Rozino - Overview

Rozino Development – Mine Site to Payable Gold

Velocity completed an independent Prefeasibility Study (PFS) on the Rozino gold project located in southeast Bulgaria in August 2020.  The PFS establishes the Rozino deposit as supporting an economic open pit mine operation with gold recovery by a combination of on-site concentration in a flotation plant and further off-site processing in an existing, operating processing plant.  For PFS details see News Release NR#20-18 August 31, 2020.

The Rozino project includes on-site crushing, milling and simple flotation to produce a gold concentrate with a grade ranging between 15 and 40 g/t.  The concentrate will be trucked 85 km on existing roads to the currently operating processing plant located in Kardzhali where gold doré will be produced.

Prefeasibility Study1 Highlights

  • After-Tax Financials:  After-tax NPV5% of CAD$163 ($123) million and after-tax IRR of 27.4% using a base case gold price of $1,500 per ounce.
  • Life of Mine Earnings:  $293 million before interest, taxes, and depreciation.
  • Cash Cost:  All-in sustaining cost2 of $755 per ounce of gold and cash cost3 of $699 per ounce of gold.
  • Capital Costs:  Total estimated capital costs of $94.8 million and pre-production capital costs of $87.1 million (including an 11% contingency).
  • Mineral Resource: Indicated Mineral Resource at a 0.3 g/t gold cut-off grade of 20.5 Mt at 0.87 g/t gold, for contained gold of 573,000 ounces and an Inferred Mineral Resource at a  0.3 g/t cut-off of 0.38 Mt at 0.8 g/t gold for 10,000 ounces4.
  • Initial Mineral Reserve: Probable Mineral Reserve at a 0.5 g/t gold cut-off grade of 11.8 Mt at 1.22 g/t gold for 465,000 ounces.
  • Mining:  Open pit with 0.5 g/t gold cut-off grade (COG), low strip ratio of 2.2 and 1.22 g/t life of mine (“LOM”) gold grade.
  • Conventional Process Flow Sheet: Returns 79.3% gold recovery to doré at the operating processing plant.
  • Processing:  On-site flotation producing gold-bearing pyrite concentrate assaying from 15 to 40 g/t and transportation to the processing plant (located 85 km from the Project) for processing to produce doré.
  • Low Environmental Risk:  Small project footprint with benign, non-acid generating and non-hazardous waste and tailings material.
  • Opportunities for Project Enhancement:  The Rozino gold deposit is open to the southeast and exploration is ongoing.  Additional pit tailings storage capacity exists to accommodate potential increases in ore production.

Notes:
(1)  Base case parameters assume a gold price of US$1,500/ounce and an exchange rate (CAD$ to US$) of 0.75. Financial results on 100% equity basis.
(2)  All-In Sustaining Cost (AISC) is defined as all cash costs related to production costs such as mining, processing, refining, site administration, and NSR royalty to final product (direct and indirect), and mine closure and rehabilitation. Sustaining capital costs related to continuing the business including development and equipment required to sustain production are included. Taxes, working capital, M&A, disposals, and acquisitions as well as new mine development capital costs are excluded.  See “Use of Non-IFRS Financial Performance Measures” below.
(3) Cash Costs include production costs such as mining, processing, refining, site administration, and NSR royalty, divided by gold ounces sold to arrive at a cash cost per gold ounce sold. See “Use of Non-IFRS Financial Performance Measures” below.
(4)  Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.  Inferred Mineral Resources are considered too speculative geologically in nature to enable them to be categorized as Mineral Reserves and there can be no certainty that all or any part of an inferred mineral resources will ever be upgraded to Indicated Mineral Resources or Measured Mineral Resources.  

The PFS was prepared by CSA Global, an international mining consultancy with experience in Bulgaria, in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects. 

Significant Benefits of Off-site Processing

In addition to returning positive economic results, the PFS also outlines significant benefits, including shortened permitting timelines and capital cost efficiencies, for the following reasons:

  • the existing processing plant is permitted, currently operational, and has sufficient capacity to process concentrate from Rozino,
  • the use of the existing processing plant reduces total capital cost requirements for Rozino, and
  • on-site development at Rozino requires permitting for mining, flotation, and disposal of benign waste. The area of disturbance has been kept compact to facilitate reclamation and closure.

Mineral Reserves

Probable Mineral Reserves (effective date 20th August 2020).

Ore Type Reserve Category Tonnes Mt Gold Grade
g/t
Contained Metal
koz Gold
Metallurgical Recovery
%
Recoverable Metal
koz Gold
Oxide Probable 1.9 1.07 64 67.4 43
Transitional Probable 1.8 1.15 68 70.7 48
Sulphide Probable 8.1 1.27 332 83.3 277
Total Probable 11.8 1.22 465 79.3 368

Notes:
(1)  The Mineral Reserve disclosed herein has been estimated in accordance with CIM Definition Standards.
(2)  Mineral Reserves discard cut-off grade was 0.5 g/t gold.
(3)  Mineral Reserves are based on a $1,500/oz gold price.
(4)  Mineral Reserves account for mining dilution and ore loss.
(5)  Probable Mineral Reserves were based on Indicated Mineral Resources.
(6)  Sum of individual amounts may not equal due to rounding.

Conventional Open Pit Mining


PFS pit shell showing Velocity drill holes and highlighting drill intercepts greater than 0.5 g/t gold.

Conventional Mineral Processing 

Mineral Resource Estimate

Mineral Resource Estimate (effective date April 15, 2020).

Within $1,500/oz pit shell
Indicated Mineral Resource Estimate
Cut-off
g/t
Tonnes
Mt
Grade Gold
g/t
Contained Gold
koz
0.2 27.2 0.72 630
0.3 20.5 0.87 573
0.4 15.5 1.04 518
0.5 12.0 1.22 471
0.6 9.42 1.40 424
 
Inferred Mineral Resource Estimate
Cut-off
g/t
Tonnes
Mt
Grade Gold
g/t
Contained Gold
koz
0.2 0.49 0.7 11
0.3 0.38 0.8 10
0.4 0.29 0.9 8
0.5 0.23 1.0 7
0.6 0.17 1.2 7

Notes:
(1)  The selected base case Mineral Resources are reported at a cut-off grade of 0.3 g/t gold.
(2)  Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
(3)  The Mineral Resources have been classified and reported in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum “CIM Definition Standards - For Mineral Resources and Mineral Reserves” ("CIM Definition Standards").
(4)  Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.  Inferred Mineral Resources are considered too speculative geologically in nature to enable them to be categorized as Mineral Reserves and there can be no certainty that all or any part of an inferred mineral resources will ever be upgraded to Indicated Mineral Resources or Measured Mineral Resources.

Location

Rozino is located within the Tintyava prospecting and exploration licence owned by Tintyava Exploration AD, in which Velocity has 70% ownership.  Bulgarian partner Gorubso Kardzhali AD (Gorubso) holds a 30% interest. 

The Rozino project lies within the municipality of Ivaylovgrad in southeast Bulgaria, approximately 350km by road east-southeast of the capital, Sofia.

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