Feasibility Study

The Josemaría Project Feasibility Study

A CONVENTIONAL, ROBUST AND RAPID PAY BACK, OPEN PIT COPPER-GOLD PROJECT IN SAN JUAN, ARGENTINA

Josemaría Resources has announced the results of the Independent Feasibility Study (“Feasibility Study”) for its 100% owned copper-gold-silver Josemaría Project (the “Project”) located in San Juan, Argentina.

The Feasibility Study demonstrates a robust, rapid pay-back, low risk project, with an open pit operation feeding a conventional process plant at 152,000 tonnes per day over a 19 year mine life, yielding average annual metal production of 136,000 tonnes of copper (“Cu”), 231,000 ounces of gold (“Au”) and 1,164,000 ounces of silver (“Ag”) per year.

FEASIBILITY STUDY HIGHLIGHTS INCLUDE:

Unless otherwise indicated, all dollar amounts are stated in U.S dollars (“$”)

  • $1.53 billion(“B”) after-tax Net Present Value at an 8% discount rate (“NPV8”)and a 15.4% Internal Rate of Return (“IRR”) at metal prices of $3.00 per pound (“lb”) copper, $1,500 per ounce (“oz”) gold and $18 per ounce silver.

  • The Josemaria Project return increases to over $2.16B After-Tax NPV8 and 18% IRR utilising spot metal prices at the close of trading on Friday 16th Oct 2020 of $3.04/lb Cu, $1,900/oz Au and $24/oz Ag.
  • Total contained metal in the proven and probable mineral reserve of 6.7 billion lb Cu, 7.0 million oz Au and 30.7 million oz Ag with mineral resources open at depth.
  • A proven and probable mineral reserve of 1,012 million tonnes (“Mt”) with diluted grades of 0.30% Cu, 0.22 grams per tonne (“g/t”) Au and 0.94g/t Ag, of which 197Mt are in the proven mineral reserve category, with a low 0.98:1 (waste:ore) strip ratio.
  • Optimised mine production plan with average grades in the initial 3 full years of production notably better than the life of mine average, supporting strong investment payback potential and driving a 3.8-year payback period from start of production.
  • 19-year mine life optimised to maximise early cash flow with average annual production over the initial 3 years of 166,000t Cu, 331,000oz Au and 1,248,000oz Ag payable metal in concentrate.
  • 152,000 tonnes per day average life-of-mine process plant throughput with a 3-line conventional Semi Autogenous Ball Mill Crushing (SABC) circuit utilising an optimised layout for a maximised gravity flow circuit.
  • Simple and conventional metallurgical extraction process utilising conventional flotation reagents without the use of cyanide.
  • Life-of-mine average recoveries of 85.2% for Cu, 62.6% Au and 72% Ag, producing clean, precious metal rich concentrate, with 27% Cu content and no significant penalty elements.
  • A total initial project capital cost of $3.09B including all engineering, procurement, construction, and management (“EPCM”), site and offsite infrastructure, pre-construction engineering work and contingency.
  • Life-of-mine Total Cash Cost(1) of $1.55/lb Copper Equivalent(2) (“CuEq") production including Mining of $0.34/lb, Processing of $0.52/lb, TCRC & Shipment of $0.47/lb, Royalty of $0.06/lb and Sustaining Capex of $0.16/lb with General and Administrative costs (“G&A”) being apportioned to appropriate areas.
  • 100% of planned infrastructure is within the pro-mining San Juan province, simplifying permitting and approval processes to ensure a clear path to project development.
  • Ready access to, and availability of, all essential resources including abundant water, grid power and transportation and logistics infrastructure within San Juan province.
  • Concentrate logistics utilising truck and rail transport from site to an export port in Rosario, Argentina.
  • Design incorporates the latest technology, including autonomous truck and production drill fleets and optionality to incorporate green energy.
  • Clear and achievable project execution plan demonstrates commercial production could be achieved by early 2026.
  • Environmental and Social Impact Assessment (“ESIA”) is already well underway and is expected to be submitted to relevant authorities for assessment in Q1, 2021.

(1),(2),- See NON GAAP Financial measures section for detail

The Company intends to continue with an ambitious work plan to advance Josemaría and has already commenced a bridging phase of engineering prior to the initiation of basic and detailed engineering planned for early 2021.

The Feasibility Study was prepared by a team of engineering and consulting service providers led by Fluor Canada Ltd (“Fluor”) with key sections prepared by SRK Consulting (Canada) Inc. (“SRK”), and Knight Piésold Ltd. (“KP”) and input from a variety of independent consultants and qualified persons, and in accordance with the disclosure standards of National Instrument 43-101 (“NI 43-101”)

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