Advancing Toroparu to Production

Toroparu Gold Project

A Large Gold Resource in an Established Mining Jurisdiction
 

The Toroparu Gold Deposit is situated in the highly prospective Upper Puruni River Region of western Guyana, and contains the largest in-situ gold projects owned by an independent junior mining company in South America. The deposits lie within the Puruni Shear Corridor, a geologic feature that can be traced into the Malawi gold fields of eastern Venezuela. Significant resource growth possibilities with the Puruni Shear Corridor are supported both by the discovery of satellite gold deposits within the Upper Puruni Concession Area, SE Zone and Sona Hill, geochemical anomalies in the adjacent Otomung Concession, and the existence of gold deposits across the border in Venezuela along the shear.

Sandpring's 100% controlled Upper Puruni Concession contains 53,283-hectare(s) of mineral leases located in the Cuyuni-Mazaruni Region (Region 7) of Western Guyana. The regions hilly terrain is accessible by air and road. Facilities at Toroparu include a 200-person camp and 2,500-foot all-weather airfield. Toroparu is currently accessed overland via the 240-km Itiballi-Puruni-Papishao Landing Road, which was rehabilitated by Sandspring in 2003, and is a major corridor for both western Guyana and one of its important gold producing areas. Plans include completion of a second access road extending to the north to Buckhall on the Essequibo River.

TOROPARU PROJECT RE-SCOPING AND PRELIMINARY ECONOMIC ANALYSIS

The June 2019 Preliminary Economic Assessment (PEA) assessed the economic results of a re-scoping of the Toroparu Project to include expansion of production from the addition of Sona Hill satellite deposit resources to the mine plan; the reduction in operating costs from self-generated hydro power available from Sandspring's Kurupung River Hydroelectric Project, and the reduction in initial capital contributions required to construct the mine due to the Precious Metals Purchase Agreement with Wheaton Precious Metals (see November 11, 2013 press release).

Highlights from the Assessment include:

  • 7.353 million ounces of Measured & Indicated Gold Resource and 3.150 million ounces of Inferred Gold resource.
  • 4.5 million ounces of Gold production (3.64 million ounces produced in Au doré bars) over 24‐year Mine Life, with:
    • 1.476 million ounces gold doré production over first 10 years
    • 2.148 million ounces gold doré and 876,000 oz gold in concentrate production over balance 14 years
  • 187,500 ounces average gold production over 24-year mine life & 147,600 ounces per year of over first 10 years of production.
  • $2.544 billion Cash Flow from Operations at $1,300/oz Gold Price
    • $1.25 Billion After‐Tax Free Cash Flow (net of $974 million life of mine capital cost estimate)
  • $378 Million pre‐production capital expenditure estimate with
    • $272 Million pre‐production financing requirement (includes Wheaton PMPA deposits)
  • $232 Million Phase 2 expansion financed from internal cash flow
  • 2.92 years payback of initial capital expense 

All results can be found in the Preliminary Economic Assessment Technical Report effective June 11 2019

The phased development strategy was based on higher grade gold resources contained in near surface mineralization at Sona Hill, gold resources from the SE Zone satellite deposit and select areas of gold and silver mineralization in the shallow portions of the Toroparu main pit area. The plan is to start production with an initial 4.2 million ton per year (11,500 t/d) carbon-in-leach processing facility expanding to 8.4 million tons per year (23,000 t/d) in year 11 of the mine life.

June 2019 PEA Economics Metric Base Case Sensitivity to Gold Price
w/oPMPA w/PMPA w/ PMPA w/ PMPA w/ PMPA
Gold Price (incl $16/oz Ag & $3.00/Lb Cu)         $1,300 /oz $1,250 /oz $1,400 /oz $1,500 /oz
LoM (Years) 24 24 24 24 24
Gold Production (koz) 4,516 4,516 4,516 4,516 4,516
Payable Gold (koz) 4,488 4,488 4,488 4,488 4,488
Payable Silver (koz) 4,460 4,460 4,460 4,460 4,460
Payable Copper (klb) 124,730 124,730 124,730 124,730 124,730
Operating Cash Flow $2,934 M $2,544 M $2,358 M $2,916 M $3,287 M
After-Tax FCF $1,389 M $1,251 M $1,121 M $1,511 M $1,771 M
After-Tax IRR 16.56% 20.25% 18.16% 24.20% 27.68%
After-Tax Payback (yr) 3.67 2.92 3.27 2.34 2.02
After-Tax NPV (5%) $519 M $495 M $428 M $628 M $760 M
Payback (years) 3.67 2.92 3.27 2.34 2.02
Capital Requirements          
Initial Capital (US$M) $360 M $360 M $360 M $360 M $360 M
Capitalized Pre-Stripping $18 M $18 M $18 M $18 M $18 M
Wheaton Finance $0 M $(106) M $(106) M $(106) M $(106) M
Net Financing Requirement* $378M $272M $272M $272M $272M
Sustaining Capital (US$M) $614M $614M $614M $614M $614M
Cost Structure          
Direct Operating Costs ($541.16) ($541.16) ($541.16) ($541.16) ($541.16)
Indirect Costs ($109.55) ($102.02) ($98.43) ($109.20) ($116.38)
Total Cash Op Costs ($650.71) ($643.18) ($639.59) ($650.36) ($657.54)
Sustaining Capex ($136.75) ($136.75) ($136.75) ($136.75) ($136.75)
Corporate G&A + Exploration ($6m/y) ($32.08) ($32.08) ($32.08) ($32.08) ($32.08)
Total AISC ($819.55) ($812.01) ($808.42) ($819.20) ($826.38)

ADVANCED DEVELOPMENT STAGE PROJECT

An Accessible Site

The primary permits required for development of the project including the Environmental Authorization and the Mineral Development and Fiscal Stability Agreement are complete. A Definitive Feasibility Study for the project is underway and will provide the engineering and economic information that Sandspring needs to reach a construction decision. The Project's appealing economics, and Sandspring's long-established positive relationship with the Government of Guyana, mean that the Toroparu Project will provide Sandspring with a robust platform from which to realize the potential of this emerging gold district.

LARGE RESource, CONVENTIONAL OPEN PIT AND SIMPLE METALLURGY

Large Reserve, Conventional Open Pit and Simple Metallurgy

The 2019 re-scoped Preliminary Economic Assessment estimates production of 4.5 million ounces of gold with 125 million pounds of by-product copper and 4.46 Moz silver over a 24-year mine life. Parallel carbon-in-leach (CIL) and flotation circuits will process ore types containing varying amounts of copper. Eighty percent (80%) of the gold produced, or 3.6m ounces, is expected to be produced as doré bars and transported off-site by air to refiners in Canada or Europe, with the balance of 20% contained in copper concentrates to be shipped in containers to smelters in Europe or Asia. The PEA defines two-phases of production starting with a 4.2 Mtpy (million ton per year) CIL circuit operating for 10 years, and then expanding to 8.4 Mtpy with a parallel flotation circuit added to the mill in year 11.

A Skilled and Experienced Workforce

A Skilled and Experienced Workforce

Guyana's network of skilled workers comes from the country's strong educational system, and its well-established gold and bauxite mining sectors. Sandspring has employed an experienced team of Guyanese equipment operators, maintenance personnel, and administrative staff since 2000. The team has not only run efficient gold mining operations and extensive exploration programs on the Upper Puruni River Concessions, they have also built the camp, airstrip, rehabilitated 140 km of the access road from Puruni Landing, and constructed over 150 km of on-site roads. In addition, the mechanical, electrical, and other skilled tradesmen have successfully maintained Sandspring's fleet of mining and road construction equipment for more than 18 years.

Developing Long-term Power Alternatives

Developing Long-term Power Alternatives

A Memorandum of Understanding agreement with the Government of Guyana grants Sandspring the exclusive right to develop the Kurupung River Hydroelectric Project (KRHP) located approximately 50 km southwest of Toroparu. The KRHP can support more than 100 megawatts of run-of-river hydroelectric capacity. An initial 50-megawatt run-of-river facility would support the Toroparu Project and other enterprises located within 120 km of the power plant. The use of hydroelectric power is estimated to reduce cash operating costs at Toroparu by US$350 to US$400 million over the life of the mine.

Such a reduction in power costs would not only result in significant cost savings over the life of the Toroparu Project, but also underpin the development of the district potential of the area with inexpensive power tariffs.