VanGold PEA Outlines 7 Year Mine Life

2021-02-16

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New Resource Est. of 7.2 M oz. Indicated and 20.4 M oz. Inferred AgEq

VANCOUVER, BC / ACCESSWIRE / February 16, 2021 /Further to the Company's proposed acquisition of the El Cubo mine and mill complex ("El Cubo") from Endeavour Silver Corp. ("Endeavour") announced December 18, 2020, VanGold Mining Corp. (the "Company" or "VanGold") (TSXV:VGLD) is pleased to announce positive results from its Preliminary Economic Assessment (the "PEA") for the combined El Cubo and El Pinguico project south of the city of Guanajuato, Mexico (together the "Combined Project"). Details of the PEA including the Company's maiden Mineral Resource estimate will be provided in a NI 43-101 technical report with an effective date of January 31, 2021 and an issue date of February 12, 2021(the "PEAReport") to be filed under the Company's profile on SEDAR within 45 days. The PEA Report is being prepared by Behre Dolbear & Company (USA), Inc., independent mineral industry advisors ("Behre" - see "About Behre Dolbear" below) with the assistance of other independent consultants.

James Anderson, Chairman and CEO said: "VanGold's management believes that our proposed acquisition of El Cubo will prove to be a remarkable catalyst of growth for the Company. Behre's PEA provides us with a high-level view of VanGold's plans to process material from both El Pinguico and El Cubo at a centrally located mill. This study is an important step in unlocking value for all stakeholders at our dual projects in Guanajuato."

Particulars:

All dollar ($) figures are presented in US dollars unless otherwise stated. Base Case metal prices used in the PEA are $1,527 per gold ("Au") ounce ("oz") and $19.49 per silver ("Ag") oz. These prices are based on long-term consensus average prices. A silver equivalent ("AgEq") price ratio of 1:80 (Au:Ag) applies throughout this news release to Mineral Resources and production.

Highlights:

Mineral Resource Estimate

Total Indicated Mineral Resourcesfor the Combined Project are 718,655 tonnes grading 160 gpt Ag and 1.90 gpt Au, or 306 gpt AgEq, which equates to 7.2 M oz AgEq using a conversion ratio of 1 oz of Au is equivalent to 80 oz of Ag.

Total Inferred Mineral Resourcesfor the Combined Project are 1,453,000 tonnes grading 214 gpt Ag and 2.78 gpt Au, or 435 gpt AgEq, which equates to 20.4 M oz AgEq using a conversion ratio of 1 oz of Au is equivalent to 80 oz of Ag.

7 Year Economics - Behre prepared a discounted cash flow model for the Combined Project to determine the Net Present Value (NPV), Internal Rate of Return (IRR), Initial Capital and Sustaining Capital, and payback period. Cash flow estimates were prepared on an after-tax basis and in accordance with NI 43-101 Standards of Disclosure for PEA studies. The PEA considers a plan to ramp up to a 750 tonne-per-day ("tpd") operation, with an initial mine life of 7.0 years. On an after-tax basis, the Combined Project generates a Base Case NPV (5%) of $32.9 M and an IRR of 105%, excluding El Cubo acquisition costs. Using commodity prices of $22.41/oz Ag and $1756/oz Au, which are +15% above the Base Case (yet still lower than current spot prices), the after-tax NPV(5%) is $79.0 M and the IRR is 344%. Behre calculates a Base Case payback period of 1.87 years.

Operating Costs -Dividing Behre's Total Operating Costs of $124.4 M by the life of mine ("LOM") AgEq oz of 13.2 M to be recovered from the Combined Project, gives VanGold an operating cost per AgEq ounce of $9.42 over seven years of production, positioning VanGold's operation to be attractive in nearly all commodity price scenarios. Opportunities to Grow and Optimize - Given that planning for the Combined Project has been advanced through the PEA stage within only a five (5) month period, numerous opportunities remain for growth and optimization. The most significant immediate opportunities are the potential to expand the Company's Mineral Resources - both at El Cubo and El Pinguico through exploration drilling and development, which is now ongoing at El Pinguico. Other noteworthy opportunities include optimization of the surface stockpile metallurgy and recoveries, which the Company remains confident can be improved during the mill's re-commissioning process.

Cautionary Statement:

_The reader is advised that the PEA summarized in this news release is preliminary in nature and is intended to provide an initial, high-level review of the Combined Project's economic potential and design options. The PEA mine plan and economic model includes numerous assumptions and the use of mineral resources. Mineral resources that are not Mineral Reserves do not have demonstrated economic viability. Furthermore, there has been insufficient exploration to allow for the classification of the inferred mineral resources disclosed herein as an indicated or measured mineral resource, however, it is __reasonably expected that the majority of the inferred mineral resources could be upgraded to indicated or measured mineral resources with continued exploration. There is no guarantee that any part of the mineral resources disclosed herein will be converted into a mineral reserve in the future or that the PEA will be realized._

Mineral Resource Estimate

The mineral resource estimate used as the basis for the PEA was derived from Endeavour's previous technical report for El Cubo titled_"National Instrument 43-101 Technical Report: Updated Mineral Resource and Reserve Estimate for the El Cubo Project, Guanajuato, Mexico"_dated March 3, 2017 and amended March 27, 2018 (effective December 31, 2016) by Hardrock Consulting LLC. and computer models developed by Endeavour and VanGold's previous technical report for El Pinguico titled "_NI 43-101 Technical Report for El Pinguico Project, Guanajuato Mining District, Mexico_", dated effective February 28, 2017 by Carlos Cham Dominguez, C.P.G., copies of which have been filed by Endeavour and VanGold, respectively, under their profiles on SEDAR. Behre has reviewed the information, estimation methods and the estimates in such reports and is of the opinion that the estimates are reasonable and can be utilized for the PEA, subject to certain adjustments including those summarized below.

El Cubo Resource Estimate

Endeavour's 2016 mineral reserves and resources estimate for El Cubo (the "2016 Estimate") was comprised of 37 individual models. These models were developed for each vein or area using two different estimation methods, either a traditional manual polygonal method referred to in the technical report as a Vertical Longitudinal Projection (VLP) or as a 2-dimensional (2D) polygonal method while the majority of the estimates were made using computerized 3-dimensional (3D) block models. Fifteen areas were estimated using manual techniques and 22 different block models were used for the computerized estimates. Based on long production experience and historic measurements, a density factor of 2.5 t/m3was used to convert volumes to tonnages. Behre considers this reasonable.

After subtracting Endeavour's total mine and mill production at El Cubo since January 1, 2017 of 1,278,038 tonnes from the 2016 Estimate, Behre estimates the remaining resources at El Cubo as follows, assuming Endeavour mined all proven and probable mineral reserves first and then the measured mineral resource followed by the indicated resource:

g/t | | | | g/t | oz | g/t | oz | | | | | Measured | None | | | | | | | Indicated | 508,055 | 194 | 3,169,000 | 2.44 | 39,860 | 389 | | | | | | | | | | Inferred | 1,453,000 | 214 | 10,004,000 | 2.78 | 129,900 | 435 | | Notes:

1. Silver Equivalent calculated using 1 ounce of gold is equal to 80 ounces of silver, on the basis of the average 5-year historic silver and gold prices.

El Pinguico Resource Estimate

There are two stockpiles at the El Pinguico mine that date back to 1913 when the mine shut down during the Mexican Revolution; a surface and an underground stockpile.

Surface Stockpile

VanGold's previous sampling of the surface stockpile including the digging of 10 pits by excavator and sampling near the top and near the bottom of the pits has been reviewed by Behre. From the sampling location map, the pits are scattered relatively evenly on the stockpile. Also, previous trenching and sampling by a private group was undertaken. Based upon the topographic survey and all the sampling data, VanGold estimates the surface stockpile contains approximately 175,000 tonnes to 185,000 tonnes with a silver grade of 67 g/t and a gold grade of 0.45 g/t. Behre has reviewed the work and is of the opinion that there has been sufficient work to classify this stockpile as an Indicated Mineral Resource.

Underground Stockpile

The underground stockpile at El Pinguico fills an old open stope area from Level 4 to Level 7 of the El Pinguico mine ranging from 25 m to 100 m thick and occupying portions of the stoped out El Pinguico vein. At present, only the surface of the stockpile can be sampled. VanGold dug and sampled 20 shallow trenches some 0.5 m to 1 m deep. Part of the dump surface has been contaminated by rock fall from the overlying waste rock adjacent to the Pinguico vein.

Based upon three sampling campaigns, VanGold estimated that the underground stockpile contains a silver grade of 167 g/t and a gold grade of 1.66 g/t. The work by VanGold in 2017 confirming the historic grade estimates are reasonable. Since only the upper 5 m of the stockpile has been sampled, Behre has less confidence in the material below the 2017 trenching. It is assumed that this stockpile is comprised of low-grade vein material from development drifts, but Behre cautions that it could also include barren waste rock from development drifts. Behre has reviewed the sampling work in 2017 and is of the opinion that the underground stockpile contains potentially economic material in the upper portion, which has been sampled using modern QA/QC controls.

Behre recommends accessing Level 7 and sampling the base of the stockpile via raises and draw points, which may increase the confidence in the entire stockpile grade. However, until that work is completed, Behre is of the opinion that only the top portion can be considered as Resources and would classify the 25,600 tonnes certified in 2012 by Servicio Geológical Mexicano (SGM) as an Indicated Mineral Resource. The remaining Mineral Resources in 2021 at El Pinguico are shown in Table 14.2 below.

g/t | | | | g/t | oz | g/t | oz | | | | | Measured | 0 | | | | | | | | | | | | | | | Indicated | | | | | | | | Surface Stockpile | 185,000 | 67 | 398,500 | 0.45 | 2,680 | 103 | | Underground Stockpile | 25,600 | 166 | 136,600 | 1.67 | 1,375 | 300 | | | | | | | | | | Total | 210,600 | 79 | 535,100 | 0.60 | 4,055 | 127 | | Notes:

1. Silver Equivalent calculated using 1 ounce of gold is equal to 80 ounces of silver, on the basis of the average 5-year historic silver and gold prices.

Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. There has been insufficient exploration to allow for the classification of the inferred resources at El Cubo as an indicated or measured mineral resource, however, it is reasonably expected that the majority of the inferred mineral resources could be upgraded to indicated or measured mineral resources with continued exploration. There is no guarantee that any part of the mineral resources discussed herein will be converted into a mineral reserve in the future.

At present, there are no Mineral Reserves at El Cubo or El Pinguico.

Preliminary Economic Assessment

Behre prepared a discounted cash flow model for the Combined Project to determine the NPV, IRR, and payback period. The technical cash flow was prepared on an after-tax basis and was prepared in accordance with NI 43-101 Standards of Disclosure for PEA studies.

Note: The cash flow model includes Indicated Resources for the stockpiled material at El Pinguico and Indicated and Inferred Resources for El Cubo. Readers are cautioned that the PEA is preliminary in nature. It includes Inferred Mineral Resources considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves, and there is no certainty the PEA will be realized. Mineral Resources that are not Mineral Reserves have not demonstrated economic viability. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, socio-political, marketing, and other relevant issues.

Key parameters integral to Behre's preparation of the cash flow model and determination of the NPV include:

All results are expressed in US Dollars (US$). The analysis is based on a 100% equity basis. Specific business considerations, such as debt or equity financing and detailed tax strategies, have purposely not been included or analyzed in detail. All cash flows are determined on an after-tax basis. Net Present Values (NPV) are determined, assuming end-of-year cash flows. All costs and revenues reflect "real" or constant 2021 dollars without escalation. The measures used in the PEA are metric except where, by convention, gold and silver content, production, and sales are stated in troy ounces.

The results of the preliminary economic assessment for the Combined Project are summarized in Table 22.1 below:

2Silver Equivalents are based on a 1:80 gold:silver ratio as per the average 5-year historic silver price of $17.36/oz and gold price of $1,387/oz.

3Includes 15% contingency. | | |

Cash flow model inputs reflected in the preliminary economic assessment include:

Life of Mine and Production Forecasts.The cash flow model incorporates a 7-year operating and development period in which the El Pinguico stockpile material and the El Cubo Indicated Resources are scheduled to be recovered in Years 1 to 3. Inferred Resources are projected to be mined in Years 4 to 7. At steady state, the monthly targeted production rate is 22,500 tonnes per month for an annual total of 270,000 tonnes per year mined and processed.

Commodity Prices and Net Smelter Return.Behre used silver and gold price projections compiled by Consensus Economics, Inc. in their January 2021 Energy and Metals Consensus Forecasts® survey. For the purpose of the PEA only, it is assumed that development will begin in April 2021 and production will be initiated in October 2021. The fiscal year in the cash flow model is modeled to begin on April 1. The Consensus Economics, Inc. price forecasts for Q4 2021 through 2025 have been used for Years 1 through 5, respectively, and the Consensus Economics, Inc. long-term price forecast has been used in Years 6 and 7. The resulting average silver price is US$19.49 and the average gold price is US$1,527.

The net smelter return (NSR) has been determined on the basis of refining and freight costs of $3.75 per ounce of silver and $138 per ounce of gold.

Operating Costs.Mining, processing, and administration costs are based on the operating cost estimates summarized in Table 22.5 below.

US$/tonne Total Mill Feed1 | | El Pinguico Stockpile Haulage | 1.6 | 0.91 | | El Cubo Direct Mining and Haulage | 73.8 | 41.55 | | Processing | 25.4 | 14.29 | | General and Administrative | 23.6 | 13.31 | | | | | | Total | 124.4 | 70.06 | | 1Combined mill feed from both El Pinguico and El Cubo. | | |

Development and Capital Costs. Development and capital costs associated with mine development and equipment and mill refurbishment are shown in Table 22.6 below (see also "Contractor Alternative" below).

| Table 22.6 Initial and Sustaining Capital and Development Costs

Years 1-2 | Sustaining

Years 3-61 | Total | | Direct Mine Equipment Costs | 15.1 | 4.3 | 19.4 | | Direct Mill Capital Costs | 1.7 | - | 1.7 | | Mine Development | 4.1 | 24.0 | 28.1 | | Definition Drilling | 1.2 | 2.9 | 4.1 | | Exploration - Underground | 1.0 | 2.5 | 3.5 | | Exploration - Surface | 0.3 | 1.8 | 2.1 | | Tailings Storage and Dam Expansion | 0.8 | 0.4 | 1.1 | | Reclamation | 0.4 | - | 0.4 | | | | | | | Total | 24.4 | 35.9 | 60.4 | | | | | | | 15% Contingency | 3.7 | 5.4 | 9.1 | | | | | | | Total with Contingency | 28.1 | 41.3 | 69.4 | | 1Assumes no capital or development costs in Year 7. | | | |

Royalties.VanGold holds an option to purchase three underlying royalties covering its El Pinguico project from Exploraciones Mineras Del Bajio S.A. de C.V. ("EMBSA") as more particularly described in the Company's news release of November 13, 2020. If VanGold exercises such option, EMBSA's sole remaining royalty at El Pinguico will be a 15% net profits interest over the existing surface and underground stockpiles.

Other Costs and Taxes.Other costs include:

Mining Rights Tax..................................................... 7.5% of EBITDA Government Fee on Precious Metals....................... 0.5% of silver gross revenues Workers Profit Share................................................ 10% of pre-tax profits

These costs are based on the requirements of the Mexican government. Depreciation was determined on a straight-line basis for 8 years as per Mexican tax laws. The income tax rate is projected at 30% of operating profit (sales income or revenue less royalties, operating and other costs, and depreciation).

Sensitivity Analysis

To determine the effect of changes in several key base case assumptions, Behre prepared a sensitivity analysis for each operating scenario/factor (i.e. commodity prices, operating costs, and capital costs) that could have a significant effect on the financial performance of the Combined Project. The following parameters were evaluated in the sensitivity analysis:

Discount rates ranging from 0% to 10% were applied to determine the effect on NPV. Commodity prices generally have the greatest effect on mining project economics. The sensitivity to changes in commodity prices was determined on the basis of a constant gold-to-silver price ratio of 1:80, which is consistent with historical data. The cash variable operating costs were varied to determine the effect on NPV. Both the initial and sustaining capital costs were varied.

In each case, the particular parameter was changed for each year during the LOM review although, in reality, it is unlikely that each of the varied parameters would experience the same increases or decreases over the entire LOM. As such, the following sensitivity analyses present the best or the worst-case scenarios in the ranges evaluated and provide an indication of the relative effect that a specific operating parameter can have on the overall Combined Project economics.

Earlier from Granada Gold Mine Inc.

VanGold Begins Drilling at El Pinguico 2021-01-29
VanGold Increases Placement to $14,550,000 2021-01-25
VanGold Increases Placement to $12,600,000 2021-01-19