Revised PEA

Revised PEA Summary at a Gold Price of US $1,200/oz*

A PEA is preliminary in nature and there is no certainty that the PEA results can, or will, be realized. Mineral resources do not have demonstrated economic viability, and therefore do not constitute mineral reserves. 

Mineral Resource Estimate: 

Project Mineral Resource Estimates were updated in February 2017 (News Release February 2, 2017) by independent consultant MPR Geological Consultants of Perth, Western Australia using Multiple Indicator Kriging (MIK), and are shown below at a range of cut-off grades:

Notes: Defined under Canadian National Instrument 43-101 ("NI 43-101"), Standards of Disclosure for Mineral Projects. Numbers may not add up due to rounding.

The Mineral Resource has been estimated using the results of 79,815 metres of drilling (6,136m of diamond drilling and 74,505m of reverse circulation drilling) completed between November 2012 and December 2016.

No Mineral Reserves are declared for the project. In compliance with NI 43-101, the Revised PEA study is based on Indicated and Inferred Mineral Resources**. Pt optimizations were carried out using a gold price of US$1,100/oz on indicated and inferred resources. A series of optimized shells generated for each area and preliminary pit design undertaken based on a feed rates of 2.6, 3.0 and 3.4 Mtpa to determine optimal throughput rate. 3.4 Mtpa showed the highest NPV and was selected for pit design. Cut off grades (Au g/t) were estimated as follows:

The table below shows the breakdown of material by resource type within the pit designs:

Note: Numbers may not add up due to rounding
**Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Mining 

The Mining section of the study has been completed by Deswik Europe. Both GSS and Wadi Doum are amenable to development as open pit (OP) mines as all mineralization commences at surface with limited pre-strip. Mining of the deposit is planned to produce a total of 41.0 Mt of CIL feed from Indicated Resources and 3.4 Mt of feed from Inferred Resources and 104.4 Mt of waste (strip ratio 2.35:1) over a 13.2-year project production life, with 6 months of pre-production waste strip.

Mine planning for Block 14 was conducted using DESWIK software. As derived from a geotechnical assessment completed by SRK Consulting (UK) Ltd, inter-ramp pit slope angles range from 37° in the near surface weathered oxide rock mass to between 58° and 65° in the fresh rock depending on structural geology controls and vertical inter-ramp height.

Pit optimizations were carried out using a gold price of US$1,100/oz and a series of optimized shells generated for each area and preliminary pit design undertaken based on a feed rates of 2.6, 3.0 and 3.4 Mtpa to determine optimal throughput rate. 3.4mtpa showed the highest NPV and was selected for pit design.

Cut off grades (Au g/t) were estimated as follows:

Contract open pit mining costs were derived from first principles based on equipment required and include pit and dump operations, road maintenance, mine supervision and technical services cost. In addition to Wadi Doum mining costs include the haulage of material to the process plant.

The average open pit operating cost (US$/t mined) is shown below:

In addition to a transfer cost of $7.74/t will be incurred on material from Wadi Doum.

In compliance with NI43-101, the revised PEA study is based on Indicated and Inferred Mineral Resources. The table below shows the breakdown of material by resource type within the pit designs:

Note: Numbers may not add up due to rounding

Processing

Based on the results of metallurgical test work by SGS Mineral Services in Vancouver, Lycopodium has defined a process flowsheet which is based on a processing rate of 3.4 Mtpa.

The treatment plant design incorporates single stage primary crushing with a jaw crusher to produce a crushed product which flows to a crushed material surge bin. Surge bin overflow is conveyed to an emergency stockpile. Material from the emergency stockpile is reclaimed by front end loader (FEL) to feed the mill during periods when primary crushing is off-line. The milling circuit is configured as a two-stage circuit with a SAG mill and ball mill (SAB), both with the ability to operate in closed circuit. Milled material undergoes pre-leach thickening to increase the slurry density feeding the leach and carbon in leach (CIL) circuit to minimise tankage, improve slurry mixing characteristics, and reduce overall reagent consumption. The leach step consists of a leach and CIL circuit incorporating three dedicated leach tanks ahead of six stages of CIL for gold adsorption. Gold desorption and recovery is provided via a split AARL elution circuit, electrowinning, mercury retorting and gold smelting to recover gold from the loaded carbon to produce doré, and safely remove mercury. Tailings are thickened to recover and recycle process water from the CIL tailings with the tailings pumped to the tailings storage facility (TSF).

A summary of the ultimate recoveries used in the study is summarized below:

Process Cost Summary

Process operating costs have been developed for each material-type. In general, costs have been built up from first principle estimates, with quotations obtained for major reagents and consumables and consumption rates based on metallurgical test work, calculations or modeling. Minor reagents, laboratory, expatriate labour rates and a number of G&A costs have been sourced from the Lycopodium database. The process operating cost includes all direct costs to produce gold bullion for the Project.

Power will be generated on site using diesel generators under a Build Own Operate (“BOO”) contract. A cost of $0.50/l has been used in determining the power costs.

The table below details the Process costs used in the study which are inclusive of general and administrative costs. Process costs are presented on the basis of fixed, $18.0M/yr and variable costs. Costs are based on pricing as at 2Q 2017 and have an accuracy of +/- 30%.

Capital Cost Summary
A capital cost estimate was developed to an accuracy level range of +/- 30% to cover engineering, procurement, construction, and start-up of the mine and processing facilities, as well as the ongoing sustaining capital costs. The capital cost estimates were developed for a conventional open pit mine, CIL process plant and supporting infrastructure for an operation capable of treating 3.4 million tonnes of material per annum. For the purpose of this PEA, power supply via a third-party Build Own Operate Transfer and a contract mining scenario have been assumed.

The estimate covers the direct costs of purchasing and constructing the CIL facility and infrastructure components of the project and an allowance for mining related infrastructure.

Indirect costs associated with the design, construction and commissioning of the new facilities, owner’s costs, and contingencies have also been estimated, based on percentages of the direct capital cost estimate. Risk amounts are specifically excluded from this estimate. A breakdown of the capital cost estimates is shown below:

Pre-production Capex

Sustaining Capex

Water Supply
Work undertaken by GCS Water and Environmental Consultants of South Africa (GCS) during the course of the pre-feasibility study showed that the HA8 water resource had limited expansion potential.

As a result, SkyTEM Surveys of Denmark, an airborne geophysical contractor specialising in water exploration were contracted to fly a 5,000km electromagnetic survey with the aim of expanding the HA8 discovery and investigating a new area to the west of Block 14 (Area 5) where two old production wells are located.

The survey in Area 5 returned positive results over a large area and has now been followed up with drilling. The aquifer, which is hosted within the Nubian Sandstone Formation (NSF) has been intersected in 6 boreholes between 58m and 90m from surface. 48-hour pump test results have shown consistent aquifer yields and GCS are comfortable that the aquifer is highly likely to sustain the output required for a 3.4Mtpa process plant.

The bore field will be connected to plant site at GSS by an 80km HDPE pipeline.

Environment
In 2014, Orca initiated comprehensive environmental baseline studies under the supervision of Mineesia, a UK consultancy with experience of remote desert projects. Terms of Reference for the Environmental Impact Assessment were submitted to the Government in 2015 as part of the Environmental Protection and Management Plan.

The site is located in a remote location, with no human settlements nearby (the closest town, Abu Hamad is 200km to the south). There are numerous artisanal and small-scale mining operations in the vicinity of the Project, although these are mostly illegal and unlicensed. No other sources of industry are present in the area. There are no permanent surface watercourses within the Project area and there is limited evidence of groundwater in the crystalline basement. Soils have little to no agricultural potential. Little vegetation is present and fauna, including domestic livestock, is limited due to the scarcity of permanent water sources.