Velocity Minerals’ Balkan gold project envisions staged open pit mining of satellite deposits and transportation to a central CIL processing plant at Khardzhali.  In addition, potential development and expansion of the operating Chala underground mine at the project may increase throughput to the CIL plant.

In February 2018 Velocity formed an Exploration and Mining Alliance, the cornerstone of the Balkan gold project, with Bulgarian operating partner Gorubso Kardzhali A.D. This alliance area covers all existing and future Gorubso and Velocity projects within an area of 10,400 km2 covering the prospective Eastern Rhodope Gold Mining District in southeast Bulgaria.

Through the Alliance, Velocity has exclusive access to the CIL gold processing plant and has negotiation options to earn a 70% interest in seven near-surface gold projects and a 50% interest in an operating underground gold mine.

In a part of this, Velocity Minerals has just announced the results of an independent PEA on its Rozino gold project.  The PEA provides a base case assessment of developing the project by open pit mining and gold recovery by a combination of on-site preconcentration in a flotation plant and further processing in the existing operating CIL plant located in Kardzhali, 85 km by road from Rozino.  Saleable gold doré will be produced at Kardzhali.  The PEA financial model returns an after-tax NPV5% of C$129 million and an after-tax IRR of 33.1%.

Rozino is located within the Tintyava prospecting license, an exploration property in which Velocity has an exclusive right to acquire a 70% interest by delivering the PEA report to the underlying property owner, Gorubso, in the coming weeks.

“We have achieved our goal of advancing Rozino from discovery and exploration drilling through to this positive economic assessment in just over one year.  On delivery of the PEA, the company will have earned its 70% interest in the project and will move forward towards a prefeasibility study in joint venture with our partner Gorubso,” commented Keith Henderson, Velocity’s President & CEO.  “We believe that there is significant potential for resource expansion at Rozino and additional exploration drilling is expected to be completed over the coming months in tandem with infill drilling of the existing mineral resource.”

Henderson continued, “The work completed at Rozino represents an important first step in Velocity’s strategy to explore and develop multiple satellite deposits for processing in the existing centrally located CIL Plant.  The company is completing due diligence on other advanced properties located within the exploration and mining alliance area, with a view to earning 70% interests through additional option agreements with Gorubso.  The aim is to build a multi-asset production profile that maintains annual production of more than 100,000 oz of gold over a period in excess of 10 years.”

PEA highlights:

• Cash Cost:  All-in sustaining cost of $543/oz
• Annual Gold Production:  Steady state annual production of 65,000 oz, peak annual production of 78,000 oz
• Capital Costs:  Total estimated capital costs of C$97.6 million (includes contingency)
• Sustaining Capital:  Low estimated sustaining capital of C$6.3 million
• Mining:  Open pit with 0.6 g/t gold Cut-Off Grade (COG), attractive strip ratio of 2.5 and 1.51 g/t LOM gold grade
• Processing:  On-site flotation producing gold bearing pyrite concentrate assaying 30 g/t and transportation to the CIL plant for processing
• ROCE:  Return on capital expenditure of 3.3.

The PEA provides a base case assessment of developing Rozino by open pit mining, on-site crushing, milling and simple flotation to produce a 30 g/t gold concentrate.   The concentrate would then be trucked 85 km on existing roads to the currently operating CIL Plant where saleable gold doré would be produced.

In addition to returning positive economic results, this assessment also provides significant benefits, including shortened permitting timelines and capital cost reductions for the following reasons:

• The existing CIL Plant and tailing management facility (TMF) are fully permitted, currently operational, and have sufficient capacity to process concentrate from Rozino
• The use of the existing CIL Plant reduces total capital cost requirements
• Development on-site at Rozino only requires permitting for mining, preconcentration and disposal of relatively benign waste products.

The PEA model uses open pit contractor mining and a gold price of $1,250/oz, which is the three-year trailing average gold price.  Pit shells at this gold price returned 461,000 oz of potentially mineable gold at the Rozino deposit, based on an updated mineral resource estimate (effective date September 10, 2018).

Mining of the Rozino deposit would follow a conventional drill and blast, load and haul open-pit mining operation using contractor mining services.  Mining would commence in 2022 and ramp-up to a maximum annual total mining tonnage of approximately 6.8 Mt/y.  The steady state feed rate to the flotation plant is 1.75 Mt/y delivered by haul truck.  The mining operation requires a fleet of 90-t class excavators loading blasted and free-dig material into 45-t class articulated dump trucks (ADTs). The planned mining operation is to be supported by a fleet of ancillary equipment including graders, dozer, bowsers, drill rigs and other support equipment.  The mining costs also include grade control drilling, pit dewatering and monthly management fees.

The Project would process 1.75 Mt/y through a conventional crushing, milling and flotation processing facility located at the Rozino mine site, with a LOM average grade of 1.5 g/t Au to produce 436,000 t of dry concentrate at 30 g/t Au, with a mass pull of about 4.5% by weight.

The Rozino mineralization contains less than 1% total sulphides of which 98% is expected to be recovered in the flotation circuit resulting in a very low-sulphide tailings, with no deleterious elements that would be deposited in a tailings impoundment located to the south of the flotation plant.  A waste rock and water storage dam would be located in the same catchment area in order to minimize the environmental footprint.

The concentrate would be trucked the 85 km to the CIL plant using a fleet of standard on-highway 20 t class trucks requiring approximately 11 trips per day. New concentrate handling facilities would be constructed at the CIL plant and would feed a reconstituted slurry directly into a conventional CIL circuit, elution and EW facility to produce saleable gold doré. A total of 365,000 oz of gold doré would be produced as saleable gold product over the LOM.

CIL metallurgical recovery is calculated as the product of the leach recovery (87.5%) and the final gold recovery from on-site electrowinning (99%).

At the currently operating CIL plant a C$0.7 million capital expenditure provision has been estimated for the construction of a truck off-load facility, concentrate storage, re-pulping facility, additional gold stripping vessel and EW cell.  The remaining equipment and facilities at the CIL plant have been determined to be of adequate size and condition and would require no further capital expenditure.

Upon delivery of the PEA report in the coming weeks, a joint venture will be deemed to have been formed between Velocity (70%) and Gorubso (30%).

Next steps for the Project include completion of a PFS, which is expected to be complete in Q3 2019.  Work to be completed as part of the PFS will include:

• Exploration drilling of priority targets located contiguous to the PEA pit outlines aimed at resource expansion
• Infill resource drilling aimed at upgrading Inferred mineral resource estimates to Indicated mineral resource estimates
• Additional metallurgical testing to optimize gold recovery
• Geotechnical and hydrogeological engineering studies
• Completion an environmental social impact assessment (ESIA).  EISA work was initiated in June 2018 and is currently ongoing
• PEA report will include detailed recommendations and a budget estimate.

An updated mineral resource estimate using all of the relevant drill hole information to date was reported for a range of cut-off grades returning an Inferred mineral resource of 13 Mt @ 1.37 g/t Au at a 0.6 g/t Au cutoff grade, for total contained gold of 573,000 oz.  The estimates are based on 2 m down-hole composited gold assay grades from angled diamond drilling.

The plans for the rest of the Balkan project include:

• Sedefche project – earn 70% interest on delivery of feasibility study
• Makedontsi project – earn 70% interest on delivery of PEA
• Other exploration projects – earn 70% interest on delivery of Resource Estimate or PEA
• Operating Chala mine – earn 50% interest on exploration expenditures of C$1 million.