Positive Pre-Feasibility Study Results On Aurizona Gold Project 

 

VANCOUVER, BC - Luna Gold Corp. reported the results of its pre-feasibility study (PFS) prepared in accordance with National Instrument 43-101 (NI-43-101) on its 100% owned Aurizona gold mine (Project) located in northeastern Brazil. The PFS indicates that the Project represents a robust, rapid pay-back, high margin, simple open pit mining project that demonstrates strong returns in the current gold price environment. The financial results of the study yielded an after-tax internal rate of return (IRR) of 34% and a net present value (NPV) of $201 million based on a base case gold price of $1,250 per ounce and a discount rate of 5% (at $1,350 per ounce gold price the IRR is 41% and the NPV5% is $256 million).

With the completion of the PFS, Luna has restated its Proven and Probable Mineral Reserves for the mine at 969,000 ounces of gold contained in 18.6 million tonnes of ore at a diluted grade of 1.62 grams per tonne (g/t) of gold. This has been underpinned by the re-evaluation of the Mineral Resources at Aurizona following the comprehensive 2015 drilling program, which included 15,000 meters of oriented core drilling, 3,000 meters of RC drilling and re-logging of historic core. The extensive technical work provides a strong basis for the new project and processing flow sheet to treat all ore types. As a result, the combined Measured and Indicated Mineral Resources are now at 1.6 million ounces of gold (inclusive of reserves) contained in 29.9 million tonnes at a grade of 1.67 g/t gold.

Initial capital expenditure to fund construction and commissioning is estimated at a modest $146 million due to Aurizona's ability to leverage significant existing infrastructure in place at the brownfields mine site. Life of mine (LOM) sustaining capital is estimated to be $47 million. The all-in sustaining cost (AISC) is projected to be an attractive $708 per ounce over the life of the project and the current Mineral Reserves support a 6.5 year mine life with excellent potential to increase the Mineral Reserves and Resources and extend the mine life. Procurement and construction of the new components and equipment for the restart of the mine are expected to take 18 months.

Christian Milau, CEO, stated, "We are very pleased with the results of this pre-feasibility which provides a solid basis for continuing with the development and implementation of the Aurizona Mine restart plan. With so much of the necessary infrastructure already in place, Aurizona compares favorably to its peers given the initial capital is significantly less than many similar size projects. Further, exploration to date has outlined numerous high-priority, near-mine exploration targets that highlight the potential to significantly extend the mine life."

David Laing, COO, added, "This pre-feasibility study is a culmination of the extensive work done thus far to get the Aurizona Mine back into production in the second half of 2018. The 2015 drilling and metallurgical testwork programs have been instrumental in developing a strong technical foundation and have tremendously advanced our understanding of the geology, alteration, weathering, structure and, metallurgy, and their controls on gold mineralization, processing and recoveries."

The Aurizona Mine comprises a brownfield open pit mine, gold processing plant and property containing the Piaba and Boa Esperança gold deposits and numerous exploration targets located in Maranhao State in northeastern Brazil. This PFS provides the compilation of the engineering and geological studies that incorporated the results from the extensive drilling program conducted in 2015.

The mine plan is based on the current resource model and calls for conventional truck and excavator/front end loader open pit mine operations with a stripping ratio of 6.2:1. The new mine plan continues mining in the existing Piaba open pit, deepening the pit and mining harder rock types which will be amenable to treatment in the upgraded processing plant following the installation of the new comminution circuit.

The mine plan was developed to provide a practical mining sequence, while optimizing net present value, and incorporates the early mining of the Boa Esperança pit which on completion will provide water storage capacity as part of the overall site water management plan. Primary mining activities will take place in the Piaba pit.

Mining will be performed by a combination of Aurizona owned and operated equipment and a mining contractor. Aurizona performed mining will focus primarily on hard saprolite/transition and fresh rock and will be performed by a combination of hydraulic excavators and front end loaders and 63 tonne rigid frame trucks, and will be responsible for almost all ore mining activities as well as a base load of waste mining. The mining contractor will focus primarily on the laterite and saprolite waste mining, with the exception of the Boa Esperança pit, which will include ore. The overall approach will serve to keep the Aurizona executed mining rate relatively constant while optimizing capital expenditures on mining equipment. Drilling and blasting of all hard saprolite/transition and fresh rock will be performed by Aurizona; explosives will be purchased on a down-hole basis from a local supplier. Hard rock accounts for 57% of the Mineral Reserves, while saprolite and transition account for 14% and 29% respectively. The mine schedule delivers 18.6 Mt of ore grading 1.62 g/t Au to the mill over the Life-of-Mine (LOM). Waste tonnage totaling 115.7 Mt will be stockpiled in the north, west, south and east waste rock management areas.