Pershimco Resources Inc.
TSX VENTURE : PRO
FRANKFURT : BIZ

Pershimco Resources Inc.

January 12, 2016 12:05 ET

Pershimco New Financial Model Boosts Cerro Quema Gold Project Value by 20%

ROUYN-NORANDA, QUEBEC--(Marketwired - Jan. 12, 2016) -

THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION IN CANADA ONLY AND IS NOT AUTHORIZED FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

Ressources Pershimco Inc. (the "Company" or "Pershimco") (TSX VENTURE:PRO)(FRANKFURT:BIZ) is pleased to announce the results of its recently completed new financial model on its Cerro Quema project in Panama. This new model incorporates the results of an optimisation engineering of the "Economic Analysis" section (Chapter 22) of the previously reported Cerro Quema Project - Pre-Feasibility Study ("PFS") on the La Pava and Quemita Oxide Gold Deposits (available on the Company's website, and filed on SEDAR on August 22, 2014).

The new cash flow model included in this Chapter 22 will be available on the Company's website as well as filed on SEDAR and will update the PFS.

ITEMS Updated financial model Initial PFS Improvement
NPV (5%) ($1,275 / Oz) US $ 121.7M = (C$ 170.0 M ) US$ 110.0 M 20 %
IRR 41.4 % 33.7 % 7.7 %
CAPEX US$ 94.7 M US$ 117.1 M 19 %
AISC OPEX US$ 652 / Oz US$ 631 / Oz - 3.3 %
Exchange rate used = 1.40
NPV = Net present value
IRR = Internal rate of return
Capex = Capital expenditures
AISC OPEX = All-inclusive sustaining operating costs

Pershimco maintains a long-term gold price of $1,275/ounce ("oz") in the financial model. The increase in the NPV and IRR result from various factors including lower costs of mining equipment and services, lower fuel price and review in the construction planning and mining strategy. The US $18.7M CAPEX reduction comes mainly from:

  1. Lowering total costs of mobile equipment mining fleet: US $10.1 M.
  2. Reengineering of the ore transport (fleet, roads & conveyors) for savings: US $8.6 M.

The 10,000 tons per day production scenario provides strong economics through an annual production of more than 100,000 oz gold for the first full year of production generating significant cash flow to facilitate a quick payback period of 22 months. The PFS outlines gold production from the initial extraction phase from the first two open pits of the Project. The operation will have a mine life of 5.3 years and a processing capacity of 3.6 million tonnes per annum ("Mtpa") through a conventional heap leach and CIL/ADR plant with no agglomeration required. Average life of mine production is 78,546 oz per annum.

Parameter Unit Value
Ore mined Mt 19.7
Average head grade mined g/t 0.77
Waste mined (including pre-strip) Mt 14.3
Strip ratio waste:ore 0.72
Contained gold oz 488,000
Average gold recovery rate % 85.8 %
Pre-Production & Production Y1 ounces 100,744
Annual production Y2-6 ounces 317,067
Annual production over LOM ounces 78,546
Open pit mine life years 5
CAPEX upfront capital cost US$ million 94.7
Capital payback period years 1.8
Operating costs (AISC) US$/oz 652

Project Permitting:

The Ministry of Environment of Panama has completed the review of the Environmental and Social Impact Study ("ESIA") positioning the Cerro Quema project in the final steps of permitting. Construction is expected to be initiated this quarter.

The Cerro Quema project is the largest employer in the Azuero region with production at Cerro Quema scheduled to begin at the end of this year,will represent Panama's largest single export. In a few years, the mining industry will be one of the most important contributors to Panama's Gross Domestic Product.

Project Optimization

The PFS focused on estimating the potential of only the La Pava and Quemita oxide gold deposits. Further exploration work and studies will follow to unveil the potential of the Cerro Quema property:

  • There is considerable potential to find additional zones of gold oxide mineralization along the alteration trend that hosts the La Pava, Quemita-Quema and La Mesita deposits.
  • Sulphide resources have been estimated beneath the oxide zones in La Pava and Quema/Quemita. The sulphidic material represents a significant opportunity for a future gold-copper mining operation and a flotation concentrator.
  • There is silver in La Pava and Quema/Quemita ore. Silver revenues have not been calculated in this financial model.

Sensitivity Table:

NPV (in USD 1,000's)
Variation IRR 0% 5% 10% 15%
Gold Price
$ 1,275 41.4 % 163,640 121,692 89,912 65,473
85% $ 1,084 28.4 % 105,630 73,871 49,901 31,554
90% $ 1,148 32.8 % 124,993 89,835 63,260 42,880
100% $ 1,275 41.4 % 163,640 121,692 89,912 65,473
110% $ 1,403 49.4 % 202,013 153,300 116,338 87,858
115% $ 1,466 53.2 % 221,200 169,104 129,551 99,051
Capital Cost
$ 94,712 41.4 % 163,640 121,692 89,912 65,473
85% $ 80,505 50.2 % 176,829 134,272 102,036 77,230
90% $ 85,241 47.0 % 172,432 130,079 97,995 73,311
100% $ 94,712 41.4 % 163,640 121,692 89,912 65,473
110% $ 104,183 36.6 % 154,796 113,258 81,787 57,596
115% $ 108,919 34.4 % 150,335 109,006 77,692 53,628
Operating Cost
$ 179,989 41.4 % 163,640 121,692 89,912 65,473
85% $ 164,515 44.1 % 176,690 132,426 98,874 73,056
90% $ 169,673 43.2 % 172,340 128,848 95,887 70,528
100% $ 179,989 41.4 % 163,640 121,692 89,912 65,473
110% $ 190,305 39.5 % 154,901 114,501 83,906 60,388
115% $ 195,464 38.5 % 150,492 110,870 80,870 57,816

The In-Pit Mineral Resources are summarized in the table 8.

Table 8 - Summary of the Cerro Quema In-Pit Mineral RESOURCES (1,2,3,4,5,6)

La Pava
Zone Grade
Group
Cutoff
Au g/t
Tonnes Au
g/t
Cu
%
AuEq
g/t
Au
Ounces
Oxides Measured 0.18 7,052,600 0.82 0.04 NA 184,900
Indicated 0.18 10,896,100 0.57 0.04 NA 201,100
Meas & Ind 0.18 17,948,700 0.67 0.04 NA 386,000
Inferred 0.18 331,700 0.36 0.03 NA 3,800
Zone Grade
Group
Cutoff
AuEq g/t
Tonnes Au
g/t
Cu
%
AuEq
g/t
AuEq
Ounces
Sulphides Measured 0.31 802,000 0.44 0.22 0.80 20,600
Indicated 0.31 7,664,900 0.39 0.38 1.00 246,100
Meas & Ind 0.31 8,466,900 0.39 0.36 0.98 266,700
Inferred 0.31 75,000 0.28 0.20 0.61 1,500
LA PAVA Grade
Group
Cutoff Tonnes Au
g/t
Cu
%
AuEq
g/t
Au + AuEq
Ounces
Total Measured ---- 7,854,600 0.78 0.06 0.81 205,500
Indicated ---- 18,561,000 0.50 0.18 0.75 447,200
Meas & Ind ---- 26,415,600 0.58 0.14 0.77 652,700
Inferred ---- 406,700 0.35 0.06 0.41 5,300
Quema / Quemita
Zone Grade
Group
Cutoff
Au g/t
Tonnes Au
g/t
Cu
%
AuEq
g/t
Au
Ounces
Oxides Measured 0.18 0 0 0 NA 0
Indicated 0.18 5,983,700 0.86 0.03 NA 166,400
Meas & Ind 0.18 5,983,700 0.86 0.03 NA 166,400
Inferred 0.18 335,300 0.38 0.03 NA 4,100
Zone Grade
Group
Cutoff
AuEq g/t
Tonnes Au
g/t
Cu
%
AuEq
g/t
AuEq
Ounces
Sulphides Measured 0.31 0 0 0 0 0
Indicated 0.31 2,539,000 0.49 0.15 0.73 59,600
Meas & Ind 0.31 2,539,000 0.49 0.15 0.73 59,600
Inferred 0.31 298,100 0.30 0.17 0.57 5,500
QQM Grade
Group
Cutoff Tonnes Au
g/t
Cu
%
AuEq
g/t
Au + AuEq
Ounces
Total Measured ---- 0 0 0 0 0
Indicated ---- 8,522,700 0.75 0.07 0.82 226,000
Meas & Ind ---- 8,522,700 0.75 0.07 0.82 226,000
Inferred ---- 633,400 0.34 0.10 0.47 9,600
1. Mineral resources are reported inside an optimized pit shell. AuEq was calculated using Au + 1.6 * Cu.
2. Numbers may not add up due to rounding.
3. Mineral resources which are not mineral reserves do not have demonstrated economic viability.
4. The quantity and grade of reported Inferred resources in this estimation are uncertain in nature and there has been insufficient exploration to define these Inferred resources as an Indicated or Measured mineral resource and it is uncertain if further exploration will result in upgrading them to an Indicated or Measured mineral resource category.
5. The mineral resources were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council.
6. The mineral resource is based on economic parameters including US$1,500/oz gold, 86% oxide Au recovery, 90% sulphide Au recovery, US$2.20/tonne mining costs, US$6.13/tonne oxide processing cost, US$12.00/tonne sulphide processing cost and US$1.00/tonne G&A

Mineral Reserve Estimate

The Cerro Quema mining operation will consist of open-pit mining only with no underground mining component planned, hence, all of the ore reserves are deemed to be open pit reserves. No Inferred mineral resources are used in the estimation of the mineral reserve. Only oxide resources are used in the estimation of the mineral reserve.

The mineral reserves for the Cerro Quema Project will be provided by two separate pits: La Pava pit and Quema pit. Two separate block models were developed; one for each pit.

The Proven and Probable mineral reserves for the Project are summarized in the Table 9. A cut-off grade of 0.21 g/t Au is used for reporting all reserves. The mineral reserve represents a diluted ore tonnage.

Table 9 - Cerro Quema Mineral Reserves

Ore (Mt) Au (g/t) Cu (%) Gold Oz Contained
La Pava
Proven 6.82 0.80 0.04 176,000
Probable 7.40 0.67 0.04 159,000
Sub-total 14.22 0.73 0.04 335,000
Quema
Proven - - - -
Probable 5.49 0.86 0.03 153,000
Sub-total 5.49 0.86 0.03 153,000
Total
Proven 6.82 0.80 0.04 176,000
Probable 12.89 0.75 0.03 312,000
Total 19.71 0.77 0.04 488,000

Notes

  1. Canadian Institute of Mining and Metallurgy and Petroleum ("CIM") definitions were used for Mineral Reserves
  2. The Mineral reserve Is based on US$1,275/oz gold

Kappes, Cassiday and Associates

Mr. Mark Gorman, PE

Mark holds a BS degree in Chemistry, an MS degree in Metallurgical Engineering and an MS degree in Civil Engineering. He is a registered Professional Engineer in the State of Nevada. He has 20 years of mineral processing experience working in copper and precious metals. He worked for The Mineral Park Mine as their Chief Metallurgist and Allied Nevada as their Corporate Metallurgist prior to joining KCA.

The technical geological information contained in this press release has been reviewed and approved by Mr. John Kapetas, B.Sc. Hons, MAusIMM, MAIG, a Qualified Person under NI 43-101 rules and standards.

About Pershimco Resources Inc.

Pershimco Resources Inc. (TSX VENTURE:PRO)(FRANKFURT:BIZ) is a mineral exploration and development company with a near-term gold oxide production scenario and a copper-gold porphyry target at its 100%-owned Cerro Quema Project in Panama. Cerro Quema's concession boasts paved road access, no indigenous groups and the most favorable climate in the country. Additionally, the Cerro Quema Project has proven to have significant exploration upside with resource expansion potential in over 12 oxide targets identified along a 17km trend as well as porphyry indicators along a 12km strike length that highlights the potential for a nearby copper-gold porphyry system. With strong shareholder support, Pershimco aims to achieve cash flowing status in the near term to continue uncovering the value of Cerro Quema. Please refer to the Cerro Quema Project - Pre-Feasibility Study on the La Pava and Quemita Oxide Gold Deposits, available on the Company's website, and filed on SEDAR on August 22, 2014 as well as to the press release of July 8, 2014.

The Company's documents are available on www.sedar.com.

Please visit the Company's website at www.pershimco.ca.

This press release contains forward-looking statements that reflect, as of the date of this press release, Pershimco's expectations, estimates and projections about its operations, the mining industry and the economic environment in which it operates. Statements in this press release that are not supported by historical fact are forward-looking statements, meaning they involve risk, uncertainty and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Although Pershimco believes that the assumptions inherent in the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which apply only at the time of writing of this press release. Pershimco disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except to the extent required by securities legislation.

Neither the TSX Venture Exchange nor its regulation services provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release. Statements made in this news release that are not historical facts are "forward-looking statements" and readers are cautioned that any such statements are not guarantees of future performance, and that actual developments or results, may vary materially from those in these "forward-looking" statement.

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