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Galleon Gold files PEA Technical Report for West Cache Gold Project

Feb 23, 2022

Galleon Gold Corp. has filed on SEDAR a Technical Report detailing the Preliminary Economic Assessment and updated Mineral Resource Estimate for the West Cache Gold Project, Timmins.

The PEA was prepared in accordance with National Instrument 43-101 (“NI 43-101”) by P&E Mining Consultants Inc. of Brampton, Ontario, Canada with an effective date of January 10, 2022. The Technical Report can be found on the Company’s website (www.galleongold.com) and on SEDAR under the Company’s profile (www.sedar.com).

PEA Highlights – West Cache Gold Project 

  • Pre-Tax Net Present Value at a 5% discount rate (“NPV5%”) of $378 million with Internal Rate of Return (“IRR”) of 33.7%; 3.0 year payback at US$1,700/oz gold price
  • After-tax NPV5% of $240 million with IRR of 26.7% and 3.3 year payback
  • 11 year Life of Mine (“LOM”) plus two year ramp-up. Production at 2,400 tpd
  • 940,200 ounces of gold mined over Life of Mine (“LOM”) with average annual production of 85,500 ounces. Recovered gold is estimated at 893,200 ounces over the LOM.

Updated Mineral Resource Estimate Highlights  (underground Mineral Resource at 1.6 g/t Au cut-off grade)

  • Significant increase in the grade and total ounces in the Indicated and Inferred Mineral Resource classifications
  • Indicated Mineral Resource of 472,000 ounces (4,051 kt at an average grade of 3.63 g/t Au)
  • Inferred Mineral Resource of 1,088,000 ounces (11,788 kt at an average grade of 2.87 g/t Au)

PEA Financial Results Summary

The economic analysis was performed assuming a 5% discount rate. A summary of project economics is listed in Table 1. On a pre-tax basis the NPV5% is estimated at $378 million, IRR at 33.7 % and payback over 3.0 years. On an after-tax basis: NPV5% is estimated at $240 million, IRR at 26.7 %, and the payback in 3.3 years.

Mine Design and Production Schedule

Planned mineral extraction utilized 20 separate geological domains covering an area of 2.1 km x 1.2 km. The Deposit extends to a depth of over 1.0 km from the surface, with extraction targets covering the entire vertical extent. Due to the large areal extent of the Mineral Resource, it has been divided into four mining areas (Mines A-D) with separate portals. 

Each mining area is further sub-divided into mining “Blocks” to increase available working faces and limit development requirements prior to commencement of production. Ramps developed from each portal will provide access to the Deposit. Extraction of mineralized material will use the longhole retreat stoping method with cemented hydraulic backfill. Sublevels have been planned at 30 m vertical intervals. Mining equipment will consist of 30 tonne trucks with 7 and 10 tonne load-haul-dump units.

Production has been scheduled at 2,400 tpd which is equivalent to 880,000 tpa.

Operating Costs

Under this PEA, mining and development will be performed entirely by Company personnel, with an owned equipment fleet.  Mining equipment will be leased over five-year terms. Processing will be performed at an offsite toll process plant in the Timmins area, with tailings backhauled from the process plant to the West Cache site for use as backfill.  A contractor will be engaged to transport mineralized material to the toll process plant and backhaul tailings. 

Capital Costs

Initial capital costs are estimated at $150 million and are relatively low for a project of this size since they do not include construction of a process plant or a tailings storage facility. The majority of initial capital costs will be for underground mine development since the Mineral Resource extends over a large area.  Infrastructure costs are minimal due to the close proximity of the site to Timmins, Highway 101 and an existing powerline. Sustaining capital is estimated at $199 million over the LOM and is primarily for mine development. 

Updated Mineral Resource Estimate

The Mineral Resource Estimate was based on the results of 557 holes and 210,000 metres of drilling, including 213 holes with 46,380 metres of surface diamond drilling completed since the Company acquired the project. Geological modeling undertaken as part of a Mineral Resource Estimate announced last year (see September 8, 2021 news release) identified un-assayed areas from historical drilling with significant gold potential by projecting known gold zones intersected in the 2020-2021 drill program. The Company undertook a re-log and sampling program as well as verified assay data from third party drilling in 2015-2016. These recent results identified additional areas of better geological continuity and were used to re-build the Mineral Resource model wire-frames and mine plan from a combined open pit/underground approach to the all-underground mine plan design used in the current PEA.

The Mineral Resource Estimate for the West Cache Project, with an effective date of January 10, 2022, is summarized in Table 6, while Table 7 provides select cut-off grade sensitivities.  

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Next Steps

The results for the PEA, using the base case assumptions, indicate the West Cache Project has both technical and financial merit. The project’s next steps include:

  • Infill drilling to increase near-mine Mineral Resources and convert Inferred Mineral Resources to the Indicated classification
  • Additional drilling along strike and dip to extend mineralization as well as identify new high-grade mineralized shoots
  • Deeper exploration drilling to test plunge and area between Zone #9 and West Deep
  • Step-out drilling to test regional targets outside of the known Mineral Resource area– only 10% of the project area has been drill tested
  • Continue baseline and permitting studies in support of bulk sample application
  • Commence planning and studies for initial ramp engineering for bulk sample



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