The resource estimate was derived from applying AuEq cut-off grades to the block model and reporting the resulting tonnes and grade for potentially mineable areas. The volume of the existing underground workings was removed from the resource estimate. The AuEq calculation ratio is derived from the following:
Au Price = US$955/oz
Au Recovery = 95 %
Ag Price = US$14.77/oz
Ag Recovery = 85 %
Therefore the Au / Ag ratio is ($955 / $14.77) / (85 % / 95 %) = 72.3:1
The following calculations based on similar open pit and underground operations to that anticipated at MacLellan demonstrate the rationale supporting the AuEq cut-off grade that determines the open pit potentially economic portion of the mineralized domains.
Underground Au Cut-Off Grade Calculation (Dollars are CDN unless stated otherwise).
Au Price
US$955/oz (24 month approx trailing average price Apr 30/10)
US/CDN Exchange rate
$0.95
Mining Cost
$57/t mined
Process Cost (3,000 tpd)
$15.00/t milled
General/Administration
$5.00/t mined
Therefore, the AuEq cut-off grade for the underground portion of the resource estimate is calculated as follows:
Open Pit Au Cut-Off Grade Calculation (Dollars are CDN unless stated otherwise).
Au Price
US$955/oz (24 month approx trailing average price Apr 30/10)
US/CDN Exchange rate
$0.95
Process Cost (3,000 tpd)
$15.00/t milled
General/Administration
$5.00/t mined
Therefore, the AuEq cut-off grade for the open pit portion of the resource estimate is calculated as follows:
Operating costs per ore tonne = ($15 + $5) = $20/t
[($20) / [($955/oz /0.95Au x 95% Recovery)/31.1035] = 0.65g/t
The open pit resource model was further investigated with a Whittle pit optimization to ensure a reasonable stripping ratio was applied and a reasonable assumption of potential economic extraction could be made. The following parameters were utilized in the pit optimizations:
Au Price
US$955/oz (24 month trailing average price Apr 30/10)
Ag Price
US$14.77/oz (24 month trailing average price Apr 30/10)
Au Recovery
95 %
Ag Recovery
85 %
Ore Mining Cost
$3.50/t mined
Waste Mining Cost
$2.75/t mined
Process Cost
$15/t processed
General/Administration
$5/t processed
Pit Slopes
50°
The above data were derived from similar open pit gold projects to MacLellan. Readers are referred to the optimized pit shell in Appendix VII.
The resulting resource estimate can be seen in the following tables.
Table 16.5: Open Pit Resource Estimate at 0.65 g/t AuEq Cut-Off Grade1,2,3,4,5,6
Table 16.7: Total Open Pit and Underground Resource Estimate1,2,3,4,5,6
Classification
Tonnes
Au (g/t)
Ag (g/t)
AuEq (g/t)
Au (oz)
Ag (oz)
AuEq (oz)
Measured
1,618,000
3.53
11.6
3.70
183,700
604,000
192,100
Indicated
3,696,000
3.61
22.7
3.92
428,900
2,697,000
466,100
Measured &
Indicated
5,314,000
3.59
19.3
3.85
612,600
3,301,000
658,200
Inferred
4,428,000
2.97
42.4
3.56
422,600
6,043,000
506,200
Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
The quantity and grade of reported Inferred Resources in this estimation are uncertain in nature and there has been insufficient exploration to define these inferred resources as an Indicated or Measured Mineral Resource and it is uncertain if further exploration will result in upgrading them to an Indicated or Measured Mineral Resource category.
The Mineral Resources were estimated using the CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council December 11, 2005.
The mined tonnage from previous operations was removed from the block model.
Process costs used were $15/t and G&A was $5/t. Open pit mining was $3.50/t for ore and $2.75/t for waste with underground mining at $57/t. Open pit slopes were 50°.
The mined tonnage from previous operations was removed from the block model.
The resource estimate open pit and underground sensitivity tables were derived by applying a series of increasing AuEq cut-offs to the domains that constrain the mineralization. These domains were subsequently used during the application of all cut-off grades within the sensitivity table.
Table 16.8: MacLellan Open Pit Portion Resource Estimate Sensitivity
As a test of the reasonableness of the resource estimate, the block model was queried at a 0.1 g/t AuEq cut off grade with blocks in all classifications summed and their grades weight averaged. This average is the average grade of all blocks within the mineralized domain. The values of the interpolated grades for the block model were compared to the length weighted capped average grades and average grade of composites of all samples from within the domain (Table 16.10).
Table 16.10: Comparison of Weighted Average Grade of Capped Assays and Composites with Total Block Model Average Grade
Category
Main Zones
Nisku Zones
Au (g/t)
Ag (g/t)
Au (g/t)
Ag (g/t)
Capped Assays
2.44
20
2.77
13.6
Composites
2.43
19.5
2.75
13.4
Block Model
2.15
19.1
2.53
12.3
The comparison above shows the average grade of all the gold and silver blocks in the constraining domains to be similar to the weighted average of all capped assays and composites used for grade estimation. In addition, a volumetric comparison was performed with the block model volume of the model versus the geometric calculated volume of the domain solids.
