The Pine Cove Mine & Mill

The Pine Cove Mine and Mill, including nearby Port Rousse, forms the hub of the Company’s operation on the Island of Newfoundland.  The Pine Cove Mine and Mill is located 4.5 kilometres northeast of the community of Baie Verte, NL.

A total of 2,511,000 tonnes of ore and 118,028 ounces of gold have been mined and produced from the Pine Cove Mine since commencement of mining in 2011. Anaconda expects to complete mining in the main pit at Pine Cove in the later part of the first quarter of 2018, and will commence planning for small pushbacks of the main pit in 2018. As at December 31, 2017, the Company maintained an ore stockpile of 145,000 tonnes, which will be processed over the first two quarters of 2018 as the mine operation transitions to the Stog'er Tight deposit.

Mining was carried out by standard open pit methods a contract miner. The plant site includes a 1280 tonnes per day (“tpd”) grinding and flotation mill with concentrate leaching (1280 tpd at 95% availability, operating 365 days per year), crusher and conveyors, ore stockpile, shops, warehouse, administration, water supply, sewage, on site diesel generated power, fuel storage, and other ancillary structures and roads. Final product is a gold doré bar which is shipped to a refiner in Ottawa for further processing and final assay. The Company’s metal merchant then sells gold having a purity of 99.995% on the open markets. All the ore mined from Pine Cove Pit and Stog’er Tight Pit are processed at Pine Cove Mill.

Upon completion of mining in the main Pine Cove Pit, the Company plans to convert the open pit into a 7 million-tonne in-pit storage facility, which will allow for the deposition of tailings into the facility in the first quarter of 2018. The conversion of the pit to a tailings facility has received approval from the Newfoundland and Labrador Department of Natural Resources.

The Pine Cove gold deposit was discovered in June 1987 by South Coast Resources Ltd.  In 2003, Anaconda acquired an option from then-owner New Island Resources Ltd. to earn up to a 60% interest in the Pine Cove Project. A successful bulk sample and a positive NI 43-101-compliant Technical Report lead to production in 2008. The mill was subsequently reconfigured and a flotation circuit to produce a gold-pyrite concentrate was added. Commercial production was achieved in September 2011, enabling Anaconda to earn its 60% interest. In January 2011, Anaconda acquired New Island’s remaining 40% interest.

Gold mineralization at Pine Cove is hosted within quartz veined and albite, sericite, rutile and pyrite altered mafic volcanic and intrusive rocks of the Venom’s Bight formation.  The orebody is located in the immediate hanging wall of the Scrape Thrust a 2nd order fault splay off the nearby Baie Verte-Brompton Line.  The deposit is bounded by a distinct maroon argillite horizon of the Bobby Cove formation and the Pasture Pond Thrust in its immediate hanging wall.  The deposit dips gently to the north and is east-west striking.

Since 2015, diamond drilling totalling 1,588.2 m in 20 drill holes was primarily focused around the margins of the Pine Cove deposit. Drilling tested the expansion of the open pit mainly in the Pine Cove Pond area to the south of the current open pit.  Percussion drilling was focussed on ore and resource definition drilling at the Pine Cove Mine (1,647.3 m in 99 drill holes).

Highlight assays from drilling at Pine Cove include:

  • 2.11 g/t gold over 10.5 metres from 9.5 – 20.0 metres and 1.4 g/t gold over 9.0 metres from 24.0 – 33.0 metres in hole PC-15-256
  • 2.68 g/t gold over 15.9 metres from 6.1 – 21.0 metres in hole PC-15-257
  • 3.16 g/t gold over 5.5 metres from 3.5 – 9.0 metres in hole PC-15-252
  • 1.14 g/t gold over 4.0 metres from 41.0 – 45.0 metres in hole PC-15-259
  • 1.47 g/t gold over 2.8 metres from 38.0 - 41.8 metres in hole PC-15-253

Mineral Resources and Reserves

The Mineral Resources for Pine Cove were estimated using a combination of historic drilling, carried out between 1988 and 2007, and new drilling carried out since the mine went into production in 2010. A total of 475 diamond drill holes and 76,586 blast holes were used, with samples composited to 1 m sample lengths. Block grades within the vein wireframes were estimated using dynamic anisotropy based on each wireframe surface. Block gold grades were estimated using ordinary kriging, with estimation only into the parent blocks. The model was depleted for the previously mined area of the historic open pit, using a topographic surface supplied by Anaconda and dated January 3, 2018.

The 2017 Mineral Resource Estimate, prepared by Catherine Pitman of AdiuvareGE, includes and Indicated Mineral Resource of 863,500 tonnes grading 2.07 g/t gold for a total of 57,730 ounces and an Inferred Mineral Resource of 476,300 tonnes grading 1.39 g/t gold for a total of 21,330 ounces, using a 0.5 g/t gold cut-off.

Summary of Mineral Resource for Pine Cove Mine as at November 22, 2017*

Category

Cut-off

Tonnes

Au
(g/t)

Ounces

Indicated

0.5

863,500

2.07

57,730

Inferred

0.5

476,300

1.39

21,330

 

*numbers are rounded

The estimated Probable Mineral Reserves as of the 2017 NI 43-101 report in the Pine Cove pit were approximately 696,200 tonnes of ore at a diluted grade of 0.96 g/t gold. Mineral Reserves reported in the table below are inclusive of Mineral Resources reported by AdiuvareGE. Mineral Resources, which are not Mineral Reserves, do not have demonstrated economic viability.

Point Rousse Probable Mineral Reserves2,5

(Effective December 31, 2017)

Deposit

3Cut-off (g/t)

Probable Tonnes4

Au (g/t)

Ounces

Pine Cove

0.5

696,200

0.96

21,440

 

1 – Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability
2 – The Pine Cove Mineral Resource statement is inclusive of Mineral Reserves

3 – Grams per tonne

4 – Rounded tonnes

5 – Proven Mineral Reserves have not been defined at the Point Rousse Project

The Mineral Reserve Estimate was derived from the ultimate pit shell design created using mining software Surpac 6.8 and running a reserve report between this shell and the most recent topographic surface available at the effective date of this report, created by Anaconda. The block model used for the Pine Cove Reserve report was the gold grade block model produced by AdiuvareGE in December 2017. Probable Mineral Reserves are estimated at the internal cut-off grade of 0.5 g/t gold and gold price of $1,600/oz (CAD) using only Indicated Mineral Resource blocks. Proven reserves were not reported, as the block model prepared by AdiuvareGE that was used for reserve reporting did not contain measured blocks.

The internal cut-off grade of 0.5 g/t gold was derived from Anaconda’s mining, processing, and general administration costs and process recovery. This internal cut-off grade is the minimum ore grade required to process the ore economically. Cut-off grade has been decreased from 0.7 to 0.5 g/t gold due to increased mill throughput rates. Table 45 below shows some of the key assumptions and costs used in the ultimate pit optimization process and Mineral Reserve estimate. The costs and the selling price estimates are equal to the budgeted costs and revenues for the current fiscal year, which are in line with actual costs and revenues achieved year to date.

Mineral Reserve

Key Assumptions and Costs

Mining Cost (per tonne)

$4.50

Processing Cost (per tonne)

$20.00

G & A Cost (per tonne)

$7.00

Gold Price (CAD/oz)

$1,600.00

Process Recovery

87%

 

NI 43-101 TECHNICAL REPORT, MINERAL RESOURCE AND MINERAL RESERVE UPDATE ON THE POINT ROUSSE PROJECT BAIE VERTE, NEWFOUNDLAND AND LABRADOR, CANADA. Prepared By:Michael Cullen., and Catherine Pitman, P.Geo.  (Independent Qualified Persons); and David Copeland, P.Geo., Paul McNeill, P.Geo., and Gordana Slepcev, P.Eng. (Qualified Persons). Effective Date: December 31, 2017. Published: February 22, 2018.

 

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