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Halifax, Nova Scotia
� January 6, 2011� Brigus Gold Corp. (�Brigus� or the
�Company�) announces the results from a recently completed independent
Technical Report (the �Report�) on its Black Fox Mine in the Timmins Gold
District, Ontario, Canada. The Report was based on the mine operations
and reserves as of October 31, 2010 and included a Net Present Value of
$359.4 million for the Black Fox Mine using a 5% discount rate. The
Company also provides an update on underground development at the Black Fox
Mine including production results from the fourth quarter (�Q4�) of 2010,
which have been impacted by development progress. All currency is
reported in U.S. dollars.
The Report, which is anticipated to be filed by the end of this week under
the Company�s name at www.sedar.com and posted to the Company�s website at www.brigusgold.com, was prepared in compliance with Canadian National Instrument 43-101
(�NI 43-101�) by Wardrop Engineering Inc., A Tetra Tech Company, Toronto,
Ontario, with assistance from Brigus staff. Highlights from the Report include:
- Mine
life of 8.6 years based on existing reserves of 906,375 ounces of gold
within 6.5 million tonnes at an average gold grade of 4.4 grams per
tonne (�gpt�).
- Processing
rate of 730,000 tonnes per annum (2,000 tonnes per day (�tpd�)) and a
recovery rate of 94%.
- Average
cash operating costs of $502 per ounce ($66.94 per tonne milled) with a
break even gold price of $602 per ounce.
- Capital
costs, including sustaining capital, of $74.8 million.
- The
Net Present Value (�NPV�) of Black Fox, at a 5% discount rate, is $359.4
million with pre-tax undiscounted cash flow of the project of $439.0
million from revenues of $0.9 billion based on a gold price of $1,200
per ounce for 88% of the ounces produced and $500 per ounce for the
remaining 12% of production ounces (in accordance with the gold stream
agreement with Sandstorm Resources (�gold stream agreement�)).
- Average
annual production of 104,000 ounces of gold over the next five years of
production.
Potential upside exists beyond the results of the Report which excludes
management�s anticipated extensions to the Black Fox ore body that remain
open at depth and along strike. Further upside potential is
demonstrated by ongoing drilling success at the Contact Zone gold deposit and
the Gibson Zone, each located within the Black Fox Complex, within three
kilometres to the southeast of the mine.
Commenting on the Report, Chief Operating Officer Richard Allan said, �The
completion of Brigus� merger in June 2010 and the commencement of underground
mine development in July 2010 has represented a new beginning for the Black
Fox Mine and Mill. This Report marks a baseline for continuing gold
production from Black Fox and confirms that the project is financially robust
based on existing reserves. The Report reinforces our confidence that
Black Fox will continue to be a low cost gold producer. Opportunities
have been identified (as noted below) that are expected to provide
significant operating upside to the mine. During the first quarter of
2011, we plan to complete the main underground infrastructure development at
Black Fox and, in the process, transition to steady state production levels
contemplated in the Report.�
Table 1: Black Fox
Mine�s Cash Flow and Net Present Value Sensitivity to Changes in the Gold
Price
Table 2: Black Fox
Mine�s Net Present Value Sensitivity
(Please see the PDF of
the news release for these tables.)
Estimated Mineral
Resources
As of October 31, 2010, Indicated Resources at Black Fox, including reserves,
were estimated at 1,031,400 ounces of gold within 5.7 million tonnes of ore
at an average gold grade of 5.7 gpt and additional Inferred Resources were
estimated at 77,500 ounces of gold within 0.8 million tonnes of ore at 3.1
gpt.
Positive drill results from several ore-grade holes distant from the existing
mine reserves, which were included in previous resource estimates, were
excluded from the current resource estimate as they were considered by Brigus
and Wardrop to be too far from the main deposit and too far apart to be
included within the Inferred Resource category. Follow up and infill
drilling around these drill holes provides the Company with high-priority
exploration targets and a further opportunity for future resource additions.
Prior to the Brigus merger, drilling to expand Black Fox resources and
reserves was limited from 2008 to early 2010 due to capital constraints.
The gold mineral resource statement in the Report was reported at a 0.88 gpt
cut-off grade for the open pit and at a 2.54 gpt cut-off grade for the
underground.
The resource estimate as of October 31, 2010 shows Indicated Resources,
including Probable Reserves, and Inferred Resources as follows:
Table 3: Estimated
Gold Mineral Resources for the Black Fox Mine (at October 31, 2010)
(Please
see the PDF of the news release for this table.)
Estimated Mineral
Reserves
Black Fox�s estimated gold mineral reserves total 0.9 million ounces of gold
within 6.4 million tonnes at an average gold grade of 4.4 gpt, according to
the Report. The economic analysis in the Report was based on the
following gold mineral reserve estimate as of October 31, 2010:
Table 4: Estimated
Gold Mineral Reserves for the Black Fox Mine (at October 31, 2010)
(Please
see the PDF of the news release for this table.)
Cash Operating
Costs
The Report cites cash operating costs of $502 per ounce of gold over the
known life of mine. Using constant dollar terms, the cash operating
costs are summarized as follows:
Table 5: Life of
Mine Cash Operating Costs at the Black Fox Mine
(Please
see the PDF of the news release for this table.)
A summary of the economic results for the base case are as follows:
Table 6: Technical
Economic Results for the Black Fox Mine (as of January 1, 2011)
(Please
see the PDF of the news release for this table.)
Upside
Opportunities
The Report identifies the following upside operating opportunities:
- Potential
expansion and further optimization of the mill to enhance the gold
recovery rate by expanding or optimizing the grinding and leaching
circuit.
- The
deposit exhibits good potential for additional resources at depth and
along strike.
- Cut
and fill stopes have been conservatively designed and in wider areas
will support higher productivity and lower unit costs.
- Evaluation
of long hole stoping methods for steeply dipping ore blocks to enhance
underground mining productivity and lower mining costs.
- Toll
processing of lower grade, open pit ore stockpiles.
The Company believes
that there is significant upside opportunity for additions to reserves and
resources from its ongoing exploration drilling program within the 42 square
kilometre Black Fox Complex including potential extensions to the Black Fox
ore body. Continuing exploration success at the Contact and Gibson
Zones and planned 2011 exploration at the former Stock gold mine, located at
the Black Fox Mill, represent additional exploration potential.
Black Fox
Operations Update
Following the mid-2010 merger of Linear Gold Corp. and Apollo Gold
Corporation to form Brigus, the Company has optimized mining operations in
the open pit while simultaneously initiating underground mine development.
The Black Fox Mine commenced production as an open pit mine in
May 2009.
The Black Fox Mine operated as the former Glimmer underground mine, from
1997-2001, before suspending operations as a result of depressed gold
prices. The current underground development includes the total
replacement of all previous underground infrastructure, including the service
and ventilation raise as well as the haulage ramp to
surface.
To date, ongoing development of the new underground infrastructure has been
slower than anticipated. Delays are attributable to certain legacy
issues preceding the Brigus merger, an extremely competitive labour market
that has contributed to various staffing challenges and operational issues
arising from contractor scheduling and equipment availability.
Completion of the new vent raise and portal are now targeted for completion
by mid-February 2011.
Recently, Brigus has accelerated its efforts to hire permanent Company mining
and development personnel with underground staffing levels increasing and
coinciding with the commencement of the new year.
Construction and relocation of the vent raise and portal continue to result
in logistical issues that have significantly restricted ore production from
the open pit. During this transitional period the Black Fox Mill
continues to operate at 2,000 tpd by drawing down low-grade stockpiles
(<2.0 gpt) held in inventory. During Q4 2010, the Company produced
approximately 13,700 ounces of gold from approximately 184,000 tonnes of
ore.
The Company is committed to the completion of the underground development and
near-term commencement of commercial production levels from the underground
mine. The new vent raise and portal is nearing completion and when
complete will result in the attainment of commercial production during the
first quarter of 2011 and quarterly production increases over the balance of
the year. The 2011 mine plan is being adjusted to reflect the updated
schedule and revised guidance will be provided following completion of the
portal and vent raise.
Goldfields Update
The Company has retained March Consulting Associates Inc. and Wardrop to
update the capital and operating costs and the resource model, respectively,
for the Company�s 100% owned Goldfields Project, located near Uranium City,
Saskatchewan, Canada. The Goldfields Project is comprised of the Box
and Athona gold deposits hosting in excess of one million ounces of gold of
Proven and Probable Reserves contained within 14.9 million tonnes at 1.4 gpt
for Box and 10.5 million tonnes at 1.0 gpt for Athona. These reports are
expected to support a development decision in Q2 2011.
Qualified Persons
The Qualified Persons who reviewed the technical information of this news
release were Richard Allan, P. Eng., Vice President and Chief Operating
Officer for Brigus and Tim Maunula, P. Geo. for Wardrop in regards to the
references to the Report.
About Brigus Gold
Brigus is a growing gold producer committed to maximizing shareholder value
through a strategy of efficient production, targeted exploration and select
acquisitions. The Company operates the wholly owned Black Fox Mine in
the Timmins gold district of Ontario, Canada. The Black Fox Complex
encompasses the Black Fox Mine and Mill, and adjoining Grey Fox-Pike River
property, all in the Township of Black River-Matheson, Ontario, Canada.
Brigus is also advancing the Goldfields Project located near Uranium City,
Saskatchewan, Canada, which hosts the Box and Athona gold deposits. In
Mexico, Brigus holds a 100% interest in the Ixhuatan Project located in the state
of Chiapas, and a 3% NSR interest in the Huizopa Project, an early stage,
gold-silver exploration project located in the state of Chihuahua. In
the Dominican Republic, Brigus Gold has a joint venture covering three
mineral exploration projects.
Contact Information:
Wendy Yang, Vice President of Investor Relations
Phone: 720-886-9656 Ext.
217
E-mail: ir@brigusgold.com
Website: www.brigusgold.com
Cautionary Note to
U.S. Investors Concerning Estimates of Mineral Resources
This news release uses the term mineral �resources�. The Company
advises U.S. investors that while these terms are defined in and required by
Canadian regulations, these terms are not defined terms under the U.S.
Securities and Exchange Commission (�SEC�) Industry Guide 7 and are generally
not permitted to be used in reports and registration statements filed with
the SEC. The SEC generally only permits issuers to report
mineralization that does not constitute SEC Industry Guide 7 compliant
�reserves� as in-place tonnage and grade without reference to unit
measures. U.S.investors
are cautioned not to assume that any part or all of mineral deposits in these
categories will ever be converted into reserves.
Non-GAAP Financial
Measures
The term �total cash cost� is a non-GAAP financial measure and is used on a
per ounce of gold basis. Total cash cost is equivalent to direct operating
cost as found on the Consolidated Statements of Operations and includes
by-product credits for payable silver production. The Company has included
total cash cost information to provide investors with information about the
cost structure of our mining operations. This information differs from
measures of performance determined in accordance with GAAP in the United
States and Canada and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with GAAP. This
measure is not necessarily indicative of operating profit or cash flow from
operations as determined under GAAP and may not be comparable to similarly
titled measures of other companies.
Cautionary and
Forward-Looking Statements
This news release includes �Forward-Looking Statements� within the meaning of
section 21E of the United States Securities Exchange Act of 1934, as
amended. All statements regarding the ability of the Company to be a
low-cost gold producer; to successfully transition to steady state production
levels; to extend the Black Fox ore body; to have continued exploration
success at the Contact and Gibson zones and initial exploration success at
the former Stock Mine/Black Fox Mill property; to successfully complete
underground infrastructure, including completion of a new vent raise and
portal; to remedy certain legacy operational issues; to be able to hire
sufficient skilled workers; life of mine production and costs; NPV and cash
flow based on life of mine plan; upside potential to extend the mine life or
increase production or resources and reserves; the amount of
exploration drilling and the timing associated therewith; are forward-looking
statements and estimates that involve various risks and uncertainties.
There can be no assurance that such statements will prove to be accurate and
actual results and future events could differ materially from those
anticipated in such statements. Important factors that could cause
actual results to differ materially from these forward-looking statements
include environmental risks and other factors disclosed under the heading
�Risk Factors� in Brigus Gold�s and its predecessor companies� most recent annual
report on Form 10-K filed with the United States Securities and Exchange
Commission and elsewhere in Brigus Gold�s documents filed from time to time
with the Toronto Stock Exchange, the NYSE Amex, the United States Securities
and Exchange Commission and other regulatory authorities. All
forward-looking statements included in this news release are based on
information available to the Company on the date hereof. The Company
assumes no obligation to update any forward-looking statements, except as required
by applicable securities laws.
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