Name of the Project
Marmato underground gold expansion project.

Location
The project is located in the Caldas department, in the Middle Cauca gold district, in Colombia.

Project Owner/s
Caldas Gold.

Project Description
A prefeasibility study (PFS) has affirmed the economic viability of the underground expansion of the project.

Marmato will ultimately comprise two distinct operations – the existing Upper Mine and the new Marmato Deep Zone (MDZ) operation, which is situated directly below the Upper Mine vein system.

The Upper Mine is the existing operating gold and silver mine that extends from the 1 300 m elevation down to the 950 m elevation, including the Veins Zone and the Transitional  Zone. The mine has been developed with level accesses proceeding horizontally from the main portal at the surface to horizontal crosscuts to provide access to the veins.

There are currently six production levels. The mine uses conventional cut-and-fill stope mining techniques, which currently supply about 1 000 t/d of material to a

1 200 t/d capacity mill that uses a Merrill-Crowe process to produce gold/silver doré bars.

Caldas plans to expand the capacity of the existing mill to 1 500 t/d over the next two years. Additional material will be mined from the wider porphyry area between the 950 m elevation and the 1 050 m elevation, referred to as the Transitional Zone, using a modified longhole stoping method. This will facilitate an increase in expected gold production from the Upper Mine to about 50 000 oz/y starting in 2021.

The life-of-mine plan for the project in the PFS is based on a total mineral reserve of 2-million contained ounces of gold based on 19.7-million tonnes at an average grade of 3.2 g/t.

Over the 14-year mine life, based on mineral reserves, production is estimated to total 1.9-million recoverable ounces of gold and 1.6-million recoverable ounces of silver from the existing Upper Mine and the expansion of the second operation into the MDZ.

Gold production will average about 165 400 oz from 2024 until 2033 once the MDZ is in full production.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of return
At a 5% discount rate, the net present value of the total LoM after-tax project cash flow amounts to $263.9-million. Before financing, the project has a 20.1% after-tax internal rate of return and payback by 2026.

Capital Expenditure
The project has initial capital costs estimated at $269.4-million for the expansion into the MDZ.

Planned Start/End Date
Not stated.

Latest Developments
Caldas Gold plans to raise up to $90-million to fund the expansion of its mining operations in the MDZ.

The company announced on August 23 a proposed issuance and sale of up to 90 000 subscription receipts at $1 000 each, on a fully-marketed private placement.

The terms of the offering were negotiated with Scotiabank and Canaccord Genuity, as co-lead agents on behalf of a syndicate of agents, including Stifel Nicolaus Canada and Red Cloud Securities.

In June, Caldas entered into a $110-million precious metals purchase agreement with Wheaton as the first step in securing financing for the expansion project.

A prefeasibility study (PFS), published in July, confirmed the economic viability of an underground expansion at Marmato.

Over the 14-year mine life based on mineral reserves in the PFS, production is estimated to total 1.9-million recoverable ounces of gold and 1.6-million recoverable ounces of silver from the existing Upper Mine and the expansion of the second operation into the MDZ.

Gold production will average about 165 400 oz/y from 2024 through 2033 once the MDZ is in full production, with an LoM total cash cost of $772/oz of gold and an average LoM all-in sustaining cost of $872/oz of gold.

Stock in Caldas rose 7.3% to C$2.50 a share.

Key Contracts, Suppliers and Consultants
SRK Consulting (PFS).

Contact Details for Project Information
Caldas Gold, tel +1 416 360 4653 or email investorrelations@caldasgold.ca.