Description and Ownership

The Cochrane Hill Gold Project located approximately 80 km from the Touquoy Property, is owned 100% by Atlantic. 

Comprehensive infill drilling is currently underway at the Cochrane Hill Gold Project (please see latest results and progress here). However, 39 diamond holes drilled by Atlantic in 2008 and 2009, combined with a further 89 holes from drilling in the 1970s and 1980s by previous explorers, for a total of approximately 15,200m of drilling, has established a substantial Mineral Resource.

Cochrane Hill Location Map

Description: CH_locationMap

Project Status

Atlantic is now focused on advancing resource definition drilling and environmental impact assessment work at Cochrane Hill.

Preliminary Economic Assessment

The Preliminary Economic Assessment, released in October 2014, analyzes two open-pit production scenarios over a minimum 8 year mine life:

  1. Base Case – assumes initial production from the MRC Project
  2. Base Plus Cochrane Case - includes the addition of gravity and float concentrate production from Cochrane Hill in year 3 of production, processed into doré at the Touquoy facility for a total life of mine production of 1,129,000 ounces of gold at an average grade of 1.62 g/t

Note that the PEA in respect of the Base Case scenario has been superseded by a Feasibility Study, the results of which have been disclosed here [link to MRC tab].  The presentation of the PEA metrics illustrates the potentially accretive value of adding Cochrane Hill to the MRC project.  Further cautionary disclosure on the PEA metrics can be found below.

PEA Highlights

Gold price: US $1,300/oz
Base Case
Base Plus Cochrane Case
Pre-tax NPV (5%)
$233 million
$354 million
Post-tax NPV (5%)
$163 million
$242 million
Pre-tax IRR
39.6%
38.0%
Post-tax IRR
33.5%
31.5%
Post-tax Payback
1.7 years
3.3 years
     
Initial capital cost
$131 million
$131 million
Capital Cost Cochrane Hill (Yr 2)
N/A
$108 million
LOM cash operating cost
$576/oz
$612/oz
LOM all-in sustaining cost
$653/oz
$684/oz
     
Total LOM Au production
702,000 oz's
1,129,000 oz's
Average annual production
87,700 oz's
141,000 oz's
LOM strip ratio
3.44
4.45
Average grade
1.55 g/t
1.62 g/t

The economics take into account the fact that Atlantic's effective ownership in Touquoy is 63.5%, and that the Company will recover all operational, overhead, financing and sunk costs prior to any distributions to its privately-owned partner in Touquoy. 

The PEA is preliminary in nature and includes Inferred Resources, which in accordance with established protocol, lack sufficient definition to enable them to be categorized as Mineral Reserves through the application of economic considerations. There is no certainty that the conclusion in the PEA will be realized or that any of the resources will ever be upgraded to reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

The independent qualified persons responsible for preparing the Preliminary Economic Assessment are; Neil Schofield MS – Applied Earth Sciences, MAusIMM, MAIG, and Marc Schulte, P.Eng. of MMTS,and John Thomas, P.Eng. of JAT Metconsult Ltd., all of whom act as independent consultants to the Company, are Qualified Persons as defined by National Instrument 43-101 ("NI 43-101") and have reviewed and approved the contents of this news release.

Mineral Resource Estimate

The Cochrane Hill Gold Project hosts Mineral Resources prepared in accordance with NI 43-101 and JORC (2012) as disclosed in the table below.  The table sets out the global estimates of Measured and Indicated, and inferred gold resources for Cochrane Hill at a cut-off grade of 0.50 g/t Au which has been highlighted in the Cochrane Hill NI 43-101 report as a possible cut-off for open pit mining.

 

Cochrane Hill Mineral Resource Estimate (0.5 g/t cut-off) – Effective as at August 1, 2014*

Category
Tonnes (Mt)
Grade (g/t Au)
Au Ounces (oz)
Indicated
4.5
1.8
251,000
Inferred
5.6
1.6
298,000

* Key assumptions used to estimate the Mineral Resources include the following:

  1. There are two main styles of gold mineralization, which are reflected in the geological domaining used in the resource modeling
  2. Drill hole sampling has provided a reasonably representative set of samples of the gold mineralization
  3. Multiple Indicator Kriging (MIK), the resource estimation methodology applied, is an appropriate method for estimating the Mineral Resources in these deposits

Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

The Cochrane Hill Mineral Resources are based on a National Instrument 43-101 technical report entitled "Technical Report of the Cochrane Hill Gold Project, Nova Scotia " dated August 1, 2014 has been prepared in respect of the Cochrane Hill Gold Project by FSS International Consultants (Aust) Pty. Ltd. (“FSSI”) of Beecroft, NSW, Australia [Link to Technical Report].

Geology

Exploration potential beyond the area of the drilled resource is excellent. The sheared, mineralised sequence occupies the axis of the overturned Cochrane Hill anticline. This intermittently outcropping shear zone has been traced for 5 km across the property in previous exploration programs, and it hosts several areas of anomalous gold geochemistry in various media. The most notable of these is a prospect located 1km west of the main zone where initial shallow RC drilling intersected mineralization up to 13.4g/t over 10m from 3m depth and 6.2g/t over 9m from 15m depth. Follow-up drilling extended this mineralization only marginally though further investigation at this locale, and elsewhere along this trend, remains to be undertaken.