Editors Note:

Today’s update is a big one! We had just finished our pitshell update for the last news release when this morning’s release came out… so back to re-running everything we went! As a result this update is longer than we normally plan on producing for a “day of release” but we hope you enjoy it! 

Welcome!

Welcome to our our first fully pit constrained update here on Mining Explained! 

We will be talking about our updated global estimate,  the difference between sulfide and oxide ores, the economic inputs we are using for our pitshell and finally our first pit constrained napkin math!

As this is our first run at providing a pit constrained guess please keep in mind that there could be errors. We have done our checks but there is always the chance of some small bug we have missed! (As always nothing here is investment advice – do your own due diligence) And with all that being said lets dive in! 

Napkin Math - Global Model Results - Jan 23 2023

Some Background Info

What is a Pitshell?

As a quick overview for anyone not familiar with pit optimization the process involves using assumed costs and our block model to evaluate which blocks it would be economical to mine. This gives us a guess at how much of the deposit can be extracted economically via a surface mining operation. Additionally it gives us the pits strip ratio (tonnes of waste / tonnes of ore) and generates a pitshell which shows how the final pit would look!  Our estimate does not take into account any local geology or faulting and uses a 45 degree pit slope which if fairly standard for a high level pass. There is no depth limit on how deep it digs evaluating only when the cost of digging additional waste outweighs the value of digging deeper to reach more ore. 

What is the difference between Oxide and Sulfide Ore?

In a perfect world we would be able to get away with a single set of inputs but for Golden Summit we need to consider at least two! The project hosts a resource that can be classified into two groups of ore: Sulfide and Oxide. Both groups contain gold and would have been very similar originally but the passage of time has altered them at a chemical level so now they must be processed differently. 

Keep in mind today we are simplifying things! Obviously there is a lot more detail that goes into the actual geology and the art of pulling metal from rock! If you are curious go buy your neighborhood geologist or metallurgist a beer and ask them about it. They will be thrilled. 

To start off lets think about the minerals we are working with. We are trying to extract minuscule molecules of gold from a sea of rock made up of a collage of different minerals all of which are in a variety of forms.

But we don’t want to talk about that today so lets come up with something simpler!

Picture a chicken egg: a golden yolk surrounded by a hard shell.

In our example the center is our gold surrounded and its surrounded by a shell of sulfide. Now gold is very hard to dissolve into a solution but one of the main compounds used today is cyanide. And for that cyanide to reach the gold our sulfide shell must be cracked. 

SULPHIDE ORE represents what is known as a refractory ore which means it is resistant to traditional methods of extraction such as cyanide leaching. As a result it must be processed with specialized techniques such as roasting, pressure oxidation or bioleaching applying either heat, pressure or bacteria to break down the refractory minerals and access the ore. 

The important part to remember is throwing the ore into a high pressure, oxygen rich furnace for a couple of hours works great. It will oxidize the ore more thoroughly than nature could have and so we the overall recover is better! The trade off is its expensive to roast rock for hours so our processing costs are much higher.

 

OXIDE ORE is typically found nearer to the surface. It has been exposed to oxygen in the atmosphere over millions of years which has caused it to slowly rust (oxidation). This process breaks down the refractory minerals in the ore allowing it to be processed cheaply with regular cyanide heap leach methods. As we mentioned above mother nature has not oxidized the material as effectively as a furnace could so overall recoveries are a bit lower.

All of this boils down to the deposit having two very different types of ore and each of them having a different processing cost!

For this release we’ve taken some time to work out what those costs may be but please keep in mind there these are very much just our thumbwag estimates. We will continue to tweak these numbers going forward as we research further but we had to start somewhere. (Did we mention that nothing here is investment advice?)

On That Note - A Correction To Our Last Post

When we last wrote about Freegold back in December we had ventured forth our opinion that the cutoff grade would not be above 0.5 gpt. Well as we put together the inputs for our pitshell run we have to report we were definitely WRONG when it comes to the Sulfide Ore! Not sure where our head was at when we were writing but we definitely underestimated the cost to process the sulfide ore and apologize for that error! More on the correct numbers later but we are committed to calling it out when we screw up!  

If there is one thing we are about here at Mining Explained it is trying to be consistently less wrong…. we figure that if we keep it up long enough we may eventually be right!

Napkin Math - Pit Constrained Model Results - Jan 23 2023

The Inputs

Now all of this having been said how do we make a guess at what our inputs for our pitshell should be?

(We have done our best to come up with a reasonable estimate but please keep in mind that we could very well be wrong)

Gold price

We have used $1700/Oz based on the 3 Year average rounded down to the nearest hundred. We felt comfortable with this value as it was used as of this fall for the Raven Resource Estimate which we have discussed previously.

Oxide Depth

For estimating how deep the oxide runs from surface before transitioning to sulfide we are going off of Freegold’s May 21st, 2013 news release which states: “The oxide cap at Golden Summit is contained largely to the upper 200 feet (60 metres) project wide”. 

(Nothing quite like having 10+ years of news archives to comb through)

Operating Costs / Inputs

Our mining cost’s are based off of a handful of comparable operations and for this pass we have varied our mining costs to evaluate their impact upon the final pitshell. Our Recoveries are based on the 2016 PEA as well as our processing costs (inflated into 2022 Dollars).

The Results

Cross-Section Through Pitshell Looking West @ 479105
Vertical Walkthrough of Model And Pitshell Looking Down and Southwest

View the - 2$ / Tonne Mining Cost - Pitshell

Pit Constrained Results

How Deep Can You Dig?

Now we are almost done for the day but we have one last piece to talk about. There is a seemingly never ending debate over how deep a pit can be dug. We will cover this in more depth soon but for now we wanted to give a bit more detail. In the table below we have included the read out for out $2.0/Tonne Pitshell. It is summed up based on block elevation and includes total ore and waste tonnes, distance from each pit crest and average ore grade. Highlighted in gray are 100m offsets from the North Crest of our pitshell to make it easier to compare different depths.

2$/Tonne Mining Cost Pitshell Readout

Click to Expand

Wrapping Up

We hope you have enjoyed our latest update on Freegold Ventures! We know this was a long piece but we hope you enjoyed it! We have not settled on a format for our pitshell updates so expect to see tweaks and changes over the coming weeks! If you have any thoughts on this or other ideas for improving our production feel free to reach out through the contact us page. We do read them!

Thanks for reading and till next time,

Cheers!

Thank You For Reading!

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