Resource World Magazine

46 www.resourceworld.com f e b r u a r y / m a r c h 2 0 1 6 Paramount Gold Nevada completes PEA at Sleeper by Patrick Moore I f the old adage about the best place to find gold is under the headframe of a former mine, then maybe paramount Gold Nevada [PZG-NYSE MKT] is wise – as well as bold – in its efforts to reawaken a sleeping giant. Paramount is a US-based precious metals exploration company with 100% ownership in the Sleeper Gold Project located near the town of Winnemucca in northern Nevada which includes the formerly producing Sleeper Mine, and 2,322 unpatented mining claims covering approximately 60 square miles or 15,500 hectares. The Sleeper Mine was a high-grade open pit gold operation oper- ated by AMAX Gold that produced 1.66 million ounces of gold and 2.3 million ounces of silver between 1986 and 1996. Paramount recently completed a positive Preliminary Economic Assessment (PEA) on the project. The key highlights are: • Low Initial Capital of $175 Million for a 30,000 tonnes per day operation • Estimated annual production of 102,000 ounces of gold and 105,000 ounces of silver • Low cash operating cost of $529 per ounce of gold equivalent produced • The Base Case has a $244 million pre-tax net cash flow, a $167 million net present value at a 5% discount rate and an internal rate of return of 25% • Quick capital payback period of 3.5 years based on after tax cash flows • The potential exists to add mineralized material The report was completed by Metal Mining Consultants (MMC) of Denver, Colorado, and filed on SEDAR. MMC's recom- mendation is to advance the project towards Prefeasibility (PFS). Paramount has sufficient cash in its treasury to complete this advancement. Estimated cost is $1.45 million. Given the positive PEA, Paramount's team is in the midst of composing a detailed plan and expected budget. The PFS study would incorporate a wide array of information including geologic models, mine design, community relations, permit challenges and timing, infra- structure, and geographic obstacles. In the case of Sleeper, a Prefeasibility Study would also entail additional metallurgical testing and infill drilling which could potentially convert mineralized material to economic reserves. The company holds numerous permits in good standing from the former mine, which will provide an excellent base for the future permitting process. The infrastructure, access, and state support are excellent. The PEA report incorporates a global mineralized material estimate completed by SRK Consulting, the results of new met- allurgical tests completed over the last two years by McClelland Laboratories, and updated gold ($1250) and silver ($16) pric- ing that reflects the current metals market. In May 2015, SRK completed a new National Instrument 43-101-compliant global estimate for the Sleeper Project. Sleeper's total measured and indicated mineralized material at 294 million tonnes grading 0.36 g/t gold and 3.25 g/t silver contain- ing 3.42 million ounces of gold and 30.8 million ounces of silver. Additionally, inferred mineralized material was estimated at 241.8 million tonnes grading 0.32 g/t gold and 1.93 g/t silver containing 2.47 million ounces of gold and 15.0 million ounces of silver. The Sleeper database, used for SRK's estimate, includes more than 4,000 reverse circulation and core drill holes, as well as his- torical surface mapping and new 3-Dimensional interpretations, to create a comprehensive structural model over the entire deposit. Additionally, data from more than 378,000 blast holes, col- lected while the project was in operation, were utilized to define trends, orientations and inclinations for the principal mineral zones. In their analysis, SRK estimated mineralized material for oxide, mixed and sulphide material separately, and reported it at various cut-off grades. The estimate, prepared by SRK in the form of the 3-D block model, was used by MMC as the basis for deter- mining mineable mineralization in the PEA. Last summer, Paramount also commissioned a helicopter mag- netic survey from Vancouver-based, Precision GeoSurveys. Over a period of two days, 1,024 line-kilometres were flown at 100-metre spacings at an altitude of 25 metres for tight target definition. The survey results define prospective hidden structures with mag- netic signatures analogous to Sleeper mineralizing alteration. The resulting base case scenario is a 30,000 tonne-per-day heap leach operation which is fed by open pit mining based on mining higher grade open pit oxide and suitable mixed mineral materials. Paramount President and CEO, Glen van Treek, commented, "We are extremely pleased. We are excited to take the next steps towards making this a reality." This PEA is preliminary in nature, as the economics and technical viability of the Sleeper Gold Project have not yet been demonstrated. n Drilling operations at the Sleeper Mine Project near Winnemucca in northern Nevada. Photo courtesy Paramount Gold Nevada Corp. mINING

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