Grassy Mountain Project
Vale, Oregon, USA
Overview and Location
The Grassy Mountain Gold Project (“Grassy”) is located in Malheur County, eastern Oregon, approximately 22 miles south of Vale, Oregon, and roughly 70 miles west of Boise, Idaho. The project site is situated in the rolling hills of the high desert region of the far western Snake River Plain and consists of 3 patented (private) lode claims where the deposit is located, 455 unpatented lode claims, and 9 mill site claims, and a lease for land surface and surface/mineral rights, all totaling approximately 8,280 acres. The local terrain is gentle to moderate, with elevations ranging from 3,300 to 4,300 ft. above mean sea level. Paramount owns 100% of the private land on which the gold deposit sits and control all mining claims within the 8,200 acres land package.
Since the acquisition of Calico Resources in 2016, the goal of the Paramount team was to advance the high grade, Grassy Mountain project towards production becoming Oregons first modern-day gold mine.
Paramount has improved the size and confidence level of the projects mineral resources, metallurgical recoveries and project economics. The project has received the County permit, and is progressing through State and Federal permitting.
In early October 2022, the Company filed an S-K 1300 Technical Report Summary on the Feasibility Study outlining a profitable small-footprint, high-grade underground mine which is progressing through state and federal permitting. The base case scenario gold and silver prices used in the FS were $1,750 and $22 respectively. The highlights of the study are as follows:
The highlights of the study are as follows:
• Initial 8-year mine life producing 362,000 ounces of gold and 425,000 ounces silver;
• Annual production of 47,000 ounces of gold and 55,000 ounces of silver;
• Mill head grade of 6.5 g/T gold and 9.6 g/T of silver;
• After-tax IRR of 22.5% and NPV5% of $114.1 million;
• Life of mine cash costs of $681 and AISC of $815 per ounce of gold;
• Initial CapEx of $136.2M, including $13.5M of estimated contingencies, $36.1M of sustaining CapEx and $12.4M closure costs for a 750 tpd mine and milling operation;
• Exceptional average gold and silver recoveries of 92.8% and 73.5 % respectively; and
• After-tax payback period of 3.3 years.
Permitting of Grassy Mountain
Paramount has continued to achieve permitting milestones at all levels of government. At the County level the Company has received its Conditional Use Permit; at the state level the Company received its permit to appropriate water, the first Oregon State agency permit received as part of the Consolidated Permitting process; and at the federal level, the Company has submitted its Plan of Operation with the Federal Bureau of Land Management.
Conditional Use Permit
In mid-2019, we announced the approval of the Conditional Use Permit (“CUP”) for the proposed Grassy Mountain underground mine from Malheur County. During a public meeting held in May 2019, the Malheur County Planning Commission (the “Planning Commission”) voted unanimously to approve the CUP and to recommend approval of a Sage Grouse Rule Permit to the Malheur County Court. The approval of the CUP is a major milestone for our Company and exemplifies the level of commitment and support from the local communities as we continue our quest to advance Grassy Mountain towards construction. The Planning Commission has granted us an extension of the CUP through May 2023.
As the permit name indicates, the county issued the CUP with conditions, which in the case of Grassy Mountain, are the following:
1. The applicant will subscribe to the Vale rangeland fire protection Association;
2. The applicant shall collaborate with the Malheur County sheriff’s office in regard to a security plan as well as law enforcement and emergency response plans;
3. Any road improvements necessary to serve Grassy Mountain must be constructed according to county design standards to the satisfaction of the County Road Master; and
4. The applicant shall obtain approval for its reclamation plan from Oregon Department of Geology and Mineral Industries (“DOGAMI”), prior to beginning mining operations. Unless otherwise prohibited by DOGAMI, the Applicant may conduct pre-construction and construction activities prior to obtaining approval for its reclamation plan.
Consolidated Permit Application
The completion of Technical Reporting has been an integral component in completing the permitting process of Grassy. The Paramount team has worked diligently to submit all baseline data reports (“BDR”), which were included within the initial Consolidated Permit Application (“CPA”) submitted to the DOGAMI in November 2019. In July 2022, Paramount received approval of two critical BDR’s, the Geochemistry and Groundwater reports which are the final two of twenty-two pre-approved BDR’s.
In January of 2020, Paramount was granted the water appropriation permit from the Oregon Water Resources Department (“OWRD”). This permit provides for a sufficient quantity of water for the proposed mining and processing operations throughout the mine life as detailed in the CPA.
Permitting success continued for Grassy with the OWRDs review of tailings data contained in the CPA. The OWRD approved the plans and specifications of the proposed tailings dam assigning the dam a low hazard risk rating, its lowest risk level. Additionally, the OWRD stated that the plans are construction ready from a safety perspective.
The DOGAMI and cooperating agencies completed their initial review of the CPA and had provided Paramount a list of supplemental information and recommendations required to submit a modified CPA. In a collaborative effort, Paramount worked with the State agencies to ensure a complete application. Once deemed complete, the State will direct the permitting agencies to write draft permits and will initiate the Environmental Assessment.
Plan Of Operation / Environmental Impact Statement
In February 2020, Paramount submitted an amended Plan of Operation (“PoO”) with the Federal Bureau of Land Management (“BLM”) to continue with the federal Environmental Impact Statement (“EIS”) in accordance with the previously filed PoO which Paramount filed in September 2017.
The Company reviewed and addressed comments from the BLM’s review of the PoO submitted by Paramount. These were addressed and included in an amended POO submitted to the BLM. Once the BLM accepts the POO as complete they will register a Notice of Intent with the Federal Register thereby triggering the initiation of the Environmental Impact Statement (“EIS”) which will be completed by HDR Inc. The EIS process is expected to take 12 months.
Post the review of historical data and the results of a helicopter mag and radiometric survey that Paramount conducted on its entire 8,200 acre claim area to map structures and magnetic anomalies, the company has identified several targets with the potential to add to the existing mineralized material inventory and to extend mine life thereby enhancing the already robust economics identified in the September 2022 Feasibility Study.
These targets include:
Currently, the Company has not set a time frame to drill test the exploration targets as we are focusing our resources on the submission of the State and Federal permits.
Cautionary Note to U.S. Investors
Paramount is subject to the reporting requirements of the Securities Exchange Act of 1934 and this filing and other U.S. reporting requirements are governed by Subpart 1300 of Regulation S-K promulgated by the SEC. Additionally, Paramount is subject to certain reporting requirements under applicable Canadian securities laws with respect to our material mineral properties under National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101) We caution investors that certain terms used under Canadian reporting requirements and definitions of NI 43-101 to describe mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Therefore, investors are cautioned not to assume that all or any part of the mineralized material contained at any of our material projects will ever be converted to Subpart 1300 of Regulation S-K compliant reserves.
Measured + Indicated
Measured + Indicated
Mineral Resources potentially amenable to open pit mining methods are reported using a gold price of US$1,750/oz, a silver price of US$22/oz, a throughput rate of 5,000 tons/day, assumed metallurgical recoveries of 80% for Au and 60% for Ag, mining costs of US$2.50/ton mined, processing costs of US$13.00/ton processed, general and administrative costs of $2.22/ton processed, and refining costs of $5.00/oz Au and $0.50/oz Ag produced. Mineral Resources potentially amenable to underground mining methods are reported using a gold price of US$1,750/oz, a silver price of US$22/oz, a throughput rate of 5,000 tons/day, assumed metallurgical recoveries of 90% gold equivalent, mining costs of US$90/ton mined, processing costs of US$30/ton processed, general and administrative costs of $15.00/ton processed, and refining costs of $5.00/oz gold equivalent produced.
The in-pit resources were then tabulated by the application of a gold-equivalent cut-off of 0.011 opt (0.38 g/T). The gold-equivalent grades were determined using a gold to silver ratio of a 106 to 1.
Processing is assumed to consist of crushing and milling followed by Carbon in Leach (“CIL”) recovery resulting in the production of a DORE bar on site.
An underground mining scenario is assumed using mechanized cut-and-fill methods, which following ramp-up, is expected to produce 1,300–1,400 tons/day, four days a week. This mining rate will provide sufficient material for the 750 ton/day mill and processing plant to operate at full capacity for seven days a week.
The Proven and Probable Mineral Reserves for Grassy Mountain were estimated by first calculating an economic cut-off grade of 0.1 AuEq oz/t (3.43 g/T) for mining underground stopes, then using the cut-off grade to design stope shapes centered on Measured and Indicated Mineral Resource blocks with gold grades greater than or equal to the cut-off grade. All Inferred material was considered to be waste with no value or metal content. Internal and external dilution and mining recoveries (ore loss) were estimated and applied as modifying factors based on the total tonnage of material inside of the final designs.
Companies and individuals involved in exploration prior to Paramount’s Project interest include prospectors Richard “Dick” Sherry and Eugene “Skip” Yates (1986), Atlas Precious Metals (Atlas) (1986 to 1992), Golden Predator Mines U.S. Inc., Newmont Exploration Ltd (Newmont) (1992-1996), Tombstone Exploration Company Ltd (Tombstone) (1998), Seabridge, and Calico (2000 to 2015). Work completed included reconnaissance, geological mapping, geochemical sampling (soil, float, rock chip), geophysical surveys (airborne magnetic and radiometric, ground-based gravity, gradient array (IP/resistivity) controlled-source audio-frequency magnetotelluric (CSAMT)), core and reverse circulation (RC) drilling, and Mineral Resource estimation. This work defined theGrassy Mountain deposit, on which a feasibility study was completed in 1990 by Atlas assuming a combined heap leach/milling
operation and open pit mining methods.
Work Completed by Paramount
Since acquiring its Project interest in 2016, Paramount has conducted an exploration review of the available Project data, helicopter-borne aeromagnetic and radiometric and CSAMT ground geophysical surveys, drilling, Mineral Resource and Mineral Reserve estimation, baseline environmental studies, and mining studies.
In addition to the above exploration programs, Paramount has progressed the Grassy Mountain Project through several stages of the state and federal permitting process. The Project will require county level, state level and federal permits to construct, operate and close a mining operation.
In November 2019, Paramount submitted its Consolidated Permit Application (“CPA”) to DOGAMI to enable the Company to build
and operate its proposed, high grade underground gold mine located in Malheur County. The Application was reviewed by the DOGAMI and cooperating agencies for completeness. As part of this process, the permitting agencies provided Paramount with a list of supplemental information and recommendations required to submit a modified CPA. Paramount, the DOGAMI and the permitting agencies continued to work together to discuss the additional information requested, ensuring the submission of a complete modified CPA which will trigger the 225 day maximum permit evaluation process, upon which draft permits are issued.
In February 2020, the Company submitted a revised Plan of Operation (the ”PoO”) to the BLM outlining the Company’s plans to build and operate the proposed Grassy Mountain underground gold mine. The BLM has reviewed the PoO for completeness and has provided the Company with comments to address. The BLM has previously reviewed 19 of the baseline data reports (“BDRs”) and their requests for clarifications have all been addressed. The BLM will register a Notice of Intent (the ”Notice”) in the Federal Register once the application is deemed complete. The Notice initiates the Environmental Impact Statement (“EIS”) process under the
National Environmental Policy Act.
In December of 2021, Paramount submitted a modified CPA with the State of Oregon and submitted a modified PoO to the BLM. Both modified applications incorporated additional information required by the regulators and mine design optimizations that were a result of feedback provided in Paramount’s initial application.
Grassy Mountain is the largest of twelve recognized epithermal hot spring precious metal deposits of the Lake Owyhee volcanic field. The Lake Owyhee volcanic field occurs at the intersection of three tectonic provinces: the buried cratonic margin, the northern Basin and Range, and the Snake River Plain. During the mid-Miocene caldera volcanism occurred in the shallow crust throughout the region, predominately ash-flow sheets and rhyolite tuff cones. The resulting regional stratigraphic section is a thick sequence of mid-Miocene volcanic rocks and coeval-to-Pliocene age non-marine lacustrine, volcaniclastic, and fluvial sedimentary rocks.
Bedrock outcrops in the vicinity of the Grassy Mountain property are typically composed of olivine-rich basalt and siltstones, sandstones, and conglomerates of the late Miocene Grassy Mountain Formation. These rocks are locally covered with relatively thin, unconsolidated alluvial and colluvial deposits. Erosion-resistant basalts cap local topographic highs. Arkosic sandstones have been encountered at the surface and at depth, but have not been correlated across the project area, in part due to lateral discontinuity associated with sedimentary facies changes and structural offset.
The basal unit to the Grassy Mountain Formation is the Kern Basin Tuff, a non-welded, pumiceous, crystal tuff which displays cross beds and local surge structures. The Kern Basin Tuff ranges in thickness from 300 ft on the south bluffs of Grassy Mountain, to 1,500 ft in a drill hole beneath the Grassy Mountain Project area.
The Kern Basin Tuff is overlain by a series of fluvial, lacustrine, and tuffaceous sediments. Most of the sedimentary units in the project area are silicified and strongly indurated. These sedimentary units include granitic clast conglomerate, arkosic sandstone, fine grained sandstone, siltstone, and tuffaceous siltstone/mudstone. The sedimentary facies of the Grassy Mountain Formation reportedly range from 300 to over 1,000 ft thick, and provide the host rocks of the Grassy Mountain mineral resource.
Several siliceous terraces are interbedded with the silicified sediments of the Grassy Mountain Formation. Terrace construction was apparently episodic and intermittently inundated by fluvial/lacustrine sediments and ash, resulting in an interbedded sequence of siltstone, tuffaceous siltstone, sandstone, conglomerate, and sinter terrace deposits. Proximal deposits are angular, inhomogeneous, clast-supported breccias of sandstone, siltstone, and sinter with indistinct clast boundaries in a sulfidic mud-textured matrix.
Grassy Mountain is a prominent, 150 ft. high, silicified and iron-stained knob. Bedding is approximately horizontal at the hilltop, and dips at 10° to 25° to the north-northeast on the northern and eastern flanks of the hill. The bedding dip steepens to 30° to 40° on the west side of the hill due to drag folding in the footwall of the N20W striking Antelope Fault. The southwest slope of Grassy Mountain is covered by silicified arkose landslide debris.
Grassy Mountain is a horst block which has been raised 50 to 200 ft. in a region of complex block faulting and rotation. Faulting at Grassy Mountain is dominated by post-mineral N30W to N10E striking normal faults developed during Basin and Range extension. On the northeast side of the deposit, these faults progressively down-drop mineralization beneath post-mineral cover. These offsets are suggested by interpreted offsets of a prominent white sinter bed in drill holes as well as intersections with fault gouge. The N70E striking Grassy Mountain Fault shows minor vertical offset of only 10 to 40 ft.
The surface expression of the Grassy Mountain system is indicated by weak to moderately strong silicification and iron staining with scattered chalcedonic veins/veinlets. Approximate dimensions of the Grassy Mountain deposit are 1600 ft. long by 1000 ft. wide by 600 ft. thick. The deposit has a general N70 E elongation and a 15° bedding plane dip to the north-northeast as a result of faulting and fault block rotation. There is an envelope of lower grade mineralization at depths of 200 to 800 ft. which contains a higher-grade zone of mineralization between 500 and 750 ft. below the surface. The well-defined base of higher grade mineralization from about 700 to 750 ft. in depth suggests a strong pressure-temperature control on gold deposition. Sinters and breccias parallel the paleosurface present at the time of mineralization. Fractures created a stockwork pattern generally found below the sinter, though some vein extensions may extend to the surface. The stockwork is surrounded by silicified sediments.
Mineralized quartz-adularia stockwork and vein types include single, banded, colliform, brecciated, and calcite-pseudomorphed veins. Visible gold (0.5 mm) has been found within the stockwork portions of the boiling horizon. The gold mostly occurs as electrum along the fracture margins or within microscopic voids. A brassy color is imparted due to the high silver content. The average silver to gold ratio at Grassy Mountain is 2.5:1.
Silicification occurs both pervasively as silica flooding and as cross-cutting veins, veinlets and stockworks. The silicified envelope has plan dimensions of 3000 ft (N-S) by 2500 ft (E-W). Silicification is surrounded by barren, relatively unaltered, clay-rich (20-40% montmorillonite), tuffaceous siltstone and arkose with minor disseminated diagenetic pyrite. Many of the sinters occur as sheets instead of mounds, which suggests that they may be related to vents along faults rather than point sources. Potassic alteration occurs as adularia flooding with destruction of biotite. The adularia is extremely fine-grained and is identified microscopically or by cobaltinitrite staining. Sulfate phases identified by XRD include jarosite and alunite in several mineralized samples. Clast-supported breccias contain sub-rounded to sub-angular sand to boulder-sized clasts of silicified arkose and siltstone in a jarosite-sericite clay matrix.