Grassy Mountain Gold Project
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, 462 unpatented lode claims, 9 mill site claims, 6 associated placer claims, and a lease for land surface and surface/mineral rights, all totaling approximately 8,200 acres. The local terrain is gentle to moderate, with elevations ranging from 3300 to 4,300 ft. above mean sea level. Paramount owns 100% of the private land on which the gold deposit sits and controls all mining claims within the 8,200 acres land package.
Following the acquisition of Calico Resources in 2016, Paramount has been focused on advancing the high-grade Grassy Mountain project towards production. Post delivering a robust Pre-Feasibility Study (“PFS”) in 2018, the Company recently completed a Feasibility Study (“FS”) on Grassy while continuing to advance the project through county, state, and Federal permitting.
On October 29, 2020, Paramount filed the NI-43-101 Technical Report on the Feasibility Study for the proposed high-grade, underground mining operation at Grassy Mountain. The base case scenario gold and silver prices used in the FS were $1,472 and $16.64 respectively. The highlights of the study are as follows:
• Initial CapEx of $97.5 million, $10.1M of estimated contingencies, $25.6M of sustaining CapEx and $6.3M closure costs for a 750 tpd mine and milling operation;
• Annual production of approximately 47,000 ounces of Au and 55,000 ounces of Ag over an initial 8-year mine life with a 3.1 year after-tax payback period;
• P&P reserves containing 390,000 ounces of Au and 425,000 ounces of silver;
• Average mill head grade of approximately 6.5g/T;
• Life of mine cash costs of $584 and AISC of $672 per ounce of gold;
• Total after-tax free cash flow of $165M; and
• After tax IRR of 26% and NPV (5%) of $123 million at the base case metal prices.
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 – COUNTY LEVEL
In mid-2019, Paramount announced that it had received 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 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 the Company and exemplifies the level of commitment and support from the local communities as Paramount continues in its quest to advance Grassy Mountain towards construction.
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 – STATE LEVEL
The completion of the PFS in May 2018 was an integral component in completing the permit approval process. Throughout 2018 and 2019, the team worked diligently to complete all of the baseline data reports (“BDR”) of which a majority have been accepted as complete and were included within the Consolidated Permit Application (“CPA”) submitted to the DOGAMI in November 2019.
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 approvedthe 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 have provided Paramount a list of supplemental information and recommendations required to submit a modified CPA. Paramount is currently working diligently to complete the modified CPA which will trigger the 225 day maximum permit evaluation process, upon which draft permits are issued.
PLAN OF OPERATION / ENVIRONMENTAL IMPACT STATEMENT – FEDERAL LEVEL
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.
Paramount has received initial comments from the BLM’s review of the PoO submitted by Paramount in early 2020. The Company is in the process of addressing the comments received which will be included in an amended POO that it will submit 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 9,530 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 Feasibility Study.
These targets include:
• North Spur is located 500 ft. north of Grassy and consists of silicified structures in an area surrounded by low grade gold which was identified in historic shallow drilling. None of the drilling in this area penetrated these silicified structures;
• Dennis Folley is located about two miles north of Grassy. To date, there has been no drilling completed in this area. However, surface mapping and sampling identified strong silicified outcrops with several geochemistry anomalies that are expected to represent the surface expression of a mineralized system below; and
• Wally/Wood is located approximately one mile north-northwest of the main deposit. Sinter has been seen on surface and previous shallow drilling has intersected up to 90 ft. grading 0.025 opt gold (0.71 g/t). In addition, this area has a well-defined resistivity anomaly which is similar to the anomaly identified at the Grassy deposit.
• Crabgrass is located 2.4 km southwest of the Grassy deposit and is host to a historic non NI 43-101 compliant resource estimate of 0.6 million tonnes grading 1.35 g/t Au containing 24,473 oz Au; and
• Bluegrass is another high priority target as previous shallow drilling has had positive results including 24 meters of 1.1 g/t Au.
Paramount has not set a time frame to drill test the aforementioned targets as it is currently focusing its resources on the submission of the State and Federal permits, and the completion of an NI 43-101 Feasibility Study.
Cautionary Note to U.S. Investors Concerning Estimates of Indicated, Inferred Resources and Reserves
This web site uses the terms “measured and indicated resources”, “inferred resources” and “proven and probable reserves”. We advise U.S. investors that while these terms are defined in, and permitted by, Canadian regulations, these terms are not defined terms under SEC Industry Guide 7 and not normally permitted to be used in reports and registration statements filed with the SEC. “Inferred resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of a feasibility study or pre-feasibility studies, except in rare cases. The SEC normally only permits issuers to report mineralization that does not constitute SEC Industry Guide 7 compliant “reserves”, as in-place tonnage and grade without reference to unit measures. U.S. investors are cautioned not to assume that any part or all of mineral deposits in this category will ever be converted into reserves. U.S. investors are cautioned not to assume that any part or all of an inferred resource exists or is economically or legally mineable. Under SEC Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.