Vedron Gold Inc. - Lexam VG Gold Inc.

Vedron Gold Inc.
Buffalo Ankerite South Pit
Project
Preliminary Economic Assessment
May 2007
VETRIN
Mine Planners Ltd.
R. D. Moran P. Eng.
P.A. Bevan P. Eng.
Consulting Mining
Geologist
J. R. Doran P. Eng.
VETRIN
Mine Planners Ltd.
TABLE OF CONTENTS
Section 1.0 SUMMARY……………………………………………………………...…
INTRODUCTION:
PROPERTY DESCRIPTION AND LOCATION:
LOCAL INFRASTRUCTURE AND RESOURCES:
HISTORIC DRILLING:
GEOLOGICAL SETTING:
DEPOSIT TYPES:
DATA VERIFICATION:
MINERAL PROCESSING:
MINERAL RESOURCE ESTIMATES:
ECONOMIC ANALYSIS:
RECOMMENDATIONS:
Section 2.0 TERMS OF REFERENCE
Section 3.0 RELIANCE ON OTHER EXPERTS
Section 4.0 PROJECT BACKGROUND INFORMATION
Section 5.0 GEOLOGICAL SETTING
Section 6.0 EXPLORATION DRILLING
Section 7.0 ASSAY QUALITY CONTROLS
Section 8.0 MINERAL PROCESSING
Section 9.0 SOUTH PIT MINERAL RESOURCE ESTIMATE
Section 10.0 PERMITTING, SOCIAL CONSULTATION & ENVIRONMENTAL
COMPLIANCE
Section 11.0 PROJECT BUDGET & ECONOMICS
Section 12.0 CONCLUSIONS
Section 13.0 RECOMMENDATIONS
Section 14.0 REFERENCES
Section 15.0 APPENDIX
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List of Tables
Table 1.1 Resource Summary – Diluted Tons and Grade by 30 %
Table 1.2 Cumulative Cash Flow
Table 4.1 Land Tenure
Table 8.1 Historic Metallurgical Results
Table 9.1 Undiluted Open Pit Resource Estimate
Table 9.2 Section by Section Resource Estimate
Table 10.1 Preliminary Environmental & Social Permitting Schedule
Table 11.1 Mining Cost Summary
Table 11.2 2007 to 2009 Cash Flow Forecast
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List of Figures
Figure 1.1 Regional Location Map
Figure 1.2 Project Location
Figure 4.1 Regional Location Map
Figure 4.2 Fuller & Buffalo Ankerite Claim Location
Figure 9.1 Section 5120 E
Figure 9.2 Section 6020 E
Figure 11.1 Project Location Within Timmins Gold Camp
Figure 11.2 Project Schedule
Figure 11.3 South Pit General Arrangement
Figure 11.4 Pit Profile c/w Local Ruins & Resident Structures
Figure 11.5 Sensitivity Analysis
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1.0 SUMMARY
Introduction:
The Buffalo Ankerite South Zone Project is a proposed gold mine using conventional open pit
mining methods with a designed depth of 150 feet and a strike length of 1600 feet. The overall
activities will consist of the dewatering, overburden stripping, waste stripping, mine backfilling,
waste and ore mining, followed by gold extraction at a local mill facility. The waste produced during
this project will be stockpiled adjacent to the open pit. Ore grade material will be trucked via
highway haulage equipment, to a local mill for processing under a custom milling agreement. The
tailings will be stored in the custom mill’s existing tailings pond and will be treated and monitored
by the custom miller.
Vedron Gold Inc. has completed over 15,000 feet of exploration and infill drilling on the South Zone
from 2005 to 2006. The NI 43-101 complaint mineral resource estimate has been prepared by Peter
Bevan P. Eng., an independent consulting geologist with over 25 years of mine operations,
exploration and property evaluation experience.
Vedron Gold Inc. has also advanced the permitting process up to and including, submission of an
application for a C of A to discharge process water, and, is in the final stage of fulfilling the
requirements in order to submit a closure plan for approval. The remaining activity for the closure
plan submission will be the public consultations and addressing their issues. The writer has been
informed by Vedron personnel that consultations with the First Nations have taken place.
Mr. Tom Meredith, President of Vedron Gold Inc., has engaged Vetrin Mine Planners Ltd. (VMPL)
to prepare a preliminary economic assessment study for the South Pit Project using Peter Bevan’s
mineral resource estimate.
Property Description & Location:
The Buffalo Ankerite South Pit Project is located within the city limits of Timmins Ontario which is
located approximately 700 kms. north of Toronto, Ontario ( figure 1.1). The Buffalo-Ankerite property
is in the north half of Deloro Township, approximately 3.5 miles southeast of the city of Timmins.
From 1926 to 1953 the property was an active underground gold mine during which time over
1,000,000 million ounces were produced at a recovered grade of 0.19 ounces per ton. The South Pit’s
gold resources are contained in crown pillars over historic underground workings and in footwall and
hanging wall zones adjacent to these historic workings. Crown pillars consist of remnants of the South
Zone which was mined from the 170 & 200 foot levels of the March Mine to the west and the Buffalo
Ankerite Mine to the east. The parallel zones have been located during diamond drill programs carried
out by the former Placer Dome Inc. and by Vedron Gold Inc.
1.1
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The north and south parts of the Buffalo-Ankerite property are composed of patented mining claims.
Surface rights over the proposed pit are in the hands of the city of Timmins and a third party. A
small neighbourhood of approximately 20 homes is located to the west of the historic BuffaloAnkerite property. Claim locations, in relation to past producers, appear in section 4.0, figure 4.2.
and a list of “Land Tenure” appears in Table 4.1 of this same section.
Figure 1.1
Regional Location Map
Timmins
Local Infrastructure and Resources:
The Timmins area is well serviced by mine contracting and mine equipment suppliers. Several large
pillar recovery projects have been and or are currently active in the camp. These consist of the Dome
1.2
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open pit, which mined through 800 feet of the original Dome Mine underground workings that dated
back to the turn of the 20th. century and the current surface mining of the Pamour Mine, by the
Porcupine Joint Venture between Kinross and Goldcorp. The Timmins area has the expertise and a
knowledge base, required to mine safely through underground workings from surface.
Figure 1.2 illustrates the density of past mining activity around the project site and also the proximity
of the residences to the pit boundaries.
Figure 1.2
Project Location
Vedron Fuller Project
Buffalo Ankerite
1926 to 1953
1,019,150 oz.
# 5 Shaft
#3 shaft
Mill Ruins
Aunor Mine
1944 to 1984
2,502,214 oz.
Vedron Gold
Town
Site
Delinite Mine
1937 – 1964
920,214 oz.
1.3
South Pit Project
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Historic Drilling:
In 2002, the Porcupine Joint Venture (PJV) of Kinross and Placer Dome, under option from Vedron
Gold Inc., undertook an exploration program on the Buffalo-Ankerite South Zone.
The program consisted of fifty-nine holes, drilled in two-phases by Placer Dome, which have been
added to the existing database. Phase One consisted of 26 holes totaling 7,549 feet. Phase Two
drilled footage was approximately 12,455 feet in 33 holes.
Vedron Gold Inc. completed 46 holes (VBA-06-33, VBA-06-54 to VBA-06-70) totaling 15,358 feet.
Ten of the 46 holes were used in the resource estimates as well as the PJV diamond drill holes.
All drill holes were bored using NQ size bits. If the hole hit an underground working (drift, raise or
stope) and the drillers were successful in being able to continue drilling, this was normally done with
a BQ bit. Not all holes were successful in continuing, though many were and there were some holes
which hit no opening at all. Collars were surveyed by a GPS instrument and down hole surveys were
carried out using a Reflex Early Shot method.
Core was logged and generally all of it was split into two, except in the ultramafics, using a manual
core splitter for analysis.
Geological Setting:
The Buffalo-Ankerite property forms part of a continuous sequence of mines that extend from the
Dome Mine in the east to the Delnite Mine in the west.
The major regional structure in the Timmins Mining Camp is the Destor-Porcupine Fault Zone. This
fault is roughly east-west trending, and has been traced for over 440 km. The fault has had a
complex and varied history. It has been thrusted, rifted, and shows evidence of left lateral strike-slip
displacement.
Details on stratigraphy, structure and alteration are described in section 5.0 “ Geology of the
Property”. The long history of the Timmins camp has resulted in a wealth of geological studies on
the genesis of the gold depositions.
Deposit Type:
The majority of the mineralization is associated with tourmaline-quartz-carbonate breccia zones
(TBX) located within a pillowed mafic volcanic unit. Breccia fragments are comprised of ankerite1.4
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sericite altered pillowed mafic volcanics within a tourmaline-ankerite rich matrix. The finer the size
of the carbonatized mafic fragments within the vein, the higher the gold grade.
Pyrite is widespread within these veins and ranges from 5-10% with a halo of 3-5% pyrite within the
highly carbonatized pillowed volcanic flow. Visible gold is generally not observed but a good
correlation of pyrite content with gold grade indicates a close association with the gold occurring
probably in fractures within the pyrite or along boundaries of the pyrite grains.
Gold values within the conglomerate lithology are associated with quartz and quartz-tourmaline
veins with 2-5% pyrite content at the vein margins.
Data Verification:
The PJC drill program of 2002 was administered from the Dome Mine complex in South Porcupine
and drill core samples were assayed at the Dome Mine Lab. The report titled “Buffalo Ankerite
South Project, Geology, June 2003” by C. Parolin describes in detail the statistical evaluations done
to compile the results of their 59 hole exploration program.
Vedron Gold Inc. used the services of Laboratoire Expert Inc. in Rouyn-Noranda, PQ. for their core
samples during the 2005 and 2006 drilling. Check samples were sent to Laboratoire Bourlamaque
Inc. in Val d’Or, PQ. for re-assay. Each lab’s certificate of proficiency is contained in section 7.0.
The author reviewed the resource estimate with Peter Bevan P. Eng. which is the basis for the pit
model used for this economic evaluation.
Mineral Processing:
At the time of this report Vedron Gold Inc. has not pursued any metallurgical testing on the South
Zone material. The focus has been on recovering historic data to establish a realistic figure for
milling recoveries in the economic model.
Production statistics from the Ontario Department of Mines annual reports from the 1940’s indicate
that gold recoveries above 92% using the Merrill Crowe metallurgical process was the norm for the
Buffalo Ankerite and the adjoining March mine mills. The potential custom mill that is being
considered for this project is a Merrill Crowe operation built in the late 1980’s.
Establishing milling characteristics such as, energy requirements, retention times, and filtration rates
will be beneficial in establishing a base line for a custom milling agreement. Barring the discovery
of technical reports from the past, the option of sending off core samples to a qualified lab should be
considered.
1.5
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Mineral Resource Estimate:
Mr. Peter Bevan P. Eng. has calculated the resources contained within the limits of the planned open
pit to the minus 150 foot elevation. The diluted, indicated and inferred totals are outlined in Table
1.1. Section by section tonnages and grades are contained in Table 9.2 which also introduces a
dilution factor of 30 % into the totals. It is these total diluted tons and grade that are used in the cash
flow model contained in Section 11.
The total resource tonnage includes material within the designed pit boundaries grading above 0.03
oz. Au/ton. Material already broken and hauled to surface by necessity, will only incur the additional
costs of surface trucking and milling. Total estimated drill indicated and drill inferred resources
within the pit boundaries are as follows:Table 1.1
Resource Summary – Diluted Tons and Grade by 30 %
Total Diluted Tons &
Grade
432,440
0.113
48,800
ozs.
Economic Analysis:
For the purpose of this evaluation, a 650 US$ gold price and an exchange rate of .9285 CDN was
used to establish a base price of $700 / oz. CDN for the revenue calculation. No inflation factor has
been included in the production costs. The cost of capital and corporate taxation has not been
factored into this evaluation. The author has been informed that a 20 % NPI exists on the activities at
the Buffalo Ankerite site.
Table 1.2 provides the LOM cumulative cash flow and NPV of the project. A detailed cost and
revenue stream is contained in section 11, Table 11.2. The estimated recovered ounces for the
project are 44,956 at a mill recovery of 92%. Capital recovery is less then 10 months in this scenario
and the project generates a positive cash flow of $7.8 M.
Capital costs are confined to the up front finite activities which can be subcontracted out as required,
to advance the project startup. These costs cover such startup charges as permitting, engineering, town
site agreements or buyouts, site preparations, settling ponds and overheads during this phase. The total
budget for pre-production reaches a maximum of $2.97 M in the first quarter of 2008. A credit of $1.5
M is applied in 2009 as a potential resale value of the town site once pit mining is completed.
1.6
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The daily ore production rate of 1000 tons per day was specified, using grade control drilling and blast
methods. Maximum waste bench heights of 30 feet are planned and ore benches were kept to 15 feet in
depth as a grade control method. The pit mining costs submitted included all labour, consumables,
equipment rentals, equipment operating, markup and overheads necessary to excavate 104,000 tons of
overburden, 432,000 tons of ore and 1,520,000 tons of waste. The total estimated cost to excavate
these quantities is $7.2 M.
Table 1.2
Cumulative Cash Flow in (000’s) CDN $
CUMULATIVE CASH FLOW
YEAR
2006
CASH FLOW AFTER CAPEX
Net Present Value at
TOTAL TOTAL TOTAL
2007
2008
2009
-$2,808
10%
$5,169
$7,846
$7,614
Recommendations:
Due to the healthy economics demonstrated by this model, Vetrin Mine Planners Ltd. (VMPL)
recommends that Vedron Gold Inc. proceed with the recommendations as detailed in section 13 of
this report.
These recommendations in summary will:
1) Upgrade the engineering design and plan to the point where requests for tenders can be
issued to qualified mining contractors
2) Firm up or close a custom milling agreement
3) Drill an additional 900 feet of diamond drilling to up grade a potential 80,000 tons from
inferred to indicated resources, an upgrade of 36 %
4) Initiate public consultations to explain the project and measure to degree of opposition
The successful completion of items 1, 2 and 3 will firm up the operating costs for the feasibility
study and item 4 will help in establishing realistic time lines and capital requirements for the project.
1.7
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2.0 TERMS OF REFERENCE
The Buffalo Ankerite property located in Timmins Ontario contains an underground gold mine that
operated between 1926 and 1953 which produced 1,019,130 ounces of gold from two localized areas
known as the “North Zone” and “South Zone”. During the late 1970’s, the property owner of the
day, excavated several small pits over the crown pillars of the “South Zone”. This study
encompasses the continuation of the South Zone crown pillar recoveries to a depth of 150 feet and
also includes, all additional gold mineralization surrounding the crown pillars that was not touched
due to past economics, or are recent discoveries.
Mr. Tom Meredith, President of Vedron Gold Inc, has secured the services of Vetrin Mine Planners
Ltd. to complete a preliminary economic assessment for the mining of the South Pit resources. The
mineral resource estimate has been prepared by Mr. Peter Bevan P.Eng., an independent consulting
geologist.
All information contained in this report was compiled and gathered by Vedron Gold Inc from recent
and past 43-101 compliant exploration drilling, and from past production data and studies completed
by others.
The Qualified Persons who contributed to this report include Mr. Peter Bevan P.Eng., Mr. Rodney
Doran P.Eng., and Mr. Ronald Moran P.Eng. All three individuals have visited the project site as
recently as April 2007. The physical conditions of the project location were studied in order to locate
the following; overburden stockpile, waste stockpile and approximate surface pit limits. The ore will
be trucked off site to an existing local mill for custom milling.
This study includes inferred mineral resources which are defined as being too speculative, to be
counted on as having a positive economic impact on the project. The percentage of resources that
fall into this category is 35 % of the total ounces of the gold resource.
2.1
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3.0
RELIANCE ON OTHER EXPERTS
The authors of this Technical Report have reviewed and analyzed data provided by
Vedron Gold Inc. and the technical team listed in Section 15.1 and have drawn their own
conclusions there from, augmented by its direct field examination. Vetrin has not carried
out any independent exploration work, drilled any holes or carried out any sampling and
assaying. However, the presence of gold in the local rocks is substantiated by the
previous exploration and historic development work completed on the property.
The authors have relied upon the data presented by Vedron Gold Inc. and from the
feasibility technical team in formulating its opinion, although all reasonable diligence in
checking, confirming and validating data was exercised. Vetrin accepts in good faith that
Vedron Gold Inc. and the members of the feasibility technical team, not working under
Vetrin’s direct supervision, disclosed all relevant data during the development and
preparation of the feasibility study.
The various agreements under which Vedron Gold Inc. holds title to the mineral lands for
this project have not been investigated or confirmed by Vetrin and Vetrin offers no
opinion as to the validity of the mineral title claims. The description of the property, and
ownership thereof, lease payments, royalties, etc. as set out in this report, are provided for
general information purposes only.
The description of the geology, mineralization, exploration and resource estimate
included in the Preliminary Economic Assessment (PEA) study and this report are based
on the NI 43-101 Technical Report completed by Peter Bevan P. Eng., in April, 2007
referred to as Buffalo Ankerite South Pit Resource Estimate.
All currency amounts are stated in Canadian dollars.
Quantities are stated solely in Imperial Units, due to the historical and current database
existing in Imperial Units.
Vetrin Mine Planners Ltd. is pleased to acknowledge the helpful cooperation of Vedron
Gold Inc.’s management and consultants including Peter Bevan P. Eng. and Rodney
Doran P. Eng., all of whom made available and all data requested, and responded
promptly, openly and helpfully to all questions, queries and requests for material.
3.1
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4.0 PROJECT BACKROUND INFORMATION
4.1 Property Description and Location
The Buffalo-Ankerite property is in the north half of Deloro Township, approximately 3.5 miles
southeast of the city of Timmins in northern Ontario. The property, a past producer, is situated in
the historic Porcupine Gold Camp.
Figure 4.1
Regional Location Map
Red
Lake
Timmins
Val d’OR
Sudbury
4.1
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4.2 CLAIMS
The Buffalo-Ankerite property (both north and south parts) is composed of patented mining
rights/claims. Surface rights have not been legally searched but numerous land parcels are owned
and/or occupied in the area. A small neighbourhood of approximately 20 homes is located on the
historic Buffalo-Ankerite property. The claim locations, in relation to past producers, appears in
figure 4.2. The list of “Land Tenure” appears in Table 4.1 of this section.
4.3 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE &
PHYSIOGRAPHY
The claims are readily accessible by Route 101 from Timmins and a secondary highway, known
locally as “The Back Road”. The Dome Mine/Mill Complex is located approximately 2 miles east
of the Buffalo-Ankerite Property.
The climate is characterized by short, cool summers and long, cold winters. Mean annual
temperatures range from -17˚C in January to a high of 17˚C in July. Mean annual precipitation for
the area is 35 inches, of which 23 inches falls as rain. The prevailing wind is westerly.
Local resources are available from Timmins in the way of personnel and equipment required for a
mining operation.
The area has good infrastructure being serviced by good roads. Electric power is readily available.
The property is located on relatively flat ground.
4.2
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Figure 4.2
Fuller and Buffalo Ankerite Claim Location
4.3
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4.4 HISTORY
Prospecting in the Porcupine area began in 1907. The Dome, McIntyre and Hollinger mines were
discovered in 1909 and the City of Timmins was founded in 1912 as a consequence of the Porcupine
Gold Rush. The Porcupine gold camp is the largest historical gold producing district in North
America, having produced over 64 million ounces.
4.4.1 Buffalo-Ankerite North
1911
Shaft to 50 feet and shaft to 120 feet by Dobie Mines Ltd.
1916 – 1921 Surface exploration, shafts to 350 feet, 130 feet and 3 shafts to 50 feet; work by
Coniagas Mines Ltd. under an option from the owners, Ankerite Mining Company
Ltd.
1922
Mine workings re-sampled by United States Refining and Smelting Co. under an
option from the owners, North American Gold Corporation.
1922-24
Under an option agreement, underground development resumed by Porcupine
Goldfields Development and Finance Co. Ltd. Lateral work on 200- and 300-foot
levels, 3,438 feet; surface drilling 17 holes, 7,739 feet and underground drilling 21
holes, 4,630 feet.
1925-29
Ankerite Gold Mines Ltd. operated the mine and a mill of 250 tons per day. Total
development on the property: shafts 1,302 feet; lateral work 12,696 feet.
1931
Lateral work 1,254 feet; drilling 2,421 feet and mill operated by Ankerite Gold Mines
Syndicate.
1932:
Development, mining and milling continued by Buffalo Ankerite Gold Mines Ltd.
1935-53
The adjoining March (Marbuan) Mine was taken over and the two mines operated as
one property by Buffalo Ankerite Gold Mines Ltd. Ankerite No. 1 shaft 367 feet,
Ankerite No. 2 shaft 1,200 feet; Ankerite No. 5 (main) shaft 3,996 feet; No. 8
(Imperial) shaft 109 feet; 27 levels with the deepest at 3,750 feet, drifting 63,000 feet
approximately, crosscutting 47,000 feet approximately, mill capacity 400 tons per
day.
1953
The Buffalo-Ankerite mine closed. The mine operated from 1926 to 1953 and
produced approximately five million tons of ore at a recovered grade of 0.193 oz.
4.4
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Au/ton, by underground stoping methods, yielding 983,885 ounces of gold. From
1936 to 1953, production from Buffalo-Ankerite South was included in the total.
4.4.2 Buffalo-Ankerite South
Claim HR833 (P8276) two shafts each 50 feet deep by Maidens Macdonald.
1916-17:
Claim HR833 vertical shaft deepened to 107 feet and shaft inclined 65˚, deepened to
100 feet by LaRose Mines Limited under an option from Coniagas Mines Ltd.
1921-25:
March No. 1 shaft claim HR823 (P7955) was sunk 800 feet with levels at 100 and
321 feet, surface drilling 2 holes 2,260 feet; work by March Gold Mines Ltd.
1917-26:
Claim HR833 March No.2 inclined shaft deepened to 190 feet, March No.3 shaft
deepened to 330 feet, another shaft to 115 feet by Porcupine Gold fields Development
and March Gold Mines Ltd.
1926-32:
Mill of 150 tons per day in operation; March No. 3 shaft deepened to 425 feet, South
Winze (No. 4) from 425 to 675 feet, levels 170, 200, 300, 425, 550 and 675 feet;
work by March Gold Mines Ltd.
1933-34:
Mill operated, March South Winze deepened to 1,050 feet, levels at 800, 925 and
1,050 feet; work by Marbuan Gold Mines Ltd.
1935-53:
Property consolidated with Buffalo Ankerite Gold Mines Limited. No. 6 Winze
extends from 1,050 to 2,020 feet with levels at 1,250, 1,400, 1,550, 1,700, 1,850 and
2,000 feet. The production shaft for both mines was Buffalo Ankerite No. 5 shaft
with the mines connected by haulage drives on the 1,050- and 2,000-foot levels.
4.4.3 Production
Years
Gold
Ounces
Silver
Ounces
Ore Milled
Tons
1925-35
61,039
5,400
317,769
1936-53
Production included with Ankerite Mine North
ODM Statistical Files, March (Marbuan Gold Mines Ltd.)
Total production from Buffalo-Ankerite South is believed to be in the order of 500,000 tons,
yielding 100,000 oz. gold.
4.5
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In the late 1970’s, Pamour Mines open pit mined a portion of the crown pillars of the BuffaloAnkerite South deposit. Though no production records could be found, volumes developed by 3dimensional models by Dome Mines suggests some 350,000 tons of rock were excavated by
Pamour.
4.4.4
Historical Drilling
Buffalo-Ankerite North has been drilled by Placer Dome (15 holes totaling 8, 949.5΄; Paymaster ? (4
holes of 1,733 ft.) and 163 underground drill holes totaling 63,319 ft. Drilling by Vedron is reported
under the section 6.0 “Drilling”.
In 2002, Placer Dome/Porcupine Joint Venture (PJV), under option from Vedron Gold Inc.,
undertook an exploration program on the Buffalo-Ankerite South Zone.
Fifty-nine holes, drilled in a two-phase effort by Placer Dome, were added to the existing database.
Phase One consisted of 26 holes totaling 7,549 feet. Phase Two drilled footage was approximately
12,455 feet in 33 holes. Core logging was done directly into Placer Dome’s RDBMS Sample
Management System/Laboratory Information Management System (SMS/LIMS). Drill hole
information was then merged with the main data set in the master Access database. Drill hole data
was then accessed in Vulcan through an ODBC Link.
4.6
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Table 4.1:
Land Tenure
Tenure
Pat#/Lic/Lease Parcel
Vedron Property (Giftsearch on title as owner)
ME 60 15 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
ME 61 16 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
ME 62 17 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
P 7407 54 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
P 7406 55 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
P 7426(HR 905) 183 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
P 7413(ME73) 186 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
HR 906 1321 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
P 7934(HR 952) 2725 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
P 8269(ExpPt2:6R-1903) 3275 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
P 8271(ME50) 3276 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
P 8272(ExpPt2:6R-1903) 3279 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
P 8204(LO 336) 3377 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
P 9598(HR 904) 4155 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
P 9600(HR 902) 4156 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
P 9599(HR 903) 4157 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
P 9605(ME 57) 4158 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
P 9604(ME 58) 4161 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
P 9603(ME 59) 4162 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
P 9602(ME 67) 4163 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
P 9601(HR 901) 4164 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
P 9856 4589 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
HR 832 5038 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
HR 823 5039 SEC
23816 SEC
Vedron Property (Giftsearch on title as owner)
P 8276 5040 SEC
23816 SEC
4.7
District
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Vedron Property (Giftsearch on title as owner)
HR 926 5041 SEC
23816 SEC
Table 4.1: Land Tenure (continued)
Tenure
Pat#/Lic/Lease Parcel
District
Vedron Property (Giftsearch on title as owner)
HR 900 5042 SEC
Vedron Property (Giftsearch on title as owner)
HR 950(TRS 775) 5998 SEC
23816 SEC Vedron
Property (Giftsearch on title as owner)
P 7426A 9234 SEC
23816 SEC Vedron
Property (Giftsearch on title as owner)
P 7251(Ex.Pt2;6R-3858) 21535 SEC
23817 SEC
Vedron Property (Giftsearch on title as owner)
HR 951(TRS 774) 22957 SEC
23817 SEC
Vedron Property (Giftsearch on title as owner)
HR 1138(TRS 1280) 2525 SEC
23817 SEC
Vedron Property (Giftsearch on title as owner)
HR 1139(TRS 1281) 2566 SEC
23817 SEC
Vedron Property (Giftsearch on title as owner)
P 24590 6414 SEC
23817 SEC
4.8
23816 SEC
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Mine Planners Ltd.
5.0 GEOLOGICAL SETTING
5.0.1 Regional Geology
The Timmins area is a part of the Western Abitibi Greenstone sub province of the Superior province.
The rocks in the area are generally Archean age (2,750-2,670 Ma) with younger (Proterozoic)
diabase dykes and sills crosscutting and intruding them.
The older Deloro Assemblage is generally south of the Destor-Porcupine Fault and is exposed in the
Shaw Dome area, southeast of Timmins. The assemblage is primarily composed of pillowed,
amygdaloidal and plagioclase-phyric, calc-alkaline basalt and andesite.
The Tisdale Assemblage is bounded to the south by the Destor-Porcupine Fault and on the north and
west by the Porcupine Assemblage. In the east, the Timiskaming Assemblage uncomformably
overlies it. The Tisdale Assemblage is composed of komatiitic basalts (Hersey Lake Series) grading
through Mg-tholeiites (Central Series) to Fe-tholeiites (Vipond and Gold Center Series).
The Tisdale Assemblage is intruded by quartz-feldspar porphyritic dacite stocks and comformably
overlain by calc-alkaline felsic pyroclastics of the Krist Assemblage. The age of the Krist
Assemblage is 2,686 Ma. The Krist is preserved in two synclines near the Fuller, the Kayorum
Syncline to the east and the Porcupine Syncline to the northeast. There is a temporal association
with the Krist and porphyries, and a spatial association between the porphyries and gold
mineralization is common.
The Krist Assemblage is conformably overlain by the Porcupine Assemblage. The Porcupine
Assemblage is a clastic metasediment sequence approximately 3,000m thick.
Timiskaming Formation sediments of the Three Nation Assemblage complete the Archean rocks
found around the Fuller Deposit. The Timiskaming Formation unconformably overlies the Tisdale
and Krist. The Timiskaming is composed of at least three polymictic conglomerate units,
greywackes and argillites.
5.1.2
Regional Structures
The major regional structure in the Timmins Mining Camp is the Destor-Porcupine Fault Zone. The
fault is roughly east-west trending, and has been traced for over 440 km. The fault has had a
complex and varied history. It has been thrusted, rifted, and shows evidence of left lateral strike-slip
displacement.
5.1
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5.1 GEOLOGY of the PROPERTY
5.1.1 General Setting
The Buffalo-Ankerite property forms part of a continuous sequence of mines that extend from the
Dome Mine in the east to the Delnite Mine in the west.
5.1.2 Stratigraphy
The Buffalo-Ankerite North and South deposits are located primarily within a narrow pillowed
mafic volcanic flow unit of the Central Series, Tisdale Assemblage. The volcanic rocks are
complexly folded around the South Tisdale Anticline and Kayorum Syncline resulting in an Sshaped flexure in the stratigraphy. The pillowed mafic volcanic unit, which hosts the main
mineralized domains of the Buffalo Ankerite South property, is flanked to the north and south by
Hershey Lake Series ultramafic flow units. In the area of the property, the volcanic flows strike
between 065 and 070°, and dip at approximately 60° to the north and thicken to the west.
A discontinuous conglomerate unit is located along the contact between a flow textured mafic
volcanic unit and the south ultramafic unit. The conglomerate is interpreted as Timiskaming in age
containing mainly bleached mafic volcanic clasts with occasional porphyry and ultramafic clasts and
typically follows this contact and is similarly oriented for dip.
Quartz-feldspar porphyries intrude the volcanic units and late northwest-trending diabase dykes cut
all the above rock types.
5.1.3 Structure
The F3 axial plane of the South Tisdale Anticline trends 300° azimuth and plunges steeply to the
southeast and Kayorum Syncline is 275-280° azimuth plunging to the west-northwest. The regional
Destor-Porcupine fault is located immediately to the south within the south ultramafic unit and
varies from 200-300 metres in width. The southwest limb of the South Tisdale Anticline and
northeast limb of the Kayorum Syncline are close to the hinge of the Kayorum Syncline and
terminate against the Buffalo Ankerite 135 Fault Zone (Spur Fault). This left-lateral fault separates
the Buffalo Ankerite South Mine from the Buffalo Ankerite North Mine, which were at one time one
continuous deposit. The Buffalo Ankerite 135 Fault Zone is northwest/southeast trending at
approximately 115° azimuth and dips at about 80° to the southwest.
5.2
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5.1.4 Alteration
The pillowed mafic volcanic rocks show moderate ankerite and weak sericite alteration while the
flanking ultramafic rocks show moderate to strong ankerite alteration with minor local fuchite. The
ultramafic rocks are in fault contact with the mafic volcanic rocks as evidenced by talc fault gouge at
the contacts. The degree of alteration intensity varies from east to west, with the strongest alteration
in the east where the mafic volcanic rocks are narrow towards the Buffalo Ankerite 135 Fault and
weakest in the west, where the thickness of the mafic volcanics increases.
5.1.5 Deposit Types
The majority of the mineralization is associated with tourmaline-quartz-carbonate breccia zones
(TBX) located within a pillowed mafic volcanic unit. Breccia fragments are comprised of ankeritesericite altered pillowed mafic volcanics within a tourmaline-ankerite rich matrix. The finer the size
of the carbonatized mafic fragments within the vein, the higher the gold grade.
Pyrite is widespread within these veins and ranges from 5-10% with a halo of 3-5% pyrite within the
highly carbonatized pillowed volcanic flow. Visible gold is generally not observed but a good
correlation of pyrite content with gold grade indicates a close association with the gold occurring
probably in fractures within the pyrite or along boundaries of the pyrite grains.
Gold values within the conglomerate lithology are associated with quartz and quartz-tourmaline
veins with 2-5% pyrite content at the vein margins.
5.3
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6.0 EXPLORATION DRILLING
6.0.1 Historical Drilling
Buffalo-Ankerite North has been drilled by Placer Dome (15 holes totaling 8, 949.5 ft.; Paymaster?
(4 holes totaling 1,733 ft.) and 163 underground drill holes totaling 63,319.2 ft is reported under the
following section 6.2 “Drilling by Vedron”.
In 2002, Placer Dome/Porcupine Joint Venture (PJV), under option from Vedron Gold Inc.,
undertook an exploration program on the Buffalo-Ankerite South Zone.
Fifty-nine holes, drilled in a two-phase effort by Placer Dome, were added to the existing database.
Phase One consisted of 26 holes totaling 7,549 feet. Phase Two drilled footage was approximately
12,455 feet in 33 holes. Core logging was done directly into Placer Dome’s RDBMS Sample
Management System/Laboratory Information Management System (SMS/LIMS). Drill hole
information was then merged with the main data set in the master Access database. Drill hole data
was then accessed in Vulcan through an ODBC Link.
6.0.2 Drilling by Vedron
The Buffalo-Ankerite North Zone has been drilled by 33 holes (VBA-05-01 to VBA-05-13 and
VBA-06-34 to VBA-06-53) totaling 17,354.5 feet. This is in addition to the historical drilling
reported earlier.
Seventeen holes of the total of 33 have been used in the resource estimates as well as some of the
historical diamond drill holes.
The Buffalo-Ankerite South Zone has been drilled by 46 holes (VBA-06-33, VBA-06-54 to VBA06-70) totaling 15,358 feet. Ten of the 46 holes were used in the resource estimates as well as
historical diamond drill holes.
All drill holes were bored using NQ size bits. If the hole hit an underground working (drift, raise or
stope) and the drillers were successful in being able to continue drilling, this was normally done with
a BQ bit. Not all holes were successful in continuing, though many were and there were some holes
which hit no opening at all. Collars were surveyed by a GPS instrument and down hole surveys
were carried out using a Reflex Early Shot method.
Core was logged and generally all of it was split into two, except in the ultramafics, using a manual
core splitter for analysis.
6.1
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7.0 ASSAY QUALITY CONTROL
7.0.1 Sampling Method and Approach
Core samples received at the assay laboratory (Laboratoire Expert Inc. in Rouyn-Noranda, PQ) are
crushed by jaw crusher to ¼ inch.
The sample is then reduced to 90% passing – 10 mesh.
After this it is riffled and a 300g split taken which is pulverized to 90% passing – 200 mesh.
7.0.2 Sample Preparation, Analyses and Security
1 assay-ton of pulverized material is used for determination of the grade. The first pass is a gold fire
assay geochem, together with blanks and standards. Any sample assaying over 1000 ppb (1g.) is
checked gravimetrically.
Check assaying was performed by Laboratoire Bourlamaque Inc. in Val d’Or, PQ.
7.0.3 Data Verification
The writer (P. Bevan ) visited the property from February 6-9, 2007 to examine core from the 20052006 drilling campaigns. He also checked that assay values received from the laboratories had been
correctly entered into the computer data banks.
7.1
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7.1 CERTIFICATES OF PROFICIENCY
7.2
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7.3
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7.4
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7.5
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Mine Planners Ltd.
7.6
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7.7
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7.8
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8.0 MINERAL PROCESSING
8.0.1 Historic Mill Recoveries
At the time of this report Vedron Gold Inc. has not pursued any metallurgical testing on the South
Zone material. The focus has been on recovering historic data to establish a realistic figure for
milling recoveries in the economic model. The search for detailed milling characteristics such as
grinding and retention times is still ongoing.
The author would like to acknowledge the help of the staff at the South Porcupine branch of the
Department of Mines, Geological section for their research efforts in obtaining the following historic
annual report statistics for the Buffalo Ankerite Property. The figures contained in column 1 of the
following table are direct copies from some of the Ontario Department of Mines annual reports from
1936 through to 1947. The reporting format during that era tracks the dollar value of head grade,
tailings grade and recovered grade. The calculation to convert to percent recovery is contained in
column 6 of the table.
The recovery results demonstrate that the Merrill Crowe milling technology of the 1940’s was
compatible to the Buffalo Ankerite ore such that recoveries in the low to mid 90 percent range were
consistently obtained. This recovery rate is an accepted target in today’s mining industry and for the
purpose of this economic model a gold recovery rate of 92% has been used. A potential custom
milling source is a Merrill Crowe mill built in the late 1980’s.
It is speculated at this time that what is referred to the South mill is actually the March Mine mill
which would therefore be results from the milling of the South Zone only. In 1941 the results of the
two mills are combined in the ODM annual reports and by 1944 it appears that only the North Mill
was operating and would have milled a blended North and South Zone feed. If this speculation is
right, then the 1938 and 1940 recoveries of 93.2% and 91.8% from the south mill: reinforces the use
of 92 % for this economic model.
8.1
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8.2
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9.0 SOUTH PIT MINERAL RESOURCES ESTIMATE
The following data was pulled from the 43-101 report produced by Peter Bevan P. Eng. Mr. Bevan’s
qualifications are contained in Section 15.1 for review.
Although Vedron possesses plans, vertical sections and longitudinal sections showing all the levels,
only two stopes are shown on the longitudinal between the 1st level and surface. Some of the
resource blocks are immediately adjacent to an underground opening which may be a drift, a raise or
a stope.
When open pitting is carried out above and through underground workings, such workings will have
to be back filled with broken material from blasting. Mining through underground workings will
require detailed analysis’s of the drill data and available underground mine drawings to plan the
mining sequence in order to minimize hazards and to develop realistic production schedules.
Mr. Peter Bevan P. Eng. has calculated the resources contained within the planned open pit to the
minus 150 foot elevation. The undiluted, indicated and inferred totals are outlined in Table 9.1.
Section by section tonnages and grades are contained in Table 9.2 which also introduces an
estimated mining dilution factor of 30 % into the totals. It is these total diluted tons and grade that
are used in the cash flow model contained in Section 11. Figures 9.1 and 9.2 are geologic cross
sections containing the pit plan and demonstrate the general geometry of the pit and resource limits.
The parameters used for this estimate are essentially the same as mentioned above with the
exception of the cut-off grade which was reduced to 0.03 oz. Au/ton. This figure was used as the cut
off for material already broken and hauled to surface. Additional costs for this material would
consist of trucking and milling only. The estimate of the drill indicated and drill inferred resources
within the pit boundaries are as follows:Table 9.1
Undiluted Open Pit Resource Estimate
Indicated Resources:
220,000 tons grading 0.146 oz. Au/ton
Containing 32,000 oz. gold
Inferred Resources :
113,000 tons grading 0.147 oz. Au/ton
Containing 17,000 oz. gold
Total :
333,000 tons grading 0.146 oz. Au/ton
Containing 49,000 oz. gold
9.1
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Table 9.2
Buffalo Ankerite South Pit - Diluted to 30 %
Section by Section Resource Estimate
Potential Open Pit Resources
Indicated Resources
Section
Inferred Resources
Tons
Grade
GXT
Tons
Grade
GXT
13,158
24,794
15,522
26,403
35,985
20,048
17,623
4,481
1,368
12,359
7,206
9,041
26,864
5,031
0.228
0.163
0.318
0.087
0.093
0.193
0.119
0.240
0.079
0.114
0.084
0.086
0.112
0.327
3,001.28
4,040.67
4,939.43
2,291.31
3,346.65
3,870.94
2,096.17
1,073.47
108.11
1,409.31
606.10
775.91
3,009.66
1,643.61
6,711
0.228
1,530.67
3,339
7,000
1,974
20,504
8,811
2,241
8,114
11,521
3,877
5,596
24,228
8,848
0.310
0.053
0.045
0.201
0.119
0.240
0.055
0.162
0.108
0.081
0.106
0.238
1,036.65
371.00
88.82
4,127.39
1,048.08
536.74
449.12
1,862.21
418.51
453.28
2,556.50
2,107.83
Sub -Totals
219,883
0.146
32,213
112,764
0.147
16,587
+30% dilution
@ 0 grade
285,848
0.113
32,213
146,593
0.113
16,587
432,440
0.113
48,800
4520E
4620E
4720E
4820E
4920E
5120E
5220E
5320E
5520E
5620E
5720E
5820E
5920E
6020E
6120E
Total Diluted
Tons & Grade
9.2
ozs.
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Figure 9.1 “Not to Scale” -General Section Pit Profile
9.3
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Figure 9.2 “Not to Scale”- General Pit Section Profile
9.4
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10.0 PERMITTING, SOCIAL CONSULTATION
AND ENVIRONMENTAL COMPLIANCE
10.0.1 Overview and Approach
The permitting, social consultation and environmental compliance are some of the risk
factors of any project. The following sections outline some of the environmental and
social considerations for the Buffalo Ankerite Project. Permitting requirements and
potential risks associated with the permitting and social consultation for this project are
identified.
10.0.2 Environmental Baseline Studies
The Buffalo Ankerite project is located within the boundaries of the City of Timmins and
adjacent to the locality commonly known as the Buffalo Ankerite Town site or property.
The mine site is classified as Rural Wilderness (AW) and Industrial by the City planning
department. The mine is accessed from the Back Road or Gold Mine Road that joins
Timmins and South Porcupine. Access to the mine site is gained either by the paved
Buffalo Ankerite Town site road or the gravel secondary service roadway that is located
some 200 metres to the east. (currently temporarily blocked).
Average annual temperature is 1.3 degrees C with average extremes ranging from -17.3
in January to a high of 17.3 in July. The total annual precipitation is in the order of 839
mm with approximately 68 percent of the precipitation as rain. The project is located
within the southern limit of the Boreal – Predominantly Forest Region of Canada. The
principal tree species in this area include white and black spruce, balsam fir, jack pine,
white birch and trembling aspen. Tree species composition will vary according to soil
types and topographic position. Large wildlife species include bear, moose and wolf.
Various fish species are present in lakes and streams in the area including northern pike,
walleye, small mouth bass and non-sport fish.
An aquatic environmental baseline study was completed in late 2006 by B. Z.
Environmental Consulting of Timmins, Ontario. This study will provide the basis for the
environmental considerations in the permitting that will be filed for the mine including
the Ministry of Environment’s Certificate of Approval for the mine water discharge and
the Ministry of Northern Development and Mines’ Closure Plan. It is not anticipated that
additional pre-operational studies will be required at this time.
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10.1
SOCIAL BASELINE STUDIES
10.1.1 First Nations
Meaningful communication and consultation with First Nations are essential elements to
develop and operate a mine in Ontario. It has been determined that three native groups
may have an interest in the Buffalo Ankerite project. These groups include the
Mattagami, Matachewan and Wahgoshig First Nations. Letters detailing the project plans
were sent out to all of the listed groups providing a 30 day notification of interest period.
Following no apparent interest in the project follow up telephone calls were made that
discovered that all groups were interested in learning more about the project. Formal
consultation was held with all of the groups at which time support for the project was
asked in the form of a letter of support in return for the offer of employment opportunities
for qualified personnel. To date no letters of support have been received.
10.1.2 Archaeology and Heritage Resources
Since the Buffalo Ankerite open pit project will be an expansion of the four individual
pits that were previously mined in the late 1970’s it is not anticipated that any significant
archaeological or heritage sites will be identified. However Vedron Gold Inc. has
commissioned an archaeological and heritage impact assessment for the project to ensure
that there are no significant archaeological or heritage features that require protection or
mitigation.
10.1.3 Socio-economics
The project is located within the City of Timmins Limits, population 43,000. The Buffalo
Ankerite Mine is located south of Schumacher, east of Timmins proper and southwest of
South Porcupine.
The Buffalo Ankerite Town site of some two dozen homes is situated less than three
hundred metres from the extreme west end of the proposed pit. The old Fuller Mine
Town site of an approximate equal number of homes is located on the Back Road and
east of McDonald Lake approximately one kilometre northwest of the Buffalo Ankerite
pit. The City of Timmins utilizes the Ontario Ministry of the Environments (MOE) set
back limits for industrial development. Applying the Class II category would require
purchasing or relocating the homes that are located within the 70m limit from the west
end of the mine workings or terminating the western end of the open pit mine workings to
ensure that this distance is maintained. Application of the Class III category would
require either purchase of all of the homes that are located south of the Back Road or
mining the outlined zone by underground mining methods. Local Ministry of Northern
Development & Mines Mineral Development personnel have indicated that surface open
pit mining falls in the Class III category. The category distances may be reduced through
10.2
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the application of various mitigative measures on the effects of surface mining submitted
to the City in the form of studies. Each of the studies would be peer reviewed by
contracting out the studies to qualified consulting companies. This process is very costly
and time consuming and will lead to considerable additional permitting costs to be
incurred by the Company. The mitigative measures finally adopted may lead to much
higher open pit mining costs than were originally anticipated.
Timmins is a mining community with more than ten operating and historic mines located
within the city boundaries. The general public recognizes the present and past mining
activity and is generally receptive to new mining activity. There is a risk that the residents
in the Buffalo Ankerite Town site may view the project and its associated effects as an
infringement on their quality of life. A plan to address the mitigation of resident’s
concerns is being developed. It should be noted that with the current high metal prices
and enhanced local mining activity, homes in the Timmins area are currently at a
premium.
Due to the proximity of the proposed open pit, hours of operation, methods of mining and
ore and waste hauling operations may be restricted. Application of any of these
restrictions will increase the cost of mining. Blasting operations will likely be restricted
in size and blasts scheduled to minimize the noise. Ore hauling may be restricted in hours
of operation and routing of the production traffic.
10.2
CONSULTATION AND PERMITTING
10.2.1 Consultation
In addition to First Nations consultation mentioned in the social baseline section,
consultation will be needed with government and the pubic. For the Buffalo Ankerite
project Vedron Gold Inc. will be meeting the government agencies in an interministerial
meeting and following the pubic notice and information requirements as outlined in the
Mining Act. Beyond regulatory requirements it is expected that additional meetings and
consultation with the local residents will be required.
The surface rights of the land where the proposed pit will be located are owned by other
interests. Vedron Gold Inc. will have to either purchase the surface rights or secure an
agreement with the current owners before proceeding with the permitting required for
operations.
The east end of the planned pit abuts mining rights owned by The Porcupine Joint
Venture. In order to maximize the amount of ore recovered from the open pit consultation
with the owner of the mining rights in this area would be prudent.
10.3
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10.2.2 Permitting
The environmental approval and permitting process under the Ontario Environmental
Protection Act and the Ontario Water Resources Act is the critical path in obtaining
permits for the operation of the Buffalo Ankerite project.
The Ontario Mining Act requires that the company submit a certified Closure Plan along
with adequate financial assurance to complete closure activities to legislated standards.
According to legislation certified Closure Plans are filed (approved) within 45 day of
submission however, plans judged to be incomplete are returned to the Company and
must be resubmitted, subject to the standard timelines of 45 days, upon completion of the
revisions. No mining may proceed without receipt of notice that the submitted Closure
Plan has been filed.
Any potential for fish habitat alteration or destruction from the Buffalo Ankerite project
will be assessed by the Department of Fisheries and Oceans under provisions of the
Federal Fisheries Act.
Since the property is located within the boundaries of the City of Timmins the city noise
bylaw will apply to mining activities such as drilling, blasting, crushing and hauling.
Any building construction on site will require a Building Permit issued by the City of
Timmins.
It is necessary to initiate discussions with government agencies as early as is reasonable
in the project planning to begin the familiarization and review process. In Ontario the
first step is the inter-ministerial meeting at which time the project plans are presented to
the involved regulatory agencies.
Once begun we anticipate that the permitting process will take three to four months;
however, this process may be extended due to availability and demand on the reviewers
and the complexity of issues that may arise from the reviews. There is a risk that protests
by adjacent home owners may delay the granting of approvals by the regulating agencies.
Persistent protestors have the capacity to delay the project for an indefinite period of
time.
10.3
REHABILITATION AND CLOSURE
Financial assurance will have to be submitted with the Closure Plan to cover the costs of
securing the planned open pit, monitoring and rehabilitating the mine site, and long term
post closure environmental monitoring. Financial assurance will likely be in the form of a
liquid security (cash or letter of credit).
10.4
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The objectives of the mine site rehabilitation and closure are to return the land to
compatibility with surrounding land uses. Rehabilitation is anticipated to be carried out
progressively following an adaptive management approach. Since complete pit flooding
will not be a viable option due to the adjoining underground workings open pit
rehabilitation activities will require securing the safety of the final pit crests (fencing,
berming and sloping). Other rehabilitation measures required for the property will be
installation of concrete shaft caps on existing openings, removal of buildings, levelling of
the concrete structures and foundations that currently exist on the site and general site
revegetation. All indications from existing mine rock and historic tailings exposure point
to the absence of potential acid generating material. No acid drainage management costs
are expected at the project.
10.4
WASTE AND WATER MANAGEMENT
The Closure Plan will require assessment for chemical characterization and acid base
accounting of both the ore and waste rock. The ore will be shipped offsite for processing
therefore storage and management of tailings will not be an issue. Waste rock stockpiles
will have to be stabilized, covered with overburden and vegetated. Drainage from the
waste rock piles will have to be managed to ensure acceptable water quality.
No landfills will be established on site. All mine garbage will be hauled offsite for
disposal at licensed facilities.
Since water management will be a key component of operations and closure, careful
consideration in the design of the handling and treatment will be required. Proposed
water management systems will form the basis of the necessary approval instruments.
Waste assimilation challenges may be presented by design low flows in the receiving
waters likely made up of the South Porcupine River or one of its minor tributaries. Waste
load allocation considerations may also be an issue due to proposed and existing
discharges to these receiving waters.
10.5 TAILINGS
All of the ore produced will be hauled offsite to a custom mill. Unless the Closure Plan
and the Certificate of Approval of the custom mill presently specify milling from the
Buffalo Ankerite project, amendments to these approval instruments to include milling of
this ore will be required.
Purchase of the surface rights will likely include purchase of the mine tailings that are
located north of the mine site. Rehabilitation of these tailings will require stabilization
and vegetation.
10.5
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11.0 MINE PLAN & BUDGET
11.1 Infrastructure
The project is located in the heart of the Timmins mining camp containing paved access roads, power
lines, communications and mine service industries in the immediate area. The Buffalo Ankerite mine
was located immediately south of the original road connecting Timmins to South Porcupine. A four
lane bypass route was constructed in the 1960’s further to the north and the remaining historic route is
now officially called Moneta Ave.on the Timmins end or by the more familiar local term as the “The
Back Road”. An aerial view of the project location relative to the city of Timmins and historic mining
sites is available in Figure 11.1. Figures 11.2 and 11.3 illustrate the project location relative to local
conditions
Figure 11:1
Project Location Within Timmins Gold Camp
Paymaster Mine
1915 – 1966
1,192,206 oz.
Buffalo
Ankerite/March Mine
1926 -1953
1,019,130 oz.
City of Timmins
Aunor Mine
Delnite Mine
1937-1964
1940 – 1984
2,502,214 oz.
920,404 oz.
Vedron Gold Inc.
Buffalo Ankerite South Pit Project
In order to accelerate the mobilization and site setup time, the capital costs, incorporate the use of a
generator to supply the energy required for the initial dewatering to the minus 150 foot elevation.
Regulatory requirements for new power installations are costly and time consuming. The power
11.1
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requirements for a high volume low head pump would be under 100 hp. and once pumped down to the
minus 150 foot elevation , the pumping becomes a low volume and intermittent, which will place less
demand on a generator plant. The project would initially be supervised from the existing Vedron
office located several miles to the west in the town of South Porcupine. Once 24 hour security is
required, a site trailer will be installed or an existing fully serviced dwelling can be used as the site
operations and security building.
Contractors with open pit gold experience exist in the Timmins, Sudbury, and Thunder Bay areas,
along with explosive suppliers, geology and engineering technical staff, assay offices, and trucking
contractors which are all part of the resources necessary to advance this project.
Water requirements for mining by open pit methods are minimal and should water be required for dust
control and or washing of bedrock exposures, the source will be from the pit dewatering pump or by
back feeding from the settling ponds as required.
Refuge disposal is within minutes of the site at the Timmins landfill and would consist of small
amounts of explosive packaging and office refuse. Equipment maintenance waste can be strictly
controlled under the terms established, during contract tendering.
11.2 PROJECT SCHEDULE
Progress on permitting and dealing with the potential social concerns of the nearby residents is
underway. Figure 11.2 illustrates a potential time scale for the necessary activities required to bring the
project into production. At a rate of 1000 tons of ore production per day and a stripping ratio of 3.5
waste to 1 ore, the mining will take approximately 14 months to complete from the initial start of
11.2
VETRIN
Mine Planners Ltd.
mining. Lead time for regulatory reviews and approvals, contract tenders, social resolutions and
dewatering have been forecast to take 9 months from the start of the process ( February1st ,2007).
11.3 CAPITAL & OPERATING COSTS
Capital costs are confined to the up front finite activities which can be subcontracted out as required,
to advance the project startup. These costs cover such startup charges as permitting, engineering, town
site agreements or buyouts, site preparations, settling ponds and overheads during this phase. The total
budget for pre-production reaches a maximum of $2.97 M in the first quarter of 2008. A credit of $1.5
M is applied in 2009 as a potential resale value of the town site once pit mining is completed.
The time frame for this project from the start of site preparation to closure is under 24 months. In order
to minimize capital outlay for equipment and for estimating the operating costs of mining, the
approach used for this evaluation is to use a contractor with pit mining experience as the primary
source of labour and equipment. Several local contractors with past experience with grade controlled
pitting techniques have been contacted for budget numbers for the mining of the Buffalo Ankerite
South Pit. A preliminary pit design was submitted to each of the contractors. For the purpose of this
study, the budget numbers from the highest and lowest submissions were not used in the cash flow
model.
The following specifications were provided to the potential mining contractors.
The daily ore production rate of 1000 tons per day was specified, using grade control drilling and blast
methods. Maximum waste bench heights of 30 feet are planned and ore benches were kept to 15 feet in
depth as a grade control method. The pit mining costs submitted included all labour, consumables,
equipment rentals, equipment operating, markup and overheads necessary to excavate 104,000 tons of
overburden, 432,000 tons of ore and 1,520,000 tons of waste. The total estimated cost to excavate
these quantities is $7.2 M.
Mining Cost Summary - Table 11.1
Activity
Vedron Overheads
Pre-Production Capital
Waste & Ore Mining
Mining Contingency
Trucking
Milling
Total
LOM Costs
$ 1,729,800
$ 1,466,500
$ 7,168,400
$ 350,300
$ 1,556,800
$11,351,600
$23,643,400
11.3
$/Ton
$ 4.00
$ 3.39
$16.58
$ 0.81
$ 3.60
$26.25
$54.63
VETRIN
Mine Planners Ltd.
Reclamation and closure costs are contained in the item listed as “Vedron Overheads” and are set at
$500,000. A positive salvage value of $1.5M is also included in the overheads. This is the proposed
amount for the resale of the lots and buildings should Vedron own part or the entire town site.
Figure 11.3
South Pit General Arrangement
#3 Shaft
Gold Mill Ruins
Access Routes
Historic
Workings
# 2 Shaft
Approx.. Pit Boundary
11.3.1 Vedron Labour
Project supervision and technical support by Vedron employed staff is accounted for in the cash flow
model under “Vedron Overheads”. Within these costs, are staff salaries, assaying, and consumable
costs associated with the day to day operations of a mine plant alone with a 5% administration cost on
every staff work-hour.
11.4
VETRIN
Mine Planners Ltd.
11.3.2 Trucking
Local rock trucking firms; (i.e. Transport Norwest, Savard, etc.) and are well established in the
Timmins camp and are now actively hauling run of mine rock to the “Kidd Creek ( Estrata) mill and
smelter complex or to the Estrata (Kidd Mine site) on a daily basis. At the time of this study a rate of
$3.60 per ton was used to evaluate the loading and trucking cost to potential custom milling sources.
This rate was reviewed by a local trucking firm and confirmed as competitive trucking.
Figure 11.4
Pit Profile c/w Local Ruins & Resident Structures
11.5
VETRIN
Mine Planners Ltd.
11.3.3 Milling
A custom milling cost of $26.25 per short dry ton was used for this study. This number is within the
range that would be expected for a mill of this size and would include the operators’ markup. The rate
also includes a Vedron milling representative on site to oversee the day to day quality controls
required for a successful medium term milling agreement.
11.4 ECONOMIC ANAYLSIS
11.4.1 Economic Parameters
For the purpose of this evaluation, a 650 US$ gold price and an exchange rate of .9285 CDN was
used to establish a base price of $700 / oz. CDN for the revenue calculation. No inflation factor has
been included in the production costs. The cost of capital and corporate taxation has not been
factored into this evaluation. Vedron Gold Inc. reports a non capital loss carry forward amount in
their “2006 Audited Annual Financial Statement” that could be used to offset the tax burdens applied
to this project.
Table 11.2 provides the year by year break down of the cost versus revenue stream for the project.
The estimated recovered ounces for the project are 44,956 at a mill recovery of 92%. Capital
recovery is less then 10 months in this scenario and the project generates a positive cash flow of $7.8
M.
Figure 11.5
Sensitivity Analysis - Cash Flow
11.6
VETRIN
Mine Planners Ltd.
($CDN $000)
$10,000
$6,000
$2,000
90%
95%
100%
105%
110%
$4,699
$6,273
$7,846
$9,420
$10,993
Exchange Rate
$11,346
$9,505
$7,846
$6,350
$4,988
Operating Costs
$10,062
$8,954
$7,846
$6,738
$5,631
$7,993
$7,920
$7,846
$7,773
$7,700
Gold Price
Capital Costs
Figure 11.5 illustrates the impact what a change of plus or minus 10% in revenue and costs will have
to the cash flow model of $700 CDN. The chart merely demonstrates that the gold price and
exchange rate have the larges impact on the projects profitability followed by fluctuations in
operating costs. Other factors, such as a 1% variance in mill recoveries will influence the cash flow
by over $300,000 CDN in this model.
11.7
VETRIN
Mine Planners Ltd.
Table 11.2
VEDRON GOLD INC.
BUFFALO ANKERITE SOUTH PIT
432,440 TONS @ .113 OZ/TON at
1,000 TONS/DAY
2007 to 2009 CASH FLOW FORECAST
CDN$ in (000's)
CAPEX
APITAL & PRE-PRODUCTION COSTS
Permitting & Pre- Eng/geol - Mine
Townsite Purchase
Site Prep.
Mine Ops. Office
Eng/Geol Office & Equipment
Closure Bond
Settling Ponds
Pit Dewatering & Mine Rehab
200 KVA Gen Set
Site Vehicles
Townsite Resale
TOTAL CAPITAL
COSTS/ORE TON
CUMULATIVE CAPITAL COSTS
MILL FEED and GRADE
920 Bench
890 Bench
860 Bench
830 Bench
800 Bench
780 Bench
Total Resources
TONS PER QUARTER
CONTAINED OUNCES
CUMULATIVE TONS To SURFACE
CUMULATIVE OUNCES
MILLING SCHEDULE
MILLED TONS
AVERAGE HEAD GRADE
MILL RECOVERY AT
RECOVERED GRADE
RECOVERED OUNCES
REVENUE
BUDGETED CANADIAN
$ GOLD PRICE
PRODUCTION & MILLING COSTS
UNITS
$ PER TON
$0.35
$4.62
$0.12
$0.12
$0.05
$1.16
$0.12
$0.06
$0.15
$0.13
-$3.47
$3.39
GRADE
oz/ton
432,440
Year
2006
UNITS
TONS
0.113
92.0%
0.104
OZ.
UNITS
CDN
$700.00
UNITS
TONNAGES
$ PER TON
# UNITS
COSTS/ORE TON
$51.24
432,440
1
104,000
1,520,000
432,440
432,440
432,440
432,440
CUMULATIVE CASH FLOW
YEAR
2006
CASH FLOW BEFORE CAPEX
CASH FLOW AFTER CAPEX
11.8
TOTAL
2008
TOTAL
2009
$1,000
$1,967
$1,967
$1,000
$2,967
-$1,500
-$1,500
$1,467
TOTAL
2007
14,472
75,528
TOTAL
2008
TOTAL
2009
1,521
125,431
130,620
72,868
12,000
PROJECT
TOTALS
$150
$2,000
$50
$50
$20
$500
$50
$25
$67
$55
-$1,500
$1,467
PROJECT
TOTALS
14,472
77,049
125,431
130,620
72,868
12,000
0.113
OZ.
$4.00
$0.63
$0.47
$3.22
$4.03
$0.81
$3.60
$26.25
TOTAL
2007
$150
$1,000
$50
$50
$20
$500
$50
$25
$67
$55
UNITS
TONS
VEDRON OVERHEADS
CONTRACTOR MOBILIZATION
OVERBURDEN STRIPPING
WASTE MINING
ORE MINING
ORE MINING CONTINGENCY
TRUCKING COSTS
MILLING COSTS
TOTAL PRODUCTION
YEAR
2006
10,170
90,000
10,170
0.113
38,696
342,440
38,696
0.113
48,866
432,440
48,866
TOTAL
2007
45,000
TOTAL
2008
360,000
TOTAL
2009
27,440
4,678
37,426
2,853
TOTAL
2007
TOTAL
2008
TOTAL
2009
$3,275
$26,198
$1,997
TOTAL
2007
TOTAL
2008
TOTAL
2009
$360
$304
$224
$1,449
$363
$73
$162
$1,181
$1,370
$3,449
$1,380
$277
$1,296
$9,450
$99
$720
$1,730
$304
$224
$4,898
$1,743
$350
$1,557
$11,352
$4,116
$17,222
$819
$22,157
TOTAL
2007
TOTAL
2008
TOTAL
2009
PROJECT
TOTALS
PROJECT
TOTALS
432,440
44,956
PROJECT
TOTALS
$31,470
PROJECT
TOTALS
-$841
$8,135
$9,313
$9,313
-$2,808
$5,169
$7,846
$7,846
VETRIN
Mine Planners Ltd.
12.0 CONCLUSIONS
The positive economics of this project strongly justifies the additional expenditures required to
complete the recommendations outlined in section 13. These recommendations will upgrade the
resource status, increase the accuracy of the ore and waste volumes, solidify the mining and milling
costs and measure the degree of serious public opposition to the project. Of the four recommendations,
only the degree of public opposition is difficult to quantify in terms of time and resources at this stage.
12.1
VETRIN
Mine Planners Ltd.
13.0 RECOMMENDATIONS
13.1 Engineering & Budget Upgrade:
1) Several site plans exist with dated profiles of the exiting pits with or without the locations of old
mine workings. A re-survey of the property with a specific mandate to establish section profiles
through the proposed pit design, will become the base line for measuring quantities for internal
use, and for tendering of a mining contract with up to date quantities. There are also known
shafts and raises within the pit model which have been sealed by past owners. These voids have
to be relocated and exposed as a safety percussion and or as a mining asset such as a pumping
station.
2) To develop firm mining costs, a request for tender of an ore and waste mining contract should
be pursued to confirm these numbers. Recent sharp increases in fuel costs will be passed down
to the customer (Vedron Gold Inc) and or a fuel baseline will be specified in the bids. The
custom milling agreement should be advance to the point that there is no risk of loosing the mill
capacity to other projects.
13.2 Resource Upgrading:
1) In order to increase the resources in the proposed pit, by upgrading of inferred resources to the
indicated category, the writer recommends drilling seven short holes for a total of 875 feet.
These are as follows:Sections
5220E
5620E
5720E
5820E
5920E
6020E
6120E
Total
Length
100΄
175΄
125΄
100΄
100΄
175΄
100΄
875΄
Dip
-45°S
-45°S
-45°S
-45°S
-45°S
-45°S
-45°S
Northing
5125
5415
5408
5400
5543
5559
5607
This drilling, which would be intersecting current inferred resources on seven vertical
transverse sections, could result in transferring some 82,700 tons to the indicated category if
100% successful. As current open pit indicated resources stand at 220,000 tons, this would be
a significant increase of 38%.
13. 1
VETRIN
Mine Planners Ltd.
The budget for this small drilling program is as follows:Diamond drilling (7 holes, 875 feet) $30/ft
$26,250
Moves
2,800
Geologist ($400/day - 10 days)
4,000
Helper (core splitter)
1,000
Surveying (down hole)
2,000
Assaying (240 samples - $15/sample)
3,600
Total
$39,650
13.3) Public Consultations :
The government regulatory branches have a zero complaint policy which means all public decent
regardless of its origin or validity has to be addressed and reconciled. In the case of this project,
there are 10 residents in immediate proximity and another 12 residents in close proximity that
will have genuine concerns over public safety and changes in life style caused by the open pit
mining. The actual impacts of blasting and the noise levels from the mining activities have to be
analyzed and evaluated within the Vedron group with possibly the input of a local contractor.
Blast vibrations can be mitigated using best available technology. The absolute control of “fly
rock” is the problem that can not be easily addressed other then by scaling down of production
rates and “matting” of blasts. Once these conditions are well understood, Vedron will have to
make a decision on whether reconciling with the residents or scaling back production rates is
both the social and economic solution.
13. 2
VETRIN
Mine Planners Ltd.
14.0 REFERENCES
1.
E.H. van Keas, Exploration and Mining Potential of the Buffalo-Ankerite 5 Shaft Area, 11
pages, March 28, 1987.
2.
C. Parolin, et al., Buffalo Ankerite South Project Resource Model and Geology, 72 pages, June
2003.
3.
S.A. Ferguson et al., Gold Deposits of Ontario, Part 1, 315 pages, 1971.
4.
Google Earth , 48 deg. 27 ‘ 45” N, 81deg. 17’ 44” W
5.
6.
“P. Bevan”
______________________
Peter Bevan, P. Eng.
May 2007
__________________
Date
“Rodney Doran”
______________________
Rodney Doran, P. Eng.
May 2007
__________________
Date
14.1
VETRIN
Mine Planners Ltd.
15. APPENDIX
15.1
VETRIN
Mine Planners Ltd.
15.0.1 Certificate for Peter Bevan
As a co-author of this report entitled “Preliminary Economic Assessment for the Buffalo Ankerite South Pit”, I, Peter Bevan do here
by certify that:
1.
I am an independent consulting mining geologist, and carried out this assignment for, Vedron Gold Inc., Suite 520, 65
Queen St. West, Toronto, Ontario M5H 2M5, tel. (416) 368-0099, fax (416) 368-1539.
2.
I hold the following academic qualifications:
B.Sc. Mining Geology and Associateship from the Royal School of Mines in London, England in 1960.
3.
I am a registered Professional Engineer in the Province of Ontario since
1973 with specialization in development and production. I am a member of:
(a)
The Canadian Institute of Mining, Metallurgy and Petroleum (Life Member)
(b)
The Prospectors and Developers Association of Canada
4.
I have worked as a geologist in the minerals industry for 47 years since my graduation from university, the last 25 years as a
consultant.
5.
I am responsible for the preparation of in part or whole of Sections 4,5,6,7,8 & 9 of this report;
6.
I am responsible for the preparation of all sections of the technical report titled “Qualifying Report on the Buffalo-Ankerite
Property, South Porcupine, Ontario, Canada (NTS 42E12/SW) prepared for Vedron Gold Inc. and dated April 30, 2007 (the
“Technical Report”) relating to the Buffalo Ankerite Property disclosed in this report. I visited the property from February
6-9, 2007 inclusive.
7.
I have had no prior involvement with the properties that are the subject of the Technical Report, in the estimation of
resources in 2006-07.
8.
I am not aware of any material fact, or material change with respect to the subject matter of the Technical Report that is not
reflected in the Technical Report, the omission to disclose which makes the Technical Report misleading.
9.
I am independent of Vedron Gold Inc. (the issuer) applying all the tests in section 1.4 of National Instrument 43-101.
10.
I consent to the filing of the report with any Canadian stock exchange or securities regulatory authority, and any publication
by them of the report.
Dated this 1st day of June, 2007.
“Peter Bevan”
Peter Bevan
15.2
VETRIN
Mine Planners Ltd.
15.0.2
Certificate for Ronald Moran
As a co-author of portions of this report titled “ Preliminary Economic Assessment for the Buffalo Ankerite South Pit”, I, Ron Moran,
do certify that:
1.
I am principal owner of Vetrin Mine Planners and carried out this assignment for:
Vedron Gold Inc. Suite 520, 65 Queen St. West, Toronto, Ontario M5H 2M5. tel. (416) 368-0099 fax. (416) 368-1539
2.
I hold the following academic qualifications: B.Sc. Mine Engineering, Michigan Technological University, 1980;
3.
I am a Professional Engineer registered with the Professional Engineers for the Province of Ontario (registration number
90243288);
4.
I have worked in the minerals industry for over 25 years;
5.
I am responsible for the preparation in part or whole of Sections 1.0,11.0, 12.0 13.0;
6.
I do by reason of education, experience and professional registration, fulfill the requirements of a Qualified Person as
defined in NI 43-101. My work experience includes over 25 years as a mine engineer and planner in the base metals and
gold sector of the industry and most recently as an independent consultant.
7.
I have visited the Buffalo Ankerite Project Site;
8.
I am independent of the parties involved in the transaction for which this report is required, as defined in Section a.4 of NI43 101;
9.
I have had no prior involvement with the mineral properties in question;
10.
I have read NI 43-101 and portions of this report for which I am responsible and which have been prepared in compliance
with the instrument;
11.
As of the date of this certificate to the best of my knowledge, information and belief, the technical report contains all
scientific and technical information that is required to be disclosed to make this report not misleading;
Dated this 1st day of June, 2007.
“Ronald Moran”
Ronald Moran, P. Eng.
15.3
VETRIN
Mine Planners Ltd.
15.0.3
Certificate J. R. Doran, P. Eng.
As a co-author of portions of this report titled “ Preliminary Economic Assessment for the Buffalo Ankerite South Pit”, I, J.R.Doran,
do certify that:
1.
I am a Senior Mining Engineer with B. H. Martin Consultants Ltd., and carried out this assignment for Vedron Gold Inc.,
Suite 520, 65 Queen St. West, Toronto, On M5H 2M5, tel. (416) 368-0099, fax (416) 368-1539;
2.
This certificate applies to the Permitting, Social Consultation & Environmental Compliance sections of the technical report
titled “Preliminary Economic Assessment Buffalo Ankerite South Pit” prepared for Vetrin Mine Planners Ltd.
3.
I hold the following academic qualifications;
B.S. Mining Engineering from South Dakota School of Mines & Technology, and B.S. Engineering Administration
Michigan Technological University.
4.
I am a Professional Engineer registered with the Professional Engineers of Ontario (registration number 11936010);
5.
I have worked in the mineral industry for more than thirty-five years;
6.
I am responsible for the preparation of the section 10, titled Permitting, Social Consultation and Environmental Compliance
of this report;
7.
I have visited the Buffalo Ankerite Project Site;
8.
I am independent of the parties involved in the transaction for which this report is required,
9.
I have had no prior involvement with the mineral property or the issuer.
10.
I have read NI 43-101 and portions of this report for which I am responsible and which have been prepared in compliance
with the instrument;
11.
As of the date of this certificate, I am not aware of any material fact, or change in reported information, in connection with
the subject property, not reported or considered by me, the omission of which makes this report misleading.
12.
I consent to the filing of the report with any Canadian stock exchange or securities regulatory authority, and any publication
by them of the report.
Dated this 31st day of May, 2007.
“J.R. Doran”
J.R. Doran, P, Eng.
15.4