Cisneros is 80 km northeast from Medellin, some two hours by paved road and close to infrastructure including high voltage power lines. The property hosts a structurally controlled mesothermal lode gold system. Drilling began in October 2009 and to date the company has drilled over 45,000 metres as it worked to produce an initial mineral resource estimate in August 2013 and updated mineral resource estimate and Preliminary Economic Assessement in 2018 that focused on the Guayabito and Guaico deposits.

For additional details on the Updated Mineral Resource and Preliminary Economic Assessment please refer to the news release of 20th February, 2018

• The project is located in the central portion of the department of Antioquia, roughly 55 km northeast of Medellin
• Comprised of 10 concessions totalling 5,630 hectares
• Structurally controlled, mesothermal, high grade vein deposits. Ore mineralization of interest is predominantly gold with associated silver, copper and molybdenum
• Potential economic deposits in the project area include precious metal veins and stockworks, gold copper porphyries, mesothermal gold and metals
• Extensive history of high grade artisanal gold mining on the project area
• Exploration projects in the vicinity include AngloGold Ashanti/ B2Gold (Gramalote Project), Colombian Mines/Arturus Ventures (Nus Project), Sol Vista (Guatalupe Project), Red Eagle (Pavo Real Project) and CuOro (Santa Elena Project)
• Excellent access, infrastructure and security in the area
• Strong local support and involvement in the project
• Environmental Base Line Study, Regional and Local Socio-economic
• Studies and preliminary metallurgical testing have been completed
• Deposits are comparable to the Red Lake District in Ontario, Canada; Bralorne in British Colombia, Canada and Parcoy in Peru

In February 2018, Antioquia Gold published a NI 43-101 compliant Preliminary Economic Assessment and updated mineral resource estimate for Cisneros prepared by Fernando Linares, MAusIMM of Lima, Peru.

The Report has an effective date of September 24, 2017 and the Corporation has filed the complete report on SEDAR.

PEA Highlights

• Updated Mineral Resources for the Cisneros Properties, above cut off grade, for all mineralized structures consists of 728,603 tonnes of Measured + Indicated Mineral Resources with an average grade of 5.389 g/t Au and 536,211 tonnes of Inferred Mineral Resources with an average grade of 6.345 g/t Au.
• Mine production is projected to start in 2Q, 2018. The Guaico and Guayabito vein areas are planned to be mined by the cut and fill method and the Nus structures by Long Open Stoping method. The mining rate is projected to produce an average of 15,000 t/month of mineralized material. The process plant has been designed to operate 347 days per year overall and treat 500 tonnes of mineral daily.
• Gold design average ore head grade is estimated to be 6.43 g/t Au
• An overall recovery of 90% has been anticipated.
• Life-of-mine (LoM) of 5.0 years.
• LoM gold production of 150,900 ounces gold recovered.
• The project has a pre-tax net present value (NPV) of US$23.71M and post-tax NPV of US$16.75 M using a 5% discount rate.
• The project has a pre-tax internal rate of return (IRR) of 24.0% and post-tax IRR of 18.7% using a 5% discount rate.
• The total preproduction and sustaining capital cost estimated for the Cisneros project is US$75.5 M and includes expenses from 2014 to March 2018. The Capital cost consists of pre-production capital cost of US$61.5 M, sustaining capital cost of US$14.1 M and a contingency of 15% (US$7.8 M)
• Project payback is 2.6 years on a pre-tax basis.
• A mineralized stockpile of 19,402 tons will be maintained for the commissioning of the plant, as a result of the preparation of the stopes in the Guayabito and Guaico-Nus areas of the Cisneros Project.
• Mined ounces (in-situ) will increase from 28 koz in 2018 to 39 koz in 2019, and then decrease gradually for the remaining mine life.
• The Cisneros Project mine potential mill feed estimate was based on the updated mineral resources. A total of 516,351 tonnes at a grade of 5.44 g/t Au of measured and indicated resources and 268,412 tonnes at a grade of 6.812 g/t Au of inferred mineral resources were considered for the financial evaluation. The following assumptions were used as the criteria to estimate these economic mineral resources:
  • The potential mill feed economic Mineral Resources are inclusive in reported mineral resources.
    
  • Specific cut off was calculated for Guaico, Nus and Guayabito structures. A cut-off of 2.95 g/t Au for Guaico, 2.62 g/t Au for Guayabito and 1.66 g/t Au for Nus was estimated.
  • Metal price, production, selling cost and recovery were considered as the major factors in the calculation of cut off grade.
  • Gold price assumptions are no more than the average value for the last six months as indicated by the price fixes of the London Metal Exchange.
  • General and administration cost and sustaining cost were not considered in the cut off grade estimation.
  • Guayabito Sur structures and Papi veins were not included. These require more development that is economically not viable in comparison with current tonnage.
  • Mineral resources within 30 m of surface are not considered. A pillar of 9 m width along each level will be left behind. Both of these reduce the initial resources.
  • The potential economic mineral resource includes a historical mineral stockpile reported to contain 7,500 tonnes grading 5.1 g/t Au. The mineralized material was sourced from mine development up to September 30, 2017 on the Guaico and Nus mines.

Mineral Resource Estimate

The updated resource estimate incorporates results from 110 drill holes, including results of 14 new drill holes drilled in 2016-2017 and 1130 channels sampled during 2016 and 2017. The mineralized structures, updated with new data are: Nus, Guaico, Footwall-03, Footwall-05, Vega and La Manuela-01. Resources for Guayabito North and Papi, remain unaltered from the 2013 mineral resource estimate.

Updated mineral resources for the Cisneros Properties, above cut-off grade, for all mineralized structures consist of 760,731 tonnes of measured and indicated resources with an average grade of 5.233 g/t Au and 536,211 t of Inferred Mineral Resources with an average grade of 6.345 g/t Au.

Total Measured Resource Estimates for Cisneros Deposits

Total Indicated Resource Estimates for Cisneros Deposits

Total Measured + Indicated Resource Estimates for Cisneros Project

Total Inferred Resource Estimates for Cisneros Deposits

 Underground Mining

The base case scenario for the Project includes mining of measured, indicated, and inferred mineral resources with underground Cut and Fill ( C&F ) and Longhole Open Stoping mining methods.

Preliminary assumptions for Cut and Fill Mining method is that it is a selective mining process. The dilution for veins lower than 0.8 metres in width were not considered as part of the block modelling process for veins on Cisneros projects. Block model are diluted to 0.8 m and no additional dilutions were considered for the mine plan in these preliminary evaluations.

The mining recovery factor is depended on results of rock mechanics studies. For every 100 vertical metres it is suggested to leave a nine metre horizontal pillar which will be dependent on the vertical extent of each vein’s geometry. The following table shows the dilution and mining recovery factor for C&F mining based on specific calculations that were considered for dilution and mining recovery factors during mine plan scheduling.

Mining Recovery Factor for Cut and Fill mining

A mining recovery of 92% is assumed for longhole open stoping Mining. The mining recovery factor is depended on rock mechanics recommendations. Again it is suggested to leave a nine metre horizontal pillar for every 100 vertical metres.
Process Plant

The objective of the metallurgical process is to obtain gravimetric concentrates and flotation concentrates in a plant with a capacity of 500 tonnes per day (tpd). The plant will be composed of a single production line in two conventional processes namely gravity followed by flotation to obtain sulphide concentrates containing gold.

The process plant has been designed to operate 347 days per year and treat 500 tonnes of material daily. The average head grade is estimated to be 6.43 g/t Au and an overall recovery of 90% is anticipated. Mineable resources have been estimated at 784,763 tonnes with a life-of-mine ( LoM ) of five years. A stockpile of 19,402 tons, resulting from development of stopes in the Guayabito and Guaico-Nus areas will be maintained for the commissioning of the plant.

The general flow sheet of the plant process consists of four sections to produce gold concentrates. These include primary and secondary crushing, grinding and gravity, flotation and concentrate filtration.

Capital and Operating Costs

The total preproduction and sustaining capital cost estimated for the Cisneros project is US$ 75.5 M and includes expenses incurred from 2014 to March 2018. Preproduction capital cost is US$ 61.5 M and sustaining capital cost is US$14.1 M.  Capital costs include a contingency of 15% (US$ 7.8 M).

The capital cost profile for the Cisneros Project includes pre-production and sustaining capital. Sustaining capital includes expenses incurred during the expected production period of April 2018 to 2022. All capital costs were estimated for a 3,000 tonnes per month mill capacity.

Economic Analysis and Cash Flow Results

A pre-tax and post-tax cash flow model was developed for the Cisneros project. The financial evaluation presents results for Net Present Value (“NPV”), Internal Rate of Return (IRR) and payback period. All the evaluations include only CAPEX and Sustaining capex from 2017 to LoM and a contingency of 15%. Capital expenditures prior to 2017 of US$13.2 M are included as indicated in the audited financial statements of Antioquia for 31-Dec-2016. The results show that the project has a pre-tax IRR of 24.0% and pre-tax NPV of $23.7M and post-tax IRR of 18.7% and post-tax NPV of $16.7 M.

Cisneros Gold Project economic model summary

Cash costs of production are estimated at US$697 /oz with all in costs including closure and capital costs estimated at US$1,146 /oz

Operating Cost Analysis

Sensitivity Analysis

The NPV is most sensitive to metallurgical recovery, gold price and gold grade and less sensitive to OPEX and CAPEX.

Cisneros Project Post-Tax @ 5% NPV Sensitivity Analysis

Subsequent Drilling after PEA Effective Date

During the preparation of the PEA an exploration campaign was carried out with diamond drilling from surface. A total of 2,912.00 meters were drilled in the areas of Guayabito, Nus and Guaico. 2,344.20 metres of drilling were included and reported in the PEA and 567.80 meters were not reported in the PEA as results were obtained after the effective date of the PEA.  AGD’s management believes the results of these drillholes will not materially impact the PEA results.

Drill Hole Highlights

Drill Hole Specifications