Trek Mining Announces Positive Feasibility Study for the Aurizona Gold Mine and Award of EPCM Contract to Ausenco

Download PDF

Trek Mining Inc. (“Trek Mining” or the “Company”) is pleased to announce the results of the feasibility study (“FS”) for its 100% owned Aurizona Gold Mine (“Aurizona” or the “Project”) located in northeastern Brazil. All amounts are in US dollars, unless otherwise indicated.


  • After-tax NPV5%of $197.1 million and IRR of 34% at $1,250/oz gold
  • Low initial capital cost of $130.8 million, with LOM sustaining capital cost of $51.3 million
  • LOM gold production of approximately 886,000 ounces at an average gold recovery of 91%
  • Average annual gold production of approximately 136,000 ounces
  • Average LOM AISC of $754/oz, placing Aurizona in the lowest quartile of the industry average
  • Proven and Probable Mineral Reserves of 19.8 million tonnes at 1.52 g/t gold for 971,000 ounces of gold
  • FS supports the viability of a mine restart plan with an upgraded 8,000 tonnes per day crushing and grinding circuit to treat all ore types
  • First gold pour targeted for year-end 2018 

The FS is based on a new mine plan and updated Mineral Reserve estimate and outlines the design of an open-pit gold mine producing on average approximately 136,000 ounces of gold per year, with an initial 6.5-year mine life and significant exploration upside, as demonstrated with recent drill results. Initial capital to fund construction and commissioning is estimated at a modest $130.8 million due to the Company’s ability to leverage significant existing infrastructure in place at the brownfields mine site. Life-of-mine (“LOM”) sustaining capital is estimated at $51.3 million, including closure costs. All-in-sustaining costs (“AISC”) are estimated at $754 per ounce (“$/oz”) over the life of the Project, which is in the lowest quartile of the industry average. The Project demonstrates strong returns in the current gold price environment, with an after-tax internal rate of return (“IRR”) of 34% and an after-tax net present value using a 5% discount rate (“NPV5%”) of $197.1 million using a base case gold price of $1,250 per ounce ($254.3 million and 42% at $1,350/oz gold price).

The FS was prepared by Lycopodium Minerals Canada Limited with the support of three other globally recognized engineering firms: AGP Mining Consultants Inc. (“AGP”), SRK Consulting (Canada) Inc. (“SRK”) and BVP Engenharia in partnership with Walm Engenharia e Tecnologia Ambiental. The FS is being summarized into a technical report that will be filed on SEDAR within 45 days, in accordance with National Instrument 43-101 (“NI 43-101”).

Christian Milau, CEO, stated, “The feasibility study outlines a robust, construction-ready, open-pit gold mine that we can rapidly advance to production. This new mine plan supports the original conviction of Trek Mining’s executive team that we are developing a low-cost, high-margin operation that will provide substantial cash generation for the Company, producing on average 136,000 ounces of gold per year at respectably low all-in sustaining costs. Further, based on recent drill results we are confident that we can extend the mine life with exploration success, bringing additional value to both our shareholders and community partners.”

David Laing, COO, added, “This feasibility study reflects extensive engineering and technical work conducted over the last two years. With much of the necessary infrastructure already in place, initial capital to restart Aurizona is significantly less than other similar-size projects, resulting in quick project payback. With the feasibility study complete, we will turn our attention to engineering, procurement and construction activities to get Aurizona back into production.” 


The 100%-owned Project, located in Maranhão State in northeastern Brazil, is a 223,000-hectare property containing a past-producing open-pit mine and gold processing plant, the Piaba and Boa Esperança gold deposits and numerous exploration targets. The FS provides a compilation of the engineering and geological studies performed in 2016 and 2017, which incorporated the results from drilling conducted in 2015 and additional geotechnical and geochemical site characterization work carried out in 2016 and 2017. FS highlights are summarized in the table below.

Feasibility Study Highlights

Gold price (base case)$1,250/oz
Exchange rate (Brazilian Real to US Dollar)3.3:1
Average annual gold production (LOM)136,000 ounces
Total gold production (LOM)885,700 ounces
Average gold grade1.52 grams per tonne (“g/t”)
Strip ratio5.7:1 (waste:ore, tonnes)
Average gold recovery91%
Throughput8,000 tonnes per day (“tpd”)
Initial mine life6.5 years
Cash costs (LOM)$691/oz
Direct operating costs (LOM)Mining – $2.44/tonne mined; Processing – $8.43/tonne milled; G&A – $2.88/tonne milled; Non-recoverable taxes – $0.89/tonne milled
AISC (LOM)$754/oz
Cash flow (after tax) (LOM) *$286 M
Initial capital$130.8 M ($148/oz)
Sustaining capital, including closure costs$51.3 M ($54/oz)
NPV5% (after tax)$197.1 M (base case), $254.3 M ($1,350/oz gold)
IRR (after tax)33.8% (base case), 41.6% ($1,350/oz gold)
Payback (after tax)2.8 years

* Net of initial capital cost.


Using the base case gold price of $1,250/oz and incorporating only Proven and Probable Mineral Reserves of 971,000 ounces of gold, the Project has an after-tax NPV5% of $197.1 million and an after-tax IRR of 33.8%. The Project’s economics are most sensitive to fluctuations in the gold price and foreign exchange rate, as summarized in the tables below.

Aurizona Mine Sensitivity to Gold Price

Gold price ($/oz)$1,000$1,150$1,250$1,350$1,500
NPV5% (after tax)$49.2 M$139.6 M$197.1 M$254.3 M$339.8 M
IRR (after tax)12.3%25.6%33.8%41.6%52.9%
Payback period (years)

Aurizona Sensitivity to Brazilian Real:US Dollar Exchange Rate 

Foreign exchange (BRL/US$)3.1:13.2:13.3:13.4:13.5:1
NPV5% (after tax)$165.9 M$182.0 M$197.1 M$211.2 M$224.6 M
IRR (after tax)28.1%31.0%33.8%36.5%39.2%


Initial capital to fund construction and commissioning is estimated at a modest $130.8 million due to the Company’s ability to leverage significant existing infrastructure in place at the brownfields mine site. Most major mine and processing elements are already in place, including a tailings storage facility (“TSF”) and waste dumps, a dedicated power line, camp offices and accommodations, water, roads and communications.

The re-engineered plant includes an entirely new 8,000 tpd crushing and grinding circuit that will allow all known types of mineral bearing rock at Aurizona to be processed through the gold recovery plant. Procurement and construction of the new components and equipment for the mine restart are expected to take up to 18 months, with first gold pour targeted for year-end 2018.

Initial and sustaining capital costs reflect the use of contractor mining, eliminating the need to purchase a new mining fleet.

Aurizona Capital Cost Estimate (including duties and taxes) 

Initial Capital$MSustaining Capital$M
Treatment plant & repairs49.3Tailings dam35.8
Reagents & plant services12.0Owner’s costs1.2
Tailings dam3.1Closure costs (net of salvage value)3.7
Owner’s costs *29.0  
Management costs6.7  
Construction indirects7.7  
Waste storage facilities0.5  
Total Initial Capital$130.8Total Sustaining Capital$51.3

* Includes pre-production costs, working capital and power substation upgrade activities.

Aurizona Operating Cost Estimate (including non-recoverable taxes and excluding recoverable taxes) 

Onsite Operating CostsCost Per OunceCost Per Tonne MilledCost Per Tonne Mined
Non-recoverable taxes$20$0.89
Total Direct Operating Costs$628$28.03
Refining & transport$14
Total Operating Costs$642
Total Cash Costs *$691

* For IFRS accounting purposes, some stripping costs may be capitalized and included in sustaining capital instead of in operating costs.

Mineral Reserves and Resources

Proven and Probable Mineral Reserves are estimated at 971,000 ounces of gold contained in 19.8 million tonnes of ore at a diluted grade of 1.52 g/t of gold. These Mineral Reserves support an initial 6.5-year mine life with excellent potential to expand the reserve base and extend the mine life with exploration success.

Aurizona Mineral Reserve Estimate, Effective Date May 29, 2017 

  Proven  Probable  Total 
Ore TypeTonnage (kt)Gold Grade (g/t)Contained Gold (oz)Tonnage (kt)Gold Grade (g/t)Contained Gold (oz)Tonnage (kt)Gold Grade (g/t)Contained Gold (oz)
Fresh Rock4,0791.46192,0008,1861.72452,00012,2651.63644,000
  Proven  Probable  Total 
PitTonnage (kt)Gold Grade (g/t)Contained Gold (oz)Tonnage (kt)Gold Grade (g/t)Contained Gold (oz)Tonnage (kt)Gold Grade (g/t)Contained Gold (oz)
Boa Esperança5270.8414,0005270.8414,000

Notes: This Mineral Reserve estimate has an effective date of May 29, 2017 and is based on the Mineral Resource estimate dated January 5, 2017 by SRK. The Mineral Reserve calculation was completed under the supervision of Gordon Zurowski, PEng of AGP, who is a Qualified Person as defined under NI 43-101. Mineral Reserves are stated within the final design pit based on a $1,056 per ounce gold price pit shell with a $1,200 per ounce gold price for revenue. The cut-off grade was 0.60 g/t Au for the Piaba pit area and 0.41 g/t Au for the Boa Esperança area. The mining cost averaged $2.32/tonne mined, processing averaged $11.30/tonne milled and G&A was $2.84/tonne milled. The process recovery averaged 90.3%. The exchange rate assumption applied was R$3.30 equal to $1.00. The FS scope only considers the Piaba and Boa Esperança open pit mineralized zones. The Mineral Reserve estimates contained herein may be subject to legal, political, environmental or other risks that could materially affect the potential development of such Mineral Reserves. Mineral resources that are not included within the Mineral Reserves do not have demonstrated economic viability.

The combined Measured and Indicated Mineral Resources are estimated at 1,431,000 ounces of gold (inclusive of reserves) contained in 28.3 million tonnes at a grade of 1.57 g/t gold, with additional Inferred Resources in the open pit of 45,000 ounces of gold contained in 880,000 tonnes at a grade of 1.61 g/t gold and underground Inferred Resources of 490,000 ounces of gold contained in 5.1 million tonnes at a grade of 2.99 g/t gold. 

Aurizona Mineral Resource Estimate, Effective Date January 5, 2017 

PiabaOpen PitMeasured8,8601.46415,000
  Measured and Indicated27,8901.581,417,000
Boa EsperançaOpen PitIndicated3701.1414,000
Total Open Pit M&I28,2601.571,431,000

Notes: This Mineral Resource estimate has an effective date of January 5, 2017 and was prepared by Mr. Marek Nowak, M.A.Sc., P.Eng. of SRK, who is a qualified person under NI 43-101.  Mineral Resources are inclusive of Mineral Reserves. Mineral Resources that are not included within the Mineral Reserves do not have demonstrated economic viability. Open pit mineral resources are reported at 0.6 g/t gold cut-off and underground resources are reported at 2.0 g/t gold cut-off. Small tonnage and grade differences may be found due to rounding. The Mineral Resource estimates contained herein may be subject to legal, political, environmental or other risks that could materially affect the potential development of such Mineral Resources.

The Company believes there is considerable potential to expand the reserve and resource base and extend the mine life through exploration success. The Project’s 223,000-hectare land package includes the Aurizona mining license, brownfields exploration properties proximal to the Aurizona mine site, and earlier-stage greenfields exploration properties that are under option to AngloGold Ashanti Holdings plc. Near-mine, drill-ready exploration targets include Piaba West, which has the potential to extend the existing Piaba deposit 900 metres to the southwest, and Tatajuba, which is situated on the same Piaba structure and represents a potential four-kilometre extension along strike from Piaba West.


The mine plan is based on the current Mineral Reserve model and calls for conventional truck and excavator/front end loader open-pit mine operations with a waste-to-ore stripping ratio of 5.7:1. The new mine plan continues mining in the existing Piaba open pit, deepening the pit and mining all rock types. 

The mine plan was developed to provide a practical mining sequence while optimizing net present value, and incorporates early mining of the Boa Esperança pit which, on completion, will provide water storage capacity as part of the overall site water management plan. Primary mining activities will take place in the Piaba pit.

Mining will be performed by a mining contractor, based on quotes received from a variety of experienced mining contractors. The grade control function will be performed by Aurizona personnel.

Mining costs, including the mining contractor charges and Aurizona supervision and grade control, are estimated to average $2.44 per tonne mined (excluding taxes) over the current LOM.

Fresh rock accounts for 62% of the Mineral Reserves, while saprolite/laterite and transition account for 18% and 20%, respectively. The mine schedule estimates delivery of 19.8 Mt of ore grading 1.52 g/t gold to the mill over the LOM. Waste tonnage totaling 113.2 Mt will be placed in the north, west, and south waste rock storage facilities.


The production schedule reflects a mine plan that provides a practical mining sequence, ensures the availability of sumps at the appropriate times of year and provides ore stockpiles on the run of mine pad to supplement plant feed during the rainy season. The LOM production schedule is presented in the table below.

Aurizona Production Schedule

Year Pre-Prod1234567Total
Ore to Plantkt 2,9183,2083,0062,9202,9202,9201,94419,836
Gold Gradeg/t 1.491.501.661.651.431.431.471.52
Direct to Millkt 1,8412,1102,5012,9202,4002,9201,14715,839
To Stockpilekt1,0731,57270864400003,997
From Stockpilekt01,0771,098506051907973,997
Total Minedkt4,59029,53532,40032,20815,60011,2185,9781,533133,062
Recovery%; 92.8%91.9%92.0%90.4%90.4%90.0%90.2%91.2%
Gold to Doréoz 130,082142,161147,952139,733121,876120,82483,069885,696


The FS is based on a process plant capable of treating 8,000 tpd of fresh rock through a combination of conventional gravity concentration and leach/CIP (carbon in pulp) cyanidation processes. The design includes a new comminution circuit which comprises a primary jaw crusher, SAG (semi-autogenous grinding) mill, ball mill and pebble crusher. This circuit will treat more than 8,000 tpd of ore as the proportion of saprolite increases. The plan also calls for the repair, refurbishment and improvement of the existing process plant equipment. This will include new hydro-cyclones, a new intensive leach reactor, three new leach tanks, a refurbished CIP circuit, a new pressurized elution circuit, a new carbon regeneration kiln and a new high rate thickener. Additional improvements to the existing process plant include upgrades to the cyanide destruction and tailings deposition system, gravity recovery circuit, electrical supply and distribution system, instrumentation and controls, and plant infrastructure. 

Average cost to process a tonne of ore is expected to be $8.43 per tonne milled over the current LOM. The cash cost varies dependent on the blend of the three main ore types being processed, with variations in power, steel, cyanide and lime consumption due to differences in hardness, abrasiveness and mineralogy.


The process gold recovery is based on previous production from 2010 to 2015, and additional test work conducted from 2011 through to 2016. The test work has been consistent across the various campaigns and laboratories and shows that gold is readily recovered using conventional cyanide leaching with a design retention time of 30 hours. Using a P80 100 µm grind size, gold recoveries of between 90% and 97% are expected over the LOM. Design recoveries by metallurgical domain are presented in the table below.

Aurizona Gold Recoveries 

Process and MineralizationAu Recovery
Piaba Saprolite93.1%
Piaba Transition94.1%
Piaba Fresh Rock90.0%
Boa Esperança Saprolite91.8%
Boa Esperança Transition97.1%

Leaching reagent consumption ranges from 0.45 to 0.54 kg/t NaCN and 0.80 to 3.71 kg/t lime.


The Project will expand the capacity of the existing Vené TSF in three lifts. The first expansion will be carried out before the restart of the process plant, followed by two additional lifts approximately every two years thereafter. Construction of a new tailings facility, Zé Bolacha, will start in year four. Both facilities are designed as unlined, compacted earth fill structures with sand chimneys and blanket drains. Following neutralization, tailings slurries (approximately 40% solids) will be pumped via pipeline to the TSF and spigoted from the dam crest to maintain the water pool towards the rear of the reservoir area and away from the main dam embankment. Water will be recovered and pumped back to the process plant or the Boa Esperança pit reservoir.


Given the brownfields nature of the Project, Aurizona is endowed with considerable infrastructure, which includes the back end of the plant, offices, warehouses, laboratories, communications and a camp. It also benefits from the existing road access from Belem (440 km) and São Luis (320 km), as well as access to the electrical grid (with a powerline to site) via the Maranhão power distribution utility, which provides access to lower-cost, free-market power supplies. 

The site-wide water balance work has indicated that the operation has access to sufficient fresh water for uninterrupted operations in extreme drought conditions, and the storage and discharge capacity to contain flooding from extreme wet periods.


There is abundant labour in the region and, as a prior operator, the Project has access to previously trained local and regional staff. The Company has continued with its human resources programs during the care and maintenance period, in anticipation of restarting operations. Training programs for a variety of administrative and technical skills will benefit the project by increasing the pool of skilled labour, and benefit local community members through the development of transferable skills. The Company will provide up to 500 jobs during both construction and operations, and expects that substantially all employees and contractors will be Brazilian.


The Project was placed on care and maintenance in the third quarter of 2015. The Company has maintained its licenses and permits in compliance with regulatory requirements and has requested that the existing License to Operate (“LO”) be amended to cover changes to the operating parameters, including the increased plant throughput to 8,000 tpd and raises to the Vené TSF.  Receipt of the License to Install (“LI”) is anticipated in the third quarter of 2017 and will allow full construction to commence, keeping Aurizona on track to restart operations by the end of 2018.


Trek Mining has awarded the project EPCM work to Ausenco Engineering Canada Inc. (“Ausenco”), a private, diversified engineering, construction and project management company with extensive experience in the “fit-for-purpose” design and cost-effective construction of gold plants and mining projects globally, including a number of recent study, basic engineering and construction projects in Brazil. Ausenco will provide EPCM services to the project from its Vancouver and Belo Horizonte offices and will be complemented by Trek Mining’s team.


The financial model incorporates assumptions about the expansion and extension of the income tax reduction benefit made available under a government economic stimulus program (the “SUDENE”) to companies for industrial projects developed in northeastern Brazil. The income tax rate is 15.25%. The financial model also incorporates recovery of certain Brazilian value-added type taxes, primarily ICMS and PIS/COFINS.


The most significant opportunity to add value at Aurizona is through exploration success. Near-mine exploration targets have the potential to extend the Piaba deposit up to five kilometres along strike to the southwest. Early results from the planned 30,000-metre 2017 drilling program have successfully demonstrated that significant gold mineralization persists below the shallow, westernmost reserve pit and that the Piaba gold deposit extends along strike at least 350 metres to the west. The Company will continue to test mineralization along strike and also at depth, with the objective of increasing the reserve and resource base and extending the mine life.

Subsequent to completing the Vené TSF design for the FS, engineering work has demonstrated that additional lifts to the Vené TSF to accommodate the entire LOM tailings are feasible at a substantially lower cost than building the Ze Bolacha TSF.  Work is ongoing to complete this design and cost estimate.


The FS was prepared by several independent Qualified Persons (“QPs”) and was consolidated by Lycopodium Minerals Canada Limited (“Lycopodium”). The Mineral Resources and the new geological block model were prepared by SRK. The Mineral Reserves, mine plan and mining sections of the study were prepared by AGP, and the geotechnical and environmental matters were led by SRK. The TSF was designed by BVP Engenharia in partnership with Walm Engenharia e Tecnologia Ambiental. The QPs involved in preparation of the FS were Mr. Michael Royle, MAppSci, PGeo, of SRK; Mr. Marek Nowak, MASc, PEng, of SRK; Mr. Esteban Hormazabal, Min Eng, MSc, MAusIMM, of SRK; Mr. Stephen Day, MSc, BSc, PGeo, of SRK; Dr. James Siddorn, PhD, PGeo, of SRK; Mr. Jeff Parshley, PG, CPG, CEM, of SRK; Mr. David Hoekstra, PE, of SRK; Ms. Sindy Cheng, PEng, of Lycopodium; Mr. Miguel Tortosa, PEng, of Lycopodium; Mr. Neil Lincoln, PEng, of Lycopodium; Mr. Paulo Cella, PhD, MSc, of Walm Engenharia e Proyectos; and Mr. Gordon Zurowski, PEng, of AGP. The FS is being summarized into a technical report that will be filed on SEDAR within 45 days, in accordance with NI 43-101.


Trek Mining is a Canadian mining company with a portfolio of production, near-production and exploration-stage projects in North and South America. The Company is producing gold from its Koricancha Mill, a custom-built gold and silver ore processing facility in Peru, and expects to commence construction in the second half of 2017 at its past-producing Aurizona Gold Mine in Brazil with the objective of pouring gold at Aurizona by the end of 2018. Trek Mining’s exploration properties include both near-mine and district exploration opportunities at Aurizona; the Warintza porphyry copper-molybdenum exploration project in Southeastern Ecuador; the Ricardo porphyry copper-molybdenum exploration project in Chile; and Elk Gold, a past-producing high-grade gold mine in British Columbia, Canada. Further information about Trek Mining’s business strategy and portfolio of assets is available at or by email at


“Christian Milau”

CEO & Director


The technical content of this press release has been reviewed and approved by the QPs that were involved with preparation of the FS: Mr. Michael Royle, Mr. Marek Nowak, Mr. Esteban Hormazabal, Mr. Stephen Day, Dr. James Siddorn, Mr. Jeff Parshley, Mr. David Hoekstra, Ms. Sindy Cheng, Mr. Miguel Tortosa, Mr. Neil Lincoln, Mr. Paulo Cella, and Mr. Gordon Zurowski. David Laing, BSc, MIMMM, Trek Mining’s COO, and Scott Heffernan, MSc, PGeo, Trek Mining’s EVP Exploration, are QPs under NI 43-101 and have also reviewed, approved and verified the technical content of this news release.

For readers to fully understand the information in this release, they should read the technical report in its entirety when it is available on SEDAR, including all qualifications, assumptions, exclusions and risks that relate to the FS.  The technical report is intended to be read as a whole, and sections should not be read or relied upon out of context.


    Neither the TSX Venture Exchange nor its Regulation Services Provider (as such term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

    This document contains certain forward-looking information and forward-looking statements within the meaning of applicable securities legislation (collectively “forward-looking statements”). The use of the words “will”, “expects”, “hopes”, “objective”, “expected”, “expectation” and similar expressions are intended to identify forward-looking statements. Forward-looking statements contained in this press release include statements regarding planned exploration activities and results, ability of the Company to expand the Aurizona resource base, planned development activities, the anticipated restart of production at Aurizona, the anticipated capital costs, sustaining costs, net present value, internal rate of return, availability of labour, gold recoveries, production rates, exchange rates, tax rates in Brazil and commodity prices. Although Trek Mining believes that the expectations reflected in such forward-looking statements and/or information are reasonable, undue reliance should not be placed on forward-looking statements since Trek Mining can give no assurance that such expectations will prove to be correct. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements, including the risks, uncertainties and other factors identified in Trek Mining’s periodic filings with Canadian securities regulators, and assumptions made with regard to: the anticipated Board of Directors decision to approve construction of Aurizona; the ability to raise the capital required to fund construction and development of Aurizona; the ability to restart production at Aurizona; timing of the anticipated restart of production; the results of future exploration at Aurizona; and the Company’s ability to achieve the results outlined in the feasibility study. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and Trek Mining does not undertake any obligations to publicly update and/or revise any of the included forward-looking statements, whether as a result of additional information, future events and/or otherwise, except as may be required by applicable securities laws.