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 Gold Project is located in northwestern B.C., 15km northeast of the town of Stewart and within Nisga’a traditional territory. Discovered in 1989 the property was explored extensively until 1996 by Lac Minerals Ltd. and Royal Oak Mines Ltd, 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.
In April 2014, the Company entered into an Option Agreement to acquire Red Mountain Project from Seabridge. The acquisition of the Red Mountain Project was completed in May 2017 and is owned 100%, subject to certain underlying agreements and royalties, by IDM Mining.
In June 2017, the Company announced the results of a Feasibility Study that confirmed the positive economics for a near term high-grade, bulk mineable underground operation at Red Mountain. Highlights of the Feasibility Study can be found below.
In addition, the Red Mountain Gold Project is well advanced in the environmental assessment process and the Company anticipates receipt of Environmental Assessment approval during the first half of 2018.
Ongoing resource expansion underground and surface drilling has continued during the 2017 field season, targeting near-mine areas with the objective of increasing reserves and resources, potentially extending the mine-life at the Red Mountain property.
Feasibility Study Highlights
(all currencies are reported in Canadian dollars unless otherwise specified)
- Base case economics utilize a gold price of US$1,250 per ounce and silver price of US$17 per ounce and an exchange rate of C$1.00 equals US$0.76;
- The pre-tax base case economics indicate a Net Present Value (NPV) of C$155 million at a 5% discount rate with an Internal Rate of Return (IRR) of 40% and a 1.7 year payback of initial capital;
- The after-tax base case economics indicate a NPV of C$104 million at a 5% discount rate with an IRR of 32% and a 1.9 year payback of initial capital;
- Due to the wide nature of the mineralized zones, the majority of the deposit is amenable to bulk underground mining methods. The project utilizes a year-round design processing rate of 1,000 tonnes per day (tpd) with year-round underground mining;
- Average life of mine fully-diluted head grades are 7.53 g/t Au and 21.86 g/t Ag;
- Life of project direct cash cost is estimated at US$539 per ounce of gold recovered. Net of the silver by-product, costs drop to US$492 per ounce;
- Initial capital costs are estimated at C$135.7 million, which includes a 10% contingency;
- The economic model assumes base case gold recovery rates ranging from 92.8% to 88.1% for gold and 90.3% to 78.3% for silver, depending on the mineralized zone;
- Average annual payable production of 78,000 ounces of gold and 215,000 ounces of silver;
- Mine operating life is estimated at 5.4 years with an overall construction and commissioning period of approximately 15 months;
- 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 hydro-electric project adjacent to the proposed mill site location; and,
- Opportunity to increase potentially mineable ounces north of the current resource area, where mineralization has been traced for a further 800 meters. Additionally, further resources may be identified through further drilling both up and down-dip from the AV and JW Zones, and along strike from the 141 Zone and Marc Zone.
Summary of Estimated Resources as of January 23, 2017, reported at 3.0 g/t AU cut-off
|Classification||Tonnage||Au (g/t)||Ag (g/t)||Oz Au||Oz Ag|
|Measured + Indicated||2,074,700||8.75||25||583,700||1,655,700|
(1) Measured and Indicated Resources are inclusive of Reserves
(2) Resources that are not mineral reserves do not have demonstrated economic viability
Summary of Estimated Mineral Reserves as of June 26, 2017
1. A gold price of US$1,250/oz and an exchange rate of CDN$1.00 to US$0.76.
2. A gold cut-off grade of 3.55 g/t for longhole mining and 4.10 g/t for development and cut & fill mining.
3. Silver was not used in the estimation of cut-off grades but is recovered and contributes to the revenue stream.
4. Rounding as required by reporting guidelines may result in summation differences.
- The Red Mountain Gold Project has excellent exploration upside with no significant surface work on the property since 1996, glacial ice has retreated throughout the property, including areas adjacent to known high-grade showings
- Ongoing surface work identified multiple prospects and the new discovery at Lost Valley
- Potential to add high-grade underground resources north of JW Zone and at 141 Zone
- 16 km trend of prospective geology, mineralized showings
- Geological analogue to KSM: intrusions along early Jurassic growth faults
- Widespread > 1g/t Au gold mineralization similar to Snowfield, Mitchell Deposit. The Red Mountain project has numerous mineralized zones and showings which are open for expansion