Positive Results From PEA On The Dugbe Gold Project

TORONTO - Ian Stalker, CEO of Pasofino Gold Limited, said, “The Company has completed a PEA on the Dugbe Gold Project, which includes both the Dugbe F and Tuzon deposits. We are extremely pleased with the set of outcomes from this PEA exercise. It underscores the potential of the Project to deliver significant value to all stakeholders going forward. Our consulting engineers and management team have set the basis for a quality feasibility study which is in progress, and which will incorporate the positive recent infill and step out exploration results recently announced. We look forward to completion of the Feasibility Study which should provide a solid foundation for the start of the build phase expected to occur in 2023”

The PEA was prepared in accordance with Canadian Securities Administrators' National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101"). The reader is advised that the PEA summarized is intended to provide only a high-level review of the project potential and design options. The PEA mine plan and economic model include numerous assumptions and the use of inferred mineral resources. The PEA is preliminary in nature, includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

DRA Global (South Africa) was appointed as lead consultant to prepare the PEA in accordance with NI 43-101, and was assisted by SRK Consulting Ltd (UK) and Epoch Resources (Pty) Ltd.

A number of trade-offs were completed by DRA Global and Pasofino during the PEA work, including the evaluation of processing capacities from 4Mtpa to 7Mpta and a trade-off on a full range of power options. The 5Mtpa option was identified as the most suitable capacity for the current project, based on the life of the project, estimated capital and shareholder return.

For an owner mining scenario, the base case requires USD391M in initial capital. Operating costs are expected to be approximately USD826/oz during the initial years, and an average of USD893 /oz over the life of mine. During the first 4 years, operating costs are kept low by mining the shallow mineralized material in both pits (Dugbe F and Tuzon) at a targeted strip ratio of less than 2.8, increasing thereafter to an average of 6.8 over the balance of life of mine.

In terms of contained ounces, the PEA relies on 65% Indicated Resources and 35% Inferred Resources, from the Dugbe F and Tuzon deposits which are 4km apart. Updated Mineral Resource Estimate (MRE) on the Dugbe F and Tuzon deposit are anticipated to be released in the next two months. With the PEA now complete, the foundation is now set for the completion of the feasibility study in order to then fully demonstrate the financial viability of the Project, which is ongoing.

The Project is located in south-eastern Liberia, approximately 60km east of Greenville and 240km south-east of the capital Monrovia. The combined Project covers an area of 2,559km2 and is defined within a single Mineral Development Agreement (MDA), issued to Hummingbird in January 2019, valid for 25 years. The centre of the Project has an approximate latitude of 5.093º and longitude of -8.502º. The Dugbe F and Tuzon deposits are approximately 4km apart. The Sackor Prospect is located 2.5km SW of Dugbe F. The Project area comprises a number of license areas that were amalgamated, the most recent of these being the Central License area.

The Project area is an undeveloped area of Liberia, with one main access road, recently upgraded by the mine, and several villages. Most people in the area engage in artisanal mining, hunting or small-scale farming. No utilities such as power and water are available. The area is primarily degraded rainforest over low rolling hills, interspersed with numerous rivers. A sizable river, the Geebo, divides the two deposits. The climate is typically tropical, with high humidity, daytime temperatures and rainfall. The nearest town of consequence is Greenville, the Sinoe County capital, which has a basic port and a palm oil processing centre, but no grid-scale utilities.

Without any material further exploration work the Tuzon MRE was updated with an effective date initially reported as 30 July 2020, later revised to 19 August 2020 to align both deposit estimates, using the model but applying updated economic parameters.

Both the Dugbe F and Tuzon deposits are shallow and so amenable to open pit mining operations. The planned open pits will be mined utilizing conventional truck and shovel method to supply mill feed to the run of mine (RoM) tip (near Tuzon) and waste to the respective pit's waste stockpile facilities. The primary aim of the PEA work was to test and evaluate various mining and processing options in order to scope the more detailed study work to follow. Most of the testing and evaluation was carried out through mine optimization models that included technical and financial data from all aspects of the planned operation. As Pasofino is completing drilling work with the intention of converting Inferred Resources into Indicated Resources, the PEA work included Inferred material, in order to obtain a more accurate processing capacity for the probable mine life.

Three rounds of optimization were completed as the results and inputs were refined. The technical results will be used to guide the further Feasibility Study work. The results of one of the selected scenarios were also used to support the financial model in this report to determine the financial potential of that scenario. Geological and production schedule data was used to determine a suitable mining approach and fleet, which in turn informed the optimization work. A fleet option was selected and further detailed for the selected scenario.

A number of historical test work programs have been undertaken on samples originating from the Dugbe F and Tuzon deposits over the period 2009 to 2014. DRA reviewed the historical test work, with a primary focus on the Mintek work, to derive a conceptual level flowsheet, recovery and operating cost estimate for the updated PEA.

The Dugbe Gold Mine Project 5.0 Mtpa gold processing plant design has been based on a typical semi-autogenous grinding (SAG) and ball milling circuit followed by a carbon-in-leach (CIL) gold recovery circuit. This process flowsheet is well known in industry and has historically been proven as a successful processing route for oxide and fresh gold ores. Based on previously reported similarities between the Dugbe F and Tuzon ore deposits in terms of mineralization style, host lithology type and geometry, DRA interprets the metallurgical response for Dugbe F would be similar to Tuzon. The gold recoveries for Dugbe F and Tuzon oxide and fresh ore will be validated in the 2021 test work program undertaken at ALS laboratories.

From the historical test work, gold recoveries are expected to range from 87.1% to 89.5%, averaging 88.4% over LoM. The recovery assessment is based on a feed blend containing 71% Tuzon fresh material and 26% Dugbe F fresh material with the remaining 3% comprised of oxides.

The primary access is a 74km road from the port of Greenville to the mine site utilizing the existing public road infrastructure. The main requirement is to upgrade the existing access roads and tracks to accommodate the anticipated traffic volumes during mining operations, as well as providing public access to the local villages. The road is split into two defined sections: the 30km road from Greenville Port to Plazon Junction and the 44km track from Plazon Junction to the mine site. Access along the 30km from Greenville to Plazon Junction consists of gravel roads that are mostly in fair condition. The balance of the primary access road, between Plazon Junction and the mine site, consists of existing gravel roads and tracks. This section will require extensive upgrades to meet the required standards.

It is anticipated that the Project will be water positive, and as such care will be taken to ensure that all water discharged to the environment meets the necessary quality requirements as per local legislation and international best practice. The main water systems will be the tailings storage facility (TSF) and the process plant. Tailings slurry will be delivered to the TSF and the solids will settle out. The TSF will collect rain and runoff water. Water will be returned to the process plant for reuse, and excess water will be discharged in a controlled manner to the environment. Other water-related considerations are runoff from the waste storage facility (WSF) and process plant areas. Waste ore will be tested for any geochemical contamination before a decision is made regarding appropriate designs for the WSF. All runoff from the process plant will be directed to pollution control dams.

An electric load list was developed, based on a preliminary mechanical equipment list (carbon-in-leach recovery flow sheet). The load demand of the process plant and associated infrastructure is anticipated to be 25MW (28MVA), whilst annual energy consumption is expected to be approximately 205GWh. As there is no electrical utility infrastructure in the vicinity of the mine site, energy demands must be met through local generation. Power provision will be the largest single operating cost for the operation. Consequently, various power supply options were evaluated to find the most cost-effective solution. Power generation can also be a material source of greenhouse gases and environmental impact, so low carbon emission options were also considered. A high-level trade-off study was completed to determine the most cost-effective power generation technologies available to the Project; where the levelized cost of energy was compared between thermal generation (diesel and HFO), hydroelectric power generation and solar photovoltaic (PV) power generation. The base case power generation costs considered in this report are based on HFO fueled thermal generation plant, as this technology is readily available to the Project. "Hybrid" power generation solutions, involving a portion of PV generation and battery storage, should result in a reduction in energy cost and will be assessed during the execution of the FS. Other 'green' generation technologies show a reduction in the levelized cost of energy but require an investment by third parties, which is being actively pursued by Pasofino.

Based on HFO fueled power generation, operating costs are expected at $0.18 per kWh, with USD52.1M capital investment required (the capital portion is assumed to be spread over a 12-year period, based on the application of a build-own-operate-transfer (BOOT) type contract agreement). The operating cost is primarily comprised of fuel cost, which is subject to fluctuation with the crude oil price (dated January 2021).