Rau Project

Highlights

  • Since 2007, 22 targets with gold and/or base metal mineralization have been discovered across a 20 km trend at the Rau Property;
  • Targets comprise several distinct styles of intrusive-related mineralization, demonstrating systematic zonation outwards from the Rackla Pluton, which represents one of the proposed hydrothermal fluid sources for the district and may have mineralized porphyry potential;
  • The neighbouring Bobcat target reflects outward fluid flow and the development of gold-copper skarn mineralization. This mineral zonation continues to transition outwards to a gold-silver dominated carbonate-replacement system exemplified by the Tiger Gold Deposit (NPV5% of $106.6 million and an IRR of 34.8% before tax);
  • At the periphery, silver-zinc-lead manto-style mineralization has developed at the Ocelot target, demonstrating distal components of fluid flow.

Systematic exploration at the Rau Project has revealed an exciting geological environment, which has already led to multiple discoveries and suggests a robust system with significant additional potential.

Rau Geology

The Rau Project lies within a band of regional-scale thrust and high angle reverse faults that imbricate rocks of Selwyn Basin and Mackenzie Platform. Stratigraphy along the Rau Project dominantly consists of Cambrian to Devonian aged carbonates (dolostones, silty limestones, fossiliferous limestones) interbedded with thin mafic volcaniclastic flows, as well as siltstones and shales. A 62 million year old felsic intrusion (the Rackla Pluton) has been emplaced on the western side of the property.

Rau Mineralization

Polymetallic, intrusive-related mineralization has been identified over a 20 km trend and shows systematic zonation outwards from the Rackla Pluton - one of the proposed hydrothermal fluid sources for the district. Mineralized showings discovered to date include intrusive-proximal skarn, through intermediate and distal carbonate replacement and manto systems.

Geology, Geophysics & Geochemistry


Tiger Au-Ag Deposit (carbonate replacement)

Highlights

  • Carbonate-replacement style oxide and sulphide gold mineralization;
  • Completed 28,215 m of drilling in 162 holes at the Tiger Deposit;
  • Total measured and indicated oxide and sulphide resources of 5,680,000 tonnes at a grade of 2.66 g/t gold containing 485,700 ounces of gold*;
  • Inferred oxide and sulphide resources of 3,230,000 tonnes at 1.81 g/t for a total of 188,500 ounces of gold;
  • ATAC has a positive joint decision document for an all-season tote road to the Rau Trend and Tiger Deposit;
  • The Tiger Deposit remains open along strike and to depth.

Tiger PEA 2016:

  • NPV(5%) of $106.6 million and an IRR of 34.8% before tax, and an NPV(5%) of $75.7 million and an IRR of 28.2% after tax, with an all-in sustaining cost of US$864/oz;
  • Pre-production capital cost of $109.4 million and life-of-mine (“LOM”) sustaining capital costs totaling $8.3 million;
  • Total project life of approximately 9 years, including 1 year of construction and pre-stripping followed by 6 years of owner-operated open-pit mining and 2 years of reclamation;
  • Gold production of 302,307 ounces at an average undiluted grade of 3.81 g/t gold.

Tiger Geology

The Tiger Deposit is developed within a shallow water limestone sequence interlayered with volcanoclastic horizons. This assemblage has been deformed into open folds that plunge gently to the southeast. Several high-angle faults cut the stratigraphy and are hypothesized to have acted as mineralizing fluid conduits. The limestone horizons have been pervasively replaced by coarse grained dolomite during the earliest stages of mineralization. The volcanoclastic flows played an important role in focusing mineralizing fluid flow, acting as an impermeable cap to the carbonates and providing a source of soluble iron for the gold deposition.

Tiger Mineralization

Gold mineralization at Tiger occurs in three distinct forms: oxide gold, fracture hosted native gold, and gold-bearing arsenopyrite. Both geochemical and age relationships, suggest that the gold mineralization at Tiger is distally (3 km) related to the Rackla Pluton.

Magmatic fluids emanating from the Rackla Pluton are thought to have been channeled along faults to reach the Tiger Deposit stratigraphy. Upon entering the Tiger host stratigraphy, the mineralizing fluids became focused along stratigraphic horizons capped by volcanic layers. Progressive dolomitization of the limestone then occurred accompanied by sulphide/gold deposition and final pervasive oxidation upon cooling of the system.

Preliminary Economic Assessment 2016*

Preliminary Economic Assessment 2016*

Highlights from the 2016 PEA, with the base case gold price of US$1,250/oz and an exchange rate of CA$1.00 equal to US$0.78 are as follows. Unless specified otherwise, all values are shown in Canadian dollars.

  • NPV(5%) of $106.6 million and an IRR of 34.8% before tax, and an NPV(5%) of $75.7 million and an IRR of 28.2% after tax, with an all-in sustaining cost of US$864/oz;
  • Compared to the 2014 PEA, the 2016 PEA extends the mine life by 2 years, more than doubles the pre-tax NPV(5%) and increases the pre-tax IRR by 4.8%;
  • Approximately 302,307 ounces of gold produced at an average undiluted grade of 3.81 g/t gold;
  • Total project life increases to approximately 9 years, including 1 year of construction and pre-stripping followed by 6 years of owner-operated open-pit mining and 2 years of reclamation; and,
  • Pre-production capital cost of $109.4 million and life-of-mine (“LOM”) sustaining capital costs totaling $8.3 million.

Mining and Processing

The Tiger Project has been modeled as an owner-operator, conventional truck-and-shovel open-pit mining operation with a conventional CIP gold recovery process. Year-round operations would be supported via a 65 km tote road, which connects the project to the Yukon highway system, near Keno City.

Mineralized material will be loaded into 40 tonne articulated trucks and delivered to the process plant, located 1 km southwest of the pit. Waste material from the pit will be stored in two waste dumps, located at the northwest and southwest sides of the pit. A total of 3.2 Mt of the Mineral Resource and 15.6 Mt of waste rock will be produced during the 7 years of mining and pre-stripping. The LOM average gold grade of mined oxide and sulphide resources is 4.06 g/t and 2.99 g/t, respectively. The LOM strip ratio (defined as waste material mined divided by Mineral Resources mined) is 4.9.

Due to the soft nature of the mineralization and host rock, a single stage of crushing will be performed by a MMD sizer. Crushed material will be ground to 80% passing 75 microns using a semi-autogenous grinding mill and a ball mill in series before cyanide leaching in a conventional CIP circuit. The leached tailings will be detoxified and stored in a lined facility within the Tiger valley. Gold will be refined into doré bars on site through a standard adsorption, desorption and recovery treatment. Based on the results of metallurgical testwork and the mining schedule, projected LOM average recoveries are 90.3% for oxide mineralization and 57.7% for sulphide mineralization.

The processing plant will operate year-round at a rate of 1,500 tonnes per calendar day, and will achieve full throughput in Year 2. Peak annual production will be approximately 86,555 oz of gold in Year 2, with a LOM average annual production of approximately 50,000 oz gold, excluding the final year which will operate for a reduced period.

Table II: Summary of Gold Price Sensitivity (0.78 US$/CA$)

Gold Price (US$/oz) $1,200 $1,250 $1,300
Pre-tax Cumulative Net Cash Flow ($M) $130.1 $149.4 $168.7
Pre-tax NPV(5%) ($M) $90.8 $106.6 $122.3
Pre-tax IRR 30.8% 34.8% 38.8%


Table III: Summary of Exchange Rate Sensitivity (US$1,250/oz Au)

Exchange Rate (US$/CA$) 0.76 US$/CA$ 0.78 US$/CA$ 0.80 US$/CA$
Pre-tax Cumulative Net Cash Flow ($M) $162.0 $149.4 $137.4
Pre-tax NPV(5%) ($M) $116.9 $106.6 $96.8
Pre-tax IRR 37.4% 34.8% 32.3%

Capital and Operating Costs

Total LOM capital costs are $117.7 million, with $109.4 million in pre-production costs and $8.3 million in sustaining capital. To minimize initial capital costs, the PEA has assumed that modular equipment would be used where possible and that some equipment and facilities will be leased.

The following tables summarize the project capital and operating costs.

Table IV: Pre-Production and Sustaining Capital Costs

Area Pre-Production ($M)* Sustaining ($M)* LOM ($M)*
Site Infrastructure $8.1 - $8.1
Tote Road $11.0 - $11.0
Open Pit Mining** $13.2 $0.03 $13.2
Materials Crushing and Handling $2.0 - $2.0
Process Plant $29.7 - $29.7
Tailings and Water Management $7.9 $6.1 $14.0
Project Indirects $19.8 - $19.8
Owner’s Costs $1.2 - $1.2
Contingencies*** $16.5 $2.2 $18.7
Total $109.4 $8.3 $117.7

* Totals may not add exactly due to rounding.
** Includes capitalized pre-production mining costs. Major mining equipment is leased.
*** Contingencies were factored on an area-by-area basis depending on the detail level of each estimate.


Table V: Operating Costs

Description LOM Average
Mining Cost ($/t mined)* $4.31
Processing Cost ($/t processed) $26.98
G&A ($/t processed) $12.38
Surface Services ($/t processed) $3.80
Equipment Leasing ($/t processed) $1.68

*Not including capitalized pre-production mining costs

Technical Reports


Bobcat Au-Cu Target (skarn)

The copper-gold Bobcat Target is located 4.5 km southeast of the advanced-stage Tiger Gold Deposit.

Highlights

  • Preliminary hand pitting returned numerous multi-gram gold and multi-percent copper grab samples; including 6.07 g/t Au with 7.41% Cu and 5.08 g/t Au with 3.69% Cu; and
  • Open-ended 1.5 x 2 km multi-element soil geochemical anomaly.

The Bobcat target is situated below treeline in a moderately vegetated area of mostly gentle relief. Mapping in the area identified significant exposures of limestone and marble, which boundaries remain open. These outcrops lie roughly 1.5 km east of the mapped surface expression of the Rackla Pluton.

The Bobcat exploration target is best defined by anomalous gold, bismuth and tin with sporadic copper highs from soil samples collected from a 1.5 by 2 km area. The Bobcat soil anomaly directly coincides with the skarn targets derived from a desktop geophysical review completed in late 2017. Prospecting near a historical 7.37 g/t gold and 5.90% copper rock sample location identified a 20 x 20 m vegetation anomaly containing abundant skarn mineral vein float from an area of altered limestone and marble bedrock.

Mineralization at Bobcat is typically hosted in gold-copper bearing tremolite veins with varying concentrations of chalcopyrite and copper oxides. The mineralization is characteristic of distal, retrograde skarn alteration related to an intrusive center. Follow-up work around the Bobcat target and the surface exposure of the Rackla Pluton is highly warranted due to the recent prospecting results and proximity to infrastructure.

Eleven hand-pits were dug within the vegetation anomaly and most encountered mineralized skarn vein material. Highlight Bobcat grab samples are tabulated below.

Sample # Au (g/t) Cu (%) Ag (g/t)
W591409 4.78 0.23 64
W591411 3.34 3.33 43
W591414 6.07 7.41 157
W591562 5.08 3.69 24
W591573 2.87 2.27 27

Bobcat 2018 Pit Samples


Spotlight Au-Ag Target (skarn)

The Spotlight skarn target is located 6.5km north-east of the Tiger Gold Deposit. Work in 2018 included soil sampling and prospecting, to follow-up the 2017 discovery of high grade grab samples containing 7,080 g/t silver and 3.27 g/t gold. These samples were collected from a 500 m long gold and silver soil anomaly.

Soil sampling in 2018 expanded the gold and silver anomaly to over 2.2 km in length, with highlight in-soil metal values 0.70 g/t gold and 15.20 g/t silver. This anomaly remains open to the north, east and west.

One day of detailed prospecting was conducted in the Spotlight area during 2018. Rock samples returning 4,090 g/t silver and 1,765 g/t silver in limonite bearing quartz veins were collected near the initial discovery. Prospecting 1.2 km along the anomalous soil trend returned brecciated quartz-siderite material containing 2.17 g/t gold and 1.38 g/t gold.

Significant hornfels, marble alteration and abundant tremolite development indicate high fluid flow, likely from a nearby intrusive system. These observations are supported by the development of gold-copper-tungsten skarn mineralization at the historic Blue Lite occurrence located 1 km to the south of Spotlight.


Ocelot Zn-Ag-Pb Zone (manto)

  • Located 15 km northwest of the Tiger Deposit;
  • Ocelot silver-lead-zinc mineralization begins at surface, and remains open at depth and along strike;
  • Completed 4,891 m of diamond drilling in 24 holes;
  • Numerous untested surface geochemical showings nearby;
  • OS-11-11 returned 37.91 m of 188.07 g/t silver, 8.69% lead and 6.06% zinc.
The Ocelot Target is underlain by a sequence of dominantly limestones and dolostones within the equivalent structural corridor that hosts the Tiger Deposit 15 km to the southeast. Mineralization encountered through drilling in 2011 consists mainly of medium to coarse grained pyrite accompanied with varying concentrations of low iron sphalerite and galena. The carbonates replaced by the sulphides locally exhibit strong structural and fluidized breccia textures.
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