Hasbrouck Project Pre-Feasibility Study

The 2016 pre-feasibility study (“the 2016 PFS”) updates the July 2015 pre-feasibility study (the “2015 PFS”) with value engineering, detailed scheduling, revised contractor cost estimates, an updated gold price and various other changes. Refinements to the Life of Mine (“LOM”) plan and economic model in the 2016 PFS are positive, and the updated gold price provides additional value.  Mineral Reserves and Resources are unchanged from the 2015 PFS. Exploration potential near the fully permitted Three Hills open pit is highlighted. The 2016 PFS and the 2015 PFS were both prepared by a team of Qualified Persons headed by Mine Development Associates (MDA) of Reno, Nevada.

The Hasbrouck Project consists of the Hasbrouck and the Three Hills deposits and surrounding land package, located near Tonopah, Nevada.  All dollar values presented in this news release are in U.S. dollars and are presented on a 100% project basis. Highlights include:

  • 594,000 recoverable gold equivalent ounces
  • 74,000 gold equivalent ounces annually for eight years
  • $661 Adjusted Operating Cost per ounce
  • $709 All-In Sustaining Cost per ounce
  • $120 million NPV (5%) and a 43% IRR, after-tax, with a 3.1 year pay-back
  • $1,275/oz Au and $18.21/oz Ag metal price assumptions
  • $47 million initial capital
  • No change to Mineral Resources or Reserves from the 2015 PFS
  • Good exploration potential proximal to the Three Hills permitted pit
  • Fully permitted Three Hills Mine, shovel-ready

The Company has a 75% interest in the Hasbrouck Project with rights to the remaining 25% owned by Waterton Precious Metals Fund II Cayman, LP.  Waterton’s 25% interest is fully participating and the holder must contribute to capital or be diluted.

The Hasbrouck Project: comprised of the Three Hills and Hasbrouck deposits
The Hasbrouck Project: comprised of the Three Hills and Hasbrouck deposits
(Click to enlarge)

The Hasbrouck Project is one of only a handful of shovel-ready, high-margin gold projects.  The Hasbrouck and Three Hills deposits are all-oxide with low stripping ratios, minimal pre-strip, and no adverse environmental or cultural factors.  The resources and their metallurgy have been well-studied and analyzed. Good infrastructure exists nearby consisting of accommodations, grid electricity, paved highways and multiple water sources. The Phase 1 Three Hills Mine is fully permitted and permitting work for the Phase 2 Hasbrouck Mine is underway.  For further information on permitting at Three Hills please refer to the Company’s November 27, 2015 news release.

The completion of the 2016 PFS confirms strong operating margins for the Hasbrouck Project.

Effect of Changes on Project Economics

Item NPV (5%)
(US $M)
Initial Capital
(US $M)
LOM Cash Flow
(US $M)
2015 Pre-feasibility Study $75 25.6% $54 $117 3.7
Changes Made in 2016 PFS          
     Diesel Cost Reduced $7 2.3% $0 $10  
     Pre-Production Mining Cost Increased $1 -0.6% $5 $1  
     Gold Plant Deferred (2 Years) $1 2.3% -$6 $0  
     Re-furbished Crushing & Conveying Plant $3 1.6% $0 $4  
     Water Sourced from Wells $7 7.1% -$1 $3  
     Gold Recovered During Drain Down Recognized $10 1.7% $0 $15  
     Reclamation Bond Amounts Recalculated $0 0.3% -$2 $0  
     Metal Price Increased ($1,275/$18.21 vs $1,225/$17.50) $19 5.2% $0 $24  
     Other * -$3 -2.4% -$4 -$2  
Summed Changes in 2016 PFS $45 17.6% -$8 $55  
2016 Pre-feasibility Study $120 43.2% $47 $171 3.1

* Other is due to consequential impacts on working capital, contingencies, and indirects due to changes above.

The 2016 PFS estimates initial capital at $47 million (2015 PFS - $54 million) which will be used to construct the Phase 1 Three Hills Mine. Capital to build the Phase 2 Hasbrouck Mine will come from free cash flow generated by Three Hills.  Six million tons of ore will be processed annually to produce 74,000 gold-equivalent ounces per year for eight years.  Adjusted Operating Costs are projected to be $661 per ounce of gold, with All-In Sustaining Costs of $709 per ounce of gold, both net of silver by-product credits.

The Three Hills and Hasbrouck deposits are 8 kilometers apart and located within a large land position hosting multiple near-surface gold intercepts.  Known gold intercepts are located proximal to current resources; these are not included in the resource model.  These intercepts present exploration targets with the potential to increase and extend known resources.

The 2016 PFS estimates Phase 1 production for two years at the Three Hills Mine followed by Phase 2 production for six years at the Hasbrouck Mine.  Combined production is estimated at 594,000 gold equivalent ounces.  LOM stripping ratio is estimated at 1.1:1.  LOM head grade is estimated at 0.6 g/t gold (0.017 oz Au/ton) while gold recovery from heap leaching is estimated at 76%. 

A Carbon-In-Columns (“CIC”) plant will be installed at the Three Hills Mine.  Gold will be stripped from carbon off-site by a contractor. An Adsorption-Desorption-Recovery plant (ADR) complete with CIC will be installed at the Hasbrouck Mine to handle the greater amount of silver at Hasbrouck.

The Hasbrouck Project Updated Pre-feasibility Study

Mine Development Associates*, September 1, 2016 – in US dollars, based on 100% of the project (1)

    Units Three Hills
Total Hasbrouck
Headgrade oz Au/ton - g Au/t 0.018 - 0.62 0.017 - 0.57 0.017 - 0.58
Ore million tons 10 36 45
Stripping Ratio waste:ore 0.9 1.1 1.1
Annual Ore Processed million tons 5 6 6
Processing Rate tons per day 15,000 17,500 15,986
Gold Grade oz Au/ton - g Au/t 0.018 - 0.62 0.017 - 0.57 0.017 - 0.58
Silver Grade oz Ag/ton - g Ag/t NA 0.297 - 10.17 0.233 - 8.00
Contained Gold kOz 175 588 762
Contained Silver kOz NA 10,569 10,569
Contained Gold Equivalent (1) kOz 175 610 784
Gold Recovery % 81.5% 74.0% 75.7%
Silver Recovery %   11.0% 11.0%
Recoverable Gold kOz 142 435 577
Recoverable Silver kOz NA 1,163 1,163
Recoverable Gold Equivalent
kOz 142 452 594
Average Annual Gold Production kOz 69 71 71
Average Annual Silver Production(2) kOz NA 194 194
Average Annual Gold Equivalent Production kOz 69 74 74
Gold Price US$/oz $1,275 $1,275 $1,275
Silver Price US$/oz $18 $18 $18
Initial Capital US$ million $47    
Growth Capital US$ million   $83  
Sustaining Capital US$ million   $13  
Life of Mine Capital US$ million     $143
Contingency (included) US$ million $6 $15 $21
Contingency (included) % 14% 19% 17%
Adjusted Operating Cost per Ton of Ore (3) US$/ton ore $7.40 $8.71 $8.43
Mining US$/ton ore $3.18 $3.74 $3.62
Processing US$/ton ore $2.55 $3.93 $3.63
G&A US$/ton ore $0.44 $0.46 $0.46
Other (4) US$/ton ore $1.23 $0.58 $0.72
Adjusted Operating Cost per Ounce(3) US$/oz Au net of by-products $502 $714 $661
All-In Sustaining Cost per Ounce (5) US$/oz Au net of by-products $510 $774 $709
Life of Mine year 1.7 7.1 8.8
NPV (5%) - after tax US$ million     $120
IRR - after tax %     43%
Payback Period year     3.1

(1)  Gold equivalent calculations are made using the ratio of recovered silver / gold and metal prices
(2) Silver production is averaged over the Hasbrouck mine life only
(3)  World Gold Council - Adjusted Operating Costs include:
On-site mining and G&A, royalties and production taxes, permitting and community cost related to current operations, 3rd party smelting, refining and transport costs, stock-piles and inventory write-downs, site-based non-cash remuneration, operational stripping costs and by-product credits
(4) Other category includes royalties, production taxes, permitting, refining, and by-product credit
(5)  World Gold Council All-in Sustaining Costs includes:
Adjusted Operating Costs (above) plus corporate G&A, reclamation & remediation—accretion & amortization, expenditures sustaining exploration and study costs, capital exploration, capitalized stripping and sustaining capital
(6) World Gold Council All-In Cost includes:
All-In Sustaining Costs (above) plus community, permitting, and reclamation and remediation costs not related to current operations and non-sustaining exploration and study costs, capital exploration, capitalized stripping and capital expenditure
(7) Project economics are presented for 100% of the project which is jointly owned by WKM (75%) and Waterton Precious Metals Fund(25%)


Three Hills section showing gold domains and geology
Three Hills section showing gold domains and geology
(Click to enlarge)

Hasbrouck section showing gold domains and geology
Hasbrouck section showing gold domains and geology
(Click to enlarge)


Sensitivity to Gold Price

  After Tax Sensitivity - Metal Price (K USD)
Au Price Undisc. Cash Flow
NPV 5%
IRR Ag Price
$1,000 $36,130 $16,779 12% $14.29
$1,100 $86,063 $54,971 24% $15.71
$1,200 $135,024 $92,477 35% $17.14
$1,225(1) $147,164 $101,779 38% $17.50
$1,275(2) $171,446 $120,384 43% $18.21
$1,300 $183,587 $129,687 46% $18.57
$1,400 $230,210 $165,393 56% $20.00
$1,500 $275,060 $199,698 65% $21.43


     (1) Gold price used in 2015 PFS
     (2) Gold price used in 2016 PFS

Hasbrouck Project Reserves

Proven and Probable reserves total 45.3 million tons containing 762,000 ounces gold and 10.6 million ounces silver:

Hasbrouck Project Reserves,  June 3, 2015, Mine Development Associates (1, 2)
Three Hills k tons Grade
(oz Au/ ton)
k oz Au oz Ag/ton k oz Ag
0.005 opt
Au cutoff
Variable (3) Proven
  Total Hasbrouck Project
Variable (3) Proven


  1. The estimation and classification of Proven and Probable reserves have been prepared by Thomas L. Dyer, P.E., of Mine Development Associates following CIM standards
  2. Reserves are estimated based on $1,225/oz gold and $17.50/oz silver
  3. Cutoff grades used for reserves are:  Three Hills 0.005 oz Au/ton, Hasbrouck Upper Siebert 0.008 oz Au/ton, and Hasbrouck Lower Siebert 0.007 oz Au/ton

Hasbrouck Project Resources

Mineral Resources are reported inclusive of Mineral Reserves.

Hasbrouck Deposit Reported Mineral Resources* November 3, 2014,

Mine Development Associates  (0.006oz AuEq/ton Cutoff)

Class Tons oz Au/ton oz Au oz Ag/ton oz Ag
Measured 8,261,000 0.017 143,000 0.357 2,949,000
Indicated 45,924,000 0.013 595,000 0.243 11,147,000
M+I 54,185,000 0.014 738,000 0.26 14,096,000
Inferred 11,772,000 0.009 104,000 0.191 2,249,000

Notes: oz AuEq/ton = oz Au/ton + (oz Ag/ton x 0.000417)

Three Hills Deposit Reported Mineral Resources* August 4, 2014,

Mine Development Associates (0.005oz Au/ton Cutoff)

Class Tons oz Au/ton oz Au
Indicated 10,897,000 0.017 189,000
Inferred 2,568,000 0.013 32,000

1. CIM definitions are followed for classification of Mineral Resources
2. Mineral Resources are estimated using a gold price of $1,300 per ounce and a silver price of $22 per ounce
3. Totals may not represent the sum of the parts due to rounding
4. The Mineral Resources have been prepared by Paul Tietz, C.P.G of Mine Development Associates in conformity with CIM “Estimation of Mineral Resource and Mineral Reserves Best Practices” guidelines and are reported in accordance with the Canadian Securities Administrators NI43-101.  Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.  There is no certainty that all Mineral Resources will be converted into Mineral Reserves


West Kirkland plans to continue advancing Phase 2 Hasbrouck Mine permitting, thereby reducing risk to Phase 2, and is preparing to make a construction decision at Three Hills Mine as market conditions dictate. West Kirkland plans to engage with its major shareholders with regards to a potential construction decision. 

The reader is cautioned that a production decision might be made on the 2016 PFS and that the Company may proceed to production without completion of a feasibility study. There is an increased risk associated with making a production decision based only on a pre-feasibility study.

Authors and Qualified Persons Statement

The 2016 PFS was prepared in conformance with NI 43-101 by Mine Development Associates (MDA).  Technical work, analysis and findings were completed by Thomas L. Dyer, P.E. and Paul Tietz, C.P.G. of MDA, with contributions by Herb Osborne, Metallurgical Eng., SME, of H.C. Osborne & Associates (metallurgy), Ryan Baker, P.E., of Newfields (civil and heap leach) and Carl Defilippi, SME, of Kappes Cassiday & Associates (process design).  Each person is a "Qualified Person" under NI 43-101 and has reviewed and approved the information in this news release relevant to the portion of the 2016 PFS for which they are responsible. MDA has reviewed and verified the data disclosed in this news release to conform to CIM “Estimation of Mineral Resource and Mineral Reserves Best Practices” guidelines and to NI 43-101.  West Kirkland will file an NI 43-101 technical report in support of the technical disclosures made in this news release on SEDAR within 45 days.

Sandy McVey, P.Eng., Chief Operating Officer for West Kirkland, and a non-independent Qualified Person as defined by NI 43-101, has also reviewed the information contained in this news release and has verified the data.

Sample Preparation, Analyses, and Security

It is MDA’s opinion that the sampling, assaying, and security procedures used at Three Hills and Hasbrouck deposits follow industry standard procedures, and are adequate for the estimation of the current Mineral Resources and Mineral Reserves.

Data Verification

MDA completed audits of the database, performed a site visit, reviewed QAQC data and confirmed historic assays.  After performing their review, they consider the assay data to be adequate for the estimation of the current Mineral Resources and Mineral Reserves.


Updated September 1, 2016