Open Pit Mine – La Demajagua

The joint venture company plans to develop an open pit mine at the La Demajagua sulphide gold-silver deposit on the Isle of Youth in south west Cuba with construction commencing in January 2023 and commissioning expected in June 2024.

The ore body has been subjected to 50,000m of historic drilling by Canadian companies and 28,000m of recent drilling by the joint venture.

JORC Resources for the proposed open pit were updated by Western Australian mining engineers, Cube Consulting and reported to ASX on 28 June 2022. The Resources will be finalised when outstanding assays are received, and in time for detailed mine planning and costing for the Definitive Feasibility Study (“DFS”) for the proposed mine, which is expected to be completed by the end of 2022.

Mineral Resource
Estimate

The Mineral Resource Estimate for La Demajagua Preliminary Shell at 0.8 g/t Au cut off.

Resource CategoryTonnes (Mt)Au Grade (g/t)Contained Au (oz)Ag Grade (g/t)Contained Ag (oz)
Indicated6.483.11648,00032.26,703,000
Indicated3.82.10260,00024.03,004,000
Total10.32.74908,00029.39,707,000

The Isle of Youth is located 60km off the south west Coast. The mine site is 20m above sea level and flat, and is located within a 900 ha mining coast concession 35km from the port city of Nueva Gerona via a paved highway, and is connected to power, water, and fibre optic cabling.

The anticipated feed to the concentrator is expected to be approximately 50,000 tpa of oxide/transitional ore grading 2.7g/t Au and 36.0g/t Ag, and 900,000tpa of sulphide ore grading 3.27g/t Au and 40.5g/t Ag.

Based on metallurgical test work by SGS Laboratories the flotation recoveries are expected to be approximately 80% Au and 75% Ag for oxide/transitional ore, and 90% Au and 95% Ag for sulphide ore, with a concentrate grade of 37.5 g/t Au and 500 g/t Ag.

Estimated annual production of concentrate is 70,000t containing approximately 85,000 oz Au and 1,150,000 oz Ag ( 100,000 oz Au equivalent ), with a mine life of 8 years before underground operations for 10 years.

The concentrate will be sold to a major international trading company and current negotiations on an off-take agreement are expected to be finalised in November 2022 for inclusion in the DFS.

Initial
Scoping Study

The Initial Scoping Study for the La Demajagua mine was based on an early Resource Estimate and a 6 year mine life and advised to the ASX on 17 February 2022.

The Initial Results indicated a Project Development Cost of US$75M including pre-development costs and interest during construction. Of this amount Antilles Gold is contributing US$13M as its equity ( 49% ) in the joint venture company. GeoMinera transferred the La Demajagua mining concession with 50,000m of drilling results indicating a 2.0M oz Au equivalent ore body to the joint venture company for US$13.5M of shares ( 51% ).

Antilles Gold will have contributed US$9M of its equity by the end of 2022 which has been spent on drilling, metallurgical test work, completion of the DFS, and project management and administration of the joint venture company. The US$4M balance will be spent on mine infrastructure between January and May 2023.

Antilles Gold is obliged to use its best endeavours to arrange third party financing for the mine development and expects to be able to do so with a combination of deferred payment terms from the suppliers of the concentrator, an 8 Mw power station, and heavy mining equipment, together with credit supplied by purchasers of concentrate, and typical project financing.

The Initial Scoping Study
results are as follows:

Annual Metal Production
(80.0 oz Ag = 1.0 oz Au)
~100,000 oz AuEq
LoM Sales Revenue
(@ US$1,650/oz Au, US$22/oz Ag after processing costs, and discount to buyer)
US$700M
LoMProduction Costs
(including royalties, financing, depreciation)
US$320M
LoMConcentrate Shipping Costs
US$53M
LoM Profit After Tax
(15% tax rate waived for 5 operating years)
US$312M
LoM Cash SurplusUS$325M
Average Annual Cash SurplusUS$54M
Project Pay Back18 months
Project NPV8US$218M
Project IRR44%
Antilles Gold’s Equity Contribution to ProjectUS$13M
Antilles Gold’s Share of LoM Cash SurplusUS$159M

The above returns will increase significantly when the Scoping Study is updated in October 2022 which will take into account recently increased Resources including an additional 190,000 oz Au, and an extension of the mine life to 8 years.

Antilles Gold’s share of LOM Cash Surplus is expected to increase to over US$210M which will be an excellent return on its US$13M investment.