
OVERVIEW
The 100% owned Ağı Dağı and Kirazlı gold development projects are located in Çanakkale Province on the Biga Peninsula of northwestern Turkey. Ağı Dağı is located about 50 kilometres ("km") southeast of Çanakkale, and Kirazlı is located approximately 25km northwest of Ağı Dağı. The Company also owns the Çamyurt deposit located approximately 4km from Agi Dagi. Alamos acquired the projects January 6, 2010 from Teck and Fronteer Development for total consideration of approximately $90 million.
Positive feasibility studies were completed on Ağı Dağı and Kirazlı in 2017 with both projects contemplated as stand-alone open-pit, heap-leach operations. These studies were a continuation of the pre-feasibility study completed on the projects in 2012. Under the feasibility study, Ağı Dağı is expected to produce an average of 177,600 oz of gold at mine-site all-in sustaining costs1 of $411/oz over a 6 year mine life. A separate preliminary economic assessment was completed on the nearby Çamyurt deposit which assumes mineralized material from Çamyurt is trucked and processed through infrastructure at Ağı Dağı after that mine has been depleted, resulting in a combined mine life of nearly 10 years between the two projects.
The Company expects to first develop Kirazlı and then utilize cash flows from that operation to help fund development of Ağı Dağı. Following a construction decision, the Company expects a 36 month development timeline for Ağı Dağı, including approximately three months of pre-commercial production. The critical path task for the completion of the Ağı Dağı project will be the construction of the water reservoir.
Location
Ağı Dağı is located approximately 50km southeast of Çanakkale. Kirazlı and the early stage Çamyurt
Project are located approximately 25km northwest and 4km, respectively from Ağı Dağı. The projects are located in the Çanakkale Province in the Biga Peninsula of northwestern Turkey, some 250km by air southwest of Istanbul or 800km west of Ankara, Turkey’s capital. The Company maintains an administrative office in Ankara, Turkey, and exploration offices in Etili and Sogutalan, both small towns located in the Biga District of Turkey. These offices support all activities for the Aği Daği and Kirazlı Projects. Çanakkale is the largest centre on the Biga Peninsula with a population of approximately 100,000. Infrastructure in close proximity to the project is excellent and well-serviced with paved roads, electricity, transmission lines, and electricity generating facilities, the most significant being a large coal-fired power plant adjacent to the nearby Town of Çan, which has a population of approximately 30,000.
The Aği Daği property currently consists of a total of 10,514 hectares of mineral tenure in fifteen contiguous operation and exploration licenses covering a prominent ridge with 900 metres ("m") of relief and includes the Çamyurt Project. Subsequent to December 31, 2011, the Company acquired an additional 5,171 hectares in three concessions at Aği Daği through auction. Mineral rights for all concessions comprising the Turkish assets are controlled by Kuzey Biga and Doğu Biga, Turkish subsidiaries of the Company. As all projects are located in a forestry reserve, surface rights are controlled by the State government of Çanakkale.
History
On January 6, 2010, the Company acquired the Ağı Dağı and Kirazlı advanced-stage development projects through the purchase of three Turkish companies held by Teck Resources (“Teck”) and Fronteer Development Group (“Fronteer”). The Company paid a total of $40 million cash and issued an aggregate of 4 million common shares to Teck (as to 60%) and Fronteer (as to 40%), for total consideration amounting to $90 million at the closing of the sale.
In March 2010, the Company published a positive preliminary economic assessment technical report (“Scoping Study”) evaluating the economic potential of developing Ağı Dağı and Kirazlı into gold mines. This was followed up by a positive pre-feasibility study completed on both projects in 2012. Positive Feasibility Studies were completed on both projects in 2017.
GEOLOGY AND MINERALIZATION
Geology
The Aği Daği and Kirazlı deposits are epithermal, high-sulphidation, disseminated gold systems where gold mineralization is hosted within Miocene-age rocks.
At Ağı Dağı the Oligo-Miocene volcanics mainly consist of andesite porphyry, porphyritic andesites and dacite-rhyolite flows and tuffs. The andesite porphyry facies occurs at the base of the sequence and the dacite-rhyolite facies at the top. This sequence appears to occur in two parallel, northeast trending basins along the length of Ağı Mountain. Phreatic and phreatomagmatic breccias cut the entire volcanic sequence. These breccias were emplaced as mushroom shape pipes with northeast trending roots that were identified to a vertical depth of 400m and over a 2km strike extent.
There are five main zones of gold mineralization present at Ağı Dağı. The Baba, Fire Tower and Deli zones occur within the interpreted southeastern basin and the Ayi Tepe to Ihlamur mineralized zones occur in the interpreted northwestern basin.
Hydrothermal alteration at Ağı Dağı covers an area in excess of 25km² and exhibits many of the alteration facies that typically relate to high-sulphidation, epithermal gold deposits including: silicic, vuggy silica, advanced-argillic, argillic, propyllitic, and sericitic facies. Silicification with vuggy and massive silica is the most prominent alteration type surrounded by several facies of advanced argillic then argillic alteration.
Mineralization
At Ağı Dağı, gold mineralization is associated with a northeast trending silica cap rock about four km by two km in extent which forms a topographic high 700 to 900m in relief. The gold mineralization is disseminated and is associated with intense silicic alteration comprised of both massive and vuggy silica. Host rocks include volcanic felsic to intermediate tuffs and flows and phreatic breccias. Pyrite is the most abundant primary sulfide mineral associated with gold in the sulphide rocks. Trace to minor amounts of enargite, covellite, galena, and molybdenum are present locally.
Gold mineralization appears to be continuous from Baba through Fire Tower zone and into the Deli zone, which is a total distance of over 4km. Minable resources have been generated for the Baba and Deli zones of the Ağı Dağı deposit and have also been developed for the Fire Tower zone.
The bulk of the gold resources have been defined at the Baba and Deli zones. Gold mineralization in the Baba zone occurs within or spatially associated with a large, upward-flaring, matrix-supported heterolithic phreatic breccia that cuts dacite tuffs and andesite flows. Silicification (often vuggy and/or crackle-brecciated) appears to be related to this breccia body and overprints the breccia and the dacite. Gold mineralization largely occurs within the breccia body but occasionally extends into the dacite tuffs.
Some lower-grade mineralization also occurs in the andesite adjacent to the breccia. The bulk of gold mineralization occurs within the oxide zone.
Gold mineralization at Deli appears to be related to a more classic high-sulphidation epithermal model with elevated gold-lead-arsenic-silver. It occurs in an intensely silicified package of rhyolite – andesite volcanics that are intruded by EW-elongated breccias. Gold is again associated with the breccias and (mainly silica) altered volcanics. Most of this package has been oxidized.
Mineralization along the Ayi Tepe – Ihlamur trend has only been sporadically drilled and additional drilling is required to quantify the very favorable mineral potential.
MINING AND PROCESSING
Mining
Conventional open pit mining methods will be utilized at Ağı Dağı with contract mining to be employed. Ağı Dağı is comprised of two deposits which form the Baba and Deli pits. Baba and Deli are located approximately 2.5km apart. The final pit designs are based on a 5m bench height. A traditional drill, blast, load and haul sequence will be used to deliver ore to the crushing circuit. Waste produced over the life of the mine will be used as engineered fill for the leach pad foundation, primarily during the pre-production phase, trucked to the waste rock dump located directly north of the Deli pit, or backfilled into the pits once the ultimate pit bottoms are achieved.
As with Kirazlı, an opportunity to improve the design of the pit slopes at Ağı Dağı was outlined in the 2012 pre-feasibility study and additional geotechnical work was subsequently undertaken. The geotechnical evaluation was based on core logging, point load testing and laboratory analysis of the geotechnical core holes. Based on the findings, the recommended inter-ramp/overall pit slope angles have been increased to a range of 35 to 48° depending on the sector of the pits with all but one of the sectors between 40 and 48°. This has reduced the amount of waste to be mined resulting in a lower life of mine waste-to-ore ratio of 1.03:1, from 1.16:1 in the 2012 pre-feasibility study. This has helped reduce the mining cost per tonne of ore and improved the overall economics of the project.
Processing and Infrastructure
Ağı Dağı has been designed as a 30,000 tonnes per day (“tpd”) heap leach operation utilizing a multiple lift, single use leach pad. Ore will be mined from both the Baba and Deli pits and processed through two primary crushers, one located near each pit. The primary crushed ore will then be conveyed to a central secondary crushing circuit where it will be crushed to a nominal size of 26 millimetres. The secondary crushed ore will be drum agglomerated, stacked on the leach pad by conveyor stacking and processed with conventional heap leaching methods.
The crushed ore will be stacked in 10m lifts with the leach pad facility to be constructed in three phases to an ultimate height of 70m. Phase 1 will have a capacity of 29.7 million tonnes, phase 2, a capacity of 19.8 million tonnes, and phase 3, a capacity of 24.1 million tonnes for an ultimate capacity of 73.6 million tonnes. This is approximately 19.2 million tonnes larger than the current mineral reserve of 54.4 million tonnes to accommodate future potential exploration success and the current 16.6 million tonnes of mineralized material included within the PEA mine plan for Çamyurt. The capital required for all three phases is included within the total life of mine capital estimate for Ağı Dağı.
A dilute cyanide solution will be applied to the crushed ore over a 90 day leaching cycle with the pregnant solution collected and processed through the adsorption-desorption-recovery (“ADR”) plant where gold and silver doré will be produced.
Based on column tests conducted on the different alteration types at Ağı Dağı, gold and silver recoveries are expected to average 80% and 25%, respectively.
Ağı Dağı will be supplied with power by connecting to commercial power. Overhead power lines will connect 34.5 kV, three phase and 50 Hz power system to a metering and switching substation located on site near each primary crusher. In the event of a power failure, a diesel fired backup generator will be used to supply emergency power.
Operational water will be supplied via a pipeline from a planned reservoir to be constructed by Alamos. The reservoir for Ağı Dağı will be independent of the reservoir to be constructed for the Kirazlı project. In conjunction with the Ministry of Forestry and Water Affairs – State Hydraulic Works (“DSI”), a water reservoir project has been designed to supply the process water requirements of the Ağı Dağı project and clean drinking water for the nearby communities. The feasibility study on the reservoir project has been approved by DSI.
Since acquiring the Ağı Dağı and Kirazlı projects in early 2010 and in line with the Company’s objectives of sustainable development and social responsibility, the Company recognized the importance of improving the quality of potable water delivered to the local communities within its project areas and has committed to the development of the reservoir.
Production from Ağı Dağı and Çamyurt is subject to a 2% net smelter return (“NSR”) royalty payable to Franco-Nevada Corporation.
Technical Information and Cautionary Notes on non-GAAP Measures and Additional GAAP Measures