QIS Update #10 - 2018 - Deer Horn Capital discusses preliminary assessment and Newlox Gold Ventures pours more gold - June 6th 2018
Included in this update:
- Deer Horn Capital Releases its Updated PEA, PEA Indicates a 9 year mine life with a 1.6 year payback. (DHC:CSE)
- - Newlox Gold completes its third gold pour in Central America (LUX:CSE)
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Deer Horn Capital Inc. (DHC:CSE)
Current Price: $0.37 (coverage commenced April 10/18 - $0.17)
DEER HORN REPORTS POSITIVE PRELIMINARY ECONOMIC ASSESSMENT AT ITS DEER HORN GOLD-SILVER-TELLURIUM PROJECT IN BRITISH COLUMBIA
PEA indicates a 9-year open-pit mine life with average grades of 3.73 g/t gold, 117.1 g/t silver and 118 ppm tellurium with a 1.6-year payback.
Deer Horn Capital Inc. has released positive results from an independent preliminary economic assessment at its Deer Horn gold-silver-tellurium polymetallic property in north-central British Columbia.
The full PEA, which was prepared in accordance with National Instrument 43-101 regulations, is available for viewing on the Company's website at www.deerhorncapital.ca and in its disclosure record on SEDAR.
PEA Highlights (values shown in $CDN unless indicated otherwise)
- - Pre-tax NPV (5%) of $56.6 million and internal rate of return of 56%;
- - After-tax NPV (5%) of $36.5 million and internal rate of return of 42%;
- - Initial Capital of $28.3 million;
- - After-tax payback of initial capital in 1.6 years;
- - Life of Mine (LOM) production of 73,000 Ounces Gold, 2,100,000 Ounces Silver, 67,000 kilograms Tellurium, 1,700,000 pounds Copper, 3,600,000 pounds Zinc
The PEA figures were calculated using metals prices of US$1,300 per ounce for gold, US$17 per ounce for silver, US$100 per kilogram for tellurium, US$3.00 per pound for copper and US$1.00 per pound for zinc. The Preliminary Economic Assessment is preliminary in nature. It includes inferred mineral resources that are considered 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 the Preliminary Economic Assessment will be realized.
Deer Horn plans to operate the project as a high-grade "small mine" under the British Columbia Mines Act. This designation simplifies and expedites the permitting process with considerably lower up-front costs.
"We've engineered Deer Horn for low capital costs and rapid payback in a well-established mining jurisdiction," said Deer Horn CEO and President Tyrone Docherty. "Our strategy is to put the project into production quickly and establish its viability initially on a small scale. Since the PEA was calculated on only 450 meters of a 2.4-kilometer-long mineralized system, we believe we can explore and expand the operation over time using mining cash flow and exploit the knowledge of the system that we gain as we mine."
The PEA recommended infill and tightly-spaced step-out diamond drilling focused both on upgrading and expanding the existing high-grade resource. "We plan to conduct infill drilling to upgrade as much of the inferred resources as we can. Previous drilling traced the vein's strike length for at least 875 meters," added Docherty. The PEA emphasized that the deposit remains open to the west, east and down-dip.
"It's also important to remember that Deer Horn is largely unexplored over its 51 square kilometers," added Docherty. "The gold, silver and tellurium represent only a portion of the targets we plan to explore further. For example, prospecting in 2012 identified new showings indicative of a buried copper porphyry system. We also have important concentrations of tungsten on the property. We will report more on these additional targets in the near future."
Mineral Resource Estimate
The Mineral Resource Estimate has been prepared in accordance with NI 43-101 by Gary Giroux, P.Eng., qualified person under the meaning of NI 43-101, and summarized in the Table 1 below.
DEER HORN NI 43-101 INDICATED AND INFERRED MINERAL RESOURCE ESTIMATE
Au CutoffTonnes Au Ag Te Cu Pb Zn Au Ag Te Cu Pb Zn
(g/t) (tonnes)(g/t)(g/t)(ppm)(%) (%) (%) (Ounces)(Ounces) (kg) (lbs) (lbs) (lbs)
1 414,000 5.12 157.5160 0.190.0380.3968,000 2,100,00066,0001,750,000344,0003,600,000
Au Cutoff Tonnes Au Ag Te Cu Pb Zn Au Ag Te Cu Pb Zn
(g/t) (tonnes)(g/t)(g/t)(ppm)(%) (%) (%) (Ounces)(Ounces) (kg) (lbs) (lbs) (lbs)
1 197,000 5.04 146.5137 0.160.0390.3432,000 930,000 27,000690,000 169,0001,470,000
Notes: This Mineral Resource Estimate was prepared by Gary Giroux, P.Eng. in accordance with
NI 43-101, with an effective date of May 5, 2018.
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
The estimate of Mineral Resources may be materially affected by environmental, permitting,
legal or other relevant issues. The Mineral Resources have been classified according to the
CIM Definition Standards for Mineral Resources and Mineral Reserves in effect as of the date
of this news release.
Metal assays were capped where appropriate.
The Tellurium, Copper, Lead and Zinc resource was estimated with about one-half the data used
to estimate Au and Ag. The reader should be aware that the confidence in the Te, Cu, Pb and
Zn estimates are lower than the confidence on Au and Ag.
A 1.0 g/t Au cut-off is chosen as a possible open pit mining cut-off for this deposit.
This cut-off grade includes the following considerations:
Gold Price of US$1,300/oz., Silver Price of US$17/oz., Tellurium price of US$100/kg,
exchange rate of 0.8 US$:CDN$, process costs of $29 per tonne milled, process recovery of
90% and mining costs of $4/tonne mined.
Mineralized material from the Deer Horn deposit will be mined from an open pit. The mine will operate during the summer months only to keep costs low. The material will be processed using a conventional flowsheet including crushing, grinding and flotation to produce base metal concentrates with precious metals.
The pit delineated resources used as the basis for the PEA economics are included in Table 2. These resources are a subset of the Mineral Resource Estimate shown in Table 1.
DEER HORN NI 43-101 PIT DELINEATED RESOURCES FOR PEA
Mill Feed Au Ag Te Cu Pb Zn Waste Strip
(tonnes) (g/t) (g/t) (ppm) (%) (%) (%) kt Ratio
656,000 3.73 117.11 17.6 0.14 0.02 90.2 87,022 10.7
The pit delineated resource has an effective date of 15 May 2018.
The Qualified Person for the estimate is Mr. Marc Schulte, P.Eng.
Mineral Resources that are not Mineral Reserves do not have
demonstrated economic viability. The estimate of Pit Delineated
Mineral Resources may be materially affected by metal price
assumptions, geologic interpretations and mineral resource
estimates, metallurgical recovery assumptions, operating cost
assumptions, surface rights, permitting, regulatory restrictions,
environmental, legal or other relevant issues.
The Mineral Resources have been classified according to the CIM
Definition Standards for Mineral Resources and Mineral Reserves
in effect as of the date of this news release.
A $29/t NSR cut-off grade includes the following considerations:
Gold Price of US$1,300/oz., Silver Price of US$17/oz., Tellurium
price of US$70/kg, exchange rate of 0.8 US$:CDN$, process costs of
$29 per tonne milled, process recovery of 90 %, mining costs of
$4/tonne mined. Open pit layouts utilize overall pit slope angles
of 44 degrees.
The pit delineated resources are mined tonnes and grade, the
reference point is the mill feed at the primary crusher.
Mining recovery of 100% of mineralized tonnes and grade.
Mining dilution of 50% at 0.133 g/t Au, 5.096 g/t Ag, 7.196 ppm Te,
0.005 % Cu, 0.001 % Pb, 0.011 % Zn, applied to the block modeled
mineralized tonnes and grade.
The preliminary economic assessment is preliminary in nature.
The preliminary economic assessment includes Inferred material that
is considered 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
the preliminary economic assessment will be realized.
Capital and Operating Costs
The total estimated initial capital cost for the Deer Horn project is $28.3 million and sustaining capital is $2.6 million over the LOM. The estimated LOM operating costs are $94 per tonne mill feed. The following tables summarize the cost components:
Table 3 Initial Capital Costs ($ millions)
Direct Capital Cost Capital($ Millions)
Tailings and Water Management$2.3
Total Direct Capital Costs $ 19.6
Indirect Capital Cost
Owner's Costs $1.4
Total Indirect Capital Cost $ 4.0
Contingency (20 %) $ 4.7
Total Capital $ 28.3
Table 4 LOM Average Operating Costs ($)
Mining costs$44 $/tonne milled
Processing $30 $/tonne milled
G&A $20 $/tonne milled
Total $ 94$/tonne milled
Next Engineering and Development Steps
The Company will soon initiate work towards a Preliminary Feasibility Study this year. Further details about the Deer Horn PEA will be released soon. Qualified Persons, Quality Control and Assurance.
The independent qualified persons responsible for preparing the Deer Horn PEA are; Tracey Meintjes, P.Eng. of Moose Mountain Technical Services (MMTS), Marc Schulte P.Eng. of MMTS, Bob Lane , P.Geo. of Plateau Minerals Corp, and Gary Giroux, M.A.Sc., P.Eng. of Giroux Consultants Ltd., all of whom act as independent consultants to the Company, are Qualified Persons as defined by National Instrument 43-101 ("NI 43-101") and have reviewed and approved the contents of this news release.
The updated PEA is a significant development for Deer Horn as it lays out an economic business case on a very small portion of the company's property. Deer Horn has significant opportunity to upgrade resources in the inferred category to the indicated category through a relatively small capital infill drilling program. Furthermore, the PEA was calculated on only 450 meters of a 2.4-kilometer-long mineralized system which provides opportunity to expand the resource as the deposit remains open to the west, east and down-dip. Even without further drilling, the project is deemed to have a mine life of 9 years with a 1.6 year payback which are very encouraging economics.
Unlike the majority of mining companies which have hundreds of millions of shares outstanding as they move toward production, Deer Horn still has only 14 million shares outstanding and has a modest market capitalization of around $5 million.
Newlox Gold Ventures Corp. (LUX:CSE)
Current Price: $0.05 (coverage commenced Mar. 31/14 - $0.05)
NEWLOX'S THIRD GOLD POUR
Newlox Gold Ventures Corp. has made its third pour of gold dore at its remediation and precious metal recovery facility in Central America. Efficiency has continued to improve since its inaugural pour of gold dore announced on April 23, 2018, and its second pour announced on May 17, 2018.
These three events are significant milestones for the company as it continues successful testing of its specialized three-stage tailings reprocessing system. Newlox's operations team are growing daily throughput, tailings remediation efficiency and gold recovery. Management expects to continue increasing yields week over week.
Continuous operation of all the processing plant's circuits is generating significant data at Newlox's on-site atomic absorption spectroscopy laboratory. This will expedite procedural adjustments by the company's engineering team, with the goal of reaching optimal efficiency.
Ryan Jackson, president of Newlox Gold, commented: "These three gold dore bars are major milestones for the company. Our focus has shifted from development-stage activities to full-scale operations. It is encouraging that the pouring of precious metals dore is now occurring regularly as our operations team increase throughput and efficiency."
Newlox continues to move its gold production operations forward in a slow but methodical process. It is important to note that there were 24 days between the announcements of the first and second dore pour which was reduced to 13 days between the second and third pour. It is management's intention to reduce this time period to approximately 7-8 days and then start to increase the throughput before looking at a second production cycle. These are small pours and the company is still in the process of optimizing procedures and recoveries. Newlox is a very low cost producer so it shouldn't take long for the company to be in a break-even scenario and then moving toward becoming a profitable small-scale production operation.
Newlox Gold has 71.7 million shares outstanding and a market capitalization of just $3.6 million.
The corporate information provided in this report is for informational purposes only. While every effort has been taken to provide accurate information, the completeness or accuracy of such information is not guaranteed. Certain statements in this report may constitute “forward looking” statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. The company profiled assumes no liability for the information presented. The information contained in this report should not be construed as offering investment advice. Those seeking direct investment advice should consult a qualified, registered, investment professional. This is not a direct or implied solicitation to buy or sell securities. Readers are advised to conduct their own due diligence prior to considering buying or selling any stock. Trading accounts, including personal, family and corporate accounts, under the control of QIS Capital management currently hold 200,000 shares of Deer Horn Capital Inc. and 4,589,398 shares and 833,472 warrants of Newlox Gold Ventures Corp. QIS Capital is engaged in an advertising agreement with Deer Horn Capital Inc. and may trade the company’s common shares. No stock exchange has approved or disapproved of the information contained herein. Copyright ©2018, QIS Capital Corporation.