Fäboliden Gold Mine

Overview

The Fäboliden Gold Mine ("Fäboliden") is located in northern Sweden, 30 kilometres by road southeast of Dragon Mining’s Svartliden operation and 700 kilometres north of the Swedish capital Stockholm. It represents a  source of gold bearing ore  that can be trucked to, and processed at the Svartliden Plant.

The 1,964.98 hectare Fäboliden project area held by the Company comprises the Fäboliden K nr 1 Exploitation Concession that hosts the Fäboliden gold deposit and two contiguous Exploration Permits that encompass the immediate strike extensions of the Fäboliden deposits host geological sequence.


Fäboliden Gold Project Location

The Fäboliden gold depositrepresents an orogenic gold deposit, with mineralisation hosted by Paleoproterozoic meta-sediments and meta-volcanic rocks, surrounded by granitoids. The host sequence is cross-cut by a set of northwest-southeast striking, flat lying undeformed and unmineralised dolerites.  Gold displays a strong association with sulphides and most abundant gangue minerals.

The Fäboliden deposit is defined over a strike length of 1,295 metres and includes a 665 metre vertical extent from 485mRL to -180mRL and remains open in several directions.

Production

Test mining activities commenced at Fäboliden, with the first parcel of ore from the open pit, mined and transported to the Svartliden Plant during June 2019.  During the permitted mining period between May and September, 60,393 tonnes of ore grading 2.6 g/t gold was mined in 2019.

In accordance with the conditions of the Test Mining Permit, test-mining activities recommenced at Fäboliden in May 2020.  Test mining activities will continue through to the end of September 2020.

The Company continues to work towards obtaining environmental approval for full-scale mining at Fäboliden.

Exploration

Exploration at Fäboliden commenced in 1993 and has primarily involved drilling, with 333 holes (64,770.45 metres -  322 diamond core drill holes; 11 reverse circulation drill holes) completed prior to Dragon Mining’s acquisition of the project.  In addition to drilling, other activities undertaken by the previous owners include test mining and processing, resource estimation and compilation of a Definitive Feasibility Study for a large tonnage low-grade mining and processing operation.

In conjunction with the acquisition of Fäboliden in 2015, Dragon Mining completed a 34 hole (2,941.50 metres) diamond core drilling program to evaluate the near surface, higher-grade zone in the southern portion of the deposit.  This program yielded a series of significant intercepts including highlights 4.00 metres @ 20.70 g/t gold, 7.00 metres @ 18.24 g/t gold, 14.00 metres @ 11.05 g/t gold, and 13.00 metres @ 8.37 g/t gold. The results from the drilling program have shown that the higher-grade zone displays good continuity both down dip and along strike, the grades received from drilling commensurate with the results from historic drilling.

In 2018 the Company completed a 15 hole, 707.5 metre diamond core drilling campaign that targeted areas where future waste rock and overburden dumps will be established once full scale production commences.  The areas were effectively sterilised with no significant gold results received.

Reserves and Resources

The Measured, Indicated and Inferred Mineral Resource for the Fäboliden Gold Mine totals 11,000 kt   grading 3.1 g/t gold for 1,100 kozs, inclusive of Ore Reserves as at 31 December 2019.  The Mineral Resource is reported at a 1.1 g/t gold cut-off for material inside the Revenue Factor (“RF”) 120% Pit Shell  and 1.9 g/t gold for material outside the RF 120% Pit Shell.  The cut-off levels are based on costs and recoveries from the updated Fäboliden Life-of-Mine (“LOM”) study and a gold price of US$1,584 per troy ounce that is extrapolated for the potential economic extraction of the resource at a level approximating 120% of the long term forecast gold price of US$1,320 per troy ounce as at 20 January 2020.

The Company achieved a positive outcome for the updated LOM for the development of the Fäboliden Gold Mine, generating a total Proved and Probable Ore Reserve of 2,300 kt  grading 2.8 g/t gold for 210 kozs as at 31 December 2019.  It represents an increase in the duration of the proposed full scale open-pit mining operation to approximately eight years, including the final period of test mining.  The Ore Reserves are reported at an in-situ ore cut-off grade of 1.3 g/t gold that is based on a long term consensus forecast gold price of US$1,320 per troy ounce as at 20 January 2020, a USD:SEK exchange rate of 9.6, process recovery of 82%, mining factors and costs.

The LOM study is based on the establishment of an  open-pit mining operation and the haulage of ore to Dragon Mining’s Svartliden Plant.  The Fäboliden Ore Reserves demonstrate a base case operation, which the Company expects to be able to further enhance before full-scale mining commences.


Planned site layout

For further information on the Ore Reserves and Mineral Resources for the Fäboliden Gold Project refer to the Resources and Reserves page.

Environment

On 23 November 2017, the County Administration Board (“CAB”) in Västerbotten granted Dragon Mining a Permit for test mining operations at Fäboliden (“Test Mining Permit”), the Test Mining Permit obtaining legal enforcement on the 11 May 2018. The Company commenced pre-stripping activities in August 2018 and extracted and transported the first ore to the Svartliden Plant in June 2019.  In accordance with the conditions of the Test Mining Permit, test-mining activities recommenced at Fäboliden in May 2020.  Test mining activities will continue through to the end of September 2020.

The Company continues to work towards obtaining environmental approval for full-scale mining at Fäboliden. Having completed two supplementary information rounds, the application was publicly announced by the Land and Environment Court 4 April 2020 with a deadline for comments set to 2 June 2020.

The majority of stakeholders have submitted their statements within the set deadline, whilst a small number of stakeholders have been granted an extension. The Company is currently reviewing the submitted statements and awaiting the remaining submissions along with instructions from the Land and Environment Court regarding the next step in the Fäboliden permitting process.

The change permit application for the Svartliden process site, to allow the full-scale processing of Fäboliden ore and tailings disposal, has commenced with an initial consultation with the CAB. On 8 June 2020, the CAB ruled that the change permit does not constitute a significant environmental impact. This allows the Company to undertake a smaller Environmental Impact Assessment and opportunity to advance through a more simplified permitting process.

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