Acquisition of the Sigma-Lamaque Milling

Acquisition of the Sigma-Lamaque Milling Facility and Mines
September 4, 2014
Forward Looking Statements
Cautionary Note Regarding Forward Looking Statements: Certain disclosure in this release, including the closing of the transaction
and the agreement with a local construction company, the approval of Québec Ministry of Energy and Natural Resources of a
revised reclamation plan and the cost of the associated reclamation obligation, the potential synergies and integration of the mill
and processing facilities with Lamaque South, the ability to access Lamaque South mineralization through existing underground
portals, the operational capacity of the mill, the completion of an integrated development plan, the estimates of the mineral
resource inventory on the Sigma property and the acquisition of the Sigma II claims constitute forward-looking statements. In
making the forward-looking statements in this release, the Company has applied certain factors and assumptions that are based
on the Company's current beliefs as well as assumptions made by and information currently available to the Company, including
that the Company is able to obtain any government or other regulatory approvals, the Company is able to procure sufficient
financial resources, that the Company is able to procure required personnel, equipment and supplies in sufficient quantities and on
a timely basis and that relevant third party studies and reports prepared for the Company are consistent with management's
expectations. Although the Company considers these assumptions to be reasonable based on information currently available to it,
they may prove to be incorrect, and the forward-looking statements in this release are subject to numerous risks, uncertainties
and other factors that may cause future results to differ materially from those expressed or implied in such forward-looking
statements. Such risk factors include, among others, those matters identified in its most recently filed MD&A and other continuous
disclosure filings. Readers are cautioned not to place undue reliance on forward-looking statements. The Company does not
intend, and expressly disclaims any intention or obligation to, update or revise any forward-looking statements whether as a result
of new information, future events or otherwise, except as required by law.
Integra’s Lamaque South project is under the direct supervision of Hervé Thiboutot, Eng. and Senior Vice-President of the
company, and Francois Chabot, Eng., Operations and Engineering Manager of the Company, both Qualified Person (“QP”) as
defined by National Instrument 43-101. The Company’s QPs have approved the scientific and technical content of this release.
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Topics Covered
Today’s Speakers
Stephen de Jong – President and CEO
George Salamis – Director and VP of Corporate Development
1
Transaction Overview
7
Photos of Sigma-Lamaque Milling Facility and
Mines
2
Transaction Highlights
8
Due Diligence Summary
3
Consolidated Land Position
9
Revised Environmental Reclamation Estimate
4
Acquisition and Agreement Overview
10
Map of Area of Interest
5
Waste Rock Co. Background and Agreement
Benefits
11
Upcoming Events
6
Milling Facility Overview
12
Questions and Comments
13
Appendix
3
Transaction Overview
•
Integra Gold Corp. (“Integra”) has entered into an Asset Purchase Agreement to acquire the Sigma-Lamaque Milling Facility and
Mines (the “Property”)
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The Property has been on a care and maintenance program since its closing in May 2012, and is being acquired from the
court-appointed receiver of the assets, Samson Bélair/Deloitte & Touche Inc. (the “Vendor”)
•
Management has been engaged in a review of various mill acquisition opportunities in the Val-d’Or area since early 2014 and
identified the Property as an excellent opportunity to secure high-quality infrastructure adjacent to Integra’s Lamaque Project
(“Lamaque South”) at an attractive price
•
Total acquisition consideration for the Property is $7.55M comprised of $1.80M cash and 25 million common shares valued at
$5.75M (based on current share price of $0.23 per share), subject to adjustment as discussed below (“Integra Shares”) 1
– The share consideration issuable at closing of the transaction will be the greater of 25 million common shares and that
number of common shares having an aggregate value of $5.75M based on a price per share equal to the volume weighted
average price of the Integra Shares on the TSX Venture Exchange (“TSXV”) for the five trading days preceding the closing of
the transaction, subject to a maximum issuance of 19.9% of issued share capital in all cases
•
In connection with the acquisition, Integra has entered into a waste rock agreement with a local construction materials and mining
service company (“Waste Rock Co.”), to grant Waste Rock Co. exclusive access and ownership over the waste rock on the Property
as well as certain mining claims in exchange for $1,025,000 cash to be used against the purchase price of the Property
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Waste Rock Co. will assume all environmental reclamation obligations associated with their acquired waste rock property
•
The transaction has received conditional approval from the TSXV and has been authorized by the Superior Court of Quebec, who
granted a vesting order pursuant to the receivership process
•
The transaction is anticipated to close in October 2014 and, in any case, must be completed no later than October 31, 2014
Note: All figures expressed in Canadian dollars.
1. Subject to a staged lock-up period of 18 months and certain sales restrictions as outlined in the Company’s press release dated September 3, 2014.
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Transaction Highlights
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Attractive Purchase Price
Substantial Asset Value
Minimal Share Dilution and No-Debt Burden
Reclamation Costs Mitigated through Waste Rock Agreement
Sigma Milling Facility Adjacent to Flagship Project
Potential Integration of Underground Infrastructure
Project Synergies
Tailings Infrastructure
Permits in Place
Minimal Carrying Costs
Mineral Resource Complementary to Mill Acquisition
Consolidates Land Position and Adds Exploration Targets
Government Support
Positive Impact on Local Community
5
Consolidated Land Position
6
Acquisition and Agreement Overview
Sigma-Lamaque Milling Facility and Mines
Cash: $1.80M
Integra Shares: $5.75M1,2
Integra
Consideration
Assets to be
Acquired
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$775,000 cash
$5.75M Integra Shares1,2
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Milling Complex
Tailings Site
Mining Concessions and Claims
Underground Infrastructure and Equipment
Measured and Indicated Resources: 586,000 oz
@ 4.96 g/t Au3
Inferred Resources: 1,853,000 oz @ 6.29 g/t
Au3
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Commitments
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Integra agrees to bear responsibility for all
environmental reclamation costs associated
with its acquired assets, including any
unexpected future costs above those currently
estimated
Integra will grant to Waste Rock Co. the
exclusive right to waste rock from the Property
and Lamaque South
Waste Rock Co.
Consideration
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$1,025,000 cash
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Waste Rock Piles
Certain Mining Concessions
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Waste Rock Co. agrees to bear responsibility for
all environmental reclamation costs associated
with its acquired assets, including any
unexpected future costs above those currently
estimated
Waste Rock Co. will authorize Integra to sample
waste rock piles to detect any potential gold
mineralization
Waste Rock Co. agrees to negotiate blasting
rights with Integra in the event mineral resources
are identified inside Waste Rock Co.’s mining
claims and shall facilitate any exploration on its
mining claims at Integra’s expense
Assets to be
Acquired
Commitments
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3.
Subject to adjustment at the Closing Date.
Subject to a staged lock-up period of 18 months and certain sales restrictions as outlined in the Company’s press release dated September 3, 2014.
Technical Report for the Lamaque Mine Project by Micon International Limited – August 2, 2011. See appendix for additional notes regarding this resource estimate.
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Waste Rock Co. Background and Agreement Benefits
Waste Rock Co. Overview
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Extensive experience as a supplier and
producer of construction materials
General contractor servicing residential,
industrial, mining, and civil engineering
industries
Civil Engineering
• Construction of Roads
• Site Preparation
• Excavation and Backfill
Environmental &
Mining
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Site Closures
Tailings Area Rehabilitation
Land Restoration and Seeding
Underground Backfill
Water Supply and Rainwater Systems
Concrete
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Pre-Mixed Concrete
High-Performance Concrete
Shotcrete
Rolled Compacted Concrete
Agreement Benefits
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Reduces overall cost of environmental reclamation
as waste rock will be removed from site
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Shares the environmental risks of the Property
between two parties
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Provides $1,025,000 cash towards purchase price
of the Property
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Maximizes the economic value of the Property by
generating utility from waste rock
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Creates additional jobs for the Val-d’Or community
through production from the waste rock
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Milling Facility Overview
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Operating capacity is 1,200 – 2,200 tpd and metallurgical gold recoveries from the mill have consistently been
reported by prior operators in excess of 95% processing similar mineralization as that encountered at Lamaque
South
In excellent condition and has been well maintained throughout the care and maintenance period initiated in
May 2012
Leaching and Carbon in Pulp
Crushing
Grinding
Theoretical 5,000 tpd capacity
Leaching circuit contains five 11.5m x 11.5m
agitated leaching tanks
CIP circuit includes seven agitated CIP tanks,
Lochhead Haggerty rotary kiln for carbon
regeneration
The grinding circuit comprises:
• Single 9’ x 12’ Allis Chalmers rod mill
• Krebbs 15 head classification cyclone
• Two 12’ x 14’ ball mills with target production
rates of 2,400 tpd with both ball mills operating
• Two Knelson concentrators
• Vibrating table
The crushing circuit comprises:
• Primary: metso C110 primary jaw crusher
• 150 tonne capacity receiving hopper
• Dainong rock breaker
• Triple deck sizing screen
• Secondary: Metso Nordberg HP400 cone crusher
• Belt conveyor to fine ore bin
Gravity Circuit and Refining
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Pregnant solution sent to one of two EW cells
with stainless steel mesh cathodes
Inductotherm 75kW capacity induction furnace
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Photos of Sigma-Lamaque Milling Facility and Mines
Figure 1: Milling Facility and Pit
Figure 2: Ball Mill
Figure 3: Inside the Milling Facility
Figure 4: Leach Tanks
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Photos of Sigma-Lamaque Milling Facility and Mines
Figure 5: On-Site Workshop
Figure 6: Open-Pit Mine
Figure 7: Portal Entrance in Pit
Figure 8: Tailings Pond and Waste Rock
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Due Diligence Summary
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In connection with the acquisition, Integra commissioned various independent, third-party environmental and
engineering firms to assist with due diligence on the following:
– Estimate the capital and operating costs associated with restarting the mill
– Environmental review of the mine site
– Evaluation of the tailings management facility
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Summary of key due diligence findings:
Costs
 The original Preliminary Economic Assessment (“PEA”) estimated $46 per tonne in
processing, including $15 to $20 per tonne in transport and toll milling fees which will no
longer be applicable
Environmental
 Total environmental reclamation obligation of $12.1M
 $3.5M reclamation bonding already in place
 Integra and Waste Rock Co. will each submit a revised reclamation plan to the Québec
Ministry of Energy and Natural Resources (“MERN”) based on their area of interest
Tailings
 Tailings pond currently has two to three years of capacity which can be increased to
accommodate future capacity requirements by raising one of the dykes
 Maintained and monitored by a full time environmental manager throughout the care
and maintenance period
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Note: All figures expressed in Canadian dollars.
Revised Environmental Reclamation Estimate
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Estimated total environmental reclamation obligation of $12.1M
With the waste rock removed as planned under the agreement with Waste Rock Co. the environmental
reclamation obligation for Integra and Waste Rock Co., based on their respective area of interest, is expected
to be $5.0M and $7.1M respectively
$3.5M reclamation bonding currently in place
– Anticipated bonding split based on area of interest for Integra and Waste Rock Co. is $2.5M and $1.0M,
respectively
Environmental Reclamation Obligation Breakdown
Reclamation Estimate
$12.1M
Waste Rock Co.
$5.0M
Gross
Environmental
Obligation
$7.1M
Waste Rock Removal
$5.1M
$2.5M
Bonding
Note: These figures
are estimates and
will be subject to
approval by the
MERN after Integra
and Waste Rock Co.
each submit a
revised reclamation
plan based on the
respective areas of
interest
$1.0M
=
$2.5M
Net Obligation
$1.0M
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Map of Area of Interest
14
Upcoming Events
2014
Activity
Announcement of
Transaction
Q3
Execution
Plan
Resource Update
Engineering
Socio-economic
Updated Mine Plan
Revised Reclamation Plan for
Sigma-Lamaque
Q4
Q1
Q2
Analyst Conference Call
Closing of Transaction
Drilling
2015
Regulatory and TSXV Approvals
Fortune Zone – 3,000m /
Triangle Condemnation –
1,200m
Significant Exploration Targets –
15,000m
Parallel, Triangle and Fortune
Review of Sigma-Lamaque
Mineral Resources
Mine Design, Geotechnical, Infrastructures, Hydrogeological
Consultation
MERN Approval
MERN Approval
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Questions and Comments
Appendix
Sigma-Lamaque Milling Facility and Mines History
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The Sigma-Lamaque Milling Facility and Mines are comprised of the former Sigma (Placer Dome) and Lamaque (Teck Cominco)
underground mines
Over 60 years of operating history collectively producing over 9M ounces of gold
Developed with 10 surface shafts to a maximum depth of 1,100m below surface, and has a fully permitted milling facility and
tailings pond
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Lamaque underground mine operated by Teck Cominco from 1933 – 1985, producing ~4.6M ounces of gold
Sigma underground mine operated by Placer from 1937 – 1997, producing over 4.5M ounces of gold
Ownership of the two mines consolidated under Placer in 1993
McWatters Mining Inc. (“McWatters”) acquires the Sigma-Lamaque mine in 1997
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McWatters scales back underground production reducing output from 2,200 tpd to 500 tpd from 1998 – 1999, and subsequently closes
underground operations in 1999
Open-pit mining developed in 1998 with capacity expanding from 3,000 tpd to 5,000 tpd from 2000 – 2002 but never reaches commercial
production
McWatters enters into bankruptcy shutting down all operations in October 2003
2004
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Century Mining Corporation (“Century”) acquires the Sigma-Lamaque mine from the McWatters bankruptcy in September 2004
2005
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Initial bulk sampling yields positive results leading to commencement of full scale operations in April 2005
2008
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Sigma-Lamaque mine placed on care and maintenance in July 2008 due to lack of financing
2009
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2010
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Century secures debt financing of $33M, equity financing of $25M, and enters into a forward contract with Deutsche Bank AG
(“Deutsche Bank”) to deliver 49,868oz of Au over a five-year term
Sigma-Lamaque mine reopened and production resumed in March 2010
2011
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Century becomes a wholly-owned subsidiary of White Tiger Gold Ltd. in March 2011
Micon International Limited completes a National Instrument 43-101 compliant technical report on the Sigma-Lamaque mine with an
updated resource estimate in August 2011
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Century defaults on the Deutsche Bank contract, and Century is placed in receivership in May 2012
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Sigma-Lamaque Milling Facility and Mines placed on care and maintenance in May 2012
1933
1997
1998
2003
2012
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Property Mineral Resource Estimate
As disclosed in the technical report commissioned by Century entitled “Technical Review of the Mining Plan/Operations and Audit
of the Resource and Reserve Estimates for the Lamaque Mine Project, City of Val-D’Or, Bourlamaque Township, Abitibi County,
Québec, Canada NTS Map 32C/04” dated August 2, 2011 (the “Technical Report”) completed by Micon International Ltd.
(“Micon”) and filed on the SEDAR profile of Century, mining concessions on the Property contain 586,000 oz of Measured and
Indicated gold resources at 4.96 g/t and 1,853,000 oz of Inferred gold resources at 6.29 g/t.
Integra has not independently verified this mineral resource estimate although, to the best of its knowledge, information and
belief, there is no new material scientific and technical information that would make disclosure of the mineral resources
inaccurate or misleading. Integra intends to commission Micon in 2014, the independent authors of the 2011 Technical Report for
the Property, to update the report incorporating any mining completed since the last disclosure and changes in assumptions.
Notes: As disclosed in the Technical Report dated August 2, 2011; effective date June 20, 2011. The estimate of the mineral
resources presented forthe Property were audited by William J. Lewis, B.Sc., P.Geo. and Dibya Kanti Mukhopadhyay, MAusIMM
(CP), of Micon, who are independent of Century. The cut-off grade is 1 g/t gold for substantially all of the reported resources. See
the Technical Report for additional information with respect to the Property.
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