The Dufferin Mine is a high-grade underground gold
mine and fully permitted mill in Nova Scotia, Canada, with historic
and recent production, a planned near-term restart, and potential for
extensive expansion. RCG has a project turnaround
plan and team in place so that production can recommence during the second quarter of 2017. The mine has a 300 tpd gravity and flotation mill and, with
certain upgrades and refurbishment, all necessary infrastructure in
place to conduct full-scale gold mining operations.
The Company has completed refurbishment of the major mill components and is performing test milling. As part of the test milling process, the Company produced its first gold on the project in early March, 2017. RCG is preparing to begin trial mining of
an initial approximately 15,000 tonnes in order
to confirm mineralization grade and prepare for a full restart of the
mine and mill.
A Preliminary Economic
Assessment has been completed for the project that indicates 216,050 gold ounces recovered over a 10-year mine life with a pre-tax CAD$121.1M NPV5 and 158% IRR, post-tax CAD$89.2M NPV% and 121% IRR. The projected average cash cost per ounce is CAD$617, with cumulative cash flows of CAD$170.4M pre-tax and CAD$126.3M post-tax.
The project’s current mineral resource is 58,000 ounces gold
indicated (151,500 tonnes @ 11.9 g/t Au) and 150,000 ounces gold inferred
(703,900 tonnes @ 6.6 g/t Au).
The Dufferin deposit is faulted in half and offset
into East Dufferin and West Dufferin. East Dufferin was discovered in
the early 1980s, and has seen only limited mining and bulk sampling,
with 2001 production of 55,000 tonnes averaging a recovered grade of
13.4 g/t Au. Mine development and drilling have intersected 17
mineralized vein systems over 1.6 km of strike length, and recent
drilling returned numerous high-grade intercepts such as 287 g/t Au
over 1 m.
At West Dufferin gold was first discovered in
1868, followed by mining of 41,000 ounces at a recovered grade of
11.9 g/t Au. Subsequent exploration by Cominco (1930s), Sulpetro
(1970s), Jascan (1980s), and NYCON Resources (2000s) has identified
18 vein systems and demonstrated the continuity of gold-bearing veins
over a strike length of 1.5 km. The entire mineralized system at both
East and West Dufferin has a strike length of over 3 km and is
open to the east, west, and at depth.
The project comprises 1,684 ha, accessible by
gravel road 25 km from Sheet Harbour in southeastern Nova Scotia,
about 135 km northeast of Halifax.
Mineralization at Dufferin consists of quartz
veins occupying multiple vertically stacked fold hinges in
metamorphosed sediments. Dufferin and other deposits in the district
are orogenic-type gold deposits, which have produced a majority of
the world’s gold, including many of those in the Canadian Shield
and the Meguma Terrane of Nova Scotia, where Dufferin is located.
Veins at Dufferin are composed principally of quartz and carbonate
minerals, with numerous sulfides, galena being the best predictor of
gold grade. Gold occurs dominantly as free gold and contains about
Expansion and exploration potential at Dufferin
are excellent. More than 35 quartz saddle reef zones have been
identified, of which only a few have been mined. The >3-km-long
deposit is open to the east, west, and at depth. Depth potential is
particularly promising: orogenic gold deposits are known for great
depth extents. Dufferin’s closest analogue is Bendigo, Australia,
which attained depths of >1,000 m over 8,000 m of strike length
and produced over 38 million ounces of gold.
The PEA is preliminary in nature and includes inferred mineral resources that are too speculative geologically to have the 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. The Company is not basing its production decision on a feasibility study of mineral reserves demonstrating economic and technical viability; as a result there is increased uncertainty and economic and technical risks of failure associated with its production decision.
The scientific and technical information in this disclosure was reviewed and approved by David S. Smith, MS, MBA, CPG, who is a Qualified Person under National Instrument 43-101 Standards of Disclosure for Mineral Projects.