TSX-V: IDM
Q: IDMMF
Last: 0.15 2017-04-27
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British Columbia

Summary

The 'Golden Triangle' of northwestern B.C. hosts multiple large and high-grade past-producing mines and deposits, several of which are approaching potential development. High-grade past-producing gold-silver mines include the Premier, Eskay Creek and Snip operations. Seabridge's KSM Project and Pretivm's Valley of the Kings Deposit host very large previous metal deposits in the same belt of rocks as Red Mountain.

The 17,125 hectare Red Mountain Project is located in northwestern B.C., 15km northeast of the town of Stewart and in Nisga'a traditional territory. Discovered in 1989, the property was explored extensively until 1996 by Lac Minerals Ltd. and Royal Oak Mines Inc., with 466 diamond drill holes and over 2,000 meters of underground development completed, along with extensive engineering and environmental baseline work. Additional studies were completed over the past 12 years by Seabridge, North American Metals Corp. and Banks Island Gold Ltd.

Red Mountain is currently in the Environmental Assessment Process, with active engagement with the Nisga’a First Nation and Federal and Provincial regulators.  IDM is targeting filing an Environmental Application for an underground mine in Q4 of 2016.

In July 2016, IDM announced the results of an updated Preliminary Economic Assessment (“PEA”) authored by JDS Energy and Mining Ltd. The PEA outlines the anticipated low capital and operating costs, robust economic potential and near-term production profile of the Red Mountain underground gold project.

Preliminary Economic Assessment

  • Base case economics utilize a gold price of US$1,250 per ounce and silver price of US$15 per ounce and an exchange rate of C$1.00 equals US$0.80.
  • The pre-tax base case economics indicate a Net Present Value (NPV) of $133.1 million at a 5% discount rate with an Internal Rate of Return (IRR) of 42.4% and a 1.9 year payback of initial capital.
  • The after-tax base case economics indicate a NPV of $86.6 million at a 5% discount rate with an IRR of 32.3% and a 2.0 year payback of initial capital.
  • Due to the wide nature of the mineralized zones, the majority of the deposit is amenable to bulk underground longhole mining methods. The project utilizes a year round design processing rate of 1,000 tonnes per day (tpd) and underground mining rate of 1,500 tpd for 8 months per year.
  • Average life of mine head grade is 7.0 g/t Au and 21.5 g/t Ag
  • Life of project direct operating cost is estimated at US$441 per ounce of gold recovered.  Net of the silver by-product, costs drop to US$418 per ounce.
  • Initial capital costs are estimated at US$89.0 million, CAD$111.2 million, which includes a 10% contingency.    
  • The economic model assumes base case gold recovery rates ranging from 90.1% to 88.0% for gold and 84.6% to 76.0% for silver, depending on the mineralized zone.
  • Average annual payable production has increased by 25% over the 2014 PEA to 70,000 ounces of gold and 194,000 ounces of silver.
  • Mine life is estimated at 5 years with a 15 to 18 month pre-production period.
  • Opportunity to reduce project capital costs include sourcing used mining and processing equipment and possible sharing of infrastructure costs for the road and powerline with an established independent power producer looking to develop a run-of-river hydroelectric project adjacent to the proposed mill site location.
  • Opportunity to increase potentially mineable ounces through the conversion of additional inferred resource by way of infill drilling, as recommended by JDS, and through immediately proximal exploration efforts.

Resource

Mineral Resource Statement for the Red Mountain Gold Project at a 3 g/t Cut-off Grade*

Deposit Class Tonnage Au g/t Ag g/t Au oz Ag oz
  Measured          
MARC   642,800 9.84 38 203,400 784,500
AV   204,500 7.91 21 52,000 136,100
  Measured Total 847,200 9.38 34 255,400 920,700
  Indicated          
MARC   17,100 10.14 25 5,600 13,500
AV   505,000 7.45 21 120,900 333,500
JW   114,100 9.57 13 35,100 48,300
141   158,400 4.82 13 24,500 63,900
  Indicated Total 794,600 7.29 18 186,100 459,100
  Measured & Indicated Total 1,641,800 8.36 26 441,500 1,379,800
  Inferred          
MARC   2,600 12.44 28 1,100 2,300
AV   35,100 10.18 19 11,500 21,600
JW   176,100 7.38 10 41,800 59,300
MARC FW   44,200 6.29 6 8,900 8,700
AV Lower   44,900 5.11 6 7,400 9,100
JW Lower   120,600 4.4 4 17,100 14,200
141   55,000 5.12 6 9,100 9,800
132   69,600 4.81 13 10,700 28,600
  Inferred Total 548,100 6.1 9 107,500 153,700

*Note: 3.0 g/t Au is used as the cut-off grade for underground long hole stoping. Totals may not add due to rounding.

Exploration

The Red Mountain Project has excellent exploration upside with numerous mineralized zones and showings across the Property, including: Rio Blanco, McAdam, Cambria, Marc Extension, Hartley, Mike and Brad Zones. The Red Mountain database contains surface samples. All rock samples (chip, float, subcrop, grab) contain 785 samples that average over 1.0 g/t Au and 136 samples over 10 g/t Au, and 43 samples over 30 g/t Au.

Since the last significant surface work was performed on the Property in 1996, glacial ice has retreated throughout the Property, including areas adjacent to known high-grade showings. Glacial retreat has been over 1,000 meters around the southern portion of the property. Significant potential exists in these unexplored areas. The Mitchell Deposit at Seabridge's KSM Property and Pretvim's Valley of the Kings Deposit were partially discovered due to retreating glacial ice over the past couple of decades.

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