YAMANA GOLD INC. provided notice that National Instrument 43-101 technical reports have been filed with Canadian securities regulators for the Canadian Malartic mine in Quebec, Canada, and the El Peñón mine in Antofagasta Region, Chile. The new technical reports, called “NI 43-101 Technical Report, Canadian Malartic mine, Quebec, Canada” and “NI 43-101 Technical Report, El Peñón Gold-Silver mine, Antofagasta Region, Chile”, respectively, have an effective date of December 31, 2020, and are available under Yamana’s profile on www.sedar.com.
The reports provide technical updates on two of Yamana’s cornerstone assets and information supporting the mineral reserves and mineral resources that form the basis for the Company’s 10-year strategic production outlook presented in January.
Since the previous El Peñón technical report was filed three years ago, the operation has gone from strength to strength. During that time, the Company has continued to successfully expand the operation’s mineralization footprint, replace depletion of mineral reserves each year at an average replacement factor of 130%, and develop a pipeline of mineral resources and exploration targets to maintain a mine life visibility of 10 years or more. Since year-end 2017, gold mineral reserves have increased from 764,000 ounces to 921,000 ounces at year-end 2020. Silver mineral reserves have increased from 23.6 million ounces to 29.2 million ounces over the same period.
The operation also continues to add to its mineral inventory in both the measured and indicated and inferred mineral resource categories. Since year-end 2019, measured and indicated gold mineral resources increased by 16% to 765,000 ounces while inferred gold mineral resources climbed by 16% to 850,000 ounces. Measured and indicated silver mineral resources increased by 17% to 25.5 million ounces over the same period while inferred silver mineral resources rose by 9% to 28.1 million ounces. El Peñón has a high conversion factor of mineral resources into mineral reserves and plans to draw on high conviction mineral resources that are at mineral reserve grade and located near mine infrastructure.
Successful development of mineral reserves and mineral resources has translated into the highest production levels since the Company rightsized the operation in late 2016. While production is increasing, costs are decreasing due to the improved cost structure after rightsizing combined with ongoing cost savings initiatives, internalization of core mining activities, and operational improvements. El Peñón, now entering its 22nd year of operation, continues to generate significant free cash flow.
Looking forward to the next 10 years, the Company has outlined a production profile of approximately 230,000 gold equivalent ounces (“GEO”) per year at El Peñón, based on over six years of mineral reserves and ongoing mineral reserve replacement mostly through infill drilling on several major veins near existing infrastructure and mine workings carrying mineral resources at least equivalent to mineral reserve grade. Continued exploration success would unlock opportunities to leverage the mine’s existing processing capacity of 4,200 tonnes per day (“tpd”) to increase production to approximately 260,000 GEO per year. Minimal capital investment would be required to achieve the higher processing rate.
El Peñón has an impressive track record of incremental mine life extension, and 384,000 metres of drilling is planned from 2021 to 2023 to continue this trend.
El Peñón has all required permits to continue carrying out mining and processing operations and sufficient tailings capacity for current mineral reserves plus an additional capacity of approximately 18.5 million tonnes.
The previous technical report for Canadian Malartic was filed in 2014, shortly after Yamana and Agnico Eagle Mines Ltd. acquired the operation. Since then, Canadian Malartic has produced four million ounces of gold (100% basis), increased processing capacity to 57,000 tpd, completed construction of the Barnat pit extension and highway relocation project, added more than 0.8 million ounces of underground indicated mineral resource and 13.5 million ounces of underground inferred mineral resources (100% basis), and approved construction of the Odyssey underground project, which is expected to extend the life of the complex to at least 2039 and produce an average of 545,000 ounces of gold per year (100% basis) when operating at full capacity beginning in 2029.
Development of the Barnat pit extension was completed in 2020 and mining will gradually transition from the Canadian Malartic pit to the Barnat pit. The life-of-mine plan assumes a nominal processing throughput rate of 57,000 tpd, with ore from the open pit supplemented with consumption of ore stockpiles. Based on current mineral reserves, the open pit life of mine extends to 2028.
The Odyssey project will benefit from synergies with the existing open pit operation, and utilization of the existing processing plant and other infrastructure will significantly reduce risk and minimize capital requirements. The gradual transition from open pit to underground mining allows for capital expenditure to be spread over eight years. Proceeds from the 932,000 ounces of pre-commercial production (100% basis), which is expected to begin in 2023, will significantly reduce the external cash requirements for the construction of the project from C$1,736 million to C$758 million using a gold price assumption of $1,550 per ounce.
Project enhancement opportunities will continue to be evaluated as the project advances, including opportunities for increased conversion of mineral resources and extension of the higher-grade East Goudie zone, which have the potential to significantly extend mine life and improve the gold production profile in the transition from open pit to underground mining.
The Odyssey project mine plan currently includes 0.4 million ounces of the project’s 0.8 million ounces of indicated mineral resources and 6.9 million ounces of the project’s 13.5 million ounces of inferred mineral resources. In total, the mine plan supports 7.3 million mineable ounces (100% basis). Lower grade mineral resources, that fall below cut-off grade when fully diluted and using a gold price assumption of $1,250 per ounce, are excluded from the plan. Additional mineral resources are excluded with the application of a mining recovery factor. Mineral resources from the Odyssey internal zones are not currently included in the mine plan due to the increased geological complexity of these zones. Infill drilling of these zones from underground is planned to increase geological understanding, which could present opportunities for additional production during the underground ramp-up period. In addition, mineral resources from the East Malartic zone at depth represent another opportunity for future inclusion in the mine plan, which could extend the life of the underground project. Infill drilling and additional engineering is required to evaluate the economic potential of these mineral resources.
For more information on the Odyssey project, please see the Company’s press release issued February 11, 2021, titled ‘Yamana Gold Reports Strong Fourth Quarter Results; Impressive Technical Study Results Delivered for the Odyssey Underground Project’, available on the Company’s website at www.yamana.com.
Scientific and technical information contained in this news release has been reviewed and approved by Sébastien Bernier (P. Geo and Senior Director, Geology and Mineral Resources). Sébastien Bernier is an employee of Yamana Gold Inc. and a “Qualified Person” as defined by Canadian Securities Administrators’ National Instrument 43-101 – Standards of Disclosure for Mineral Projects.
Yamana is a Canadian-based precious metals producer with significant gold and silver production, development stage properties, exploration properties, and land positions throughout the Americas, including Canada, Brazil, Chile and Argentina. Yamana plans to continue to build on this base through expansion and optimization initiatives at existing operating mines, development of new mines, the advancement of its exploration properties and, at times, by targeting other consolidation opportunities with a primary focus in the Americas.
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