 g/t (1,576,000 contained ounces) and 248,060,000 tonnes at 0.61 g/t (4,841,000 contained ounces) in the Inferred mineral resource category. The additional three holes were drilled after the updated resource was completed, and as such, were not included in the mineral resource
  • 2016

    • As part of the preliminary economic assessment ("PEA") a conceptual open pit, based on $1300 Au, was produced by Tetra Tech. As a result only blocks falling within this pit were reported as a mineral resource using a 0.3 g/t cut-off.

 

Golden Summit Mineral Resource
(US $1300 - Pit Constrained)
Grade (g/t) Au Tonnage Contained Ounces
Current Indicated Mineral Resource 0.69 61,460,000 1,363,000
Current Inferred Mineral Resource 0.69 71,500,000 1,584,000

 


Winter Drilling at Golden Summit

Geological Setting

There are three main rock units found throughout the property in particular, Fairbanks Schist, Chatanika Terrane, and intrusive rocks. Both the Fairbanks Schist and Chatanika Terrane have been subjected to one or more periods of regional metamorphism. The intrusive bodies are post-metamorphism. Chatanika Terrane rocks lie structurally above the Fairbanks Schist and north of the Chatanika Thrust fault and comprise the northernmost portion of the property. Intrusive rocks are relatively minor on the Property, and are primarily represented by the Dolphin stock, although small granitic dikes are known in several locations. The Dolphin stock is located on the ridge between Bedrock and Willow Creek. Initial diamond core logging identified five intrusive phases within the Dolphin stock, including: 1) fine- to medium-grained, equigranular to weakly porphyritic biotite granodiorite; 2) fine- to medium-grained, equigranular to weakly porphyritic hornblende-biotite tonalite; 3) fine-grained biotite granite porphyry; 4) fine-grained biotite rhyolite to rhyodacite porphyry; and 5) rare fine-grained, chlorite-altered mafic dike.

Small dikes of granodiorite cutting tonalite have been observed in core, and altered granitic dikes cut both altered and unaltered granodiorite and tonalite. This suggests multiple phases of intrusion and hydrothermal alteration. Two radiometric age dates, including two sericite Ar40/Ar39 plateau age dates (McCoy, 1996), place some constraints on the timing of crystallization and mineralization. The sericite ages were obtained from two different samples representing two distinctly different styles of gold mineralization. One sample, from stockwork style mineralization, was 90.1 Ma. Another sample, from a sericite shear-zone, was 88.3 Ma. These ages are quite similar to ages from Fort Knox (86.3-88.2 Ma). Due to age and chemical similarities, most associate the Dolphin and Fort Knox intrusive rocks with widespread intrusive-related gold deposits in the Tintina Gold Belt.

There are three styles of gold occurrences that have identified on the Property, including: 1) intrusive-hosted sulfide disseminations and sulfide-quartz stockwork veinlets (such as the Dolphin gold deposit); 2) auriferous sulfide-quartz veins; and 3) shear-hosted gold-bearing veinlets. All three types are considered to be part of a large-scale intrusive-related gold system on the Property.
 

 

Metallurgical Test Work

Metallurgical testing for the Project was initiated in 2012 with bottle roll tests being performed on 10 different drill samples with a primary objective of obtaining a preliminary indication of the cyanide leaching characteristics of the oxide mineralogy within the deposit.This testwork was performed by Kappes, Cassiday & Associates (KCA). A second set of process testwork started in 2013 and continued into 2014 on five different mineralogical composites. These tests were performed by SGS Canada Inc. (SGS). As part of this testwork SGS received 279 drill core samples that were composited into five different rock types: oxide, transition, hornfels sulfide, intrusive sulfide, and schist sulfide. This testwork primarily focused on investigation of various processing methods for the recovery of gold from sulfide materials. Additional bottle roll and column leach testwork was performed later in 2014 to investigate grind sensitivities on four drill core composites of different mineralogy and to examine heap leach behavior in the oxide material. The different composites were designated as oxide, transition, intrusive sulfide, and hornfels sulfide. These composites were initially subjected to coarse bottle roll tests conducted at five different feed sizes.

Overall gold recoveries from standard 48 hour bottle roll tests and 120 hour bottle roll tests were as follows: Oxide material averaged 88%, transition material averaged 57%, intrusive material averaged 56%, and hornfels-sulphide material averaged 45% . Standard bottle roll testwork was carried out on a variety of grind sizes however recoveries did not increase substantially with finer grinds, with the exception of the transition material which showed recoveries of greater than 70% are achievable at a 75 micron grind size.

One column leach test was performed on the crushed oxide composite to determine heap leaching characteristics of the material. These tests were performed by McClelland Laboratories, Inc with results received in January 2015. Gold extractions over 80% were achieved within 14 days on coarse crushed material (80% -25 mm). The column test was permitted to run for 65 days and final extractions were 85% for gold.

Future Exploration

The PEA completed by Tetra Tech provided additional guidance with regard to the future development of the Golden Summit Project. The PEA contemplates a development scenario with a stand-alone valley heap leach operation focused on the existing oxide portion of the resource, taking into account the potential for oxide mineral resource growth, with a staged approach to a larger milling scenario to treat the sulphide material. Using a $1,300 gold price the PEA evaluates a two-phase, 24-year open pit mine generating two gold streams, each operating at 10,000 tonnes per day (tpd) for 2,358,000 ounces of doré produced over life of mine; Processing operations for the oxide and sulphide mineralized materials are heap leach and bio-oxidation respectively.

Key Project Enhancements

  • Additional metallurgical work aimed at decreasing the costs of the treatment of the sulphide material and further refining recoveries of the sulphide material to optimize overall project economics.
  • Expansion of the current oxide portion of the resource through shallow drilling (150 metre hole depths).
  • Significant further drilling in order to upgrade the current inferred mineral resources to the indicated mineral resource category will also need to be undertaken to progress to the pre-feasibility stage.
  • Cultural resource and baseline environmental studies.


 

Exploration Outside the Dolphin Cleary Area

During 2011 and 2012 a total of 12 holes were drilled (4,589 meters) on the Christina prospect. The holes were targeted on a combination of known geological structure and chargeability anomalies outlined by the induced polarization survey. Drilling has indicated a good correlation between chargeability and mineralization. The bulk of the mineralization is associated with quartz veins and quartz stockworks with associated pyrite and arsenopyrite. Host rocks are predominately chloritic schists. Several of the holes intersected broader zones of mineralization that may be indicative of bulk tonnage potential. In addition, ground geophysical and geochemical surveys have been undertaken over much of the project area which have identified several other lower priority areas. Exploration will continue to focus on the Dolphin/Cleary area as it represents the best near term opportunity for future development.

PRELIMINARY ECONOMIC ASSESSMENT HIGHLIGHTS:

The following preliminary economic assessment analysis includes inferred mineral resources, which are considered too speculative geologically to have economic considerations applied to them, and are therefore not categorized as mineral reserves. There is no certainty that the preliminary economic assessment will be realized.

Project cost estimates and economics are prepared on an annual basis. Based upon design criteria presented in the Tetra Tech Report, the level of accuracy of the estimate is considered ±35%.

NI 43-101 Technical Report Golden Summit Project. Preliminary Economic Assessment Fairbanks North Star Borough, Alaska USA, as amended and restated May 11, 2016.

Based on a gold price of US$1,300/oz, highlights of the Golden Summit Project PEA include:

  • A post-tax NPV5% and IRR of $188 million and 19.6% respectively;
  • A mine life of 24 years with peak annual gold production of 158,000 ounces and average annual gold production of 96,000 ounces;
  • 2,358,000 ounces of doré produced over life of mine;
  • Total cash cost estimated at US$842/oz Au (including royalties, refining and transport);
  • Ability to execute Phase 1 with low initial capital; initial and sustaining capital costs, including contingency, estimated at $88 million and $348 million respectively;
  • A payback of 3.3 years post-tax; and
  • Favorable geopolitical climate; completion risk is offset through strong legislative and financial support at state and federal levels.

 

Golden Summit PEA Assumptions and Economic Results and presented in US $:

The following assumptions were used in the PEA evaluation:

Table 1:  Principal Assumptions

Description Parameter Unit
General Assumptions
Pre-Production Period 4 Years
Mine Life 24 Years
Operating Days 365 days/year
Production* 3,650 Ktpy
Market Assumptions
Price    
Gold $1,300 $/oz
Payable Metal    
Gold 2,308 koz
Deductions
Gold Deduction 0.1% $/oz
Transport & Insurance $4.00 $/oz
Refining $3.00 $/oz
Financial Assumptions
Private Royalty 2.0% (average)
Federal Income Tax 35.0%  
State Income Tax 9.4%  
Property Tax 1.3%  
Mining License Tax 7.0%  
Alaska Production Royalty 3.0%  
Technical Assumptions
Diesel $3.00 $/gal
Electric $0.13 $/kwh
Recovery    
Heap Leach 80%  
Bioxidation 90%  
*Applicable to each phase individually (oxide and sulphide).

 

The following operating costs were developed for the Golden Summit Project:

Table 2:  Golden Summit Operating Costs

Description $/t-moved $/t-ore $/oz-gold
Mining $3.04 $10.56 $441.68
Mining Lease - $1.06 $44.53
Crushing Circuit - $0.91 $38.10
Heap Leach (Oxide) - $1.20 $50.18
Process Plant (Sulphide) - $4.44 $185.59
Tailings Storage Facility - $0.12 $4.96
Infrastructure - $0.31 $13.09
Direct Operating Cost - $18.60 $778.13
Property Tax - $0.15 $6.10
Mining License Tax - $0.57 $23.74
Total Operating Cost - $19.31 $807.97

 

The following capital costs were developed for the Golden Summit Project and are presented in US $:

Table 3:  Golden Summit Capital Costs

Description Initial ($000s) Sustaining( $000s) LoM ($000s)
Direct Costs
 10    Mining $39,744 $110,784 $150,528
 20    Crushing & SAG Mill Circuits $3,921 $9,884 $13,805
 30    Heap Leach (Oxide) $11,410 $23,723 $35,133
 40    Process Plant (Sulphide) $0 $27,894 $27,894
 50    Tailings Storage Facility $0 $67,774 $67,774
 60    Infrastructure $10,131 $11,000 $21,131
 70    Construction $12,095 $56,903 $68,998
Direct Costs $77,301 $307,962 $385,263
Indirect Costs
800    Construction Indirects $456 $2,232 $2,688
810    Spares & Inventory $342 $1,674 $2,016
820    First Fills $342 $1,674 $2,016
830    Freight & Logistics $799 $2,789 $3,588
840    Commissioning & Start-Up $342 $1,674 $2,016
850    EPCM $1,369 $4,184 $5,553
860    Vendor & Consulting Assistance $228 $1,116 $1,344
Indirect Costs $3,879 $15,342 $19,221
 90    Owner's Costs $7,240 $24,984 $32,224
Total Capital $88,420 $348,288 $436,708

 

Based on the assumptions and costs above, the following cash flow results are presented:

Table 4:  Economic Results

Description Value Unit
Net Present Value (0%) $533,613 $000s
Net Present Value (5%) $187,742 $000s
IRR 19.6% %
Payback 3.3 Years

 

Sensitivity to Gold Price: Base Case US $1300 Gold
(Blue line represents Gold Price)

Source : NI 43-101 Technical Report Golden Summit Project. Preliminary Economic Assessment Fairbanks North Star Borough, Alaska USA, as amended and restated May 11, 2016