Economic Uncertainty is Driving the Price of Gold Up

NEW YORK, January 29, 2019 /PRNewswire/ --

FinancialBuzz.com News Commentary

Recently, the mining industry has been experiencing a high demand for certain commodities, as industrial metals like copper and precious metals like gold are increasingly sought after. Often, the precious metal segment is primarily driven by demand within the jewelry sector. Now, however, the precious metal industry is also seeing large investments in gold and silver for long-term growth opportunities. According to data compiled by BCC Research, the global industrial metals, precious metals, and alloys markets was valued at USD 1.5 Trillion in 2016 and is projected to reach USD 2.1 Trillion by 2022. Furthermore, the industry is set to grow at a CAGR of 4.1% during the forecast years. The demand in the industry reached approximately 4.6 million kilotons in 2016 and is currently expected to reach 5.6 million kilotons by 2022, while growing at a CAGR of 3.5%. Bluestone Resources, Inc. (OTC: BBSRF), Barrick Gold Corporation (NYSE: GOLD), Freeport-McMoRan Inc. (NYSE: FCX), Yamana Gold Inc. (NYSE: AUY), Great Bear Resources Ltd. (OTC: GTBDF)

According to CNBC, gold prices have recently climbed to a new 6-month peak, breaking the USD 1,300 per ounce mark. Investors have funneled their money into gold due to concerns over an economic slowdown, as gold is traditionally a safe investment during times of uncertainty and weakness in the U.S. dollar. Furthermore, uncertainty also arose recently after China reported its declining economic data and disappointing retailer sales, according to MarketWatch. Investors are also paying close attention to the U.S. Federal Reserve's interest rate hike, which signals a growing economy. However, if the Fed does not raise the rates, it points to a neutral or declining economy. "Recent market volatility has confirmed that gold remains a safe-haven asset and the yellow metal helps to reduce volatility in a portfolio," said Giovanni Staunovo, an Analyst at UBS. "Gold prices have behaved as you would expect during the recent period of uncertainty, rising as expectations of Fed tightening next year have been cut sharply and equities have sold off."

Bluestone Resources, Inc. (OTCQB: BBSRF) is also listed on the TSX Venture

Exchange under the ticker symbol (TSX-V: BSR). Just announced breaking news this morning that, "the results of the Independent Feasibility Study ("Feasibility Study") prepared in accordance with National Instrument 43-101 ("NI 43-101") for its 100% owned high-grade Cerro Blanco Gold project (the "Project"). The Feasibility Study demonstrates that the Project represents a robust, rapid pay-back, high-grade underground mining operation.

Darren Klinck, President and CEO commented, "The Feasibility Study outlines a robust development-ready, underground gold mine with a modest capital expenditure demonstrating superior economics. The mine plan supports the original conviction that the Project can be developed into a small footprint, low impact operation that will provide significant opportunities for local stakeholders and generate attractive returns for investors. Furthermore, over the next six months as we optimize the project and work to establish adequate project financing, we will see significant opportunity to continue with our objective to upgrade Inferred Resource ounces and then update the mine plan to incorporate potential meaningful mine life extension, further enhancing project economics."

Feasibility Study Highlights

Unless otherwise indicated, all dollar amounts are stated in U.S dollars ("$"). Base case was completed at a gold price of $1,250/oz and a silver price of $18/oz.

• Average annual production of 146,000 ounces gold over the first three years of production.

• Average life of mine ("LOM") all-in sustaining costs ("AISC") of $579/oz (net credits), which would place the Project in the bottom end of the lowest quartile of the global cost curve.

• Average annual free cash flow of $91 million (CAD$117 million) per year over the first three years of production.

• After-tax internal rate of return ("IRR") of 34%.

• Net present value ("NPV") of $241 million after-tax (CAD$309 million).

• Initial capital of $196 million with an after-tax payback period of 2.1 years.

• Life of mine production of approximately 902,000 ounces over 8-year mine life.

• Proven & Probable Mineral Reserves of 940,000 ounces of gold and 3.6 million ounces of silver (3.4 million tonnes at 8.5 g/t Au and 32.2 g/t Ag). The Feasibility Study excludes an additional 357,000 ounces of Inferred Resources (1.4 million tonnes at 8.1 g/t Au and 23.6 g/t Ag).

"The Feasibility Study is a major milestone on the path to development for the Project. In a very short 18 months, we have assembled a terrific team in Guatemala and Canada, completed a significant amount of technical work, and delivered a Feasibility Study that demonstrates a materially de-risked project with attractive economics. Advancing the Cerro Blanco Project represents a tremendous opportunity to our many stakeholder groups including local communities in Guatemala, government partners, and our shareholders," commented Darren Klinck, President and CEO.

A corporate video presentation discussing the Feasibility Study is available for by visiting the Bluestone website, http://www.bluestoneresources.ca.

Project Enhancement Opportunities

Although Bluestone considers the Feasibility Study as providing a robust basis for moving forward with attractive returns and payback, opportunities have been identified to further enhance the Project economics and optimize the engineering. The Company intends to focus on the following opportunities over the next six months in parallel with project financing initiatives:

• Mine life extension through the potential conversion of a portion of the 360,000 ounces of Inferred Resources (per the press release dated September 11, 2018) to Measured and Indicated Resources through infill drilling (currently ongoing), followed by an updated mineral resource and mine plan.

• Potential resource growth from step-out drilling along existing veins that extend beyond the current resource envelope (currently ongoing).

• Identification of new high-grade veins during infill drilling program underway as illustrated in the press release dated January 9, 2019.

• Further optimization of the mine plan and sequencing through basic engineering and trade-off study review.

• Review opportunities to optimize backfilling assumptions including evaluating alternatives to paste fill which could reduce capital and operating expenditure.

• Preliminary test work in evaluating the potential of using ore sorting technologies was very successful and highlighted an opportunity as a cost-effective method to help reduce potential dilution and enhance the production profile by allowing new areas of the orebody to be economically mined.

A drilling program is currently underway as announced on November 13, 2018 and ongoing results will be incorporated into an updated resource estimate in Q3 2019 followed by an updated Feasibility Study.

Cerro Blanco Feasibility Study

The Feasibility Study provides a compilation of the geological, engineering, and hydrology work performed by the previous owners between 1997 and 2017, as well as work undertaken by Bluestone. The results of the Feasibility Study incorporate the infrastructure in place, including 3.2 kilometers of underground development decline, fully functional water treatment plant, maintenance shops, warehouse and office facilities, and a total of 580 holes and over 128,000 meters of drilling.

Bluestone engaged a consortium of independent consultants, led by JDS Energy & Mining Inc., an international engineering firm with extensive experience in both the construction and operation of mining projects. The Feasibility Study was supported by additional leading consultants with expertise in various fields, including: Capuano Engineering, Hatch Ltd., Kirkham Geosystems Ltd., and Stantec Inc.

An independent Technical Advisory Committee ("TAC") was established to act as a peer review over key technical aspects of the Feasibility Study. The TAC is a group of internationally recognized technical experts who have been engaged with management and the Engineering Area Leads throughout the Feasibility Study. Chaired by Alf Hills, the additional TAC members are Scott Donald (Water Management, Hydrogeology, and Groundwater Modelling), Allan Moss (Mining and Geotechnical), Roger Nendick (Processing and Infrastructure), Robert Sim (Resource Estimation), and Dr. Ward Wilson (Water and Tailings Management)…

Comparison to the February 2017 Preliminary Economic Assessment (PEA)

The February 2017 PEA presented a scenario at the time of acquisition with the information available from the previous owners. Since Bluestone acquired the Project, a comprehensive review of the geology and structural controls of the deposit has been completed and formed the basis for the new resource estimate (see press release dated September 11, 2018). This included an infill drilling program undertaken as part of the resource estimate update exercise and was successful in refining the resource model thereby confirming the understanding of the deposit. Dewatering, ventilation, and cooling are important aspects of the mine design at the Project and were investigated in detail with the Feasibility Study. A fully calibrated numerical ground water model was developed, allowing for a comprehensive assessment of the hydrogeological regime and optimization of the underground mine dewatering requirements, and development of a site-wide water balance. Precedents from existing mining operations that manage and control similar underground mining environments were benchmarked against and have validated Bluestone's assumptions and approach.

Key differences between the PEA and Feasibility Study include:

• Total ounces in the mineral resource remain virtually unchanged; however, slightly fewer ounces converted into the mine plan with the refined resource model. An infill drilling program is currently underway to convert Inferred Resources into Measured and Indicated Resources.

• Operating costs were affected with a shift in the split of mining methods driven from the new mine plan, resulting in an increase to the amount of cut and fill mining.

• With a better understanding of the groundwater conditions, operating costs increased to ensure the mine dewatering could be fully and properly managed in parallel with the mine plan.  In addition, enhanced ventilation has been included to ensure underground mine air quality and temperature are consistently managed.

• Additional pre-production and sustaining capital requirements are also necessary for dewatering infrastructure.

FEASIBILTY STUDY DETAILS

Geology and Mineral Resource Estimate

The Project is a classic hot springs-related, low sulphidation epithermal gold-silver deposit comprising a system of moderate to steeply dipping quartz-adularia-calcite veins. The Mineral Resource estimate has a footprint of 800 x 400 meters between elevations of 525 meters and 200 meters above sea level. The bulk of the high-grade veins occur as two upward-flared vein arrays (North and South Zones) that converge at depth into master feeder veins, that appear to define a positive flower structure. Most of the veins are hosted in a gently dipping sequence of siltstones, limestones, conglomerates, and andesitic tuffs (Mita Unit) that are overlain by approximately 100 meters of silicified conglomerates and sinter beds (Salinas Unit) representing an un-eroded paleosurface that forms the low-lying hill at the Project. The Salinas rocks are host to a tabular zone of low-grade disseminated gold and silver mineralization.

The updated Mineral Resource estimate is the result of 128,220 meters of drilling at the project (580 drill holes) by previous operators and Bluestone, including 104 holes (18,033 meters) drilled from underground. The Mineral Resource estimate is based on a new and robust geological and structural model, supported by over 3 kilometers of underground infrastructure.

The Mineral Resource estimate was disclosed in a press release dated September 11, 2018.

Mineral Reserves and Mining

The estimated Mineral Reserves presented by reserve class are shown in the following table. The overall diluted gold grade of the mineralized material going to the mill is estimated at 8.5 g/t.

These Mineral Reserves support an initial 8-year mine life. An infill drill program is currently underway (as per the press release dated November 13, 2018) that is targeting the conversion of Inferred Resources into Measured and Indicated Resources. The Project deposit is expected to be accessed by the existing 3.2 kilometers of underground development. The current decline will serve as the primary access to the mine for personnel, materials, and haulage of mineralized material to the plant site. Annual ore production of up to 460,000 tonnes is planned from a combination of long-hole stopping and cut and fill mining methods.

Infrastructure

The Project is located approximately 160 kilometers southeast of Guatemala City. The site is accessible via the Pan-American Highway (CA1) through the town of Asunción Mita. Existing infrastructure is in place to provide year-round access, a new 5 kilometer-long access road and 8.2 kilometer power transmission line will be installed as part of the construction of the Project. The topography is flat with rolling hills. Guatemala has 400 kilometers of coastline, with the closest deep-water port (Puerto Quetzal) on the Pacific Ocean, which is connected by good highway access to the Project.

Corporate Social Responsibility and Economic Benefits

Bluestone is a values-based company where environmental and community stewardship are integral to our core values. We live in the communities we operate in and follow best practices to minimize impacts to the environment. The Project and local team have been part of the local community for over a decade and Bluestone is active in engaging with the stakeholders around the Project.  

The development of the Project is expected to provide substantial economic benefits to Guatemala, both locally and at a national level. During the 18 to 24-month construction period, the Project is expected to generate direct employment of 500+ people, and once in operation, direct employment of 400+ people. It is estimated that during production the mine will inject approximately $60 million annually and contribute approximately $500 million to the Guatemalan economy through direct employee wages, consumables, taxes, and royalties. In addition, the project is expected to generate several hundred additional indirect jobs with local suppliers and service providers.

A key priority will be to train and develop skills of the local workforce as the Project advances which is in-line with Bluestone's philosophy of working with our stakeholders and communities.

In 2018 Bluestone engaged a third -party consultant to lead an updated social baseline assessment as well as an IFC performance gap assessment. Bluestone is committed to following best practices and international standards.

Next Steps

With the Feasibility Study now completed, Bluestone will advance the Project toward development over the next few quarters. Key next steps include:

• Optimization and trade-off studies to be undertaken.

• Infill drilling as part of the resource conversion and expansion program currently underway.

• Commence engineering and design activities.

• Update resource estimate and mine plan.

• Advance project financing activities.

Technical Information

The Technical Report summarizing the results of the Feasibility Study is being prepared in accordance with NI 43-101 and will be filed under the Company's profile on SEDAR within 45 days of this press release. The Qualified Persons have reviewed and verified that the technical information in respect to the Feasibility Study in this press release is accurate and approve the written disclosure of such information.

About Bluestone Resources

Bluestone Resources is a mineral exploration and development company that is focused on advancing its 100%-owned Cerro Blanco Gold and Mita Geothermal projects located in Guatemala. A Feasibility Study on Cerro Blanco returned robust economics with a quick pay back. The average annual production is projected to be 146,000 ounces per year over the first three years of production with all-in sustaining costs of $579/oz (as defined per World Gold Council guidelines, less corporate general and administration costs). The Company trades under the symbol "BSR" on the TSX Venture Exchange and "BBSRF" on the OTCQB."

Barrick Gold Corporation (NYSE: GOLD) strives to be the world's most valued gold mining business by finding, developing and owning the best assets, with the best people, to deliver sustainable returns for its owners and partners. Recently, Barrick Gold Corporation announced preliminary full-year gold production of 4.53 million ounces for 2018, in line with the Company's guidance of 4.5-5.0 million ounces, and preliminary full-year gold sales of 4.54 million ounces. Preliminary fourth quarter gold production was 1.26 million ounces, and preliminary fourth-quarter gold sales were 1.23 million ounces. The average market price for gold in the fourth quarter was USD 1,226 per ounce. Fourth quarter gold cost of sales per ounce are expected to be approximately 15-17% higher than third quarter results, primarily as a result of a non-cash inventory impairment on Lagunas Norte's long-term stockpiles. Fourth quarter cash costs per ounce are expected to be in line with the third quarter results and all-in sustaining costs per ounce2 approximately 3-5% higher as compared to third quarter results. As the merger between Barrick and Randgold Resources Limited was effective on January 1, 2019. Randgold's preliminary full-year group gold production was 1.28 million ounces for 2018, 1% below Randgold's guidance of 1.30-1.35 million ounces as a result of a week of industrial action at Loulo-Gounkoto. Preliminary full-year group gold sales were 1.30 million ounces. Preliminary fourth quarter group gold production was 375 thousand ounces, and preliminary fourth quarter group gold sales were 376 thousand ounces.

Freeport-McMoRan Inc. (NYSE: FCX) is a leading international mining company with headquarters in Phoenix, Arizona. Freeport-McMoRan Inc. recently reported its fourth quarter financial results. Freeport-McMoRan Inc. net income attributable to common stock of USD 140 Million (USD 0.09 per share) in fourth-quarter 2018 and USD 2.3 Billion (USD 1.55 per share) for the year 2018. After adjusting for net charges of USD 21 million (USD 0.02 per share), primarily reflecting accruals for disputed royalty matters in Peru and net charges at PT-FI, partly offset by gains on sales of assets and tax credits, adjusted net income attributable to common stock totaled USD 161 Million (USD 0.11 per share) in fourth-quarter 2018. Consolidated sales totaled 785 million pounds of copper, 266 thousand ounces of gold and 24 million pounds of molybdenum in fourth-quarter 2018, and 3.8 billion pounds of copper, 2.4 million ounces of gold and 94 million pounds of molybdenum for the year 2018. Fourth-quarter 2018 consolidated copper and gold sales were lower than consolidated production of 841 million pounds of copper and 334 thousand ounces of gold because of the timing of shipments.

Yamana Gold Inc. (NYSE: AUY) is a Canadian-based gold producer with significant gold production, gold development stage properties, exploration properties, and land positions throughout the Americas including Canada, Brazil, Chile, and Argentina. Yamana Gold Inc. recently announced that fourth quarter and full year production results for 2018 exceeded production guidance for all metals. Gold equivalent ounce ("GEO") production from Yamana Mine for the fourth quarter was 310,400, including 270,200 ounces of gold and 3.26 million ounces of silver. Total Yamana gold production (including Gualcamayo) was 292,500 ounces. The Company also produced 39.0 million pounds of copper with the Chapada mine delivering on a strong fourth quarter. Full year gold and copper production from Yamana Mines exceeded the higher guidance levels set in October of last year while full-year silver production exceeded the lower guidance provided at that time. Original guidance set in February 2018 was for 900,000 ounces of gold, 120 million pounds of copper, and 8.15 million ounces of silver.

Great Bear Resources Ltd. (OTC: GTBDF) is a Canadian exploration company focused on the resource sector in northern British Columbia. Great Bear Resources recently reported drill results from the Hinge Zone ("DHZ") and South Limb Zone ("DSL") at its 100% owned Dixie Project in the Red Lake District of Ontario. Results include 1,602.73 g/t gold over 0.70 meters (approximate true width) at 150 meters vertical depth. Chris Taylor, President and Chief Executive Officer of Great Bear said, "Our Hinge and South Limb Zone are part of a continuous gold vein system which is interpreted to extend along 300 meters in strike length and has been drill tested to a depth of 212 meters.  The zone remains open in all directions and occurs immediately south of a regional east-west trending D2 fold hinge and associated structures which extends for approximately 10 kilometers into undrilled areas. For comparison, the Red Lake-Campbell complex (Red Lake Gold Mine) also occurs proximal to a regional D2 fold where shear zones developed and acted as primary hydrothermal fluid conduits, across a 3.2 kilometer by 2.2 kilometer area. Great Bear's 2019 drill program is fully funded, and results will continue to be released regularly in batches as the program progresses."

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