Value Through Gold


Brucejack Mine
Ramping Up to Steady State

FAQ: First Six Months of Ramp-Up

January 29, 2018

The Brucejack Mine has been producing gold for the first two full quarters of ramp-up operations.  Here are some questions we have received since our January 23, 2018 news release, Brucejack Mine Production Update; 2018 Guidance.

Why did Q4 2017 gold production come in lower than Q3?

Although we had expected stopes with higher-grading gold to be processed in the fourth quarter, we had challenges getting these stopes to the mill. The higher-grade stopes scheduled for mining in the fourth quarter were delayed as a result of equipment down-time and mining execution. Both of our long-hole drills went down and the stopes could not be drilled off in time also mining encountered a hang-up when blasting the slot. These issues in combination with the limited stope inventory (no other high-grade stopes accessible in the quarter) we had at year end contributed to lower gold production.

We have addressed this by adding a third drill (now on site) which will provide back-up and contribute to building stope inventory, which we feel is key. The feasibility study calls for having 5 to 6 stopes available to feed the mill at 2,700 tonnes per day. We are planning for a larger inventory of stopes so that we have a total of 10 to 12 stopes available for mining at any time. The more stopes the better, as the availability of stopes representing a range of grade will help to balance production through a given quarter as we will be able to access alternative stopes of a given grade when we encounter difficulties again. In order to build our stope inventory we have increased our underground development to 700 meters per month this year, up from 420 meters originally planned.

The gold grades for the production from these two quarters don’t seem to be panning out - didn't the Valley of the Kings Mineral Reserve estimate call for 16.1 grams per tonne gold?

The Proven and Probable Mineral Reserves estimate over the Life of Mine (LOM) in the Valley of the Kings are 15.6 million tonnes grading 16.1 grams per tonne gold. See December 15, 2016 news release.

The mine is still at the ramp-up phase, and we don’t yet have access to the level of stope inventory that we will have at steady-state. During these initial two quarters mining was limited to the 1200-meter and 1320-meter levels, some areas of which were defined by limited drilling. This is an outcome of our long-term mine plan which called for the development of sills at the 1200-meter and 1320-meter levels to establish two mining horizons for the first years of production.

As access to areas in the deposit with better drill definition and stopes with higher average gold grade become available, it is expected that the concomitant optionality for blending will improve the management of production grades.

When is Brucejack past the ramp-up stage?

We expect Brucejack to be at steady state in mid to late 2018. By “steady state”, we mean that we have full availability of stopes to mine, and that our grade control program is in place.

Why is it taking so long to get the grade control in place at the mine?

We had planned to get the grade control program up and running in the fourth quarter 2017, but a key component, the sample splitting station, proved not to be robust enough to handle day-to-day mining. Modifications have been completed and the commissioning of the sample splitting station is underway. When it is fully operational (expected mid Q1 2018) the grade control system will provide a homogenous sample for each ring blasted within a long-hole stope. This information will allow us to refine the shape of our stopes to limit dilution and provide the ability to blend ore from the various stopes on a ring-by-ring basis to smooth out head grade to the mill. With the support of infill drilling to 7.5-meter to 10-meter centers ahead of mining, we will be in a good position to control production gold grade.

Why was reconciliation below the reserve model?

Grade reconciliation to the reserve model for the first two quarters of production was approximately 20% to 25% below the reserve model. This is attributed to: a.) the small, relatively unrepresentative sample size of production being analyzed b.) lack of drill density in a significant area of the contributing stopes, and c.) rudimentary grade control without our sample splitting station operational. Ore from the stopes developed on the 1200-meter level sill contributed approximately 25% of the mill feed during this period, and these stopes had some of the least drill definition. We expect more robust reconciliation as we mine in areas with greater drill density and have our grade control system operational.

Why aren’t you providing full-year guidance?

As we are still in the ramp-up phase, we will provide longer-term guidance after Brucejack has reached steady state, with a grade control program in place and the complement of stopes to mine from.

How is your cash position? Are you going to issue equity?

We have produced over 150,000 ounces of gold in the first six months of ramp up and we are cash-flow positive. Since the mine continues to deliver, we are comfortable with our cash position.