Chesapeake Announces Updated Pre-Feasibility Study for Metates

 

VANCOUVER, BC - Chesapeake Gold Corp. reported the positive results from the completion of the Updated Pre-Feasibility Study ("Updated PFS") on its 100% owned Metates project located in Durango State, Mexico. The Updated PFS evaluated a lower ore throughput development scenario compared to the original PFS titled "Metates Gold-Silver Project NI 43-101 Technical Report Preliminary Feasibility Study". The Metates project hosts one of the largest undeveloped gold, silver and zinc reserves in the world.

The Updated PFS is based on an initial ore throughput rate of 30,000 tpd ("Phase 1") with a staged expansion up to 90,000 tpd ("Phase 2") funded primarily from internally generated cash flow. Phase 1 will operate for the first four years of the mine life with Phase 2 production starting in year five. Active pit mining is planned for 27 years followed by 10 years of processing stockpiled low grade ore. The Company believes this scalable approach provides a viable alternative option to build Metates at a lower initial capital cost while maintaining key operating efficiencies and economies of scale. All costs are shown in US dollars.

"Few world-class gold projects have scalable mine options. The Updated PFS demonstrates that an initial smaller mine with staged development at Metates can deliver attractive operating metrics with strong economics at current metal prices. Metates scalable approach is achievable due to the deposit's highest grades being realized early in the mine life, a very low strip ratio, low energy costs and proximity to key existing infrastructure. For our stakeholders, the Updated PFS also meets the industry's highest and best standards with respect to water stewardship and tailings management," stated P. Randy Reifel, President of Chesapeake.

Highlights of the Updated PFS include: Proven and probable mineral reserves of 18.3 million ounces gold, 502 million ounces silver and 4.0 billion pounds of zinc; Initial Phase 1 capital cost of $1.91 billion, including a contingency of $244 million; Average gold cash cost on a by-product basis is -$339 per ounce for years 1-4, and $346 per ounce for years 1-10; Average annual gold production of 700,000 ounces for the first 10 years of Phase 2 operations (years 5-14); Average annual production of 14 million ounces silver and 115 million pounds of zinc for the first 10 years of production; Life of mine by-product cash cost of $628 per ounce and AISC cost of $662 per ounce; Phase 2 capital cost of $1.59 billion, including a contingency of $253 million; Life of mine strip ratio of 1.1:1 -- At base case metal prices, pre-tax NPV of $1.78 billion at a 5% discount rate and an after tax NPV of $737 million.