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Hasbrouck Project
The Hasbrouck Property (“Hasbrouck” or the
“Property”) is comprised of the Hasbrouck and
Three Hills Deposits. The Hasbrouck Deposit is
located approximately five miles south of the
town of Tonopah in Esmeralda County, Nevada,
adjacent to US Highway 95 and approximately
halfway between Reno and Las Vegas. The Three
Hills Deposit is located in east central
Esmeralda County, approximately one mile west of
the community of Tonopah, Nevada, and
approximately six miles north of the Hasbrouck
Deposit.
Hasbrouck Project General Description
Allied Nevada completed a Preliminary Economic
Assessment (“PEA”) for the Hasbrouck Project in
2012, which is detailed in the
April 11, 2012
Technical Report. The PEA indicates that the proposed
development of a heap leach operation to process
both Hasbrouck and the nearby Three Hills
mineral resources is expected to be economically
robust with low execution risk.
The PEA was developed by Allied Nevada technical
staff with contributions from a number of
specialist consultants. All dollar amounts are
in U.S. currency. Economics are estimated using
metal selling prices of $1,000 per ounce for
gold and $18 per ounce for silver. The inferred
resource was estimated using a gold price of
$800 per ounce and a silver price of $14 per
ounce.
Highlights of the Preliminary Economic
Assessment
- Inferred mineral resources of 1.2
million ounces of contained gold and 29.3
million ounces of contained silver (128.6
million tons grading 0.009 opt Au and 0.228
opt Ag)
- Net Present Value ("NPV") of $98.7
million, after tax and royalties, at a 6%
discount rate
- Internal rate of return ("IRR") of 60%,
after taxes and royalties, and 18-month
payback
- Average annual production of 135,000
ounces of gold and 540,000 ounces of silver
at an average annual adjusted cash cost1 of
$555 per ounce for a five year mine life
- Initial capital cost of $78.1 million
(life-of-mine capital cost of $90 million)
for a conventional run-of-mine and crushed
heap leach facility
- Production plan assumes mining and
processing the nearby Three Hills
mineralization ahead of Hasbrouck
mineralization
- Potential to extend mine life as the
Hasbrouck deposit remains open and the
Company intends to explore other regional
opportunities
Hasbrouck would be mined and processed as a
conventional open pit, heap leach operation.
Mining equipment that is currently being
replaced at Hycroft by a larger fleet is planned
to be overhauled and transitioned to Hasbrouck
including the semi-mobile crushers.
The capital cost estimate assumes refurbishing
costs for the smaller mobile equipment that will
be transitioned from Hycroft to Hasbrouck, as
well as engineered estimates, direct quotations,
when available, and industry guidelines.
Operating costs were developed using industry
standard estimates and current labor and
commodity pricing in effect at Hycroft at the
time of the PEA. The PEA is preliminary in
nature and includes inferred mineral resources
that are considered too speculative geologically
to have the economic considerations applied to
them that would enable them to be categorized as
mineral reserves. There is no certainty that the
PEA will be realized.
The financial model was sensitized to various
metals prices and the results are shown below:
Metal
Prices
Au Ag |
NPV 0%
$ Million |
NPV 6%
$ Millions |
IRR
% |
Adjusted
Cash Cost
$/ounce |
|
$800
$14 |
$49.9 |
$29.1 |
28% |
$550 |
|
$1,000
$18 |
$147.1 |
$98.7 |
60% |
$555 |
|
$1,200
$21 |
$238.1 |
$164.8 |
104% |
$560 |
|
$1,400
$25 |
$330.2 |
$230.3 |
138% |
$565 |
* Adjusted cash costs assume
silver revenue as a byproduct credit to costs
Base line environmental studies have begun at
Hasbrouck to initialize the permitting program.
It is anticipated that the mine could receive
permits to begin construction in the second half
of 2014. For the purposes of the PEA, it is
assumed that permits to begin construction could
be received in the second half of 2013 and,
subject to completing a positive feasibility and
a decision by the Board to begin production,
operations could begin in 2015.
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