Newcore Gold Announces Positive Updated Preliminary Economic Assessment for the Enchi Gold Project, Ghana

PEA Highlights 

• Strong Project Economics with Low Capital Intensity
  • At a gold price of $1,650/oz: $333 million pre-tax net present value discounted at
    5% («NPV_5%«) and a 54% pre-tax internal rate of return («IRR»), $212 million after-tax NPV_5%, and a 42% after-tax IRR.
  • At a gold price of $1,850/oz: $471 million pre-tax NPV_5% and a 69% pre-tax IRR,
    $302 million after-tax NPV_5%, and a 54% after-tax IRR.
  • Initial capital costs estimated at $97 million, with a short after-tax payback of 2.3 years.
• Establishing the Potential for a Robust Project with Significant Growth Potential
  • Average annual gold production in years two through five of 104,171 ounces gold;
    983,296 ounces gold recovered over an 11-year life of mine («LOM»).
  • LOM strip ratio of 2.1 to 1, mined grade of 0.57 g/t gold and recovery of 79%.
  • LOM operating costs ⁽¹⁾ estimated at $923/oz of gold, cash costs ⁽²⁾ estimated at $1,043/oz of gold, LOM all-in sustaining costs (AISC) ⁽³⁾ estimated at $1,066/oz of gold.
• Updated Mineral Resource Estimate, Including an Initial Resource at Kwakyekrom
  • The PEA includes an updated Inferred Mineral Resource Estimate of 70.4 Mt grading 0.62 g/t Au containing 1.4 million ounces gold.
  • Incorporates 20,195 metres of drilling completed at Enchi in 2020 and early 2021.
• Additional Exploration Upside from Ongoing 66,000 Metre Drill Program at Enchi
  • 46,000 metres of additional drilling was not included in the Mineral Resource Estimate.
  • Exploration and drilling activities continue on the Enchi Gold Project, with drilling testing a series of highly prospective targets directed at extending the existing Mineral Resources along strike and down dip, further drilling of advanced gold targets across the 216 km² property, and first pass testing of multi-kilometre scale gold anomalies.
  • Recent drilling results not included in the PEA Mineral Resource Estimate have intersected wide zones of oxide gold mineralization as well as high-grade core structures including 5.40 g/t Au over 9.0 m, 5.78 g/t Au over 7.0 m, 6.25 g/t Au over 6.0 m, 3.31 g/t Au over 9.0 m, and 2.95 g/t Au over 9.0 m and remain open along strike and to depth.

Note: All currencies in this news release are reported in U.S. dollars unless otherwise specified. Base case parameters assume a gold price of $1,650/oz. NPV calculated as of the commencement of construction and excludes all pre-construction costs. Cash costs and AISC are non-GAAP financial measures (see cautionary language).
(1) Operating costs consist of mining costs, processing costs, and on-site G&A.
(2) Cash costs consist of operating costs plus treatment and refining charges, and royalties.
(3) AISC consists of cash costs plus sustaining capital (excluding closure costs and salvage value).

Luke Alexander, President and CEO of Newcore stated, «The updated PEA is a notable milestone for Newcore as we look to highlight the value of not only the exploration upside across the district scale property but also the economic value of the current resources that we have defined on the Project. The PEA results indicate that Enchi is an economically robust, low capital intensity, heap leach project with an after-tax NPV_5% of $212 million and after-tax IRR of 42% at a gold price of $1,650 per ounce. Importantly, the economics also highlight the quick payback of capital, approximately 2 years after first gold pour. We believe that the Project and economics have a tremendous amount of upside from resource expansion both from shallow, near surface oxide mineralisation, but also from the higher-grade structures that we are starting to define at depth. This PEA only includes 20,195 metres of drilling from our ongoing 66,000 metre drill program, and only incorporates the shallow, open pit oxide material defined to date, with the first deeper drilling on the project underway to define the potential for resource growth at depth. We are excited to continue to define the district-scale, multi-million-ounce potential at Enchi and build off the underpinning of value that the updated PEA highlights.»

Greg Smith, Vice President of Exploration of Newcore stated, «The PEA includes an updated Mineral Resource Estimate which has increased the pit constrained Inferred Mineral Resource to 70.4 Mt grading 0.62 g/t Au and containing 1.4 million ounces gold. The expansion was accomplished by extending the existing resources along strike and down dip, along with the inclusion of an initial resource estimate at Kwakyekrom which is interpreted to be an extension of the same structure hosting the Nyam Gold Deposit three kilometres to the north. All mineral resources remain open along strike and in all cases are defined by kilometre-scale gold-in-soil anomalies on surface and geophysical anomalies which characterize the structural trends. The inclusion of a shallow oxide resource at Kwakyekrom highlights the potential to discover additional deposits across the Project. We will continue to work towards defining the district scale potential of the Enchi Gold Project through our ongoing 66,000 metre drill program.»

This updated PEA for the Enchi Gold Project was prepared by BBA, in accordance with NI 43-101 Standards of Disclosure for Mineral Projects, and a technical report for the PEA will be filed by Newcore on SEDAR within 45 days of this news release.

The PEA is preliminary in nature, includes Inferred mineral resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that PEA results will be realized. Mineral resources are not mineral reserves and do not have demonstrated economic viability.

PEA Overview And Financial Analysis
The Enchi Gold Project is located in southwest Ghana, with the Project’s 216 km² land package covering approximately 40 kms of Ghana’s prolific Bibiani Shear Zone, a gold belt which hosts several multi-million-ounce gold deposits. Enchi is located 50 km to the south of Kinross’ Chirano gold mine which produced approximately 165,000 ounces of gold in 2020.

The updated PEA contemplates an open pit, heap leach operation with a low strip ratio using contract mining and processing 6.6 mtpa (approximately 18,000 tonnes per day). The heap leach facility will be built in three phases, with excess capacity available. Heap leach feed material will be trucked from four deposits (Sewum, Boin, Nyam, Kwakyekrom) to a central crushing and heap leach facility which will be located near Sewum, the largest currently defined deposit at Enchi.

A summary of the cash flow model can be viewed at the following link:
https://newcoregold.com/site/assets/files/5703/2021_06-ncau-pea-nr-summary-cash-flow-model-l.pdf

A conceptual heap leaching facility has been designed, with the facility processing oxide, transition and fresh rock mineralization.

Testwork completed in 2020 on the Sewum and Boin Gold Deposits consisted of a series of bottle roll tests on 49 representative oxide samples (29 from Sewum, 20 from Boin) from the ongoing 66,000 metre drill program. An average gold recovery of 89.4% was achieved from 24-hour bottle roll tests, with 43 of the 49 samples achieving a recovery greater than 75%. The samples from Sewum had an average recovery of 91.4% and the samples from Boin had an average recovery of 86.4%. Sewum and Boin are the two deposits on the Project that currently represent the majority of the Inferred Mineral Resource. Testwork completed in 2021 on the Kwakyekrom Gold Deposit consisted of a series of bottle roll tests on 25 representative oxide samples from the ongoing 66,000 metre drill program. An average gold recovery of 79.8% was achieved from 24-hour bottle roll tests, with 18 of the 25 samples achieving a recovery greater than 80% and averaging 86.9%.

Additional metallurgical test work is underway as part of the ongoing work program at Enchi, including column tests to better simulate heap leach conditions and further test for optimal crushing size, reagent consumption and leach permeability. Initial testwork supports cyanide leaching as a viable option for the extraction of gold from the three domains, but further work on the metallurgical behavior and physical constraint associated with heap leaching is still required to definitively select heap leaching as the best technical process option.

Capital Costs
An initial capital expenditure of $97 million (including 30% contingency on direct costs) has been estimated to construct the Project, with a further $23 million in sustaining capital during operations, $23 million for closure (including reclamation) and $14 million of salvage value. The capital cost estimate is based on an open pit mining and heap leach operation processing 6.6 mtpa utilizing contract mining. Capital costs are detailed in the table below.

Construction is estimated to be 15 months. The Enchi Gold Project benefits from relatively flat terrain (rolling hills) and simple infrastructure, limiting the amount of earthworks required. The initial capital costs reflect an estimate for the design and development of the plant and mine infrastructure that includes crushing, agglomeration, heap leaching, processing ponds and a gold recovery plant. The heap leach pads will be built in three phases, with a third of the cost upfront and the remainder included in sustaining capital in years three and six.

Reclamation and closure costs have been estimated based on the preliminary infrastructure plans and are inclusive of an allowance for rehabilitation monitoring and care and maintenance for three years post completion of mining.

Site Infrastructure
A proposed site plan for the Project can be viewed at the following link:
https://newcoregold.com/site/assets/files/5703/2021_06-ncau-enchi-pea-site-layout-l.pdf

The Project area has limited to moderate infrastructure. A paved road crosses the central portion of the Project leading to the town of Enchi. The remainder of the Project is serviced by a series of gravel roads. As such, the majority of infrastructure works are anticipated to be greenfields. Ghana’s current electrical generation capacity of 2,125 megawatts is made up of about 50% hydro and 50% thermal plants. There is a 33 kV electrical line available near the Project, located approximately 10 kilometres from the proposed plant site, with prospective options for connection routes dependent on demand and capacity required. The electrical power supply, for the mining operations and heap leach facility, will be a combination of grid and diesel generated.

The anticipated infrastructure for the Project includes mine dry facilities, equipment maintenance workshop, refuelling facilities, explosive magazine, office administration facilities, assay laboratory, and warehouse facilities. As well as, access roads, stockpiling areas, storm water handling facilities, water supply, power supply network, diesel generators, sewage treatment plant, and waste management facilities. Given the Project’s proximity to the town of Enchi, it is assumed that no onsite accommodations will be required. Accommodations for expatriate and some senior staff may be provided through rental houses in the town of Enchi.

Modern seaports at Takoradi and Tema are located 207 km and 447 km southeast of the Project, respectively, and have been used for the implementation and construction of several gold mines in recent years.

The Enchi Gold Project currently totals 216 km² with 40 kms covering the Bibiani Shear Zone, a well-known gold belt in Ghana that hosts multi-million ounce gold deposits. The Project is located 50 kms south of Kinross’ Chirano Mine.

Operating Costs
The Project is modelled as a near surface, open pit, heap leach mine with heap leach feed material trucked from four deposits (Sewum, Boin, Nyam, Kwakyekrom) to a central crushing and heap leach facility which will be located near Sewum.

Operating costs for the life of mine are estimated at $908 million. Cash costs over that time are estimated at $1,025 million and include operating costs, royalties and refining charges. A 5% royalty on revenues is due to the Government of Ghana, and a 2% NSR royalty is due to Maverix Metals Inc. Camp costs for the Enchi Gold Project are lower relative to other projects because of the Project’s proximity to the town of Enchi where most administrative facilities can be located.

Operating costs are summarized in the table below.

Processing Costs
An average processing cost of $5.28 per tonne of material leached was used in the economics, based on the designed process flowsheet. This includes crushing, agglomeration, heap leach operation, recovery plant, general site maintenance, and process labour.

Infrastructure and On-Site G&A
Operating costs related to infrastructure includes gravel road maintenance, providing for annual replacement of the wear course layer of the site gravel roads.

On-site G&A includes costs related to on-site company personnel, management cost charged by the mining contractor, and mineral tenure fees. An annual total of $180,000 has also been allocated for corporate and social responsibility (~$2/oz of gold produced LOM).

Mineral Resources
As part of the updated PEA, the Inferred Mineral Resource for the Project was updated to reflect additional drilling completed in 2020 and early 2021. The resource update includes 20,195 metres of RC drilling from the Company’s ongoing 66,000 metre drill program. The resource also reflects additional rock density work that was completed as part of the updated PEA, with a density of 2.20 g/cm³ for oxide, 2.45 g/cm³ for transition, and 2.70 g/cm³ for fresh rock applied. Previous mineral resource estimates used a density of 2.45 g/cm³ globally.

BBA also evaluated the pit constrained Inferred Mineral Resource Estimate for Enchi at a range of cut-off grades between 0.1 g/t Au and 0.5 g/t Au (Table 8 below).

The resource includes four deposits Sewum, Boin, Nyam and Kwakyekrom, each of which is open along strike and down dip. A number of additional exploration targets have also been identified outside of the existing resource area that present an opportunity for significant resource growth.

Mining and Production Schedule
A three-dimensional mining block model was created from the mineral resource block model for each deposit. The pit optimizations were conducted using the Deswik software, which runs the pseudoflow algorithm to determine the optimum pit shell.

Mining would occur in a series of 10 open pits across the four deposits with depth ranging from approximately 20 to 180 metres. The open pits have been designed with 10 metre bench heights, inter ramp slope angles of 41 and 43 degrees for oxide and transition material and 54 degrees for fresh rock with ramp widths of 21 metres at a 10% maximum gradient. Table 9 presents the subset of mineral resources within the pit designs which was calculated based on cut-off grades ranging from 0.14 to 0.24 g/t gold. For Boin and Sewum, mining dilution was estimated at 4% with a grade of 0.07 g/t Au and a mining recovery of 97%. For Nyam and Kwakyekrom, mining dilution was estimated at 12% with a grade of 0.10 g/t Au and a mining recovery of 94%. The strip ratios by deposit are outlined in Table 9 below.

Mining will be done using contract services under the supervision of Newcore and the PEA considers using a conventional truck and shovel operation. The mine production schedule is based on two 12-hour shifts, seven days a week for a total of 360 days per year.

A summary of the production schedule can be viewed at the following link:
https://newcoregold.com/site/assets/files/5703/2021_06-ncau-pea-nr-summary-production-profile-l.pdf

Enchi Gold Project Opportunities
A number of opportunities that may potentially improve the economics of the Enchi Gold Project have been identified, including:

• Expansion of the current open pits through further drilling at Sewum, Boin, Nyam and Kwakyekrom to define the potential for resource expansion both below and on strike from the current Inferred Mineral Resource.
• Incorporating drill results from an additional 46,000 metres of drilling that is not included in the updated Mineral Resource Estimate and is being completed as part of our ongoing 66,000 metre drill program.
• Additional metallurgical testwork to confirm and optimize gold recoveries, reagent consumption and flowsheet design.
• Potential to define further resource areas across the property at drill targets that do not currently have defined mineral resources but have prior drilling (Kojina Hill, Eradi).
• Follow-up on high priority airborne geophysical structural targets on the 216 km2 Project to define further potential targets across the property (Nkwanta, Tokosea, Sewum South).
• Deeper drill holes have begun to identify the potential to define higher grade gold mineralization at depth that may lead to the optimal processing methodology being a milling scenario designed for higher recoveries.

Drill Results Outside of PEA and Inferred Mineral Resource
A 66,000 metre discovery and resource expansion drilling program is underway at Enchi, with only 20,195 metres of the drill program incorporated into the updated PEA and updated Mineral Resource Estimate. The program includes both RC and diamond drilling and will include the first deep drilling planned on the Project. This drill program includes testing extensions of the existing resource areas while also testing a number of high priority exploration targets outside of the Inferred Mineral Resource. Drilling is focused on step out extensions and exploration drilling at the Sewum, Boin, Nyam and Kwakyekrom Deposits. Additional drilling is planned at previously drilled zones that are outside of the resource area (Kojina Hill and Eradi), along with first pass drilling to test a series of multi-kilometre-scale gold-in-soil anomalous zones with no prior drilling (Nkwanta, Sewum South and other anomalies). All zones represent high priority targets based on geological, geochemical and geophysical surface work and previous trenching and drilling.

Highlights from the ongoing drill program that are not incorporated in the PEA include:
Sewum Gold Deposit
Drilling has now expanded the drill tested strike extent at Sewum to 3.5 kilometres, with approximately 50% of the surface anomaly untested to date. The current pit constrained mineral resource at Sewum is defined across a strike extent of 2.4 kilometres. Key highlights:

• Drilling has intersected widespread gold mineralization with wider zones and higher grades associated with jogs in the controlling structure or with the intersections of multiple structures.
• Highlights from recent drilling, which highlights the potential to continue to expand the Sewum Deposit, include:
  • Hole SWRC093 which intersected 0.60 g/t Au over 17.0 m from 32 m (oxide) and 0.82 g/t Au over 103.0 m from 61 m (sulphides) which was drilled on the edge of the current resource and open for expansion to the north.
  • SWRC094 with 1.26 g/t Au over 16.0 m from 115 m and 2.35 g/t Au over 8.0 m from 175 m which is one of the deepest current intercepts at Sewum and highlights the potential to extend the resource to depth.
• Additional 3,663 metres of drilling has been completed as part of the ongoing drill program that will be included in a future update of the mineral resource estimate.

Boin Gold Deposit
Drilling has now expanded the drill tested strike extent at Boin to over four kilometres, with approximately 50% of the surface anomaly untested to date. The current pit constrained mineral resource at Boin is defined across a strike extent of three kilometres. Key highlights:

• Wide-spaced exploration drilling has extended gold mineralization both 400 metres to the north and one kilometre to the south of the current limits of the mineral resource open pits.
• Highlights from drilling outside of the resource area include:
  • Hole KBRC236 intersected 0.90 g/t Au over 69.0 m from 55 m, including 2.06 g/t Au over 12.0 m from 61 m (mixed oxide and sulphide zone).
  • Hole KBRC185 intersected 0.85 g/t Au over 67.0 m from 137 m, including 2.95 g/t Au over 9.0 m from 137 m (sulphide zone).
  • Hole KBRC190 intersected 1.14 g/t Au over 36.0 m from 119 m, including 1.72 g/t Au over 18.0 m from 124 m (sulphide zone), as well as a second zone with 0.61 g/t Au over 8.0 m from 103 m (sulphide zone).
  • Hole KBRC241 intersected 1.02 g/t Au over 36.0 m from 76 m, including 2.58 g/t Au over 7.0 m from 95 m (mixed oxide and sulphide zone), as well as an upper zone in the oxides grading 1.75 g/t Au over 9.0 m from 34 m.
  • Hole KBRC225 intersected two gold mineralized zones returning 1.51 g/t Au over 2.0 m from 23 m (oxide zone) and 0.67 g/t Au over 39.0 m from 70 m (mixed oxide and sulphide zone), including 1.60 g/t Au over 8.0 m from 95 m (sulphide zone).
• Additional 8,340 metres of drilling in 60 holes has been completed as part of the ongoing drill program that will be included in a future update of the mineral resource estimate.

Nyam Gold Deposit
Drilling has now expanded the drill tested strike extent at Nyam to 1.8 kilometres, with approximately 40% of the surface anomaly untested to date. The current pit constrained mineral resource at Nyam is defined across a strike extent of 1.4 kilometres. Key highlights:

• The deepest intersections of mineralization to date have been drilled at Nyam, with mineralization now defined to a vertical depth of 200 metres. This drilling has intersected wide zones of gold mineralization containing higher grade core structures.
• Highlights from drilling outside of the resource area include:
  • Hole NBRC045 intersected 1.57 g/t Au over 40.0 m from 179 m, including 5.40 g/t Au over 9.0 m from 185 m (sulphide zone).
  • Hole NBRC047 intersected 1.94 g/t Au over 25.0 m from 222 m, including 5.78 g/t Au over 7.0 m from 227 m (sulphide zone).
  • Hole NBRC024 intersected 1.34 g/t Au over 27.0 m from 57 m (sulphide zone), as well as a second zone with 3.45 g/t Au over 9.0 m from 93 m (sulphide zone).
  • Hole NBRC044 intersected 1.17 g/t Au over 26.0 m from 41 m (oxide zone).
  • Hole NBRC025 intersected 0.84 g/t Au over 32.0 m from 92 m (sulphide zone).
• Additional 5,235 metres of drilling has been completed as part of the ongoing drill program that will be included in a future update of the mineral resource estimate.

Kwakyekrom Gold Deposit
Drilling has now expanded the drill tested strike extent at Kwakyekrom to 1.3 kilometres, with approximately 40% of the surface anomaly untested to date. The current pit constrained mineral resource at Kwakyekrom is defined across a strike extent of 500 metres. Key highlights:

• Kwakyekrom is interpreted to be an extension of the Nyam structure and is located five kilometres south of the Nyam Deposit. The gold mineralization is open along strike and down dip with recent drilling extending the drill tested portion of the system by 500 metres to the south and providing the deepest intercepts to date.
• Highlights from drilling outside of the resource area include:
  • Hole KKRC051 intersected 0.61 g/t Au over 50.0 m from 148 m, including 1.36 g/t Au over 9.0 m from 164 m (sulphide zone).
  • Deepest intercepts to date on the central portion of the Kwakyekrom Deposit, with hole KKRC056 crossing the main structure approximately 150 metres vertically below surface intersecting an upper intercept of 0.96 g/t Au over 15.0 m from 110 m (sulphide zone), including 1.46 g/t Au over 9.0 m from 110 m, and a second interval of 0.94 g/t Au over 29.0 m from 160 m (sulphide zone), including 2.65 g/t Au over 6.0 m from 170 m.
  • Hole KKRC055 intersected two gold mineralized zones, 1.21 g/t Au over 4.0 m from 8 m (oxide zone) and 0.94 g/t Au over 13.0 m from 108 m (sulphide zone).
  • Hole KKRC065, the most southernly drilled hole to date and a 500-metre step-out to the south from prior drilling, intersected 0.90 g/t Au over 11.0 m from 94 m (sulphide zone).
• Additional 2,183 metres of drilling has been completed as part of the ongoing drill program that will be included in a future update of the mineral resource estimate.