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News

P2 Gold Announces Positive Gabbs Preliminary Economic Assessment

Vancouver, British Columbia, June 29, 2023; P2 Gold Inc. (“P2” or the “Company”) (TSX-V:PGLD) (OTCQB:PGLDF) reports results from a positive Preliminary Economic Assessment (“PEA”) on its wholly-owned gold-copper Gabbs Project located on the Walker-Lane Trend in Nevada.  The PEA was prepared by Kappes, Cassiday & Associates (“KCA”) of Reno, Nevada with Mineral Resource and mining contributions from P&E Mining Consultants Inc. in accordance with National Instrument 43-101, Standards of Disclosure for Mineral Projects (“NI 43-101”).  An NI 43-101 Technical Report will be prepared and posted on www.p2gold.com and the Company's profile on www.SEDAR.com within 45 days of the date of this news release.

PEA Highlights

  • Open pit, heap leach operation focused predominantly on oxide gold and copper Mineral Resources (Phase One), mining 43.4 million leachable tonnes and 102.3 million waste tonnes
  • After-tax net present value (5% discount rate) of US$163.1 million and internal rate of return of 16.7% at US$1,950 gold and $4.50 copper
  • Mine life of 11.1 years, with an average processing rate of 11,000 tonnes per day
  • LOM gold equivalent production of 837,000 ounces (43.4 million tonnes @ 0.54 g/t gold and 0.25% copper) and LOM gold production of 562,100 ounces
  • Estimated pre-production capital cost, including contingencies, of US$230.2 million

“The PEA provides a solid plan for advancing Phase One development at Gabbs, where we are taking a phased approach to production,” commented Joe Ovsenek, President and CEO of P2. “With an initial focus primarily on the oxide resources, we can shorten and simplify the path to production with an open pit, heap leach operation.  Our next goal is to optimize the mine plan and capex, evaluate contract mining and complete additional metallurgy, which we believe will significantly increase the rate of return at lower metal prices.  In addition, Gabbs has considerable oxide Mineral Resource expansion potential to extend Phase One operations beyond that contemplated in the PEA.  Phase Two will focus on the development of the sulphide mineralization which sits below the oxide mineralization.  Overall, we expect Gabbs to be a long-life gold and copper mine as the oxide mineralization is expanded and the sulphide mineralization is brought online.”

The PEA is preliminary in nature, includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized 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 Company has not defined any Mineral Reserves on the Gabbs Project.

Economic Sensitivities

Base Case metals prices were established by the Company reflecting the Company’s expectations for market conditions at the time of construction financing for the Gabbs Project.

Table 1:  Gabbs Project 2023 PEA Economics

  Low Case Base Case High Case Spot Case(2)
Gold Price (US$/oz) $1,800 $1,950 $2,100 $1919
Copper Price (US$/lb) $4.00 $4.50 $5.00 $3.81
Net Revenue (US$) $1.44 billion $1.58 billion $1.73 billion $1.49 billion
After tax NCF(1) (US$) $213.5 million $319.5 million $424.7 million $247.2 million
After tax NPV(1) 5% (US$) $90.9 million $163.1 million $234.9 million $114.4 million
After tax IRR(1) (%) 11.9% 16.7% 21.1% 13.6%
Payback/Mine Life (years) 6.0/11.1 4.2/11.1 3.5/11.1 5.5/11.1

(1)           NCF means net cash flow; NPV means net present value; IRR means internal rate of return.
(2)          As of June 27, 2023

Capital and Operating Costs

Table 2:  Gabbs Project 2023 PEA Capital Costs

Capital Costs (US$ in millions)
Mining (including contingency of 10%) $61.9
Process (including contingency of 20%) $143.7
Other (including contingencies) $24.7
Total Pre-Production Capital $230.2
Working capital and initial fills $6.8
Sustaining Capital (including contingency) $27.7
Reclamation and Closure $19.6

Table 3:  Gabbs Project 2023 PEA Operating Costs

Operating Costs (US$)
Mining ($/tonne mined) (LOM strip ratio 2.36:1) $2.31
Processing ($/tonne) $11.22
G&A ($/tonne) $1.23
AISC, LOM @ Base Case (US$/oz AuEq) $784

Mining and Processing

Mining

The mineralized material will be mined by standard open-pit mining methods using an owner mining fleet of 90-tonne haul trucks and 11 m3 hydraulic shovels, fine crushed using a system incorporating a jaw crusher, cone crushers and high-pressure grinding rolls (HPGR), agglomerated with cement and conveyor stacked on the heap leach pad in 8-metre lifts.

Processing

The Gabbs mineralized material is estimated to contain an average of 0.25% copper based on the mine plan used for this PEA.  A portion of this copper is cyanide soluble and is expected to be extracted in the heap leach circuit.  The cyanide soluble copper has an effect on the cyanide consumption.  A SART (sulfidization, acidification, recycling and thickening) plant that releases cyanide associated with the copper cyanide complex, allowing it to be recycled back to the leach process as free cyanide is included.  The resulting copper precipitate will be sold, bringing additional revenue to the Project.

Mineralized material will be single-stage leached with a dilute cyanide solution.  The gold and copper bearing solution will be collected in the pregnant solution pond and pumped to the SART plant.  Pregnant solution will be acidified with sulfuric acid, then copper will be precipitated as sulfides by the addition of sodium hydrosulfide.  The precipitate will be thickened and filtered to produce a copper filter cake for shipment to a smelter.  The barren solution from the SART plant will be processed in a carbon adsorption-desorption-recovery (ADR) plant to recover gold.  The gold will be periodically stripped from the carbon using a desorption process.  The gold will be plated on stainless steel cathodes, removed by washing, filtered, dried and then smelted to produce a doré bar.

Opportunities

  • Contract Mining – evaluate contract mining versus owner fleet
  • Metallurgy – complete additional test work to increase recoveries for oxide and sulphide mineralization and evaluate the use of HPGR for potential heap leaching of sulphide mineralization to increase recovery of free gold
  • Mineral Resource – expand oxide gold and gold and copper mineralization
  • Capex – evaluate equipment alternatives to reduce capital costs
  • Mine plan – optimize mine sequencing to increase return on capital

Gabbs Project 2023 Mineral Resource Estimate

The June 2023 Updated Mineral Resource Estimate (“2023 MRE”) was prepared by P&E based on four diamond drill holes and 27 reverse circulation drill holes completed by the Company in 2021 and 2022 and 494 drill holes completed by prior Gabbs Project operators between 1970 and 2011. 

The main difference between the 2023 MRE and the February 2022 Mineral Resource Estimate (see news release dated February 10, 2022) is the decrease in the oxide cut-off grade to 0.28 g/t gold equivalent from 0.35 g/t gold equivalent and an increase in the sulphide cut-off grade to 0.44 g/t gold equivalent from 0.36 g/t gold equivalent.  As a result, oxide Mineral Resources have increased and sulphide Mineral Resources have decreased.

Table 4:  June 2023 Gabbs Project Pit Constrained Mineral Resource Estimate(1)(2)(3)(4)

Mineral
Resource
Classification

Tonnes
(M)
Gold Grade
(g/t)
Copper
Grade
(%)

Gold
(M oz)

Copper
(M lbs)
Gold Eq. Grade
(g/t)

Gold Eq.
(M oz)
Indicated 42.3 0.50 0.28 0.676 261.3 0.78 1.058
Inferred 55.2 0.50 0.25 0.895 304.0 0.77 1.358

(1)           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, sociopolitical, marketing, or other relevant issues.
(2)          The Inferred Mineral Resource in this estimate has a lower level of confidence than that applied to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of the Inferred Mineral Resource could be upgraded to an Indicated Mineral Resource with continued exploration.
(3)          The Mineral Resources in this press release were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), Standards on Mineral Resources and Reserves, Definitions (2014) and Best Practices (2019) prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council.
(4)          The Mineral Resource Estimate was prepared for a potential open pit scenario using a constraining pit shell (with 50 degree slopes) at respective 0.28 g/t and 0.44 g/t oxide and sulphide gold equivalent cut-off grades.  The gold equivalent cut-off grades were derived from US$1,838/oz gold, US$3.96/lb copper, US$2.15/tonne mining cost, and US$11.76 and $23.66/tonne respective oxide and sulphide processing costs; US$1.25/tonne G&A cost, 78.3% and 95.2% respective Au oxide and sulphide process recoveries; and 48% and 78% respective Cu oxide and sulphide process recoveries.

Oxide Mineral Resources at Gabbs consist of Indicated Mineral Resources of 724,400 ounces of gold equivalent (30.6 million tonnes grading 0.49 g/t gold and 0.27% copper) and Inferred Mineral Resources of 779,000 ounces of gold equivalent (33.0 million tonnes grading 0.53 g/t gold and 0.23% copper).  See Table 5 below for a breakdown of the oxide and sulphide Mineral Resources.

Table 5:  June 2023 Gabbs Project Pit Constrained Mineral Resource Estimate by Rock Group(1)(2)


Rock Group

Tonnes
(M)
Gold Grade
(g/t)
Copper Grade
(%)

Gold
(M oz)

Copper
(M lbs)
Gold Eq. Grade
(g/t)

Gold Eq.
(M oz)
Oxide
Indicated
30.6 0.49 0.27 0.483 182.1 0.74 0.724
Oxide
Inferred
33.0 0.53 0.23 0.556 167.8 0.74 0.779
Sulphide
Indicated
11.7 0.52 0.31 0.193 79.2 0.89 0.333
Sulphide
Inferred
22.2 0.47 0.28 0.339 136.2 0.81 0.579

(1)           See Notes 1 to 4 to Table 1 above.
(2)          Tables may differ and not sum due to rounding.

Table 6:  June 2023 Gabbs Project Pit Constrained Mineral Resource Estimate by Zone(1)(2)

Zone
Tonnes
(M)
Gold Grade
(g/t)
Copper Grade
(%)

Gold
(M oz)

Copper
(M lbs)
Gold Eq. Grade
(g/t)

Gold Eq.
(M oz)
Sullivan
Indicated
42.3 0.50 0.28 0.676 261.3 0.78 1.058
Sullivan
Inferred
9.6 0.52 0.27 0.161 57.6 0.83 0.256
Lucky Strike Inferred 41.0 0.47 0.26 0.619 238.0 0.74 0.976
Car Body
Inferred
3.3 0.99 - 0.106 - 0.99 0.106
Gold Ledge(3)
Inferred
1.3 0.21 0.28 - - 0.47 -

(1)           See Notes 1 to 4 to Table 1 above.
(2)          Tables may differ and not sum due to rounding.
(3)          Gold Ledge Inferred Mineral Resource rounded to zero**.

Next Steps

Additional metallurgical test work will be undertaken next to refine metallurgical recoveries for both the oxide and sulphide mineralization.  Thereafter, feasibility level studies will commence and will include an evaluation of contract mining versus an owner fleet, equipment alternatives and mine plan optimization.  Timing of the metallurgical test work and feasibility level studies will be dependent on the availability of funds.

Qualified persons

The PEA was prepared by Dan Whiteley, P.E. of KCA and Eugene Puritch, P.Eng., FEC, CET, and Andrew Bradfield, P.Eng.  of P&E Mining Consultants Inc. (“P&E”) of Brampton, Ontario, each of whom is a “Qualified Person” as defined by NI 43-101 and independent of the Company and has reviewed and approved of the technical content relating to the PEA in this news release.

The 2023 MRE was prepared under the supervision of Eugene Puritch, P.Eng., FEC, CET of P&E Mining Consultants Inc., who is an Independent Qualified Person, as defined by National Instrument 43-101.  Mr. Puritch has reviewed and approved the technical contents of this news release relating to the 2023 MRE.

Ken McNaughton, M.A.Sc., P.Eng., Chief Exploration Officer, P2 Gold, is the Qualified Person, as defined by National Instrument 43-101, responsible for the Gabbs Project.  Mr. McNaughton has reviewed, verified, and approved the scientific and technical information in this news release.

About P2 Gold Inc.

P2 Gold is a mineral exploration and development company focused on advancing precious metals and copper discoveries and acquisitions in the western United States and British Columbia.

For further information, please contact:

Joseph Ovsenek
President & CEO
(778) 731-1055

P2 Gold Inc.
Suite 1100, 355 Burrard Street
Vancouver, BC
V6C 2G8
[email protected]
(SEDAR filings: P2 Gold Inc.)

Michelle Romero
Executive Vice President
(778) 731-1060

Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward Looking Information

This press release contains “forward-looking information” within the meaning of applicable securities laws that is intended to be covered by the safe harbours created by those laws. “Forward-looking information” includes statements that use forward-looking terminology such as “may”, “will”, “expect”, “anticipate”, “believe”, “continue”, “potential” or the negative thereof or other variations thereof or comparable terminology. Such forward-looking information includes, without limitation, information with respect to the Company’s expectations, strategies and plans for the Gabbs Project including the Company’s planned expenditures and exploration activities.

Forward-looking information is not a guarantee of future performance and is based upon a number of estimates and assumptions of management at the date the statements are made.  Furthermore, such forward-looking information involves a variety of known and unknown risks, uncertainties and other factors which may cause the actual plans, intentions, activities, results, performance or achievements of the Company to be materially different from any future plans, intentions, activities, results, performance or achievements expressed or implied by such forward-looking information.  See “Risk Factors” in the Company’s annual information form for the year ended December 31, 2022, dated March 16, 2023 filed on SEDAR at www.sedar.com for a discussion of these risks.

The Company cautions that there can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, investors should not place undue reliance on forward-looking information.

Except as required by law, the Company does not assume any obligation to release publicly any revisions to forward-looking information contained in this press release to reflect events or circumstances after the date hereof.

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