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Gabbs Project, Nevada

Gabbs Project Map

P2’s gold-copper Gabbs Project is situated within the northwestern end of the Fairplay Mining District in Nevada, approximately 145 miles by paved road from Reno. P2 has recently completed an updated preliminary economic assessment (the “Updated PEA”) of Gabbs, which has an of 1.16 million ounces of gold equivalent or 0.72 million ounces of gold, 2.17 million ounces of silver and 297.0 million pounds of copper (49.8 million tonnes grading 0.45 g/t gold, 1.36 g/t silver and 0.27% copper) and an Inferred Mineral Resource of 2.29 million ounces of gold equivalent or 1.28 million ounces of gold, 3.04 million ounces of silver and 567.1 million pounds of copper (112.2 million tonnes grading 0.35 g/t gold, 0.84 g/t silver and 0.23% copper).   

Location and access to infrastructure

The Gabbs Project is comprised of 543 unpatented lode mining claims and one patented lode mining claim covering four known zones of mineralization and comprising approximately 4,500 hectares. Access is good, with Nevada Highway 361 and Gabbs Pole Line Road crossing the property. A powerline also crosses the property, and a major transmission line is located within 30 kilometers. Access to water by permit is available.

Mineralization

The gold-copper mineralization at three of the known zones, Sullivan, Lucky Strike and Gold Ledge, is hosted within what are interpreted to be sills associated with an alkaline gold/copper porphyry.  The gold mineralization at the fourth zone, Car Body, is interpreted to be low-sulphidation epithermal mineralization. 

In late 2021 and early 2022, the Company completed a 48.3-line kilometer Natural Source Magneto Telluric (“NSMT”) survey at Gabbs covering all four known zones of mineralization and the prospective locations of a potential gold-copper porphyry source at depth.

The initial interpretation by the Company of the three-dimensional NSMT inversion model has identified a high priority area in the center of the property that hosts a gold-copper porphyry exploration target. This area is below the Gold Ledge Zone and confirms the two-dimensional interpretation of the NSMT inversion model. The Company requires an additional permit in order to drill the exploration target.

Gabbs Project 2024 PEA

In May 2024, the Updated PEA for the Gabbs Project was prepared by Kappes, Cassiday & Associates (“KCA”) of Reno, Nevada with Mineral Resource and mining contributions from P&E Mining Consultants Inc. of Brampton, Ontario in accordance with National Instrument 43-101, Standards of Disclosure for Mineral Projects (“NI 43-101”). (See news release dated May 22, 2024.) 

PEA Highlights

Gabbs Project 2024 PEA - Economic Sensitivities

Table 1:  Gabbs Project 2024 PEA Economics

  Low Case Base Case High Case Spot Case(1)
Gold Price (US$/oz) $1,800 $1,950 $2,100 $2,414
Silver Price (US$/oz) $22.50 $25.00 $27.50 $31.48
Copper Price (US$/lb) $4.00 $4.50 $5.00 $4.71
Net Revenue (US$) $4.2 billion $4.6 billion $5.0 billion $5.4 billion
After tax NCF(2) (US$) $769.3 million $1.1 billion $1.5 billion $1.7 billion
After tax NPV(2) 5% (US$) $326.8 million $550.0 million $768.7 million $949.2 million
After tax NPV(2) 10% (US$) $104.7 million $257.0 million $405.3 million $530.0 million
After tax IRR(2) (%) 14.4% 21.0% 27.4% 33.5
Payback(3)/Mine Life (years) 4/14.2 3/14.2 2/14.2 1.7/14.2

(1)            As of May 17, 2024

(2)            NCF means net cash flow; NPV means net present value; IRR means internal rate of return.

(3)            Preproduction capital, excluding mill and heap leach sustaining capital

Capital and Operating Costs

Table 2: Gabbs Project  2024 PEA Capital Costs

Capital Costs (US$ in millions)
Mining (including contingency of 10%) $68.5
Process, Heap Leach $204.8
Other (including contingencies) $92.2
Total Pre-Production Capital(1) $365.5
Working capital and initial fills (heap leach) $14.2
Sustaining Capital (heap leach & mill capital and contingencies) $343.2
Sustaining Capital (mining and contingencies) $141.7
Reclamation and Closure $56.4

(1)            Sum differs due to rounding

Table 3:  Gabbs Project 2024 PEA Operating Costs and AISC

Operating Costs (US$)
Mining ($/tonne mined) $1.55
Heap Leach Processing ($/tonne) $10.70
Mill Processing ($/tonne) $13.64
G&A ($/tonne) $0.73
AISC (co-product)(2), LOM @ Base Case Metal Prices ($/ounce of gold) $1,233.81

(1)            Including rehandle material

(2)            Net of silver credits

Projected Mining and Production

Table 4:  Gabbs Project 2024 PEA Projected Processing and Metal Production Summary




Year
Tonnes
Process
Ox/S(1)(2)
(k t)
Gold
Grade
Ox/S(1)
(g/t)
Silver
Grade
Ox/S(1)
(g/t)
Copper
Grade
Ox/S(1)
(%)

Gold
Production
(k oz)

Silver
Production
(k oz)

Copper
Production
(t)
Gold
Equivalent
Production(3)
(k oz)
1 9,000/
-
0.78/
-
1.68/
-
0.23/
-
150 186 9,464 201
2 9,000/
-
0.54/
-
1.28/
-
0.26/
-
130 174 12,233 194
3 9,000/
-
0.35/
-
0.96/
-
0.24/
-
86 131 11,858 148
4 9,000/
-
0.26/
-
1.17/
-
0.22/
-
63 148 11,028 121
5 9,000/
-
0.31/
-
1.16/
-
0.21/
-
69 151 10,352 124
6 4,000/
5,000
0.52/
0.52
1.40/
1.27
0.22/
0.29
133 194 17,195 223
7 4,000/
5,000
0.35/
0.41
0.72/
1.09
0.19/
0.26
100 135 14,437 175
8 4,000/
5,000
0.43/
0.43
0.89/
1.20
0.23/
0.26
107 146 15,314 187
9 4,000/
5,000
0.47/
0.47
0.72/
1.20
0.26/
0.27
118 140 16,081 202
10 4,000/
5,000
0.36/
0.36
0.60/
0.90
0.25/
0.26
93 109 15,832 175
11 4,000/
5,000
0.25/
0.37
0.55/
1.08
0.23/
0.33
83 119 18,055 176
12 4,000/
5,000
0.51/
0.36
1.21/
1.11
0.16/
0.26
102 153 14,047 175
13 4,000/
5,000
0.67/
0.49
1.39/
0.95
0.21/
0.18
139 155 11,698 201
14 2,317/
5,000
0.20/
0.42
0.64/
0.85
0.14/
0.21
84 99 10,446 138
15 -/
1,028
-/
0.45
-/
0.88
-/
0.20
16 18 1,917 26
Total         1,472(4) 2,058(4) 189,959(4) 2,466(4)

(1)            Ox/S means oxide mineralization/sulphide mineralization

(2)            Nominal tonnes

(3)            At Spot Metal Prices.

(4)           Sums may differ due to rounding

Table 5:  Gabbs Project 2024 PEA Other Mine Production Parameters

Mining (M t)
Total waste tonnes mined 399.3
Total processed tonnes mined 125.3
Total tonnes mined 524.7
Recoveries (%)
Heap - Gold Recovery, Oxide 78.3
Heap - Silver Recovery, Oxide 45.0
Heap - Copper Recovery, Oxide 54.0
Mill - Gold Recovery, Sulphide 94.5
Mill - Silver Recovery, Sulphide 50.0
Mill - Copper Recovery, Sulphide 79.9

Mining and Processing

Mining

The open pit waste and mineralized material will be mined by standard open-pit mining methods using an owner mining fleet of 136-tonne haul trucks and 15.3 m3 hydraulic shovels, fine crushed using a system incorporating a jaw crusher, cone crushers and high-pressure grinding rollers (HPGR).

Processing

Heap Leach

The Gabbs mineralized material is estimated to contain an average of 0.27% copper based on the mine plan used for this Updated 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.

After the crushing circuit, the mineralized material will be agglomerated with cement and conveyor stacked on the heap leach pad in 8-meter lifts then 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. For the first five years, the heap leach circuit will operate at a rate of nine million tonnes per annum, in years six through 14 the heap leach circuit will operate at a rate of four million tonnes per annum.   

Mill

The ROM feed material to the mill will use the same crushing circuit as the heap leach facilities.  The mill feed will be crushed to P80 6.3 mm, (1/4”) in a three-stage crushing circuit, with the third-stage an HPGR.  The ore will be conveyed to a single-stage ball mill circuit.  Sulfide and oxide mineralized material will be campaigned through the mill as the oxide material will not be treated in the flotation circuit.  The milled sulphide product will be treated in a flotation plant to produce a copper concentrate suitable for sale.  The flotation tailings and ground oxide material will be thickened, then direct cyanide leached to dissolve gold, silver and copper.  The leached solids will be washed in a CCD circuit to remove the dissolved metals and cyanide.  The dissolved copper and silver will be recovered from the CCD overflow solution in a SART plant as a copper/silver sulphide precipitate.  Regenerated sodium cyanide from the SART plant will be recycled to the leach circuit.  Gold in the SART plant barren solution will be recovered in an ADR plant and refined to produce doré bars.  The CCD tails are treated in a cyanide destruction circuit, filtered, and conveyed to a “dry stack” storage facility.

Opportunities

2024 PEA Comparison to the 2023 PEA 

The 2023 PEA contemplated processing at a rate of six million tonnes per year over a 13.4 mine life based on heap leach processing for the first five years and mill processing for the remainder of the mine life, with oxide and sulphide mineralization campaigned through the mill.  Under the 2023 PEA, oxide mineralization below the mill cutoff grade is not processed. 

As noted above, the 2024 PEA contemplates processing at a rate of nine million tonnes per year over a 14.2-year mine life based on heap leach processing for the first five years followed by concurrent heap leach processing at four million tonnes per year and mill processing at five million tonnes per year for the remainder of the mine life.  Under the 2024 PEA, oxide mineralization will be heap leached and sulphide mineralization will be milled.

Capex for the 2024 PEA is higher than for the 2023 PEA as, not only has production increased to 9 million tonnes per annum from six million tonnes per annum, the 2024 PEA maintains both heap leach processing and mill processing from year six through the remainder of the mine life, while the 2023 PEA only provides for milling from year six onwards.  The 2024 PEA allows oxide mineralization, after year five, that does not satisfy the mill cut off to be heap leached increasing the total tonnes processed from approximately 79 million tonnes in the 2023 PEA to over 125 million tonnes in the 2024 PEA. 

Economic sensitivities for the 2024 PEA are compared to those for the 2023 PEA at Base Case and Spot Metal prices, with the 2023 PEA updated for current costs, in Table 6 below. 

Table 6:  Gabbs Project Comparison of 2024 PEA to 2023 PEA Economics

  2023 PEA
Base Case
2024 PEA
Base Case
2023 PEA
Spot Case
(1)
2024 PEA
Spot Case
(1)
Gold Price (US$/oz) $1,950 $1,950 $2,414 $2,414
Silver Price (US$/oz) $25.00 $25.00 $31.48 $31.48
Copper Price (US$/lb) $4.50 $4.50 $4.71 $4.71
Net Revenue (US$) $3.7 billion $4.6 billion $4.3 billion $5.4 billion
After tax NCF(2) (US$) $939.6 million $1.1 billion $1.5 billion $1.7 billion
After tax NPV(2) 5% (US$) $485.0 million $550.0 million $818.6 million $949.2 million
After tax NPV(2) 10% (US$) $244.3 million $257.0 million $472.8 million $530.0 million
After tax IRR(2) (%) 23.8% 21.0% 36.8% 33.5%
Payback(3)/Mine Life (years) 2.5/13.4 3/14.2 1.7/13.4 1.7/14.2

(1)            As of May 17, 2024

(2)            NCF means net cash flow; NPV means net present value; IRR means internal rate of return.

(3)            Preproduction capital, excluding mill and heap leach sustaining capital

Gabbs Project 2024 Mineral Resource Estimate

The April 2024 Updated Mineral Resource Estimate (“2024 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 2024 MRE and the June 2023 Mineral Resource Estimate (see news release dated September 11, 2023) is the decrease in the oxide cut-off grade to 0.27 g/t gold equivalent from 0.28 g/t gold equivalent and a decrease in the sulphide cut-off grade to 0.36 g/t gold equivalent from 0.44 g/t gold equivalent.  As a result, both oxide and sulphide Mineral Resources have increased. 

Table 1:  2024 Gabbs Project Pit Constrained Mineral Resource Estimate(1)(2)(3)(4)

Mineral
Resource
Classification

Tonnes
(M)
Gold Grade
(g/t)
Silver Grade
(g/t)(5)
Copper
Grade
(%)

Gold
(M oz)

Silver(5)
(M oz)

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

Gold Eq.
(M oz)
Indicated

49.8 

0.45 

1.36 

0.27 

0.72 

2.17 

297.0 

0.73 

1.16 

Inferred

112.2 

0.35 

0.84 

0.23 

1.28 

3.04 

567.1 

0.63 

2.29 

  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 0.27 g/t and 0.36 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$1.60/tonne mining cost, and US$11.40 and $19.60/tonne respective oxide and sulphide processing costs; US$1.00/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. 
  5. Silver not included in gold equivalent calculation.

Oxide Mineral Resources at Gabbs consist of Indicated Mineral Resources of 760,000 ounces of gold equivalent (33.7 million tonnes grading 0.46 g/t gold, 1.43 g/t silver and 0.26% copper) and Inferred Mineral Resources of 1,040,000 ounces of gold equivalent (52.0 million tonnes grading 0.39 g/t gold, 0.81 g/t silver and 0.21% copper).  See Table 2 below for a breakdown of the oxide and sulphide Mineral Resources. 

Table 2:  2024 Gabbs Project Pit Constrained Mineral Resource Estimate by Rock Group(1)(2)

Rock Group Tonnes
(M)
Gold Grade
(g/t)
Silver Grade
(g/t)
Copper Grade
(%)
Gold
(M oz)
Silver
(M oz)
Copper
(M lbs)
Gold Eq. Grade
(g/t)
Gold Eq.
(M oz)
Oxide
Indicated
33.7 0.46 1.43 0.26 0.50 1.55 196.6 0.70 0.76
Oxide
Inferred
52.0 0.39 0.81 0.21 0.66 1.36 243.8 0.62 1.04
Sulphide
Indicated
16.1 0.43 1.21 0.28 0.22 0.62 100.4 0.77 0.40
Sulphide
Inferred
60.2 0.32 0.87 0.24 0.62 1.68 323.3 0.65 1.25

Technical Report

The Technical Report in respect of the Updated PEA and Mineral Resource Estimate of the Gabbs Gold-Copper Property has been filed on www.sedar.com.

View and download the Technical Report of the Gabbs Gold-Copper Property.

Qualified persons

The Updated PEA was prepared by Carl E. Defilippi, RM SME 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 this technical content relating to the Updated PEA.

The 2024 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 this technical content relating to the 2024 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 relating to the Updated PEA.

Historical Exploration

The Gabbs property is situated within the northwestern end of the Fairplay Mining District and has been intermittently explored by various operators from the 1970’s until 2011.  Over half of the drilling during this period concentrated on the Sullivan porphyry gold-copper deposit.  The mineralized zones at Gabbs had not been tested along strike or at depth, and of the 494 holes drilled at Gabbs between 1970 and 2011, 180 holes (36%) ended in mineralization. Also, a significant number of holes drilled prior to 2004 were, depending on the focus of the operator, assayed only for gold or only for copper, not both metals. Two pre-feasibility level studies were completed for Sullivan, in 1990 (by Gwalia Gold Mining) and 1995 (by Arimetco). Both studies were completed prior to the development of the sulphidization-acidification-recycling-thickening process (SART) for the recovery of oxide gold with copper.  The most recent substantive exploration work on the property was completed by Newcrest from 2002 to 2008, which included geochemical and geophysical surveying and drilling.  Newcrest decided in 2009 to divest its US properties and Gabbs was acquired by St. Vincent Minerals Inc. in 2010. Prior to P2’s 2021 exploration program, no exploration work had been undertaken at Gabbs since St. Vincent’s work in 2011.

Transaction Terms

On May 14, 2021, the Company acquired all the assets that comprise the Gabbs Project located on the Walker-Lane Trend in the Fairplay Mining District of Nye County, Nevada pursuant to an asset purchase agreement dated February 22, 2021, as amended by subsequent amendments dated May 4, 2021 and April 28, 2022 among the Company, P2 Gabbs Inc. (a wholly-owned subsidiary of the Company) and Borealis Mining Company, LLC (“Borealis”), an indirect, wholly-owned subsidiary of Waterton Precious Metals Fund II Cayman, LP (“Waterton”). To acquire the Gabbs Project, at closing the Company paid US$1million to Borealis, and issued 15 million shares in its capital to Waterton and agreed to pay an additional US$9 million to an affiliate of Borealis, Waterton Nevada Splitter, LLC (“Splitter”), over the following two years. (See the Company’s news releases dated February 23, 2021, announcing the acquisition of the Gabbs Project, and May 5, 2021 and April 28, 2022.), announcing amendments to the terms of the acquisition of the Gabbs Project).

Under an amending agreement dated March 6, 2023, the Company restructured the outstanding payment terms.  P2 issued to Splitter 3,320,534 shares in the capital of the Company and agreed to the following payment terms: (a) US$150,000 on or before December 31, 2023, (b) US$250,000 on or before December 31, 2024, (c) US$2 million on or before December 31, 2025 and (d) US$2.4 million on or before December 31, 2026. The Amending Agreement also contemplates, (x) if P2 raises, through the issuance of debt or equity, in excess of C$7.5 million (excluding flow-through funds), 10% of the funds raised will be paid to Splitter against the longest dated milestone payment and (y) on the sale of an interest in, or of, Gabbs, the proceeds will be paid to Splitter up to the amount outstanding at the time.

In addition, P2 issued to Splitter a US$4,000,000, zero coupon convertible note (the “Note”) with a four-year term (expiring March 5, 2027) convertible at a price of C$0.30 per share provided that the Note cannot be converted if all payments due under the Amending Agreement have been made at the time the Note is called (other than if a change of control is to occur prior to repayment of the Note). The Note can be called at any time on payment of 115% in the first year, 130% in the second year and 150% thereafter and is due on maturity, an event of default or a change of control.   Also, under the Note, approval by the shareholders of the Company is required if conversion of the Note would make Splitter a Control Person (as defined in the Exchange’s Corporate Finance Manual). (See the Company’s news releases dated March 6, 2023, March 21, 2023 and March 29, 2023.) announcing the terms of the re-structuring of the terms of the Gabbs Project.)

On March 5, 2024, P2 announced that it closed the agreement to settle the outstanding debt related to the acquisition of the Gabbs Project and the first tranche (the "First Tranche") of the concurrent non-brokered private placement of convertible debenture units (the "Units") for $1,362,000 (the "Offering"). In settling the debt, P2 entered into a termination agreement (the "Termination Agreement") with Waterton Nevada Splitter, LLC ("Splitter"), an affiliate of Waterton Precious Metals Fund II Cayman, LP pursuant to which P2 will issue or pay to Splitter (a) US$1 million (paid) and 5,231,869 common shares (issued) in the capital of the Company ("Shares") at closing at a deemed price of C$0.07 per Share, (b) US$125,000 on or before January 31, 2025 , and (c) US$125,000 on or before January 31, 2026. 

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