Solitario Announces Updated Mt. Hamilton Feasibility Study Significantly Higher Production, Grade and Increased Resources
October 20, 2014
Denver, Colorado: Solitario Exploration & Royalty Corp. ("Solitario;" NYSE MKT: XPL; TSX: SLR) and Ely Gold & Minerals ("Ely Gold;" TSX.V: ELY)
are pleased to announce the results of an updated Mt. Hamilton
Feasibility Study ("2014 FS") that focused on optimizing gold production
during the early mine life to enhance project economics. Recent
drilling, engineering and detailed mine planning have facilitated
significantly higher annual gold production for the first four years,
higher reserve grade and increased resources for the project compared to
the original Mount Hamilton Feasibility Study completed in February
2012 ("2012 FS").
2014 Mt Hamilton Feasibility Study Base Case (Gold: $1,300; Silver: $20.00):
Production Rate/Mine Life: 10,000 tons ore per day (350 days/yr.) / 7 years
Average Gold Recovery: 76.2% (70% of recoverable gold in first 30 days of processing)
Average Silver Recovery: 39%
Life of mine stripping ratio: 2.47:1.0 (waste:ore (includes stockpiled ore))
Initial Capital Cost: $91.7 M (includes $9.0 M contingency)
Sustaining Capital: $29.8 M (includes $2.4 M contingency and $10.1 M end-of-mine closure costs)
Working Capital: $8.4 M
Underlying NSR-Royalty: 3.4%
Cash Costs per Gold-Equivalent ("AuEq") Ounce* Recovered: $558
Avg. Annual AuEq Production: 73,000 oz (during 6.1 year active mining period)
Avg. Annual Gold Production: 68,600 ounces
Avg. Annual Silver Production: 279,400 oz.
*Gold equivalent (AuEq) was based on recovered payable metal with an effective ratio of 65:1Ag:Au.
Average annual production for the first four years is approximately
81,000 AuEq oz. compared to approximately 51,600 oz. forecast in the
2012 FS, an increase of 57%.
Life-of-mine total cash costs of $558 per AuEq oz. (includes all
royalties and Nevada Net Profits Tax and does not use silver as a
credit). Low operating costs are mainly due to the high reserve gold
grade, strong gold recoveries and short haulage distances.
All-in sustaining costs of $833 per AuEq oz.
Proven & Probable Reserves contain 545,400 oz. of gold and 4,459,600 ounces of silver.
Outstanding potential to upgrade a significant portion of Indicated
and Inferred Resources that are currently constrained by the capacity of
the permitted heap leach pad.
At $1,300/oz. gold and $20.00 silver prices, the IRR is 26% (after
tax) and 35.4% (pre-tax) with a 2.9 year payback of the projected $91.7
million initial capex.
High reserve grade is the primary driver for Mt. Hamilton's low total
cash cost of $558 per ounce of gold-equivalent produced. The low cash
cost has been achieved in the 2014 FS using an improved mine plan offset
by more conservative assumptions for metal prices, costs and operating
inputs compared to the 2012 FS.
The Mt. Hamilton gold project will be an open pit mining operation
with heap leach processing. Mining will occur in both the Centennial and
Seligman ore deposits. Processing is straight-forward with two-stage
crushing to minus ¾-inch, no agglomeration and relatively rapid initial
gold leach rates, followed by conventional ADR
(adsorption-desorption-recovery) metal extraction. The project also
incorporates several innovative design concepts including the use of a
vertical ore pass and underground conveying system which minimizes
environmental impacts while providing operational efficiencies and safer
Chris Herald, President and CEO of Solitario stated, "We are very
pleased with the outcome of the 2014 FS. Cash flow in the initial years
is substantially increased, resulting in enhanced project economics. Mt.
Hamilton represents one of the highest grade, lowest cost, open pit
heap leach gold projects in Nevada. The results of the updated 2014 FS
put the project in a stronger position to complete project financing. We
have been very encouraged with our discussions to date with various
financial institutions, and we are taking a measured approach to assure
the best possible outcome."
Added Mr. Herald, "Equally important to the increased annual
production rate and low cash costs are the additional gold ounces that
have been defined in the $1,300 resource pit. Reserves were capped at
22.5 million tons, as that is the maximum tonnage capacity of our
currently permitted heap leach site situated on our private land
holdings. Approximately 182,000 ounces of Indicated and 119,000 Inferred
gold ounces in the $1,300 resource pit are not included in the current
reserves. With a successful drilling program and the permitting of an
expanded heap leach facility, there is an opportunity to upgrade a
portion of these gold ounces from Indicated and Inferred Resources to
Proven and Probable Reserves, improving the project economics and
extending cash flow over a longer mine life."
Mineral Reserves were conservatively estimated from a pit design
based on $840/oz. gold and $13/oz. silver prices. Multiple pit scenarios
were evaluated under a range of gold prices to determine the most
favorable pit design for both optimal resource extraction and cash flow.
Contained Metal (1,000's of ounces)
Proven & Probable
Reserves are reported using a cutoff grade ("COG") of 0.006 oz/t Au;
The COG was based on a gold price of US$1,300/oz and a silver price of US$20/oz;
The COG was calculated at an average recovery of 76% for Au and 39% for Ag;
Average recovery for gold was calculated from a recovered grade item modeled for
each model block based on cyanide soluble and total gold grades;
Cutoff for each block was determined using this recovered grade item;
Metal grades reported are diluted; and
Some numbers may not add due to rounding.
"The Environmental Assessment process was completed in September and
the Mt Hamilton Mine is now moving to the development phase. The
increase in the Measured and Indicated Resources indicate that the Mt.
Hamilton mine life could easily exceed ten years and is not dependent on
higher gold prices. In addition, the Wheeler Ridge area is now fully
permitted for exploration and is a significant untested area." stated
Trey Wasser, Ely Gold's President and CEO. "All of our previous drill
programs have been very successful in upgrading existing and adding new
resources. Once constructed, the Mt. Hamilton mine should be producing
gold for many years to come."
Mineral Resource Statement, Mt. Hamilton Gold Project, White Pine County, Nevada, SRK Consulting (U.S.), Inc. August 2014
Contained Oz (1,000's)
Meas. + Ind.
Mineral Resources are not Mineral Reserves and do not have
demonstrated economic viability. There is no certainty that any part of
the Mineral Resources estimated will be converted into Mineral Reserves
Resources stated as contained within a potentially economically
minable open pit; pit optimization was based on assumed gold and silver
prices of US$1,300/oz and US$19.60/oz, respectively, block-by-block
modeled recovery averaging 76.3% for Au and 39% for Ag, an ore mining
cost of US$2.06/t for the Seligman deposit, an ore mining cost of
US$1.64/t for the Centennial deposit and an ore processing cost of
US$4.95/t; west pit slopes 45°, east pit slopes of 50°;
Resources are reported using a 0.006 oz/t contained gold cutoff grade;
AuEq was calculated using a Ag:Au ratio of 65:1;
Numbers in the table have been rounded to reflect the accuracy of the estimate and may not sum due to rounding.
All currency figures in U.S. $'s; Economic base case in bold; M=millions
Cash Flow (US$M)
NPV @ 8% (US$M)
NPV @ 5% (US$M)
The 2014 Feasibility Study is available on both Solitario's and Ely
Gold's web sites and will be filed today on SEDAR and furnished on EDGAR
under the title "
NI 43-101 Technical Report, Feasibility Study, Mt.
Hamilton Gold and Silver Project, Centennial Deposit and Seligman
Deposit, White Pine County, Nevada.
" The 2014 Feasibility Study was prepared by SRK Consulting (U.S.), Inc., an independent and internationally recognized
mining engineering firm. The Feasibility Study provides Mineral Resource
and Mineral Reserve estimates, and a classification of resources and
reserves in accordance with the Canadian Institute of Mining, Metallurgy
and Petroleum Standards on Mineral Resources and Reserves: Definitions
and Guidelines, November 27, 2010 (CIM). It also meets the standards of
the U.S. Securities and Exchange Commission Industry Guide 7 for
estimating and reporting reserves. This release has been reviewed for
accuracy by Mr. J. B. Pennington of SRK and for Solitario by Walter
Hunt, Chief Operating Officer, both of whom are "qualified persons" as
that term is defined in NI 43-101.
Cautionary Note to U.S. Investors concerning estimates of
Resources: This section uses the terms "Measured, Indicated and Inferred
Resources." The Company advises U.S. investors that while these terms
are recognized and required by Canadian regulations, the SEC does not
recognize the terms. U.S. investors are cautioned not to assume that any
part or all of Measured or Indicated Mineral Resources will ever be
converted into Reserves. Inferred Resources have a great amount of
uncertainty as to their existence, and great uncertainty as to their
economic and legal feasibility. It cannot be assumed that all or any
part of an Inferred Mineral Resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of Inferred Mineral Resources
may not form the basis of feasibility or pre-feasibility studies, except
in rare cases. U.S. investors are cautioned not to assume that any part
or all of a measured, indicated or inferred resource exists, or is
economically or legally minable.
Terms of the Mt. Hamilton Joint Venture
Solitario and Ely Gold formed Mt. Hamilton LLC, a limited liability
company which holds 100% of the Mt. Hamilton Project assets under an
Operating Agreement. Solitario is the manager with an 80% interest and
Ely Gold controls the remaining 20% interest.
Solitario is a gold, silver, platinum-palladium, and base metal
exploration and royalty company with projects in Brazil, Mexico, Peru
and Nevada. Solitario has significant business relationships with
Votorantim Metais and Anglo Platinum. Solitario is traded on the NYSE
MKT ("XPL") and on the Toronto Stock Exchange ("SLR"). Additional
information about Solitario is available online at www.solitarioxr.com.
About Ely Gold
Ely Gold is focused on the acquisition and development of gold
resources in Nevada, including its Green Springs property, 10 miles
south of Mt. Hamilton. Ely Gold is traded on the TSX Venture Exchange
("ELY"). Additional information about Ely Gold is available online at
FOR MORE INFORMATION AT SOLITARIO, CONTACT:
Director -- Investor Relations
Christopher E. Herald
President & CEO
FOR MORE INFORMATION AT ELY GOLD, CONTACT:
President & CEO
Neither TSX Venture Exchange nor its Regulation Services Provider
(as that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuray of this release.
Cautionary Statement Regarding Forward Looking Information
This press release contains forward-looking statements within the
meaning of the U.S. Securities Act of 1933 and the U.S. Securities
Exchange Act of 1934, and as defined in the United States Private
Securities Litigation Reform Act of 1995 (and the equivalent under
Canadian securities laws), that are intended to be covered by the safe
harbor created by such sections. Forward-looking statements are
statements that are not historical fact. They are based on the beliefs,
estimates and opinions of the Company's management on the date the
statements are made and address activities, events or developments that
Solitario expects or anticipates will or may occur in the future, and
are based on current expectations and assumptions. Forward-looking
statements involve a number of risks and uncertainties. Consequently,
there can be no assurances that such statements will prove to be
accurate and actual results and future events could differ materially
from those anticipated in such statements. Such forward-looking
statements include, without limitation, statements regarding the
Company's expectation of the projected timing and outcome of engineering
studies; expectations regarding the receipt of all necessary permits
and approvals to implement the mining plan at Mt. Hamilton; the
potential for confirming, upgrading and expanding oxide gold and silver
mineralized material at Mt. Hamilton; reserve and resource estimates;
operating cost estimates; estimates of gold and silver grades; estimates
of recovery rates; expectations regarding the cash flow generated by
the property; and other statements that are not historical facts.
Although Solitario management believes that its expectations are based
on reasonable assumptions, it can give no assurance that these
expectations will prove correct. Important factors that could cause
actual results to differ materially from those in the forward-looking
statements include, among others, risks relating to risks that
Solitario's exploration and property advancement efforts will not be
successful; risks relating to fluctuations in the price of gold and
silver; the inherently hazardous nature of mining-related activities;
uncertainties concerning reserve and resource estimates; availability of
outside contractors in connection with Mt. Hamilton and other
activities; uncertainties relating to obtaining approvals and permits
from governmental regulatory authorities; the possibility that
environmental laws and regulations will change over time and become even
more restrictive; and availability and timing of capital for financing
the Company's exploration and development activities, including
uncertainty of being able to raise capital on favorable terms or at all;
as well as those factors discussed in Solitario's filings with the U.S.
Securities and Exchange Commission (the "SEC") including Solitario's
latest Annual Report on Form 10-K and its other SEC filings (and
Canadian filings) including, without limitation, its latest Quarterly
Report on Form 10-Q. The Company does not intend to publicly update any
forward-looking statements, whether as a result of new information,
future events, or otherwise, except as may be required under applicable