TIDMAUY
RNS Number : 7970F
Yamana Gold Inc.
20 July 2021
YAMANA GOLD ANNOUNCES POSITIVE DEVELOPMENT DECISION ON ITS
WHOLLY-OWNED WASAMAC PROJECT BASED ON POSITIVE RESULTS FROM SEVERAL
STUDIES SHOWING HIGHER AVERAGE DAILY THROUGHPUT, INCREASED MINERAL
RESERVES, INCREASED AVERAGE ANNUAL PRODUCTION AND STRONG, INCREASED
CASH FLOWS
TORONTO, ONTARIO, July 19, 2021 - YAMANA GOLD INC. (TSX: YRI;
NYSE: AUY; LSE: AUY) ("Yamana" or "the Company") is pleased to
announce the results of several studies on the Company's
wholly-owned Wasamac project in the Abitibi-Témiscamingue Region of
Quebec, Canada, intended to corroborate diligence reviews conducted
by the Company on its purchase of the Wasamac project in early 2021
and update a historical feasibility study. These studies form the
new feasibility level studies of the Company and the baseline
technical and financial aspects of the Wasamac project that now
underpin the decision to advance the project to production.
Results from all studies are consistent with the Company's
conclusions in its diligence reviews relating to the purchase of
Wasamac and, in some cases, are better than the conclusions from
those reviews. While a prior feasibility study was recently
completed on Wasamac, in 2018, the Company relied on its own
diligence reviews relating to the purchase of the project, using
the prior feasibility study as a reference only and applying its
own standards and approaches as a complete update of the prior
study. These studies now form Yamana's feasibility level work
relating to the project.
The Company will be holding a conference call and webcast
relating to the Wasamac project on Tuesday, July 20, 2021, from
10:00 am to 11:00 am ET. Please see additional details relating to
the call at the end of this press release.
Optimization Highlights
-- Mineral reserves of 1.91 million gold ounces at an unchanged
average gold grade of 2.56 grams per tonne ("g/t") for an initial
mine life of 10 years.
-- Rapid production ramp-up in first year followed by sustained
gold production of approximately 200,000 ounces per year for at
least the next four years. Including the ramp-up phase, average
annual production for the first five years of operation is expected
to be 184,000 ounces.
-- Average life of mine ("LOM") gold production of 169,000
ounces per year over an initial 10-year mine life.
-- Average throughput of 7,000 tonnes per day ("tpd"), with the processing plant and associated infrastructure designed at a nameplate capacity of 7,500 tpd, representing further production upside.
-- Optimized mining method and mining sequence, utilizing a
combination of longitudinal and transverse stoping with paste fill,
which resulted in a higher production rate, reduced dilution, and a
26% reduction in LOM development metres.
-- Initial capital cost is expected to be relatively modest for
a 7,000 tpd underground operation, at approximately $416 million.
The Company undertook extensive due diligence relating to the
acquisition of Wasamac and identified several opportunities for
optimizations and improvements; the updated studies confirmed the
opportunities for optimizations.
-- The Company plans to fully fund development with available cash and cash flows.
-- Total LOM sustaining capital estimated at $318 million
primarily for underground mine development and mobile
equipment.
-- LOM cash costs and all-in sustaining costs ("AISC")(1) of
$640 per ounce and $828 per ounce, respectively, remaining well
below the Company average, reflecting the application of more
conservative cost assumptions to de-risk the project and align with
benchmark costs from Yamana's other operations.
-- Robust project economics including net present value ("NPV")
of $254 million with an after-tax internal rate of return ("IRR")
of 16.1% at $1,550 per ounce of gold and NPV of $470 million and
after-tax IRR of 24% at $1,850 per ounce of gold based on mineral
reserves and excluding future upside potential from encouraging
exploration prospects.
-- As of 2028, Yamana's average annual gold production in
Quebec, including production from Wasamac and the Odyssey
underground at Canadian Malartic, is expected to climb to
approximately 450,000-500,000 ounces and remain at this level
through 2035.
-- Wasamac is designed as a modern underground operation with a
small footprint and minimal infrastructure on the south of the
Route 117 highway. Tailings will be deposited underground as paste
fill and in a filtered dry stack tailings storage facility
approximately six kilometres northwest of the processing plant.
-- Use of an underground conveyor, electric mining equipment and
high-efficiency ventilation fans to minimize carbon emissions, with
further electrification planned as new technology becomes
commercially available between now and project execution.
-- Using a conveyor rather than diesel trucks to transport ore
to surface reduces CO2 emissions by 2,233 tonnes per year,
equivalent to taking 500 cars off the road. Over the LOM, the
Company expects to reduce CO2 emissions by more than 20,000
tonnes.
Significant Exploration Mine Life Extension Upside
-- Planned infill and exploration drilling campaign to generate
additional mineral reserves has the potential to sustain a 200,000
ounce production level for an extended period and support a
strategic mine life of more than 15 years.
-- Preliminary plans include 120,000 metres of drilling in 2021
and 2022 with a budget of $15 million over the two-year period.
-- Infill drilling to better delineate areas expected to be
developed in the first three years of production is expected to
include 30,000 metres in 2021, with a further 38,000 metres in 2022
to provide further delineation of the remaining mineral
resource.
-- A concurrent exploration effort will focus on expanding the
current mineral resource envelopes to depths below the established
mineral resource, with testing for mineralization to target poorly
explored gaps between mineralized zones.
-- Exploration on the broader Wasamac property is expected to
include 10,000 metres in 2021 with an effort to delineate secondary
zones such as Wildcat and test high priority extensions of the Wasa
Shear.
-- The recently acquired Francoeur, Arntfield, and Lac Fortune
gold deposits, located just six kilometres from the planned Wasamac
milling facilities, represent additional potential exploration
upside.
-- Mineralization on the Francoeur property and mineralization
exposed in recent trenching at Arntfield by the property's previous
owner consists of mylotinized, albite-carbonate altered rocks with
pyrite mineralization very similar to Wasamac. This shear can be
traced a further six kilometres from the Wasamac-Francoeur property
boundary to the west of the historic Francoeur mine.
-- Several parallel shear zones at Francoeur with significant
known mineralization located south of Francoeur, including Lac
Fortune, and an interpreted southern splay of the Wasa Shear in the
Arntfield area are excellent further targets for drilling and
potential mineral resource expansion.
Further Optimization and Mine Life Extension Upside
-- Opportunity for further conversion of mineral resources to
mineral reserves is expected through engineering, especially
surrounding the historic mining zone.
-- Utilization of the full design capacity of 7,500 tpd could increase annual gold production.
-- Additional metallurgical drilling and test work will be
carried out to evaluate the potential increase in
gold recovery through the installation of a flotation and concentrate leach circuit.
-- Opportunities to accelerate the project execution plan to
bring forward first gold production.
-- Silver credits have not been considered in the updated
studies. Future infill drilling programs will include assaying for
silver, which has the potential to improve project economics and
reduce AISC.(1)
WASAMAC PROJECT: OPTIMIZATIONS, IMPROVEMENTS, AND ECONOMICS
The Wasamac underground gold project is located 15 kilometres
west of Rouyn-Noranda in the Abitibi- Témiscamingue Region of
Quebec adjacent to the Trans-Canada highway and Ontario Northland
rail line, and just 100 kilometres west of Yamana's 50%-owned
Canadian Malartic mine. Yamana acquired the project in January
2021, further expanding its footprint in Quebec and significantly
enhancing the Company's long-term growth prospects.
Wasamac is supported by a feasibility study completed by the
project's previous owner in 2018. As part of its technical
diligence process relating to the acquisition of Wasamac in early
2021, Yamana identified several opportunities to optimize the mine
design and process flow sheet. Post-acquisition, Yamana undertook
several studies to evaluate these opportunities and to provide a
level of confidence and accuracy to support Yamana's standards for
feasibility studies and work. The results of these studies confirm
the opportunities identified during the diligence process and
provide for improved processing, production, cash flow and
economics.
The conclusion derived from the studies conducted since the
acquisition of Wasamac will form the basis for the project
description for the environmental impact assessment ("EIA"), which
is on the critical path for project permitting and construction.
Because of the accelerated timeline, Yamana's primary objective of
the studies that it undertook was to present an economically robust
foundation with a high level of geological, mining, and
metallurgical confidence as well as a high level of accuracy on
capital and operating cost estimates. Further optimization will
continue to be incorporated as the project advances.
One of the most promising upsides at Wasamac is the opportunity
to sustain annual gold production of 200,000 ounces for an extended
period and extend mine life through exploration drilling and
mineral reserves development. To realize this opportunity, Yamana
has commenced an exploration drilling program aimed at expanding
the current mineral resource envelopes, test extensions of the Wasa
Shear, and delineate secondary zones. Additionally, Yamana's recent
acquisition of the adjoining Francoeur, Arntfield and Lac Fortune
gold properties, represents structural extensions of gold
mineralization and adds significant potential exploration
upside.
Geological Model Refined; Mineral Reserves Increased
The defined Wasamac gold deposit is continuous over 900 metres
vertically and 2.7 kilometres along strike, and remains open at
depth and on its lateral extensions. Most of the known
mineralization is associated with finely disseminated pyrite,
albite-sericite and hematite alteration in the intensely sheared
(mylonitized) portions of the Wasa Shear zone, a subsidiary fault
of the Cadillac-Larder Lake tectonic zone. High continuity and
regular geometry, combined with a relatively simple structural
setting and consistent mineralized widths of 5 to 30 metres,
presents a favourable geological environment for high-production,
low-cost underground mining methods. Additionally, the defined
mineralization is relatively shallow compared to other mines in the
region, with a maximum depth of 845 metres below surface, although
the deposit is still open at depth.
One key element of the studies undertaken by the Company was to
verify the quality of the mineral resource model based on a good
understanding of the geological setting and mineralization
controls. As such, Yamana independently recreated a new geology
model, mineral resource domains, and mineral resource model to
provide the foundation for mineral reserves estimation and the LOM
plan. The fact that the two mineral resource models, developed
independently from the ground up, result in similar global
inventories provides an additional level of geological confidence
and helps identify targets for exploration drilling and future
mineral resource growth.
Mineral resource classification was updated using revised
criteria, with measured mineral resources being reclassified as
indicated mineral resources to align with Yamana's prerequisite
that measured mineral resources must be supported by underground
development sampling with the required quality assurance and
quality control. Additionally, mineral resources are now
constrained within potentially mineable shapes to demonstrate
reasonable prospects for eventual economic extraction and to align
with the reporting standard at other Yamana operations.
Globally, the Wasamac mineral inventory is largely similar to
the previous model, as expected, because the geological database is
unchanged, utilizing 804 drill holes for 157,991 metres of
drilling. However, Yamana has successfully increased conversion of
mineral resources to mineral reserves through the optimization of
the mining method and mine design following an in-depth
geotechnical analysis. As a result, mineral reserves have increased
above the levels determined in the diligence relating to the
acquisition of Wasamac by 231,000 ounces to 1.91 million ounces
with an unchanged average gold grade of 2.56 g/t. Mineral reserves
are estimated at a conservative gold price assumption of $1,250 per
ounce, consistent with Yamana's other operations.
Table 1: Mineral Reserves Statement, Wasamac Project at June 30,
2021
Tonnes Grade Contained
(000's) (g/t) Oz. (000's)
Probable 23,168 2.56 1,910
--------- ------- -------------
1. The Qualified Persons for the mineral reserve estimate are
Mr. Denis Gourde, P.Eng. and Sébastien Tanguay, P.Eng.
(InnovExplo).
2. Mineral reserve estimate has an effective date of June 30, 2021.
3. Estimated at $1,250/oz Au using an exchange rate of
$1.32:C$1.00, variable cut-off Au value from 1.45 g/t to 1.68
g/t.
4. Mineral reserve tonnage and mined metal have been rounded to
reflect the accuracy of the estimate and numbers may not add due to
rounding.
5. Mineral reserves presented include both internal and external
dilution along with mining recovery. The external dilution is
estimated to be 11%. The average mining recovery factor was set at
93.6% to account for mineralized material left in the margins of
the deposit in each block.
Table 2: Mineral Resources Statement, Wasamac Project at June
30, 2021
Tonnes Grade Contained
(000's) (g/t) Oz. (000's)
Indicated 5,769 1.76 326
--------- ------- -------------
Inferred 3,984 2.01 258
--------- ------- -------------
1. The Qualified Persons for the current mineral resource
estimates are Mr. Vincent Nadeau-Benoit, P.Geo. and Alain Carrier,
M.Sc., P.Geo. (InnovExplo). Mineral resources have been estimated
by Yamana and independently audited and validated by InnovExplo.
The mineral resource estimate follows 2019 CIM definitions and
guidelines for mineral resources and are reported exclusive of
mineral reserves.
2. Mineral resources were evaluated using the ordinary kriging
weighting algorithm informed by capped composites and constrained
by three-dimensional mineralization wireframes. Mineral resource
categories were assigned using clipping boundaries. Indicated
category was established for blocks interpolated during the first
two passes within 40 m closest distance from a drill hole composite
within the same mineralized zone. Inferred category was established
for the remaining interpolated blocks inside the mineralization
wireframes. A bulk density of 2.80 g/cm3 was used to convert volume
to tonnage.
3. Cut-off grades, which corresponds to 75% of the cut-off
grades used to estimate the mineral reserves, are variable based on
the metallurgical recoveries ranging from 1.10 to 1.30 g/t Au.
4. Mineral resources are below a 32 m surface crown pillar and
outside a 5 m minimum buffer around historical underground
infrastructures and constrained by potentially mineable shapes
based on a minimum mining width of 2 m and considering internal
waste and dilution.
5. All figures are rounded to reflect the relative accuracy of
the estimate. Numbers may not add up due to rounding.
Design Improvements and Increased Mineral Reserves Enable Higher
Daily Throughput
The proposed mining method for Wasamac is long-hole stoping,
with 75% of stopes planned to be mined in a longitudinal direction
and 25% to be mined in a transverse direction, optimized for the
local mineralization width and dip. This approach results in
average external dilution of less than 11%. Level spacing is
increased from 20 metres to 25 metres, while stope spans are
variable depending on stope geometry and local ground conditions.
Stopes will be filled using a combination of paste fill, delivered
from an underground paste fill plant, cemented rock fill, and rock
fill.
Total primary and secondary underground development decreased by
26%, increasing the ratio of ore tonnes per development metre by
48% to 221 tonnes per metre. The reduction is a result of three
design improvements: increasing level spacing, reducing the
requirement for footwall drifts in waste, and optimization of the
materials handling system to minimize ramp development
requirements.
The optimized materials handling system utilizes ore passes and
haul trucks to transport ore from the production levels to a
central underground primary crusher. The haul trucks will be
automated to allow haulage to continue between shifts. From the
underground crusher, ore will be transported to the crushed-ore
stockpile on the surface using a 3-kilometre long conventional
conveyor system in two segments. A parallel decline will be used
for personnel and materials. Development waste will be used as
backfill or hauled to the surface waste storage facility adjacent
to the plant. Using a conveyor rather than diesel trucks to
transport ore to surface reduces CO2 emissions by 2,233 tonnes per
year, equivalent to taking 500 cars off the road. Over the LOM, the
Company expects to reduce CO2 emissions by more than 20,000
tonnes.
The increase in mineral reserves combined with the reduction in
development metres and optimized materials handling system will
allow Wasamac to sustain a higher level of underground production
of 7,000 tpd.
The LOM plan shows a rapid ramp-up in production in the first
year with production rising to approximately 200,000 ounces per
year for at least the next four years. Average gold production is
expected to be 169,000 ounces per year over a mine life of 10
years. Including the ramp-up phase, average annual production for
the first five years of operation is expected to be 184,000
ounces.
Figure 1: Wasamac Strategic Production Profile
For figures, please refer to the announcement on Yamana Gold's
website.
https://bit.ly/3zfJYqW
Optimizations to Processing Improve Efficiencies and Reduce
Costs
The processing flow sheet and plant design have been improved to
accommodate the increased throughput, consider the results from
supplementary metallurgical testing completed since 2018, and
incorporate opportunities identified over the past three years.
The processing plant capacity has been increased to 2.74 million
tonnes per year, or 7,500 tpd, with an expectation of processing an
initial 7,000 tonnes of ore per day from the underground mine.
Utilization of this spare capacity during operations provides
operational flexibility and production upside.
Additional grinding simulations, calibrated to include the
latest test work results, determined that a more energy-efficient
configuration could be utilized, which in turn lowered the overall
power draw, reducing capital costs. Further downstream in the
leaching and absorption circuit, additional pulp chemistry
optimization test work concluded that the total circuit retention
time could be reduced from 48 to 35 hours, with fewer, but larger
leaching tanks to reduce capital costs, paired with a conventional
carbon-in-pulp tank technology, which favours the silver loadings
now seen in the Wasamac ore. The carbon stripping/regen, gold room,
and supporting reagent circuit are all housed in an adjacent
pre-engineering structure that is de-coupled from the grinding
circuit structure to improve constructability and decrease capital
costs.
Lastly, due to the optimized pulp chemistry conditions in the
leaching circuit, the overall cyanide consumption has been reduced,
which in turn negates the need for a post-leach thickener that had
been included in the previous design plan. Its removal will
generate additional capital savings. Within the tailings filtration
circuit, the layout was optimized to reduce the footprint of the
building, lower capital costs, and improve energy efficiency.
Furthermore, the tailings filter cake handling methodology was
reviewed and a cost-effective truck loading system was nominated to
further reduce capital costs.
Metallurgical recovery assumptions and metallurgical domains are
unchanged , with follow up test work confirming gold recoveries of
92.0%, 81.6%, 86.2% and 92.7% for the Main Zone, Zone 1, Zone 2,
and Zone 3, respectively. Total LOM average recovery is 88.7%.
Yamana will continue to refine the geometallurgical domains as
more information becomes available from the infill drilling
campaign planned for the second half of this year, with the
potential to limit the influence of lower recovery zones and
optimize the mine design and sequence. Additionally, in the months
ahead, test work to support a bulk flotation-concentrate
regrind/leaching flowsheet will commence to target recovery
improvements on certain ores. Initial flotation flowsheet test work
indicates superior recoveries for Zone 1 and Zone 2 samples
compared to the whole ore leach flowsheet. As part of a holistic
review of optimizing production from Zones 1 and 2, installing a
flotation and concentrate leach circuit after start-up may provide
improved recoveries. Initial production from the Main Zone and Zone
3 with the whole ore leach flowsheet presents the opportunity to
pursue this strategy.
Significant Exploration Upside and Opportunity to Extend Mine
Life
In addition to the mineral reserves used as the basis for the
mine plan, Wasamac contains 326,000 ounces of indicated mineral
resources and 258,000 ounces of inferred mineral resources, along
with expansion potential at depth and in other areas of the Wasamac
claims package. Furthermore, there are additional opportunities to
increase conversion of mineral resources to mineral reserves,
especially close to previously mined areas of the property. Yamana
has planned an infill and exploration drilling campaign to generate
additional mineral reserves, which has the potential to sustain a
higher level of production and extend mine life to support a
strategic mine life of more than 15 years.
Data compilation and drill planning combined with a recent high
resolution airborne magnetic survey have established numerous
exploration targets within the property portfolio. While drill
planning is ongoing and will be adapted to results, preliminary
plans include 120,000 metres of drilling in 2021 and 2022 with a
budget of $15 million over the two-year period.
Infill drilling to better delineate areas expected to be
developed in the first three years of production is expected to
include 30,000 metres in 2021, with a further 38,000 metres in 2022
to provide further delineation of the remaining mineral resource.
This work is expected to increase confidence in grade, improve mine
planning, and provide further geotechnical and metallurgical
data.
A concurrent exploration effort will focus on expanding the
current mineral resource envelopes to depths below the established
mineral resource and with testing for mineralization targeting the
poorly explored gaps between zones. Exploration on the broader
Wasamac property is expected to include 10,000 metres in 2021 with
an effort to delineate secondary zones such as Wildcat and test
high priority extensions of the Wasa Shear.
East of the defined Wasamac deposit, recent magnetic survey and
historic drilling indicate strong potential to trace and test the
Wasa Shear for a further 3.2 kilometres. West of the Wasamac main
zone the shear is displaced along a north-east trending
post-mineral fault and the Horne Creek fault. Geological and
geophysical information as well as significant gold intercepts in
historic drilling have delineated a high priority target along 1.5
kilometres from the Horne Creek fault to the Francoeur project
boundary that is expected to be tested during the third quarter of
2021.
Figure 2: Wasamac Mineral Reserves and Mineral Resources;
Prospective Target Areas Highlighted
For figures, please refer to the announcement on Yamana Gold's
website.
https://bit.ly/3zfJYqW
Francoeur, Arntfield, and Lac Fortune Properties Provide Further
Upside
The recent acquisition of the Francoeur, Arntfield, and Lac
Fortune gold deposits, which are located just six kilometres from
the planned Wasamac milling facilities, represents additional
potential exploration upside. Mineralization on the Francoeur
property as well as mineralization exposed in recent trenching at
Arntfield by the property's previous owner consists of mylotinized,
albite-carbonate altered rocks with pyrite mineralization very
similar to Wasamac. This shear can be traced a further six
kilometres from the Wasamac-Francoeur property boundary to the west
of the historic Francoeur mine.
Wasamac, Francoeur, and Arntfield have recorded past production
of over 720,000 ounces of gold, with Francoeur and Arntfield
contributing ounces at a grade of 6.2 g/t and 4.0 g/t of gold,
respectively.(2) Furthermore, Francoeur has a historic mineral
resource of approximately 66,600 ounces of gold at a grade of 6.5
g/t of gold in the measured and indicated mineral resource
categories. Yamana considers these mineral resources historical in
nature and they are therefore not included in Yamana's inventory
but represent further upside. Exploration on Francoeur will
prioritize confirmation and expansion of the known mineral
resources at Francoeur as well as testing high priority targets
along the Arntfield-Francoeur segment of the western Wasa
Shear.
In addition, there are several parallel shear zones at Francoeur
with significant known mineralization located south of Francoeur,
including Lac Fortune, and an interpreted southern splay of the
Wasa Shear in the Arntfield area that are excellent further targets
for drilling and potential mineral resource expansion.
Figure 3: Wasamac Exploration Program Including Francoeur,
Arntfield, and Lac Fortune
For figures, please refer to the announcement on Yamana Gold's
website.
https://bit.ly/3zfJYqW
Costs and Economics
Capital and operating costs have been fully updated to an
accuracy of +/- 15%, equivalent to an AACE International Class 3
Estimate, based on the revised mining and processing designs and
updated packages from suppliers and contractors.
As anticipated, costs estimates consider the application of more
conservative cost assumptions to de-risk the project and align with
benchmark costs from Yamana's other operations. These potential
cost increases were identified during the Company's due diligence
process and the optimizations to the mine design, materials
handling, and processing flow sheet described above partly offset
the higher costs. Additional opportunities for cost reduction and
deferment have been identified and continue to be evaluated.
Furthermore, all aspects of the studies, from the office buildings
to the materials handling system and ventilation network, have been
designed to accommodate future mineral reserves growth and mine
life extension, considering a strategic mine life of at least 15
years.
The initial capital cost for Wasamac is expected to be
relatively modest for a 7,000 tpd underground operation, at
approximately $416 million, in part because of the project's
location close to existing infrastructure, accessibility, and
proximity to a skilled workforce and suppliers in Rouyn-Noranda and
throughout the Abitibi-Témiscamingue region. Additionally, the
underground mine is relatively shallow compared to other mines in
the region, allowing for ramp access rather than construction of a
production shaft, which significantly reduces upfront capital
expenditure and allows for a rapid ramp-up in production. The
initial capital is scheduled to be spent in 2024 to 2026, with cost
savings in the processing plant offset by a higher initial mining
capital cost. M odest capital requirements will be spread over
three years, beginning in 2024 and incrementally increasing in 2025
and 2026. The Company plans to fully fund development with
available cash and cash flows.
To allow for a faster ramp-up in production and to ensure that
the mine can sustain a production rate of 7,000 tpd, Yamana has
elected to bring forward underground development to prepare the
mining infrastructure and establish multiple mining zones.
Additionally, Yamana has increased indirect costs to more
conservative levels, including owner's costs, engineering,
procurement and cost management ("EPCM") costs, and contingency to
further de-risk the project.
Total LOM sustaining capital is estimated at $318 million,
mostly for underground mine development and mobile equipment. LOM
sustaining capital is aligned with the higher production rate,
increased mineral reserves footprint and benchmarked underground
development costs per metre. Yamana optimized the mining method and
mine design for productivity and mine development and optimized the
material handling system, reducing total development by
approximately 37,000 metres, or 26%.
Wasamac's wide stopes, typically 10 to 15 metres wide, and
shallow depth below surface, combined with a competent rock mass,
underground conveyor system, and adoption of modern technology, are
expected to establish Wasamac as a low-cost underground mining
operation. Additionally, the metallurgical characteristics of the
mineralization allow for a relatively simple processing flow sheet
using low-cost conventional gold recovery methods. LOM average mine
site operating costs are estimated at $44.9 per tonne processed,
including a mining cost of $28.2, processing cost of $12.3, and
general and administrative ("G&A") cost of $4.5 per tonne. Cost
reductions due to the higher throughput rate and optimized
processing flow sheet are offset by increased unit mining costs,
which are now aligned with benchmark costs from similar underground
operations. The Company will continue to explore opportunities for
cost reduction, including potential synergies with Canadian
Malartic, as the project advances. LOM average cash costs and
AISC(1) are estimated at $640 and $828 per ounce respectively.
At the base case assumptions of $1,550 per ounce gold price and
1.28 Canadian-US dollar exchange rate, the post-tax net present
value ("NPV") at a 5% discount rate is estimated at $254.4 million
and the internal rate of return ("IRR") is 16.1%. The payback
period is estimated at four years after first gold production. At a
gold price of $1,850 per ounce, NPV and IRR increase to $469.6
million and 24%, respectively.
Table 3: Wasamac Sensitivities to Gold Price(i)
Gold Price Assumption $1,400/oz $1,550/oz $1,700/oz $1,850/oz $2,000/oz
Before-tax NPV $296.3M $477.0M $657.6M $838.2M $1,018.8M
---------- ---------- ---------- ---------- ----------
Before-tax IRR 16% 22% 27% 31% 36%
---------- ---------- ---------- ---------- ----------
After-tax NPV $144.4M $254.4M $363.0M $469.6M $575.0M
---------- ---------- ---------- ---------- ----------
After-tax IRR 12% 16% 20% 24% 28%
---------- ---------- ---------- ---------- ----------
Payback period (years) 4.8 4.0 3.5 3.1 2.8
---------- ---------- ---------- ---------- ----------
(i) Economics assuming 5% discount rate
Table 4: Wasamac Project Summary
Total gold production 1,694 thousand ounces
Average metallurgical recovery 88.7% Gold
Average annual gold production
2026 2,000 oz (33 k. tonnes, 2.75/t gold)
120,000
2027 oz (1,594 k. tonnes, 2.65/t gold)
2028 to 2031 (average per 200,000
year) oz (2,520 k. tonnes, 2.78 g/t gold)
2032 to 2035 (average per 171,000
year) oz (2,520 k. tonnes, 2.38 g/t gold)
91,000
2036 oz (1,389 k. tonnes, 2.26 g/t gold)
Average mine site costs per tonne
Mining $28.2 $/t milled
Processing $12.3 $/t milled
G&A $4.5 $/t milled
Total $44.9 $/t milled
Average unit costs
Cash Cost 640 $/oz
All-in Sustaining Cost 828 $/oz
Royalty 1.5% NSR
------------------------------ -------- ----------------------------------
Initial Mine life 10 Years
------------------------------ -------- ----------------------------------
Capital Expenditures
Initial capital Expenditures $416.3 $ million
Breakdown of initial capital expenditures by year
2024 $36.5 $ million
2025 $127.4 $ million
2026 $252.4 $ million
Breakdown of initial capital expenditures by category
Mining $171.5 $ million
Processing $83.2 $ million
Infrastructure $48.0 $ million
Indirects, EPCM & Owner's
Costs $70.3 $ million
Contingency $43.4 $ million
$ million (average $28.9 million
LOM Sustaining Capital $318.0 per year)
------------------------------ -------- ----------------------------------
Project Execution Plan
Yamana expects to commence project construction upon receipt of
all required permits and certificates of authorization by mid-2024.
Construction time to processing plant commissioning is estimated at
approximately two-and-a-half years, with the underground crusher
and conveyor system scheduled for commissioning six months later.
First gold production is scheduled for the fourth quarter of 2026,
with commercial production planned for the fourth quarter of
2027.
Completion of the studies and approval to proceed marks the
first milestone for the project since acquisition. For the
remainder of 2021, Yamana will continue the permitting process
started by the previous owners, with ongoing baseline studies
scheduled for completion by the end of the year and preparation of
the EIA scheduled for completion by the second quarter of 2022. In
parallel with the permitting activities, Yamana will undertake an
extensive exploration program and continue to evaluate the
opportunities identified by the studies.
HSEC and Permitting
Yamana is committed to developing Wasamac as a modern, compact
underground operation with minimal impact on the neighboring
communities and industry-leading working conditions. With this
objective in mind, the studies incorporate feedback received
through consultation with local residents, First Nations, and
authorities, while complying with Yamana's rigorous health, safety,
environment, and community relations standards. Additionally,
Yamana is preparing Wasamac to be the benchmark within the
Company's portfolio and the broader industry as a low carbon
emission operation, and an integral component of the Company's
climate change strategy.
The Wasamac deposit is located halfway between the Évain and
Arntfield districts of Rouyn-Noranda, just south of Route 117. To
minimize the impact on local residents, the processing plant and
most infrastructure will be located to the north of Route 117 and
material and personnel access to the underground mine will be
through a decline under the highway. This solution makes the
underground mine effectively invisible from surface, with the only
surface infrastructure on the south of Route 117 being collars for
ventilation raises for underground primary fans and a borehole for
delivery of cement to the underground paste fill plant.
The Wasamac underground mine is designed to create a safe
working environment and reduce consumption of non-renewable energy
through the use of electric and high-efficiency equipment. Yamana
has selected electric and battery-electric mobile equipment
provided that the equipment is available at the required
specifications. Battery-electric underground haul trucks are not
yet available at the required capacity with autonomous operation so
diesel trucks have been selected in combination with the
underground conveyor. However, Yamana continues to collaborate with
equipment suppliers with the expectation that the desired
battery-electric equipment will be available before Wasamac is in
operation.
Yamana will take advantage of additional technological advances
including ventilation-on-demand and high-efficiency fans to reduce
power requirements. Heating of the underground mine and surface
facilities is designed with the assumption of propane burners, but
an opportunity exists to extend the natural gas line to the project
site. Yamana has initiated discussions with the natural gas
supplier and will study this opportunity further as the project
advances.
The site for the processing plant and offices is confined to a
small footprint strategically located in a naturally concealed
area, and the processing plant has been designed with a low profile
to minimize the visual impact as well as minimize noise and dust.
The tallest building on the project site is the mill building with
a roofline height of 24 metres. The primary crusher, previously
planned to be located on surface, has been moved underground. The
crushed material will be transported to surface from the
underground mining area using conventional conveyors and stored on
surface in a covered stockpile to control dust. The revised waste
rock storage facility design allows for timely revegetation to
assist in visually integrating the facility into the landscape.
Several design improvements have been made to reduce consumption
of fresh water to minimize the effect on watersheds. Underground
mine water will be utilized in the processing plant, minimizing the
draw of fresh water and reducing the required size of the mill
basin pond.
The Wasamac tailings storage strategy is designed to minimize
environmental footprint and mitigate risk. Approximately 39% of
tailings will be deposited underground as paste fill and 61% of
tailings will be pumped as a slurry to the filter plant located
approximately six kilometres northwest of the processing plant and
then hauled to the nearby dry stack tailings storage facility.
Strategic phasing of the tailings storage facility design allows
for the same footprint as previously planned, even with the
increase in mineral reserves. The progressive reclamation plan for
this facility minimizes the possibility of dust generation and
expedites the return of the landscape to its natural state.
Yamana relies on a collaborative approach to ensure the success
of Wasamac. In this regard, our environmental assessment process is
conducted in collaboration with our neighbors and First Nations. A
community relations office will soon be opening its doors to ensure
constant dialogue and accessibility to our team as well as to
information on the project. A campaign of baseline monitoring and
testing is currently underway with the objective of completing the
EIA by the second quarter of 2022.
Yamana expects to receive all permits and certificates of
authorization required for project construction by the third
quarter of 2024. To increase the level of confidence in
metallurgical and geomechanical assumptions, Yamana is considering
the recommendation for an underground bulk sample, which could
commence earlier on a separate environmental permit. The bulk
sample would require ramp access to the underground
mineralization.
Increased Consolidated Production in Quebec
The Wasamac project significantly expands Yamana's footprint in
the Abitibi-Témiscamingue Region in Quebec and solidifies the
Company's overall long-term growth profile. As of 2028, Yamana's
average annual gold production in the province of Quebec, including
production from Wasamac and the Odyssey underground project at
Canadian Malartic, is expected to increase to approximately
450,000-500,000 ounces and sustain this level through at least
2035. Planned infill and exploration drilling campaigns to increase
mineral reserves and mineral resources at both projects have the
potential to increase the Company's average annual production in
Quebec to approximately 500,000 ounces from 2029 through 2039.
Importantly, Wasamac shares a number of similarities with the
Company's Jacobina mine in Brazil, which will allow the Company to
leverage its experience at Jacobina to effectively develop and
optimize the project. Both deposits are relatively wide, with
Wasamac stope widths averaging 12.6 metres, ideal for low-cost bulk
longitudinal stoping with low development requirements.
Additionally, both deposits are relatively shallow and continuous
over significant strike lengths with mining from several sectors
concurrently, allowing for high production rates, increased
operational flexibility, and opportunities for mineral resource and
mineral reserve growth.
Quebec has a rich mining pedigree that dates back more than a
century, significant mining infrastructure, skilled and experienced
miners, and well-established rules and regulations. The Company
looks forward to advancing the Wasamac and Odyssey projects, and it
will continue to evaluate opportunities to expand its portfolio in
northern Quebec that make financial sense and create value for its
stakeholders.
Figure 4: Quebec Gold Production Profile
For figures, please refer to the announcement on Yamana Gold's
website.
https://bit.ly/3zfJYqW
Figure 5: Quebec Gold Production Profile - Upside
For figures, please refer to the announcement on Yamana Gold's
website.
https://bit.ly/3zfJYqW
Wasamac Update Call and Webcast
The Company will hold a conference call and webcast relating to
the Wasamac project on Tuesday, July 20, 2021, from 10:00 am to
11:00 am ET. There will be time for questions from investors on the
call although investors who prefer may wish to send questions in
writing in advance of or during the call by emailing
investor@yamana.com . Please see additional details relating to the
call below.
Dial-In Details
Toll Free (North America): 1-800-806-5484
Toronto Local and International: 416-340-2217
Toll Free UK 00-80042228835
Passcode 7570018#
Webcast: www.yamana.com
Conference Call Replay
Toll Free (North America): 1-800-408-3053
Toronto Local and International: 905-694-9451
Toll Free (UK) 00-80033663052
Passcode: 1176373#
The conference call replay will be available from 1:00 p.m. ET
on July 20, 2021, until 11:59 p.m. ET on August 20, 2021.
Independent Qualified Persons
The studies to corroborate due diligence reviews conducted by
Yamana and update the historical 2018 feasibility study were
prepared under the direction of Ausenco Engineering Canada Inc., by
leading independent industry consultants, all of whom are QPs under
NI 43-101. The QPs have reviewed and approved the content of this
news release. Independent QPs from InnovExplo Inc. and Ausenco who
have prepared or supervised the preparation of the technical
information relating to the studies include: Denis Gourde, P.Eng.,
Alain Carrier, M.Sc., P.Geo., Sébastien Tanguay, P.Eng., Vincent
Nadeau-Benoit, P.Geo, Robert Raponi, P. Eng (PEO).
Qualified Persons
Scientific and technical information contained in this news
release has been reviewed and approved by Sébastien Bernier (P.Geo
and Senior Director, Geology and Mineral Resources). Sébastien
Bernier is an employee of Yamana Gold Inc. and a "Qualified Person"
within the meaning of National Instrument 43-101 - Standards of
Disclosure for Mineral Projects.
About Yamana
Yamana Gold Inc. is a Canadian-based precious metals producer
with significant gold and silver production, development stage
properties, exploration properties, and land positions throughout
the Americas, including Canada, Brazil, Chile and Argentina. Yamana
plans to continue to build on this base through expansion and
optimization initiatives at existing operating mines, development
of new mines, the advancement of its exploration properties and, at
times, by targeting other consolidation opportunities with a
primary focus in the Americas.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Investor Relations
416-815-0220
1-888-809-0925
Email: investor@yamana.com
FTI Consulting (UK Public Relations)
Sara Powell / Ben Brewerton
+44 7931 765 223 / +44 203 727 1000
Peel Hunt LLP (Joint UK Corporate Broker)
Ross Allister / David McKeown / Alexander Allen
Telephone: +44 (0) 20 7418 8900
Berenberg (Joint UK Corporate Broker)
Matthew Armitt / Jennifer Wyllie / Detlir Elezi
Telephone: +44 (0) 20 3207 7800
Credit Suisse (Joint UK Corporate Broker)
Ben Lawrence / David Nangle
Telephone: +44 (0) 20 7888 888
NOTES:
(1) A cautionary note regarding non-GAAP performance measures
and their respective reconciliations, as well as additional line
items or subtotals in financial statements is included in Section
11: Non-GAAP Performance Measures in the Company's MD&A for the
three months ended March 31, 2021 and in the 'Non-GAAP Performance
Measures' section below.
(2) Historical production for the Francoeur and Arntfield mines
is from the Francoeur National Instrument ("NI") 43-101 Technical
Report published by Richmont Mines in August 2012; Historical
production for the Wasamac mine is from the Wasamac NI 43-101
Technical Report published by Monarch Gold in December 2018. Both
NI 43-101 Technical Reports are available on SEDAR at www.sedar.com
, under the respective company's profile.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This news
release contains or incorporates by reference "forward-looking
statements" and "forward-looking information" under applicable
Canadian securities legislation and within the meaning of the
United States Private Securities Litigation Reform Act of 1995.
Forward-looking information includes, but is not limited to
information with respect to the feasibility study update,
anticipated optimizations, including throughput, production,
economics and mine life extension, expected conversion of mineral
resources into mineral reserves; HSEC and permitting objectives and
expectations; anticipated drilling campaigns at the Wasamac
project, and anticipated exploration potential upside as a result
of the recent acquisition of the Francoeur, Arntfield, and Lac
Fortune gold deposits which are in close proximity to the Wasamac
project and the timing of the filing of the updated feasibility
study. Forward-looking statements are characterized by words such
as "plan", "expect", "budget", "target", "project", "intend",
"believe", "anticipate", "estimate" and other similar words, or
statements that certain events or conditions "may" or "will" occur.
Forward-looking statements are based on the opinions, assumptions
and estimates of management of each of the companies considered
reasonable at the date the statements are made, and are inherently
subject to a variety of risks and uncertainties and other known and
unknown factors that could cause actual events or results to differ
materially from those projected in the forward-looking statements.
These factors include, without limitation, unforeseen changes in
the final feasibility update, unexpected HSEC issues, unexpected
delays or issues in receiving necessary permits, impacts on cash
flow, the timing and outcome of the planned exploration work,
changes in national and local government legislation, taxation,
controls or regulations and/or change in the administration of
laws, policies and practices, and the impact of general business
and economic conditions, fluctuating metal prices changes in
mineral resources and mineral reserves, changes in project
parameters as plans continue to be refined, changes in project
development, unanticipated costs and expenses, higher prices for
fuel, steel,
power, labour and other consumables contributing to higher costs
and general risks of the mining industry, failure of plant,
equipment or processes to operate as anticipated, , unanticipated
results of future studies, seasonality and unanticipated weather
changes, costs and timing of the development of new deposits,
government regulation and the risk of government expropriation or
nationalization of mining operations, environmental risks, title
disputes or claims, limitations on insurance coverage, labour
disputes, as well as those risk factors discussed or referred to
herein and in Yamana's Annual Information Form filed with the
securities regulatory authorities in all provinces of Canada and
available at www.sedar.com , and Yamana's Annual Report on Form
40-F filed with the United States Securities and Exchange
Commission. Although all of the companies have attempted to
identify important factors that could cause actual actions, events
or results to differ materially from those described in
forward-looking statements, there may be other factors that cause
actions, events or results not to be anticipated, estimated or
intended. There can be no assurance that forward-looking statements
will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements.
None of the companies undertake any obligation to update
forward-looking statements if circumstances or management's
estimates, assumptions or opinions should change, except as
required by applicable law. The reader is cautioned not to place
undue reliance on forward-looking statements. The forward-looking
information contained herein is presented for the purpose of
assisting investors in understanding the Company's plans and
expectations related to the development of the Wasamac project and
the feasibility study update being completed in connection
therewith, and may not be appropriate for other purposes.
This information is provided by RNS, the news service of the
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