Chesapeake Gold Corp. ("Chesapeake") wishes to report on the 2013 activities and related developments going forward on its 100% owned Metates gold-silver project located in Durango State, Mexico.
Based on the NI 43-101 Pre-Feasibility Study Technical Report dated March 18, 2013 (available on the Company's website or at SEDAR), Metates hosts proven and probable reserves of 18.5 million ounces of gold and 526 million ounces of silver, making it one of the largest known undeveloped gold and silver deposits in the world. The pre-feasibility study ("PFS") also indicates that once in operation, Metates could produce an average of 659,000 ounces gold and 15.9 million ounces silver annually over a 25 year mine life at projected cash costs of $493 per ounce of gold equivalent, net of zinc credits.
Metates is envisioned as a conventional open pit mining operation with ore fed to a crushing/grinding circuit followed by a single stage flotation plant to produce a bulk sulphide concentrate. The bulk sulphide flotation concentrate is then transported downhill to the Ranchito processing site via a slurry pipeline. At Ranchito, the concentrate is treated in a pressure oxidation plant ("POX") where the sulfides are oxidized prior to cyanidation to recover the gold and silver as dore bars. The zinc in the concentrate will be dissolved in the POX and recovered as zinc cathode using solvent extraction/electrowinning (SX/EW) methods. As reported in the PFS, overall recoveries average 89% for gold, 76% for silver, and 85% for zinc.
Chesapeake continues to advance Metates towards the completion of a full feasibility study ("FS"). M3 Engineering & Technology ("M3") is the primary consultant to complete the FS along with input from several leading international consultants that also contributed to the PFS. Chesapeake has adopted a prudent cash management approach to advancing Metates and the following summarizes the progress since filing the PFS as well as the development plans through the end of 2013 and into 2014.
- Follow-up civil engineering and site optimization at Ranchito led to re-configured layouts of the processing facilities with potential savings in both capital and operating costs.
- M3 is evaluating the benefits and economic impacts associated with the staged development of Metates where the capital to finance the expansion from the 60,000 tpd (Phase 1) to 120,000 tpd (Phase 2) ore processing rate is supplemented by cash-flow.
- In 2012, the Mexican federal government contracted the construction of two new natural gas pipelines to serve northwest Mexico. The gas pipelines are currently under construction and slated for completion in 2017. Chesapeake is reviewing indicative proposals by independent power producers in Mexico to construct and operate a dedicated natural gas power plant to supply the Metates project. The Company has also entered into an agreement with a natural gas supply company to evaluate the long term supply and pricing of natural gas sourced from the United States delivered to the dedicated power plant.
- A detailed on-site geotechnical review and survey is underway to define the specific routing and FS design of the proposed alignment of the access road and concentrate pipeline corridor from the Metates mine site to the Ranchito processing site.
- An extensive dry and wet season surface and groundwater sampling and meteorological database has been established at both the Metates and Ranchito sites over the last several years. Environmental baseline data collection is on-going and oriented to initiate a mine permitting process.
- Additional metallurgical work will commence before year end and include a simulated production, pilot plant run using new representative drill core samples. The long duration run will define the optimal operating conditions and metal recoveries from the flotation and POX processing steps. As well, a comprehensive characterization of the flotation tailings, neutralization products and cyanide leach tails will facilitate definitive engineering of the integrated waste storage facilities at both the Metates and Ranchito sites.
- Chesapeake has held several meetings with the local government and stakeholders in the surrounding communities resulting in strong support for the project's development.
The FS is expected to be completed late 2014 - early 2015 at an estimated budget of $20 million. Management believes the investigations and testwork underway will further de-risk and add significant value to the Metates project. Metates is one of the few world-class, undeveloped precious metal deposits not controlled by a major mining company in a favourable geo-political jurisdiction.
Generative exploration targeting bulk tonnage, near surface gold and silver mineralization proximate to the Metates and Ranchito sites remains an important focus. Recognizing the current status of resource sector, Chesapeake has the financial strength to acquire new exploration opportunities and undertake cost effective work to develop an organic project pipeline. Among several regional prospects under evaluation, two projects are being advanced that demonstrate potential for a new significant discovery.
Chesapeake is advancing its previously reported Nicole project, a five kilometer diameter area that has several characteristics similar to Metates including the same host rocks, hydrothermal alteration, widespread disseminated sulphides and multistage veining containing gold, silver and zinc. A 45 kilometer IP-Resistivity geophysical survey has been completed over the core zone. A preliminary interpretation of geophysical sections demonstrate a strong chargeability and low resistivity anomaly from surface down to 500 meters depth, and up to 800 meters wide under the known mineralized zone. Highlights from two previous channel sampling sections included the following mineralized intervals:
135 meters of 0.8 g/t gold, 16 g/t silver, 0.11% copper and 0.7% zinc.
35 meters of 0.7g/t gold, 20 g/t silver, 0.12% copper and 0.5% zinc.
Current geological and geophysical information indicates Nicole hosts a large hydrothermal system with gold, silver, copper and zinc having intermediate sulphidation epithermal characteristics near surface with a possible transition to a copper-gold porphyry system at depth.
Chesapeake continues to discover new significant mineralization in the expanding San Ramon district near the Ranchito site. Gold-silver-copper-zinc-lead mineralization is associated with numerous skarns along the regional limestone-granodiorite contacts and associated distal retrograde zones. Ten prospect-scale exploration targets have been identified hosting precious and base metal mineralization with associated sulfides. Where exposed, skarn mineralization ranges in thickness from 10 to 50 meters. Channel sample sections across recently discovered mineralized skarn bodies returned the following significant intervals:
69 meters of 2.1 g/t gold, 8 g/t silver and 2.0% zinc.
24 meters of 0.31 g/t gold, 150 g/t silver, 1.7% lead and 0.6% zinc.
32 meters of 0.42 g/t gold, 72 g/t silver and 0.9% copper.
13 meters of 0.63 g/t gold, 114 g/t silver, 1.9% lead and 3.3% zinc.
The multiple mineralized skarn occurrences, excellent grades and district scale potential make San Ramon a very attractive exploration focus near the Ranchito site.
For the past several years Chesapeake has developed an extensive network and proprietary database in western Mexico. Apart from the focus on the Company's flagship Metates project, Chesapeake will continue to seek grassroots exploration prospects and/or distressed opportunities. P. Randy Reifel, President, commented, "We are excited about advancing Metates towards full feasibility and at the same time generating a pipeline of high quality projects near Metates. We look forward to prioritizing future drill programs based on the results of this regional scale work."
With $38 million in cash and cash equivalents, Chesapeake is well financed to complete the FS through to commencement of the permitting process as well as to support planned exploration activities.
ALS Global was the analytical laboratory used for the samples included in this release. Sample preparation was performed in Hermosillo and Zacatecas, Mexico with analyses in Vancouver, Canada.
Gary Parkison, CPG, Chesapeake Vice President Development and a Qualified Person as defined by NI43-101, has reviewed the technical information presented in this release in regards to the Metates project. Alberto Galicia, P. Geo, Exploration Manager for Chesapeake and a Qualified Person as defined by NI43-101, has reviewed the technical information in this release in regards to the exploration prospects.
For more information on Chesapeake and its Metates Project, please visit our website at chesapeakegold.com.
CHESAPEAKE GOLD CORP
P. Randy Reifel, President