FAL L 2 0 1 6
TSX- V: G X S • FWB : G 5M • O T C MKT S : GX S FF • GO L D S O U RC E M I N E S. CO M
Mine construction at our
Phase 1 Eagle Mountain
gold project in Guyana,
South America is complete.
Mine Production and Mine
Optimization on going.
Goldsource Mines Inc. (the “Company”
or “Goldsource”) is a Canadian resource
company that is progressing development
of its advanced-stage, 100%-owned Eagle
Mountain gold project.. Commercial
Production reached in June 2016.
Optimization of processing plant, “Proofof-Concept” efforts on going. Production
plans for Phase I are based on a Preliminary
Economic Assessment (“PEA”) (effective
date June 15, 2014). Phase I calls for
a 1,000 tonne per day open pit-gravity
plant with post-commissioning and ramp
up cash operating costs of US$500 to
US$600 per ounce of gold over its mine
life. Proceeds from the Company’s 2014
private placement of $7 million have been
used to fund all development and capital
costs for Phase I mine and processing
plant construction for the Company’s Eagle
Mountain Gold Project. Eagle Mountain
Gold Project is located in Guyana, South
America, a mining-friendly, English-speaking
jurisdiction with stable democracy based on
British law.
Goldsource is led by an experienced
management team, proven in making
international exploration discoveries,
financing, and achieving construction on
time and budget.
COMMISSIONING PHASE STARTED
PROJECT CONSTRUCTION
After completing a $7 million non-brokered private placement in December 2014,
Goldsource initiated Phase I mine and processing plant construction for the Company’s
Eagle Mountain Gold Project in February 2015.
In January 2016, the Company announced that Phase I construction was complete with
commissioning of the operation underway. Production plans for Phase I are based on the
PEA dated September 12, 2014 and filed September 16, 2014 on SEDAR at www.sedar.
com. Phase I calls for a 1,000 tonne per day open pit-gravity plant with post-commissioning
and ramp up cash operating costs of US$500 to US$600 per ounce of gold.
Yannis Tsitos, President, stated, “We are very pleased with the progress to date at the
Eagle Mountain project. With the start of commissioning, Goldsource begins the exciting
process of transitioning into a new junior gold producer. The next several months
of production ramp-up are considered the proof-of-concept period to demonstrate
that operational and cost parameters outlined in the PEA are achievable. This will be
an important milestone for the company. Thanks to our dedicated and experienced
construction team and management in both Guyana and Canada, we succeeded in
completing the mine construction phase with a stellar safety record. The phase one
capital cost for construction was under budget at less than US$5 million compared to
the estimated PEA budget of US$5.9 million.”
PRELIMINARY ECONOMIC ASSESSMENT (EFFECTIVE JUNE 15, 2014)
In July 2014, Goldsource announced the summary results of its PEA for the nearsurface oxide resources (“saprolite”) at its Eagle Mountain Gold Project, approximately
230 kilometres southwest of the Georgetown, Guyana. Conceptually, the PEA results
suggest that the project has low capital and operating costs, minimized technical risk
and a short development timeline. The NI 43-101 compliant PEA was prepared on behalf
of Goldsource by A.C.A. Howe International Limited (“ACA Howe”) of Toronto, Canada.
July 2014 Updated Eagle Mountain Resource Estimate (Cut-off of 0.5 g/t Au)
Category
Material
Tonnes
Au Grade
(g/tonne)
Contained
Ounces Au
Used in
PEA
Indicated
Saprolite
1,590,000
1.45
74,000
Yes
Fresh Rock
2,331,000
1.52
114,000
No
Saprolite
7,203,000
1.32
306,000
Yes
Fresh Rock
13,433,000
1.13
486,000
No
Inferred*
Eagle Mountain (2012) and Goldsource (2014) Mineral Resource (0.5 g/t cut-off) - Technical Report Mineral
Resource Update, dated November 21, 2012 and PEA, July 31 2014 by A.C.A. Howe International Limited.
TSX -V: GXS | FWB: G 5 M • G O LD S O URCE M INE S. COM
FALCON Gravity Concentrators
being assembled on site
PRELIMINARY ECONOMIC
ASSESSMENT HIGHLIGHTS
The PEA incorporates a gold price of $1,250 /oz
Au. Estimate includes:
Pre-tax Internal Rate of Return (“IRR”) of 84%
and after-tax IRR of 63%.
• Cash operating costs, exclusive of sustaining
capital, for saprolite mine life averages $480
per ounce gold including a 15% contingency.
• Total capital costs including all proposed
expansions (Phase II, III & IV expansions)
and sustaining capital are estimated at
$24.2 million.
• Phase I, pre-production capital costs of $5.9
million including a 15% contingency.
• Conceptually, the first four years of gold
production would be 5,600, 14,400, 21,600
and 28,800 ounces gold, respectively.
• Life of mine production of estimated 168,700
ounces gold from gravity-only processing at
estimated 60% recovery.
• Inventory of 161,900 oz Au in settlement
ponds from gravity-only processing rejects for
potential future reprocessing using standard
technologies.
• Not considered in the PEA are the in-situ
“fresh-rock” resources of Indicated 2,331,000
tonnes @ 1.52 g/tonne Au containing 114,000
oz and Inferred 13,433,000 tonnes @ 1.13 g/
tonne, containing 486,000 oz (both at 0.5 g/t
Au cut-off).
•
The Company cautions that the PEA is preliminary in nature in
that it is based largely on Inferred Mineral Resources which are
considered too speculative geologically to have the economic
considerations applied to them that would enable them to be
characterized as mineral reserves, and there is no certainty that
the PEA will be realized. Mineral resources that are not mineral
reserves do not have demonstrated economic viability. The
summary results of the PEA were previously announced in the
Company’s news release dated July 31, 2014 and there are no
material differences in the Mineral Resources or PEA results
between the Report and the news release. In September 2014,
Goldsource filed a PEA report titled “Preliminary Economic
Assessment of the Eagle Mountain Saprolite Gold Project, Guyana,”
dated September 12, 2014 with an effective date of June 15, 2014.
The Report was completed by ACA Howe and can be found under
the Company’s profile on SEDAR at www.sedar.com.
EAGLE MOUNTAIN PROJECT
Five-Year Strategy
Management has a well-defined strategy to scale
gold production Eagle Mountain:
•
Part of Scrubber
Processing Plant
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The Eagle Mountain mining and processing schedules
are based on a phased-approach model with four phases
proposed over four years. Phase I mining rates would be
1,000 tonnes per day (one 12-hour shift, 7-days per week)
in year one ramping up to approximately 3,000 to 4,000
tonnes per day by year four. Conventional open cut mining of
soft weathered rock (gold mineralized saprolite) is proposed
using a team of excavators, bulldozers and wheel-loaders to
excavate and separate materials within the open cut with
downhill gravity transport by slurry to the processing facility.
The stripping ratio is low and estimated at an average of
0.9:1 (waste:ore) over mine life. No blasting or truck hauling
is required for mineralized saprolite.
EAGLE MOUNTAIN FULLY PERMITTED FOR
MINING ACTIVITIES
In August 2014, a Medium Scale Mining Permit was granted
to Kilroy Mining Inc. for operations on a 250 hectare portion
of Goldsource’s Eagle Mountain gold deposit, located within
the approximate 5,050 hectare Eagle Mountain prospecting
license. The Permit grants permission to mine gold,
diamonds, precious metals and precious minerals within
the Permit area. The Eagle Mountain prospecting license is
held by Goldsource’s 100%-owned subsidiary in Guyana,
Stronghold Guyana Inc. (“Stronghold”). As a medium scale
mining permit is required under Guyana law to be held by a
Guyanese national, Stronghold has entered into agreements
with Kilroy, a private arm’s length Guyanese company
pursuant to which Stronghold and Kilroy will jointly operate
the Property. Kilroy is the holder of the Permit and has
granted to Stronghold exclusive rights to conduct mining
operations on the Property including any additional areas
acquired by Kilroy. Stronghold will fund all expenditures on
the Property and receive 100% of all revenues, subject to
applicable government royalties and a 2% net smelter return
royalty to Kilroy as compensation for its participation.
With the current resource covering only a small portion of Eagle
Mountain – 250 hectares inside the 5,050 hectare property –
there is excellent potential for expansion. The deposit remains
open in three lateral directions and at depth, showing strong
mineralization along its edges.
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Become a low cost gold producer in the Guyana Belt with significant
free cash flow
Use cash flow to expand production capacity
from 1,000 to 4,000 tpd
Assess potential to treat gravity tailings inventory to increase recovery
and production
Acquire similar projects within the Guyana Belt to apply the same
development model
Support increased local employment and community benefits
Transition from medium scale to large scale mining license.
Location & Infrastructure
The Eagle Mountain gold project is located approximately 200 km
southwest of Guyana’s capital, Georgetown, and 45 km from the historic
Omai Gold Mine, which profitably produced an estimated four million
ounces of gold at an average grade of approximately 1.4 g/t, from 199
to 2005. Historical production from the general Madhia area is estimated
at over one million ounces of gold from alluvial and eluvial sources.
A number of successful gold mining operations are currently underway
in Guyana.
Goldsource has excellent access and infrastructure. The existing road to
the property has been rehabilitated and a major road to Georgetown is
just 10 km away. A small airport at Madhia Township is within 8 km of
Eagle Mountain and waterways are 30 km from the property. Company
has built a helipad on site.
Strategic Business Combination Unearths Eagle
Mountain’s Potential
In February 2014, Goldsource completed a business combination
agreement with Eagle Mountain Gold Corp. (TSX-V:Z), now a wholly
owned subsidiary of Goldsource.
The strategic amalgamation has created a low-cost, quick to free cash
flow consolidation vehicle with significant internally financeable growth,
built upon a high-quality gold project with well-defined resources in
mining-friendly Guyana. The new Goldsource boasts a leadership team
with extensive management experience in low-cost execution and staged
development in the Americas.
Key GXS Shareholders
Management & Board of Directors
16%
Donald Smith Value Fund (NY, USA)
16%
Omai Gold Mines Ltd., a 95% owned subsidiary of IAMGOLD Corporation
5%
570 Granville Street, Suite 501
Vancouver, BC V6C 3P1
Tel: +1 604-694-1760
Toll Free: 1-866-691-1760
[email protected]
GOLDSOURCEMINES.COM
Media Inquiries | Primoris Group Inc
Tel: +1 (416) 489-0092
Toll Free (Nth America): 1-866-437-9552
TSX-V: GXS
FWB: G5M
OTCMKTS: GXSFF
CAPITALIZATION STRUCTURE
Cash on hand
As of Nov 8, 2016
CDN$.425 M
Market Capitalization
C$39.2 M
SHARE STRUCTURE
As of Nov 8, 2016
Shares issued & outstanding
Options
Warrants
Fully diluted
140,068,336
7,869,735
30,118,769
178,056,840
INVESTMENT HIGHLIGHTS
Goldsource is led by an experienced management team, proven in making
exploration discoveries and achieving construction on time and budget. Goldsource
shares currently trade on the TSX-Vunder the symbol GXS, in Frankfurt as G5M
and in the US as GXSFF.
MANAGEMENT | DIRECTORS
Ioannis (Yannis) Tsitos - M.Sc.,
President & Director
N. Eric Fier - CPG, P.Eng., COO
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Advanced gold project in mining-friendly jurisdiction.
Existing NI 43-101 compliant resource (November 21, 2012): 188,000
indicated ounces of gold and 792,000 inferred ounces of gold.
Experienced management team to move the project forward; focused on:
-- Fast tracking to become a gold producer in QI 2016 and start
generating free cash flow.
-- Redeploying capital to accelerate organic growth and grow through
regional acquisition in the Guyana Belt.
Construction completed under PEA budget. Optimization of the operations
underway.
Currently in commercial production pouring gold.
Compelling economics (after-tax IRR 63%).
Low production cost over mine life (US$480 /oz, excluding sustaining cash
costs; 15% contingency).
Low opex over mine life (US$630 /oz all-in sustaining cash costs, incl. CDN
overhead and royalties).
Low development capex (US$5.9 million pre-production – US$24.2 million all
expansion phases).
Low technical risk - optimized development scenario designed for the deposit.
Short timeline to free cash flow; internally financeable organic growth.
Strong gold grades starting at surface, suitable for lower-cost operations.
Deposit is close to existing infrastructure.
Medium Scale Mining Permit granted. Project fully permitted for mining
activities and ready for construction financing, and subsequent
Phase I development.
Excellent potential for increased saprolite resources and mine life.
ABOUT GUYANA
Guyana is one of the most mining friendly countries in the world. The
only state in South America with English as its official language, it has
a consistently stable economy and political climate. Guyana also has a
long history of successful foreign investment in its mining sector, which is
supported and protected by British-based law and robust mining laws.
Nicholas Campbell - CFO
Bernard Poznanski - Corporate Secretary
Graham C. Thody - Chairman,
Independent Director
Jonathan Dubois-Phillips - Independent Director
Steven B. Simpson - Independent Director
CAUTIONARY STATEMENT AND DISCLAIMER: This
presentation contains “forward-looking statements”
within the meaning of applicable Canadian securities
legislation. Such forward-looking statements herein
include but are not limited to: strategic plans and
expectations in the PEA for the Eagle Mountain
Property; metal price assumptions, cash flow forecasts,
internal rate of return, projected capital
and operating costs; life of mine; and production
rates. Such forward-looking statements are based
on a number of assumptions, including but not
limited to: availability to realize the PEA; accuracy
of the interpretations and assumptions used in
calculating inferred mineral resource estimates;
and timing and amount of capital expenditures
and future operating costs. The actual results
could differ materially from those anticipated in
these forward-looking statements as a result of the
risk factors set forth below and elsewhere in this
presentation: the availability of funds; results of
exploration activities and development of mineral
properties; the uncertainties of resource estimations; the
timing and content of work programs; project
cost overruns or unanticipated costs and expenses; and
general market and industry conditions. The
assumptions used in the preparation of such
statements, although considered reasonable at the time
of preparation, may prove to be imprecise and,
as such, readers are cautioned not to place undue
reliance on these forward-looking statements. The
Company undertakes no obligation to update or
revise any forward-looking statements included
in this presentation, except as otherwise required
by applicable law. No securities commission or
regulatory authority has reviewed the accuracy or
adequacy of the information presented.
QUALIFIED PERSON: Technical information contained in
this presentation has been prepared by or under
the supervision of N. Eric Fier, CPG, P.Eng, and Chief
Operating Officer for Goldsource, who is a ‘Qualified
Person’ for the purpose of NI 43-101.