Sandspring Resources Ltd. (TSX VENTURE:SSP) ("Sandspring", or the "Company") is
pleased to announce the completion of a robust and positive pre-feasibility
study ("PFS") and initial mineral reserve estimate for its wholly-owned Toroparu
Gold Project (the "Project") in the Republic of Guyana.
The PFS goes beyond the strong economics outlined in the Updated Preliminary
Economic Assessment completed by the Company in 2012 (the "Updated PEA") to
present a plan that provides several positive changes to the Project,
including(1):
-- Estimated annual production of 246,000 ounces of gold at a mill head
grade of 1.32 g/t produced at a cash cost of $504(2) per payable ounce
of gold on average over the first four years and 228,000 ounces at a
cash cost of $700 per ounce on average over the 16 year life of mine.
-- Proven and Probable mineral reserve of 4.1 million ounces of gold
contained in 127 million tonnes of ore at a grade of 1.00 g/t Au, a 32%
increase in life of mine gold grades.
-- A redesign of the processing flow sheet to produce 78% of gold in dore
on site,
-- After-tax NPV of US$691 million and IRR of 23.1% with an attractive
payback period of 2.6 years at a long-term gold price of $1400/ounce.(3)
"We are pleased to announce completion of the PFS for Toroparu, and are
encouraged that pre-feasibility engineering confirms the robust economics of the
Project," stated Yani Roditis, Sandspring's President and Chief Operating
Officer. "Net of pre-production revenue, the estimated development capital
expenditures total US$464 million, a reduction from the Updated PEA initial
capital estimate, which we view as highly positive in the current inflationary
cost environment for mining projects. Furthermore, mine plan optimization and
design improvements during the PFS resulted in a life of mine capital reduction
of $129 million. The PFS increases our confidence and belief that Toroparu is a
project that should be built and therefore Sandspring will continue to move
forward with final permitting and development of the Project."
Rich Munson, Chief Executive Officer stated, "We are delighted that the results
of the PFS conducted by Yani and his team have confirmed the robust nature of
the Project. We are encouraged by recent approaches from third parties
expressing interest in developing Toroparu jointly with Sandspring. Despite the
expressions of interest, we recognize that funding a project of this scale is
challenging in the current environment. We have therefore engaged Cutfield
Freeman & Co, a leading independent advisory firm in the mining sector, to
conduct a process to determine the options available for financing the
development of Toroparu and enhancing the value for our shareholders." Rich went
on to say, "We have been in Guyana for nearly fifteen years and we have built
strong relationships with Government and local stakeholders. Guyana is one of
the few jurisdictions in the world welcoming responsible mining investment. The
Government of Guyana has agreed to grant the Project a large-scale mining
license authorizing Sandspring to commence production once economic feasibility
of the project has been demonstrated. We are confident that the mine development
plan outlined in this PFS is just the starting point for Sandspring not only
because of the five million ounces of resource that lie just outside our current
reserve pit shell and the ten promising gold anomalies within the recently
identified 20 km alteration footprint around Toroparu, but also because of the
pre-eminent geological team who continue to build an unequalled understanding of
the potential of our extensive land position, as well as the regional potential
of the large unexplored areas of northwestern Guyana and prolific western Guiana
Shield greenstone belts."
Project Economics
Project economic results from the PFS Base, Downside and Upside Sensitivity
Cases indicate that the Project generates a 16.1% after tax rate of return at a
$1200/ounce gold prices, 23.1% at $1400/ounce, and 33.8% at $1750/ounce of gold
indicating that project returns are both robust at historic gold prices and
positively leveraged to higher gold prices. Project economics are detailed in
Table 1:
Table 1: Project Economics
----------------------------------------------------------------------------
Project Economics Unit Downside Model Upside
$M = $US Million Sensitivity Base Sensitivity
Case Case(4) Case
Gold Price $/oz. $1,200 $1,400 $1,750
Copper Price $/lb. $3.25 $3.25 $3.50
----------------------------------------------------------------------------
Pre-Tax 0% NPV $ M $ 1,093 $ 1,775 $ 3,013
Pre-Tax 5% NPV $ M $ 557 $ 992 $ 1,782
Pre-Tax 8% NPV $ M $ 360 $ 702 $ 1,325
Pre-Tax IRR % 18.9% 27.2% 40.1%
Payback Period Years 3.58 2.42 1.37
----------------------------------------------------------------------------
After-Tax 0% NPV $ M $ 791 $ 1,268 $ 2,135
After-Tax 5% NPV $ M $ 384 $ 691 $ 1,246
After-Tax 8% NPV $ M $ 233 $ 476 $ 914
After-Tax IRR % 16.1% 23.1% 33.8%
Payback Period Years 3.66 2.63 1.57
----------------------------------------------------------------------------
EBTIDA 2017 $ M $ 235 $ 285 $ 379
Maximum Yearly EBTIDA $ M $ 235 $ 285 $ 385
----------------------------------------------------------------------------
Total Initial Capital $ M $ 501
Total Initial Capital (Net
of Pre-Prod Margin) $ M $ 464
Process Capacity Expansion
(Year 4) $ M $ 50
Remaining Sustaining Capital
(incl Closure) $ M $ 270
----------------------------------------------------------------------------
Total Capital $ M $ 821
Mine Life Years 16
----------------------------------------------------------------------------
Production Schedule
More accurate resource and geologic models produced over the course of 2011/2012
during the pre-feasibility definition drilling campaigns identified two
geographically distinct populations of gold bearing saprolite and fresh rock
ores, distinguishable by their copper sulphide contents, ore with recoverable
copper being defined as "Au/Cu Ore" and without recoverable copper content as
"Au Ore". The mine plan and production schedule defined in the PFS were
optimized for higher metallurgical recovery by processing these ores separately
in different circuits as they are mined from the Toroparu and SE pits.
The PFS is based on mining 127 million tonnes of saprolite and fresh rock ores
containing 4.107 million ounces of gold at an average grade of 1.00 g/t Au over
a two year pre-production period and 16 year mine life (Table 2). The mine plan
includes:
-- 5 million tonnes of saprolite Au Ore containing 148,000 ounces of gold
at an average grade of 0.91 g/t Au that will be processed via
conventional cyanide leach;
-- 52 million tonnes of fresh rock Au/Cu Ore containing 1,953,000 ounces of
gold with an average grade of 1.17g/t Au and 0.18% Cu that will be
processed via flotation concentration; and
-- 70 million tonnes of fresh rock Au Ore containing 2,006,000 ounces of
gold with an average grade of 0.89 g/t Au and 0.05% Cu that will also be
processed via cyanide leach.
Processing facilities will be developed in three phases (Table 2):
-- Phase 1 is designed to process 1.18 million tonnes per annum (Mtpa), or
3,250 tonnes per day (tpd) of saprolite Au Ore during the pre-production
period
-- Phase 2 is designed to process 5.475 Mtpa (15,000 tpd) of fresh rock
Au/Cu Ore via flotation concentration, and a combination of 1,500 tpd of
saprolite Au Ore and fresh rock Au/Cu Ore flotation tailings over the
first 3 years of production.
-- Phase 3 is designed to treat 5.745 Mtpa (15,000 tpd) of fresh rock Au
Ore, saprolite Au Ore and flotation tailings via cyanide leach and 2.738
Mtpa (7,500 tpd) of Au/Cu Ore via flotation concentrate starting in the
4th year of production and continuing for the balance of the mine life.
Table 2: Production Schedule(5)
----------------------------------------------------------------------
Saprolite Au Ore Fresh Au/Cu Ore
--------------------------------------------------------
Dev Years Ore Mill Au Gold Ore Mill Au Gold
Phase Processed Grade Contained Processed Grade Contained
(ktpy) (g/t) (kozpy) (ktpy) (g/t) (kozpy)
----------------------------------------------------------------------
1 PY-2 1,186 1.25 48 0 0.00 0
PY-1 1,186 0.95 36 0 0.00 0
----------------------------------------------------------------------
2 Year 1 548 0.74 13 5,475 1.74 306
Year 2 548 0.61 11 5,475 1.34 236
Year 3 517 0.65 11 5,475 1.24 218
----------------------------------------------------------------------
3 Year 4 64 1.89 4 2,738 0.98 87
Year 5 64 1.54 3 2,738 1.63 143
Year 6 64 1.85 4 2,738 1.01 89
Year 7 64 0.92 2 2,738 1.63 143
Year 8 64 1.48 3 2,738 1.73 153
Year 9 64 0.76 2 2,738 0.80 70
Year 10 64 0.77 2 2,738 1.03 91
Year 11 64 0.80 2 2,738 1.32 116
Year 12 64 0.76 2 2,738 0.51 45
Year 13 64 0.48 1 2,738 0.98 86
Year 14 64 0.48 1 2,738 0.99 87
Year 15 64 0.48 1 2,738 0.49 43
Year 16 271 0.48 4 2,505 0.49 40
----------------------------------------------------------------------
Totals 5,022 0.91 148 51,780 1.17 1,953
----------------------------------------------------------------------
Table 2: Production Schedule(5)
----------------------------------------------------------------------------
Fresh Au Ore All Ore Types
--------------------------------------------------------------
Dev Years Ore Mill Gold Ore Mill Gold Gold
Phase Processed Au Contained Processed Au Contained Produced
(ktpy) Grade (kozpy) (ktpy) Grade (kozpy) (kozpy)
(g/t) (g/t)
----------------------------------------------------------------------------
1 PY-2 0 0.00 0 1,186 1.25 48 47
PY-1 0 0.00 0 1,186 0.95 36 36
----------------------------------------------------------------------------
2 Year 1 0 0.00 0 6,023 1.65 319 275
Year 2 0 0.00 0 6,023 1.27 246 212
Year 3 0 0.00 0 5,992 1.19 228 197
----------------------------------------------------------------------------
3 Year 4 5,475 1.32 232 8,276 1.21 322 300
Year 5 5,475 0.78 138 8,276 1.07 285 258
Year 6 5,475 0.77 135 8,276 0.86 228 209
Year 7 5,475 0.77 136 8,276 1.06 281 255
Year 8 5,475 1.31 231 8,276 1.45 387 354
Year 9 5,475 0.71 125 8,276 0.74 197 181
Year 10 5,475 1.13 199 8,276 1.10 292 270
Year 11 5,475 1.39 244 8,276 1.36 362 335
Year 12 5,475 0.78 137 8,276 0.69 184 171
Year 13 5,475 0.66 115 8,276 0.76 203 185
Year 14 5,475 0.89 157 8,276 0.92 245 226
Year 15 5,475 0.48 85 8,276 0.49 129 119
Year 16 4,609 0.48 71 7,385 0.49 115 106
----------------------------------------------------------------------------
Totals 70,309 0.89 2,006 127,111 1.00 4,107 3,735
----------------------------------------------------------------------------
Total gold recovered from the redesigned flowsheet includes 2.914 million ounces
of gold in dore bars and 820 thousand ounces in concentrate for a total of 3.735
million recovered ounces. Average annual gold production is 228,000 ounces over
the 16 year mine life. Peak production is 354,000 ounces in the 8th year of
production.
By-product copper will be produced at an average rate of 25.7 million pounds per
year at a grade of 0.23% Cu over the first three years of production (in Phase
2). This copper will be contained in 55,000 metric tonnes of copper concentrates
per year on average over this period. The concentrates will be shipped to an
offshore smelter for refining. PFS metallurgical test work resulted in copper
concentrates produced from lock-cycle tests with indicative grades of 21%
copper, 62 g/t gold, and 180 g/t silver(6). Annual by-product copper production
is 8.8 million pounds per year during Phase 3, resulting in a life of mine
average of 12.0 million pounds per year.
Development Schedule & Capital Costs
The PFS stages the construction of the process facility over a three-year period
from anticipated commencement in 2014, subject to financing (Table 3). The first
year of construction incorporates the Phase 1 3,250 tpd cyanide leach plant to
recover gold from saprolite Au Ore. Construction of the Phase 2 flotation
concentrator continues over the next two years of construction to bring the
overall process design capacity to 16,500 tpd and the commencement of full scale
commercial production. In the 4th year, the process is expanded to accept a
throughput of 22,500 tpd of ore, with 15,000 tpd dedicated to processing Au Ore
and 7,500 tpd for processing Au/Cu Ore (Phase 3).
To view Table 3, the Development Schedule, please visit the following link:
http://media3.marketwire.com/docs/SSP49tab3.png.
The capital requirement to build Phase 1 of the Project is estimated to be $152
million. The saprolite Au Ore processing operation is expected to provide a
$37.0 million operating margin during the pre-production period which can be
used to offset Phase 2 capital costs. The capital required to build Phase 2 is
an additional $312 million (net of the contribution from saprolite Au Ore
operating margin). The Phase 3 22,500 tpd expansion is scheduled for
construction in year 3 of production at an estimated cost of $50 million. It is
anticipated that the operating cash flow will be sufficient to finance the cost
of expansion, along with the remaining sustaining capital costs, which are
estimated at $17 million per year on average for a total of $270 million over
the 16 year mine life. Table 4 summarizes the capital expenditure estimates
before and after commencement of production.
Table 4: Capital Cost Estimates(7)
----------------------------------------------------------------------------
PFS Capital Cost Estimates Total Initial Expansion LOM
(million USD) Capital and CapEx
(Pre-Prod) Sustaining
CapEx
----------------------------------------------------------------------------
Fresh Rock Pre-Stripping $ 24 $ 24
Mining Equipment $ 71 $ 168 $ 239
Milling Circuit $ 75 $ 75
Leaching Circuit $ 36 $ 36
Flotation Circuit $ 24 $ 24
Process Plant Infrastructure $ 6 $ 6
Plant Expansion $ 50 $ 50
Tailings Storage Facility $ 16 $ 63 $ 79
On-Site Infrastructure $ 11 $ 11 $ 22
Power Generation $ 27 $ 27
Water Management $ 9 $ 9
Camp and Ancillary Buildings $ 25 $ 25
Port and Logistics $ 9 $ 9
Access Road Upgrades $ 33 $ 33
Construction Indirects (incl. EPCM) $ 79 $ 79
Owner's Costs (Incl. Closure) $ 20 $ 15 $ 35
----------------------------------------------------------------------------
Sub-Total Project Capital Costs $ 464 $ 307 $ 771
Contingencies $ 37 $ 13 $ 50
Total Capital Requirement $ 501 $ 320 $ 821
Contribution from Saprolite Au Ore
Margin -$37 -$37
----------------------------------------------------------------------------
Total Project Costs w/ Contingencies $ 464 $ 320 $ 784
----------------------------------------------------------------------------
The contingency cost in the PFS is based on the total direct and/or indirect
costs and are included to account for unanticipated costs within the scope of
the estimate. The contingency percentage allowances vary and are individually
assessed based on the accuracy of the quantity measurement, type and scope of
work, and price information for the capital cost estimate.
The PFS estimate is based on the cost of new equipment supported by budget
quotes from vendors which do not reflect discounts for negotiated prices, bulk
purchasing, or used equipment purchases where appropriate, any of which could
lead to reductions in actual capital costs relative to the prices used in the
capital estimate.
Mining
The PFS mine plan provides for the excavation of 127.1 million tonnes of ore and
468.9 million tonnes of waste for a combined total of 596.0 million tonnes of
material at a life of mine stripping ratio of 3.69:1. Mining will be conducted
with conventional open pit mining techniques over a 16 year mine life in two
pits, the Toroparu Pit which will be mined in 13 phases, and the nearby
South-East Pit (1.2 km to southeast of Toroparu), which will be mined in four
phases.
Mining operations are planned to commence during the second year of construction
of the Project in the center of the Toroparu pit, with mining of saprolite Au
Ore to support pre-production of gold in saprolite Au Ore processing. The
following year mining will be expanded to include mining and stockpiling of
fresh rock ore to support the start-up of fresh rock Au/Cu Ore processing in the
first year of production. Total mining during the 2 pre-production years is
estimated at 15.2 million tonnes at a stripping ratio of 1.05:1. From this
point, the mine plan calls for 14 years of mining out of a total 16 year
production life. The first five years of mining will continue in the center of
the Toroparu Pit at a rate of 40 million tonnes per year, utilizing small scale
mining equipment fleet based on 50 tonne capacity haul trucks at a stripping
ratio of 3.29:1. Mined fresh rock Au/Cu Ore will be processed in the concentrate
circuit and fresh rock Au Ore will be stockpiled for later feed into the
expanded cyanide leach circuit beginning in year 4 (Phase 3). Ore loading
operations will be accomplished with a fleet of hydraulic excavators (to enhance
ore selectivity) and shovels, with operational flexibility provided by a wheel
loader.
In the 6th year of the mine plan the annual mining rate is expected to be ramped
up to an average of 50 million tonnes and the main truck fleet will be switched
over to 133 tonne capacity haul trucks to support the expanded processing
capacity. In year 13, the annual mining rate will reduce to 21 million tonnes.
In year 14, open pit operations will be completed for the mineral reserves
defined in the PFS mine plan. The processing plant will continue operating for
another two years processing from low grade ore stockpiles.
Processing
Comprehensive metallurgical programs were conducted at Inspectorate Exploration
& Mining Services Ltd. of Richmond, British Columbia in 2012 on saprolite Au
Ore; and at SGS Canada Inc. of Lakefield, Ontario in 2012 that tested recovery
and reagent consumptions separately for the two fresh rock ore types identified
as Au/Cu Ore and Au Ore. The results prompted a redesign of the PEA processing
circuit to enable the separate treatment of both fresh rock ore types.
Saprolite Au Ore, part of the Au Ore type, consists of 80-85% fines (less than
75 micron) and therefore only 15-20% coarser fraction will require grinding. All
saprolite Au Ore will be ground in a small ball mill and then treated in a
cyanide leach circuit. Recovered gold will be further refined into gold dore on
site. All fresh rock ore will be processed through crushing and grinding to a
P80 150 micron (100 Mesh) with gravity concentration included. All fresh rock Au
Ore will be treated in a cyanide leach circuit. Cyanide leach tailings will be
subjected to cyanide detoxification using Air/SO2 technology to reduce cyanide
concentrations to Guyana and World Bank environmental standards. Fresh Au/Cu Ore
will be sent to a rougher flotation circuit for copper and gold recovery.
Tailings from the rougher float circuit will be discharged, and the rougher
concentrate will be reground to P80 38 microns and processed through a cleaner
circuit to produce a final concentrate that is shipped to an offshore smelter.
First cleaner-scavenger flotation tailings will be further processed in the
cyanide leach process. Cu/Au Ore concentrate analyses have been discussed with
and preliminarily accepted by European and Asian based smelters.
Redesign of the processing facilities to treat ore types separately has improved
overall recovery of metals and significantly increased the amount of gold
produced on-site in dore bars. Metal Recoveries are illustrated in Table 5.
Table 5: Metal Recoveries
----------------------------------------------------------------------------
All Phases
Phase 1 Phase 2 Phase 3 Life of
Metal Recoveries Pre-Prod Prod Exp. Prod Mine
----------------------------------------------------------------------------
Saprolite Au Ore Leach (Dore)
Gold Recovery 98% 98% 88% 96%
Fresh Au/Cu Ore (Concentrate +
Dore)
Gold Recovery 85% 85% 85%
Copper Recovery 91% 91% 91%
Fresh Au Ore Cyanide Leach
(Dore)
Gold Recovery 96% 96%
Dore vs. Concentrate Production
Gold in Dore 100% 53% 83% 78%
Gold in Concentrate 47% 17% 22%
Concentrate
Annual Concentrate Production 55k dmt 19k dmt 26k dmt
Copper Grade 21% 21% 21%
Gold Grade 60 g/t 63 g/t 62 g/t
----------------------------------------------------------------------------
Operating Costs
Operating costs summarized in Table 6 are derived from first principles and
vendor quotations for consumable items, including fuel and power, without
incorporating potential discounts for bulk purchases or long term contract
rates. Labor rates are calculated from surveys of active contracts between
existing mining operations in Guyana and Guyanese labor organizations.
Table 6: Operating Costs(8)
----------------------------------------------------------------------------
LOM Average
LOM Average LOM Average ($/oz. payable
PFS Cash Cost Estimates(9) ($/t-mined) ($/t-milled) gold)
----------------------------------------------------------------------------
Mining Cost $ 1.9 $ 8.7 $ 298
Processing Cost (10) $ 10.5 $ 360
Site G&A Cost $ 1.4 $ 47
Smelting, Refining, and
Freight Charges $ 1.0 $ 37
Royalties $ 3.5 $ 119
Copper Credit -$4.7 -$160
----------------------------------------------------------------------------
Cash Cost $ 20.4 $ 700
----------------------------------------------------------------------------
Infrastructure
The project design includes all on and off-site infrastructure installations and
upgrades required to support a large mining and processing operation, including:
-- Construction of a new river wharf, dry cargo, fuel storage and
transportation facility/camp (Pine Tree Port Facility) at the Pine Tree
port location;
-- Upgrade of the Itaballi-Puruni-Papishao road;
-- On-site access, service and haulage roads;
-- Surface water management protections via levees, dams, diversion
channels and collection ponds;
-- Intermediate fuel oil (IFO) fueled electric power generation facility;
-- Entry station, operations man-camp, communications facility, potable
water facility, and waste management facility;
-- Mine dry and administration building, fuel depot, ready line, truck
maintenance shop, warehouse facility and laydown area, and explosives
storage facility;
-- Plant administration and control room building, laboratory, light
equipment maintenance and warehousing facility; and
-- Tailings Management Area (TMA) and Waste Rock Stockpile facilities.
Mineral Reserves and Resources
The estimates of mineral resources and reserves are effective as of March 31st
2013 and are presented in Table 7. The PFS models an open pit mine with a Proven
and Probable mineral reserve estimate containing 4.1 million ounces of gold and
211 million pounds of copper, which in contained gold terms represents 60% of
the 6.9 million ounce (in resource-pit shell). Measured and Indicated mineral
resource estimate as disclosed herein.
Measured and Indicated resources were used for conversion to Proven and Probable
reserves within the optimized PFS pit designs. The mineral reserve (in-pit)
cut-off grades used were 0.35 g/t-Au for saprolite and 0.38 g/t-Au for Fresh
Rock, which correspond to a gold price of US$970/ounce Au for saprolite, and
US$1,070/ounce Au for Fresh Rock, respectively.
The reserves are contained within the Toroparu Pit and South-East Pit and are
associated with 468.9 million tonnes of waste and a life of mine stripping ratio
of 3.69:1.
Table 7: March 31, 2013 Mineral Reserve Estimate
----------------------------------------------------------------------------
AuEq
Gold Copper (ii)
Reserve Tonnes Gold (koz.) Copper (Mlbs.) AuEq (koz.)
Material Classification (000's) (g/t) (i) (%) (i) (g/t) (i)
----------------------------------------------------------------------------
Saprolite Au Proven 1,621 0.95 50 0.09 (iii) 0.95 50
---------------------------------------------------------------
Ore Probable 3,400 0.90 98 0.10 (iii) 0.90 98
---------------------------------------------------------------
Proven +
Probable 5,022 0.91 148 0.10 (iii) 0.91 148
----------------------------------------------------------------------------
Fresh Au Ore Proven 13,976 0.93 419 0.05 (iii) 0.93 419
---------------------------------------------------------------
Probable 56,333 0.88 1,587 0.05 (iii) 0.88 1,587
---------------------------------------------------------------
Proven +
Probable 70,309 0.89 2,006 0.05 (iii) 0.89 2,006
----------------------------------------------------------------------------
Fresh Au/Cu Proven 14,183 1.27 581 0.20 64 1.62 740
---------------------------------------------------------------
Ore Probable 37,597 1.14 1,373 0.18 147 1.44 1,740
---------------------------------------------------------------
Proven +
Probable 51,780 1.17 1,953 0.18 211 1.49 2,480
----------------------------------------------------------------------------
All Ore TypesProven 29,780 1.10 1,049 0.13 64 1.26 1,209
---------------------------------------------------------------
Probable 97,331 0.98 3,058 0.10 147 1.09 3,425
---------------------------------------------------------------
Proven +
Probable 127,111 1.00 4,107 0.11 211 1.13 4,634
----------------------------------------------------------------------------
Notes on Reserve Estimate:
1. Mineral reserves are inclusive of mineral resources;
2. Mineral reserves are based on a gold cut-off-grade (CoG) price of
US$1,070/oz. for Fresh Rock and US$970/oz. for saprolite. Cash flow Base
Case used a gold price of US$1,400/oz. and copper price of $3.25/lb.;
3. Open pit reserves assume complete mine recovery;
4. Open pit reserves are diluted (further to dilution inherent in the
resource model and assumes selective mining unit of 5 m x 5 m x 5 m);
5. (i) Contained In-situ gold ounces do not include metallurgical
recoveries of 96% for gold in saprolite (Oxide), 85% for gold in Au/Cu
Fresh Rock, 91% for copper in Au/Cu Fresh Rock, and 96% for gold in Au
Fresh Rock;
6. (ii) AuEq= Gold Equivalent ounce calculated using US$1,403/oz. Au
($1,394/oz. after refining), US$3.47/lb. Cu ($3.17/lb. after NSR
deductions), 85.46% gold recovery, 91% copper recovery, Formula 1% Cu =
1.714 g/t-Au);
7. (iii) No copper will be recovered from this ore type (and thus the Gold
Equivalent Grade = Gold Grade);
8. Waste tonnes within pit is 468.9 Mt at a strip ratio of 3.69:1 (waste to
ore);
9. An open pit CoG of 0.35 g/t-Au saprolite and 0.38 g/t-Au fresh rock was
applied to open pit resources constrained by the final pit design;
10. Mineral reserve tonnage and contained metal have been rounded to reflect
the accuracy of the estimate, and numbers may not add due to rounding;
11. "(000)" = thousands, "g/t" = gram per metric tonne, "koz" = thousand
troy ounces. Ore tonnes are rounded to the nearest one thousand tonnes,
Gold to nearest 1000 oz Au, gold grade to nearest 0.01 g/t Au, Copper
rounded to nearest million pounds.
12. The mineral reserve estimate for the Project was calculated by Fernando
P. Rodrigues, BSc, MBA MMSAQP #01405QP of SRK Consulting, Inc. in
accordance with the Canadian Securities Administrators National
Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI
43-101") and generally accepted Canadian Institute of Mining,
Metallurgical and Petroleum "Estimation of Mineral Resource and Mineral
Reserves Best Practices" guidelines ("CIM Guidelines"); and
13. Reserves Effective Date: March 31, 2013.
The resource estimate for the Toroparu and South-East Deposits is reported
within a Resource Pit Shell, based on an optimized pit shape developed for the
purposes of reporting the resources are presented in Table 8.
Table 8: March 31, 2013 Mineral Resource Estimate within Resource Pit Shell,
Cut-Off Grade 0.30 g/t Au
----------------------------------------------------------------------------
Toroparu Deposit
----------------------------------------------------------------------------
Resource Classification Tonnes Au Au oz. Cu Cu
(All rock types) (000's) (g/t) (000's) % (M lb.)
----------------------------------------------------------------------------
Measured 41,542 0.98 1,307 0.109 100
----------------------------------------------------------------------------
Indicated 185,957 0.87 5,203 0.082 334
----------------------------------------------------------------------------
Measured & Indicated 227,500 0.89 6,510 0.087 434
----------------------------------------------------------------------------
Inferred 127,756 0.74 3,045 0.042 118
----------------------------------------------------------------------------
South East Deposit
----------------------------------------------------------------------------
Resource Classification Tonnes Au Au oz. Cu Cu
(All rock types) (000's) (g/t) (000's) % (M lb.)
----------------------------------------------------------------------------
Measured 2,905 0.97 91 0.037 2
----------------------------------------------------------------------------
Indicated 9,836 0.93 294 0.035 8
----------------------------------------------------------------------------
Measured & Indicated 12,741 0.94 384 0.036 10
----------------------------------------------------------------------------
Inferred 1,768 0.78 45 0.041 2
----------------------------------------------------------------------------
All Deposits
----------------------------------------------------------------------------
Resource Classification Tonnes Au Au oz. Cu Cu
(All rock types) (000's) (g/t) (000's) % (M lb.)
----------------------------------------------------------------------------
Measured 44,447 0.98 1,398 0.104 102
----------------------------------------------------------------------------
Indicated 195,793 0.87 5,497 0.079 342
----------------------------------------------------------------------------
Measured & Indicated 240,240 0.89 6,894 0.084 444
----------------------------------------------------------------------------
Inferred 129,525 0.74 3,090 0.042 120
----------------------------------------------------------------------------
Notes on Resource Estimate;
1. All resources in the revised mineral resource statement are In-Pit
resources reported within an optimized pit shell (Resource Pit Shell)
above an economic cut-off grade of 0.30 g/t Au. The economic cut-off
grade was determined using a gold price of $1,350/oz. Au, an average
metallurgical recovery of 95.9% for gold, processing and G&A costs of
$11.49/t processed, and includes $112/oz. Au for freight, smelting,
refining and royalties. Copper metallurgical recovery used was 91%. Pit
slopes used in the pit optimization were 45 degrees, and the mining
costs used were $2.06/t mined for fresh rock.
2. Mineral resources are reported in accordance with NI 43-101 and have
been estimated in conformity with generally accepted CIM Guidelines;
3. 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
estimate;
4. Mineral resource tonnage and contained metal have been rounded to
reflect the accuracy of the estimate, and numbers may not add due to
rounding;
5. While the estimate of mineral resources may be materially affected by
environmental, permitting, legal, title, taxation, socio-political,
marketing, or other relevant issues, the Company is not aware of any
such issues;
6. The quantity and grade of reported Inferred resources in this estimation
are uncertain in nature and there has been insufficient exploration to
define these Inferred resources as an Indicated or Measured mineral
resource and it is uncertain if further exploration will result in
upgrading them to an Indicated or Measured mineral resource category;
and
7. Bulk densities of 2.76 t/m3 and 1.84 t/m3 were used respectively for
Fresh Rock and saprolite tonnage calculations.
8. "(000)" = thousands, "g/t" = gram per metric tonne, "koz" = thousand
troy ounces. Ore tonnes are rounded to the nearest one thousand tonnes,
Gold to nearest 1000 oz. Au, gold grade to nearest 0.01 g/t Au, Copper
rounded to nearest million pounds.
Table 9 shows the combined Measured and Indicated resource estimate sensitivity
by cut-off grade (for combined Toroparu and South-East Deposits). The resources
are reported at different cut-off grades (corresponding to different gold prices
as shown) within the same Resource Pit Shell.
Table 9: March 31, 2013 Mineral Resource Estimate M&I Sensitivity Analysis,
within Resource Pit Shell
----------------------------------------------------------------------------
All Deposits
----------------------------------------------------------------------------
Gold Price Cut-Off Grade Tonnes Au Au oz. Cu Cu
(US$/oz.-Au) (g/t All Rock Types) (000's) (g/t) (000's) % (M lb.)
----------------------------------------------------------------------------
$2,030 0.20 272,406 0.82 7,156 0.079 475
----------------------------------------------------------------------------
$1,850 0.22 267,297 0.83 7,122 0.080 471
----------------------------------------------------------------------------
$1,690 0.24 261,285 0.84 7,077 0.081 465
----------------------------------------------------------------------------
$1,560 0.26 254,732 0.86 7,025 0.082 459
----------------------------------------------------------------------------
$1,450 0.28 247,619 0.87 6,963 0.083 452
----------------------------------------------------------------------------
$1,350 0.30 240,240 0.89 6,894 0.084 444
----------------------------------------------------------------------------
$1,270 0.32 232,357 0.91 6,816 0.085 436
----------------------------------------------------------------------------
$1,195 0.34 224,300 0.93 6,730 0.086 427
----------------------------------------------------------------------------
$1,130 0.36 216,230 0.96 6,639 0.088 418
----------------------------------------------------------------------------
$1,070 0.38 208,419 0.98 6,546 0.089 408
----------------------------------------------------------------------------
$1,005 0.40 200,728 1.00 6,450 0.090 399
----------------------------------------------------------------------------
$910 0.42 193,124 1.02 6,350 0.091 389
----------------------------------------------------------------------------
$870 0.44 185,940 1.05 6,250 0.093 380
----------------------------------------------------------------------------
$830 0.46 178,742 1.07 6,146 0.094 370
----------------------------------------------------------------------------
$795 0.48 171,656 1.09 6,039 0.095 360
----------------------------------------------------------------------------
$765 0.50 165,166 1.12 5,937 0.096 351
----------------------------------------------------------------------------
Table 10 shows the Inferred resource estimate sensitivity by cut-off grade (for
combined Toroparu and South-East Deposits). The resources are reported at
different cut-off grades (corresponding to different gold prices as shown)
within the same Resource Pit Shell.
Table 10: March 31, 2013 Mineral Resource Estimate Inferred Sensitivity
Analysis, within Resource Pit Shell
----------------------------------------------------------------------------
All Deposits
----------------------------------------------------------------------------
Gold Price Cut-Off Grade Tonnes Au Au oz. Cu Cu
(US$/oz.-Au) (g/t All Rock Types) (000's) (g/t) (000's) % (M lb.)
----------------------------------------------------------------------------
$2,030 0.20 153,557 0.67 3,286 0.040 134
----------------------------------------------------------------------------
$1,850 0.22 149,863 0.68 3,261 0.040 132
----------------------------------------------------------------------------
$1,690 0.24 145,333 0.69 3,228 0.040 130
----------------------------------------------------------------------------
$1,560 0.26 140,402 0.71 3,188 0.041 127
----------------------------------------------------------------------------
$1,450 0.28 135,159 0.72 3,143 0.041 123
----------------------------------------------------------------------------
$1,350 0.30 129,525 0.74 3,090 0.042 120
----------------------------------------------------------------------------
$1,270 0.32 123,446 0.76 3,029 0.043 116
----------------------------------------------------------------------------
$1,195 0.34 117,339 0.79 2,965 0.043 112
----------------------------------------------------------------------------
$1,130 0.36 111,476 0.81 2,899 0.044 107
----------------------------------------------------------------------------
$1,070 0.38 105,603 0.83 2,829 0.044 103
----------------------------------------------------------------------------
$1,005 0.40 99,712 0.86 2,755 0.045 98
----------------------------------------------------------------------------
$910 0.42 94,100 0.89 2,681 0.045 94
----------------------------------------------------------------------------
$870 0.44 88,466 0.92 2,603 0.046 90
----------------------------------------------------------------------------
$830 0.46 83,275 0.94 2,528 0.047 86
----------------------------------------------------------------------------
$795 0.48 78,350 0.97 2,454 0.047 82
----------------------------------------------------------------------------
$765 0.50 74,007 1.00 2,385 0.048 78
----------------------------------------------------------------------------
The resources were modeled and estimated by evaluating the drill data
statistically and utilizing a 3-D mineralized grade shell to constrain the
estimate. Gold grades were estimated by kriging into a block model with 10 meter
(width) x 10 meter (length) x 5 meter (height) blocks that were constrained to
mineral domains using Datamine Studio3 mining software. The person responsible
for the resource estimate on behalf of SRK Consulting (U.S.) Inc. is Frank
Daviess, Registered Member SME, a Qualified Person as defined by National
Instrument 43-101. Further details of the estimation procedure will be available
in an updated NI 43-101 report, which will be posted on SEDAR
http://www.sedar.com, no later than 45 days from the date of this release.
Upside Potential to Pre-Feasibility Study
Table 11 shows the estimate of combined Measured and Indicated resources (within
a resource pit shell) as issued in this Mineral Resource Estimate, but which
were not included within the pre-feasibility engineering mine designs (and mine
production schedule). The estimates shown are for selected cut-off grades
(corresponding to different gold prices as shown) for combined Measured and
Indicated resources for the Toroparu and South-East Deposits. (The PFS Mineral
Reserves were estimated using a 0.38 g/t gold cut-off grade.)
Table 11: March 31, 2013 Mineral Resource Estimate, M&I, Not Within PFS Mine
Designs
----------------------------------------------------------------------------
All Deposits
----------------------------------------------------------------------------
Gold Price Cut-Off Grade Tonnes Au Au oz. Cu Cu
(US$/oz.-Au) (g/t All Rock Types) (000's) (g/t) (000's) % (M lb.)
----------------------------------------------------------------------------
$1,350 0.30 90,243 0.83 2,419 0.056 112
----------------------------------------------------------------------------
$1,070 0.38 75,228 0.93 2,255 0.059 99
----------------------------------------------------------------------------
Table 12 shows the estimate of Inferred resources (within a resource pit shell
as issued in this statement), but which were not included within the
pre-feasibility mine design. The estimates shown are for selected cut-off grades
(corresponding to different gold prices as shown) for Inferred resources for the
Main and South-East Deposits.
Table 12: March 31, 2013 Mineral Resource Estimate, Inferred, Not Within PFS
Mine Designs
----------------------------------------------------------------------------
All Deposits
----------------------------------------------------------------------------
Gold Price Cut-Off Grade Tonnes Au Au oz. Cu Cu
(US$/oz.-Au) (g/t All Rock Types) (000's) (g/t) (000's) % (M lb.)
----------------------------------------------------------------------------
$1,350 0.30 124,339 0.74 2,967 0.041 111
----------------------------------------------------------------------------
$1,070 0.38 101,240 0.83 2,715 0.043 95
----------------------------------------------------------------------------
There is potential for the addition of an extra pit design phase to the Toroparu
Deposit PFS pit design, based on the Measured and Indicated resources, which
were estimated but not included within the PFS pit design.
Thus, there is potential to increase the life-of-mine with the addition of an
extra pit design phase, and extend the total number of years of mineral
processing. Sandspring will pursue further evaluation of this option in ongoing
technical studies for the Project.
Permitting and Licensing
In May 2012, Sandspring achieved a major milestone by obtaining its permit from
the Guyana EPA to begin construction. Under the terms of the Company's mineral
development agreement, the Government of Guyana has also agreed to grant a
large-scale mining license authorizing Sandspring to commence production once
the economic feasibility of the project has been demonstrated.
Conference Call
The Company will host a presentation and conference call for the results of
Pre-Feasibility Study on April 10, 2013 at 11:00 AM Eastern Daylight Time. The
following link provides participants access to the live and/or archived event.
http://event.onlineseminarsolutions.com/r.htm?e=606564&s=1&k=7831AFAB32D30DA90BA5B45A27B5B664
Qualified Persons
The technical report, titled "NI 43-101 Technical Report, Toroparu Gold Project,
Upper Puruni River Area, Guyana" will be filed on SEDAR within 45 days of the
date of this press release.
The scientific and technical data contained in this news release pertaining to
the Project has been reviewed and approved by the following Qualified Persons
under NI 43-101 who consent to the inclusion of their names in this release:
Frank Daviess, MAusIMM, Registered Member SME (Resource Estimation - SRK
Consulting (US) Inc.); Fernando P. Rodrigues, MMSA, #1405QP (Mining/Reserves
Estimation - SRK Consulting (US) Inc.); Peter I. Clarke, P.Eng., #13473 -
British Columbia (Mining/Economics - SRK Consulting (US) Inc.); D. Erik Spiller,
MMSA, #01021QP (Metallurgical Process Design-Tetra Tech); Thomas A. Chapel, CPG,
PE, # 33848 - Colorado (On-site Infrastructure-Tetra Tech); Daniel Lloyd Evans,
CFM, P.E., #32081 - Colorado (Water Management - Tetra Tech); each of whom is
independent of the Company.
About Sandspring
Sandspring Resources Ltd. is a Canadian junior mining company currently in
advanced exploration and moving toward a definitive feasibility study for the
multi-million ounce Toroparu Deposit in the Republic of Guyana. Visit
Sandspring's website at www.sandspringresources.com.
Additional information on Sandspring can be viewed on SEDAR under the Company's
profile at www.sedar.com or on Sandspring's website at
www.sandspringresources.com.
This press release includes certain forward-looking statements concerning future
performance and operations of the Company, including the expected positive
results from the Toroparu Project based on the estimates and findings contained
in the PFS, as summarized herein, as well as management's objectives,
strategies, beliefs and intentions. Forward-looking statements are frequently
identified by such words as "may", "will", "plan", "expect", "anticipate",
"estimate", "intend" and similar words referring to future events and results.
Forward-looking statements are based on the current opinions and expectations of
management at the time such statements are made. All forward-looking statements
and information is inherently uncertain and subject to a variety of assumptions,
risks and uncertainties, including the speculative nature of mineral exploration
and development, fluctuating commodity prices, changes in project parameters as
plans continue to be refined, uncertainties of project cost overruns or
unanticipated costs and expenses, uncertainties inherent in conducting
operations in a foreign country, uncertainties related to the availability and
costs of financing needed in the future, the risk that the conclusion of
pre-production studies may not be accurate, the Company's successful advancement
of the Toroparu Project toward feasibility and obtaining positive results from
ongoing evaluation and testing of multiple gold targets located elsewhere in the
Company's landholdings, among other risks as described in our public filings
available at www.sedar.com. Actual events or results may differ materially from
those projected in the forward-looking statements and we caution against placing
undue reliance thereon. Sandspring Resources Ltd. has an ongoing obligation to
disclose material information, as it becomes available.
(1) All references in this Press Release as follows: Au = gold, Cu = copper, "$"
= US Dollars, "oz." = troy ounces of gold, "g/t" = gram per metric tonne,
"tonnes" = metric tonnes, "tpd" = metric tonnes per day, "Mtpy" = million tonnes
per year, "koz" = thousand ounces, "Mlbs" = million pounds
(2) Cash costs include royalties and are net of by-product copper.
(3) After-tax NPV and IRR calculated at Base Case Model prices of $1,400/oz. Au
and $3.25/lb. Cu.
(4) The 4 year trailing average metals price effective on March 31, 2013, is
$1403/oz. gold and $3.47/lb. copper
(5) Au = gold, Cu = copper, "ktpy" = thousand metric tonnes pper year, "g/t" =
gram per metric tonne, "kozpy" = thousand ounces per year, "PY-#"=
pre-production year. Ore processed are rounded to the nearest one thousand
tonnes, Contained Gold to nearest 1000 oz Au, gold grade to nearest 0.01g/t Au
(6) Silver has been recovered by laboratory testwork into both flotation and
leach products. The consistency of the estimated silver grade in the concentrate
production over the life-of-mine is uncertain as there is insufficient silver
exploration data from core to determine a silver resource or reserve and a value
for silver was therefore not added to the economics of the PFS.
(7) Capital costs are rounded to the nearest million US dollars.
(8) Operating Costs are rounded to the nearest $0.10 / metric tonne or $1/per
troy ounce of gold.
(9) The "all-in cash cost" (Cash Cost + Life of Mine Capital/payable ounce of
gold) is $921 per ounce of gold.
(10) Operating costs are based on power cost of $0.18/kWh generated using
intermediate fuel oil (IFO 180) quoted by a multi-national oil marketing firm at
$124.00/bbl for delivery CIF Pine Tree River Port, Cuyuni River, Guyana; and Gas
Oil prices of $157.00/bbl for delivery CIF Pine Tree River Port.
FOR FURTHER INFORMATION PLEASE CONTACT:
Sandspring Resources Ltd.
Richard A. Munson
(720) 854-0104
info@sandspringresources.com
www.sandspringresources.com
Sandspring Resources (TSXV:SSP)
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Sandspring Resources (TSXV:SSP)
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