Engineering & Mining Journal

FEB 2019

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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Page 44 of 75

GREAT BASIN DEVELOPMENT FEBRUARY 2019 • E&MJ 43 The company has two mining units, the Nevada operations, which are in the exploration and development stage and the Mexican operations, which are in ex- ploration, development and production. "We are targeting a 100% growth increase of gold production based on the Isabella Pearl project," Devlin said. "In addition to 1.7 million silver ounces (oz/y) and significant base metals, the company cur- rently produces 27,000 ounces per year (oz/y) of gold. With Isabella Pearl project- ed to come online this June, we expect gold production will double in the first 12 months of operations." Looking at costs, the company cur- rently produces gold at a cash cost of $97 per precious metal gold equivalent oz. Its all-in sustaining costs (AISC) are $724/ oz, which is lower than the current indus- try average. Precious metals represent 51% of its revenues with the remaining revenue from zinc, lead and copper. The company's base metal byproduct credit is $1,590/oz. The company's overall reve- nue profile is expected to shift heavily to precious metals once Isabella Pearl's gold production begins. Discussing the Walker Lane district, Devlin explained that Gold Resource has four high-grade properties located in Min - eral County, Nevada: Isabella Pearl, Mina Gold, East Camp Douglas and County Line. Geologically, all the properties are in very similar Tertiary volcanic forma- tions. All are potential heap-leach opera- tions. The company is taking a synergistic approach to its Nevada operations, shar- ing equipment, facilities, infrastructure and power. County Line is the company's newest Walker Lane acquisition. It has several past-producing oxide pits and any ore dis- covered may be able to be trucked to the leach pad at Isabella Pearl for process- ing. Mina Gold has encountered some high grades with its exploration drilling program and the property has patented claims covering known mineralization, which could allow for easier permitting and lots of potential expansion, Devlin ex- plained. "East Camp Douglas represents a potential homerun for us," Devlin said. "It's a big property with high-grade, open- pit potential. It has 5,300 acres, 277 claims, 12 patents and 12 acres of fee lands. It also has a large litho cap that looks really attractive." As far as near-term production, the leach pads are currently being loaded with ore at Isabella Pearl. This prop- erty has a land position of 9,000 acres that aligns with the old Santa Fe gold operations, which produced more than 350,000 oz. "We have a lot of potential along this 6-mile corridor," Devlin said. Gold Resource announced its reserves for Isabella Pearl in April 2018. They are sitting on 2.7 million metric tons (mt) with 2.22 grams per mt (g/mt), which equates to 192,600 oz of gold. "What's really sweet about this is that we have this shallow [Isabella] pit with 1 g/mt and then we encounter the higher grade in the deeper Pearl, which averages 3.7 g/mt before moving to the 5 g/mt in the Pearl pit core," Devlin said. "All of this is heap leachable. We are forecasting $650/ton cost and an 81% gold recovery at 0.5-in. crush compared to 60% gold recovery for run-of-mine ore. We could get as as much as 94% at 3/8 in. The metallurgy looks very good." Production is scheduled to begin during the first half of 2019 with first- year gold production reaching 29,300 oz/y. Isabella Pearl gold production is projected to steadily increase with years two and three estimating 41,000 oz, and year four estimating 42,000 oz, basical- ly recovering 153,000 oz of the current known reserves over four years. The operation has a low estimated capex of $30 million. It's an open-pit, heap-leach project, which is expected to take less than 12 months to bring into production. Mining permits were granted May 15, 2018. Construction officially be- gan on June 15, 2018, and construction is ongoing today. At the official Isabella Pearl ground- breaking ceremony before miners, senior Leach pad construction at Isabella Pearl is complete, and placement of the overliner of crushed material on the pad is nearly complete. At the recent ground-breaking ceremony at the Isabella Pearl mine, Jason Reid, president and CEO, Gold Resource Corp, said, 'It's not every day you get to open a mine.'

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