Summary of key assumptions:

 

·        Oxide only

·        At least 500,000 mineable oxide ounces in $1,500 Au pit shell

·        20,000 tpd target throughput

·        $1 per tonne to lift, crush and restack existing ore on the pad (7 cells) *

·        $6.66 per tonne in total mining costs**

·        $3.50 per tonne in total heap leach/processing costs for oxide ores **

·        50% Recovery rate of gold from existing ore on pad*

·        75% Recovery rate of gold from mined ore*

·        Feedstock for Phase I expansion (3 cells, 5.5Mt) comes entirely from Big Rock zones (5Mt @ 0.58gpt**)

·        Avg grade of feedstock for Phase II 12.8Mt @ 0.70gpt**

·        Phase 1 mining (and reprocessing) complete by 2016 in order to commence phase 2 mining.

·        Phase 2 capex at $70M (this is a stab in the dark estimate, I am assuming capex will be reduced from prior expectations because we are essentially building on top of the existing pad rather than a separate in-valley heap leach)

·        Mining season from April – October (approx. 210 days) based on Viceroy operation

 

*Per Bill Sheriff’s presentation at Precious Metals Summit

**Per latest 43-101 Resource Estimate

 

 

Low Gold

Base Case

High Gold

   

 

$1,500

$1,650

$1,800

   

 

         

 

Fixed Inputs

     

 

Mining Days Days

210

     

 

Grams per Troy Oz

31.1034768

     

 

Crush/Restack

$1.00

     

 

Mining Costs

$6.66

     

 

Processing

$3.50

     

 

         

 

Phase I Reprocess (7 cells)

     

 

Throughput (tpd)

20,000

     

 

Tonnes on the pad

12,800,000

     

 

Ozs in pad

160,000

     

 

Days to Fill Pad

640

     

 

Years to Fill Pad

3.0

     

 

Feed grade (gpt)

0.38879346

     

 

Recovery Rate

50%

     

 

Cost per Tonne

$4.50

     

 

Tonnes per year

4,200,000

     

 

Oz Total

80,000

     

 

Oz per year

26,250

     

 

Cash Cost per Oz

$720

     

 

         

 

Cash Flow

Oz Produced

Net @ $1500

Net @ $1650

Net @ $1800

 

2014 Q3

13,125

$10,237,500

$12,206,250

$14,175,000

 

2014 Q4

13,125

$10,237,500

$12,206,250

$14,175,000

 

2015 Q3

13,125

$10,237,500

$12,206,250

$14,175,000

 

2015 Q4

13,125

$10,237,500

$12,206,250

$14,175,000

 

2016 Q3

13,125

$10,237,500

$12,206,250

$14,175,000

 

2016 Q4

13,125

$10,237,500

$12,206,250

$14,175,000

 

Total Gold

78,750

 

 

 

 

Total Cash Flow

 

$61,425,000

$73,237,500

$85,050,000

 

         

 

Phase I Expansion (3 cells)

       

 

Throughput (tpd)

10,000

   

 

Tonnes

5,500,000

     

 

Days to Fill Pad

550

     

 

Years to Fill Pad

2.6

     

 

Feed grade (gpt)

0.58

     

 

Recovery Rate

75%

     

 

Cost per Tonne

$10.16

     

 

Tonnes per year

2,100,000

     

 

Total Oz Mined

102,561

     

 

Oz per Year

29,370

     

 

Oz LOM

76,921

     

 

Cost per Oz

$726

     

 

         

 

Cash Flow

Oz Produced

Net @ $1500

Net @ $1650

Net @ $1800

 

2014 Q3

14,685

$11,359,280

$13,562,008

$15,764,736

 

2014 Q4

14,685

$11,359,280

$13,562,008

$15,764,736

 

2015 Q3

14,685

$11,359,280

$13,562,008

$15,764,736

 

2015 Q4

14,685

$11,359,280

$13,562,008

$15,764,736

 

2016 Q3

18,181

$14,063,871

$16,791,058

$19,518,245

 

Total Gold

76,921

 

 

 

 

Total Cash Flow

 

$59,500,992

$71,039,091

$82,577,190

 

         

 

         

 

 

Phase II

     

Throughput (tpd)

20,000

     

Tonnes

18,300,000

     

Days to Fill Pad

915

     

Years to Fill Pad

4.4

     

Feed grade (gpt)

0.7

     

Recovery Rate

75%

     

Cost per Tonne

$10.16

     

Tonnes per year

4,200,000

     

Total Oz Mined

411,851

     

Oz LOM

308,888

     

Oz per year

70,892

     

Cost per Oz

$602

     
         

Cash Flow

Oz Produced

Net @ $1500

Net @ $1650

Net @ $1800

2016 Q3

35,446

$31,833,297

$37,150,227

$42,467,157

2016 Q4

35,446

$31,833,297

$37,150,227

$42,467,157

2017 Q3

35,446

$31,833,297

$37,150,227

$42,467,157

2017 Q4

35,446

$31,833,297

$37,150,227

$42,467,157

2018 Q3

35,446

$31,833,297

$37,150,227

$42,467,157

2018 Q4

35,446

$31,833,297

$37,150,227

$42,467,157

2019 Q3

35,446

$31,833,297

$37,150,227

$42,467,157

2019 Q4

35,446

$31,833,297

$37,150,227

$42,467,157

2020 Q3

26,042

$23,387,634

$27,293,934

$31,200,234

Total Gold

309,612

 

 

 

Total Cash Flow

 

$182,554,120

$213,045,069

$243,536,017

         

 

PHASE 1+PHASE 2 NPV8 and IRR

Phase 1

$1,500

$1,650

$1,800

 

2014

$43,193,560

$51,536,517

$59,879,473

 

2015

$43,193,560

$51,536,517

$59,879,473

 

2016

$34,538,871

$41,203,558

$47,868,245

 

Total Cash Flow

$120,927,492

$144,278,241

$167,628,990

 

Capex

-$35,000,000

-$35,000,000

-$35,000,000

 

NPV8

$69,443,614

$89,683,324

$109,780,298

 

IRR%

106%

132%

157%

 
         

Phase 2 

$1,500

$1,650

$1,800

 

2016

$63,666,594

$74,300,454

$84,934,313

 

2017

$63,666,594

$74,300,454

$84,934,313

 

2018

$63,666,594

$74,300,454

$84,934,313

 

2019

$63,666,594

$74,300,454

$84,934,313

 

2020

$23,387,634

$27,293,934

$31,200,234

 

Total Cash Flow

$278,055,512

$324,497,399

$370,939,287

 

Capex

-$70,000,000

-$70,000,000

-$70,000,000

est.

NPV8

$162,537,017

$194,668,293

$232,547,541

 

IRR%

85%

101%

117%

 
         

 

 

 “Active in the Yukon.  It is a good team doing good work and it is just what the mine is worth…”  -Brent Cook on GPD

 

 

RICK RULE IN A RECENT INTERVIEW WITH THE GOLD REPORT:

 

RR: Increasingly, investors are telling management teams to be rational. They are telling managements, "In addition to giving us some leverage to the gold price, it would be nice if you made money. We do not want to see you buy 20 million ounces at 5,000 meters (m) in the Andes, only to have to spend $7 billion to bring the deposit on and generate an 8% internal rate of return (IRR) with a 7-year payback. We would rather see you do something that generated a 30% IRR with reasonable amounts of capital where you pay back the capital in three years.

Investors are asking the gold mining business to become a business. That is not too much to ask.

TGR: But in your opening remarks at the Geo Tips seminar, you noted how many of the publicly held mining companies have no gold. That seems contradictory.

RR: There is no contradiction. We want the producing companies to be rational. With regard to the juniors, 80% of them have no net present value (NPV).

The attractiveness of the juniors is twofold. The junior share prices have all been taken down, the good companies along with the bad. There are probably 20 developmental-stage juniors selling at substantial discounts to the NPV of their existing deposits, even though those deposits will grow through exploration. […]

TGR: But can an investor use catalyst events like a preliminary economic assessment (PEA) or a drill result to minimize the risk?

RR: The beauty of a bear market is that people's expectations are so low that many companies sell off on news, even news that is not truly spectacular. For the first time in my career, I see developmental-stage juniors with PEAs selling at substantial discounts to the admittedly speculative values established in the PEA.

We look for three things in a company: One, the sum of the enterprise value of the issuer and the front-end capital costs are lower than the NPV at today's gold prices. Two, IRRs above 25% but preferably about 30%. Three, capital payback within three years. I have not seen these three things come together very often in my career, but they are occurring right now.

With a good deposit, a couple of things will happen between the PEA and the bankable feasibility study. In the two years it takes to get from PEA to bankable feasibility study, the deposit is likely to be bigger and higher grade. More important, the bankable feasibility study gives legal cover to the outside directors of an acquirer. It takes courage to take over a company based on a PEA; with a bankable feasibility study in hand, you are covered.

 

 

Remember, GPD has said they are putting together the PFS to a higher level of confidence so that it is closer to a bankable feasibility study.

 

 

 

RR: The most common mistake I see speculators make is regarding the market as a source of information. It is not. It is a mechanism for buying and selling fractional ownership of businesses. Getting your information from the market is the same as getting your information from the expectations of 10,000 people who probably know less about the topic than you do.

 

 

WHAT DOES THE MARKET KNOW THAT MANAGEMENT DOESN'T???

 

 

Insider:                                                                                                                                     

Transaction:                                                                                                                                                                                                         

 

Date

Insider:

Shares

Transaction

Value

 

09/11/12

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

25,000

Acquisition or disposition in the public market at
.31 -
.31 per share.

$7,750

09/07/12

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

25,000

Acquisition or disposition in the public market at
.32 -
.32 per share.

$8,000

07/18/12

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

5,000

Acquisition or disposition in the public market at
.37 -
.37 per share.

$1,825

07/18/12

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

2,500

Acquisition or disposition in the public market at
.36 -
.36 per share.

$900

07/18/12

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

2,500

Acquisition or disposition in the public market at
.35 -
.35 per share.

$887

07/17/12

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

10,000

Acquisition or disposition in the public market at
.36 -
.36 per share.

$3,600

05/17/12

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

100,000

Acquisition or disposition in the public market at
.39 -
.39 per share.

$39,000

05/09/12

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

50,000

Acquisition or disposition in the public market at
.425 -
.425 per share.

$21,250

04/20/12

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

20,000

Acquisition or disposition in the public market at
.49 -
.49 per share.

$9,800

04/12/12

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

10,000

Acquisition or disposition in the public market at
.53 -
.53 per share.

$5,300

04/11/12

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

20,000

Acquisition or disposition in the public market at
.53 -
.53 per share.

$10,600

03/22/12

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

25,000

Acquisition or disposition in the public market at
.57 -
.57 per share.

$14,250

12/15/11

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

20,000

Acquisition or disposition in the public market at
.55 -
.55 per share.

$11,000

 

11/21/11

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

50,000

Acquisition or disposition in the public market at
.67 -
.67 per share.

$33,500

10/04/11

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

25,000

Acquisition or disposition in the public market at
.64 -
.64 per share.

$16,000

09/22/11

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

20,000

Acquisition or disposition in the public market at
.84 -
.84 per share.

$16,800

09/22/11

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

20,000

Acquisition or disposition in the public market at
.85 -
.85 per share.

$17,000

09/22/11

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

20,000

Acquisition or disposition in the public market at
.87 -
.87 per share.

$17,400

09/22/11

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

20,000

Acquisition or disposition under a prospectus at
.84 -
.84 per share.

$16,800

09/21/11

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

50,000

Acquisition or disposition in the public market at $1.00 - $1.00 per share.

$50,000

08/25/11

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

30,000

Acquisition or disposition in the public market at $1.00 - $1.00 per share.

$30,000

08/25/11

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

10,000

Acquisition or disposition in the public market at $1.02 - $1.02 per share.

$10,200

08/12/11

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

712,000

Exercise of warrants at
.80 -
.80 per share.

$569,600

03/08/11

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

60,000

Acquisition or disposition under a prospectus exemption at
.90 -
.90 per share.

$54,000

03/08/11

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

75,000

Acquisition or disposition under a prospectus exemption at
.75 -
.75 per share.

$56,250

01/21/11

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

9,000

Acquisition or disposition in the public market at
.71 -
.71 per share.

$6,390

 

01/21/11

Sheriff, William Morris
Director or Senior Officer of 10% Security Holder

1,000

Acquisition or disposition in the public market at
.68 -
.68 per share.

$680