TNR Gold Update on NSR Royalty - Los Azules Copper, Gold & Silver Project - McEwen Mining Preliminary Economic Assessment

2023-06-26

CSE - Canadian National Stock Exchange · Iron · Copper · Nickel · Cobalt · Canada

Vancouver, British Columbia--(Newsfile Corp. - June 26, 2023) - TNR Gold Corp.(TSXV: TNR)("TNR", "TNR Gold" or the "Company") is pleased to announce that McEwen Mining Inc. ("McEwen Mining") has provided an update on the Los Azules copper, gold and silver project in San Juan, Argentina. TNR holds a 0.4% net smelter returns royalty ("NSR Royalty") (of which 0.04% of the 0.4% NSR Royalty is held on behalf of a shareholder) on the Los Azules Copper Project. The Los Azules project is held by McEwen Copper Inc. ("McEwen Copper"), a subsidiary of McEwen Mining.

The news release issued by McEwen Mining stated:

"McEwen Mining Inc. (NYSE: MUX) (TSX: MUX)is pleased to provide results of the updated Preliminary Economic Assessment (the "2023 PEA") on the Los Azules Copper Project in San Juan Argentina (the "Project"). Los Azules is 100% owned by McEwen Copper Inc., which is 52% owned by McEwen Mining.

The PEA includes an updated independent mineral resource estimate, which increased to 10.9 billion (B) lbs. Cu (Indicated, grade 0.40%) and 26.7 B lbs.Cu (Inferred, grade 0.31%)."

Base Case Highlights (Open-pit, Heap Leach, SX/EW, Nameplate capacity of 175 ktpa Cu Cathodes):

Average annual copper (Cu) cathode production of 401 million lbs. (182,100 tonnes) during the first 5 yearsof operation, and 322 million lbs. (145,850 tonnes) over the 27-year life of the mine (LOM) Total Cu recoverable to cathode of 8.68 billion lbs. (3.94 million tonnes), based on the LOM extraction of mineralized material containing approximately 11.90 billion lbs.of total Cu (5.40 million tonnes), and average copper recovery of 72.8% After-tax net present value (NPV8%) of $2.659 billion1, internal rate of return (IRR) of 21.2%,and a payback period of 3.2 years- at$3.75 per lb.Cu. Initial capital expenditure of $2.462 billion, and a project capital intensity of $7.66 per lb.Cu ($16,880 per tonne Cu)(2) Average C12cash costs of $1.07 per lb.Cu and all-in sustaining costs2of $1.64 per lb.Cu (AISC Margin of 56%)2 Average EBITDA3per year of $1.101 billion(Years 1-5) and $692 million(Years 6-27) Estimated carbon intensity of 670 kg CO2 equivalent per tonne of Cu (CO2-e/t Cu)4for Scope 1&2 GHG Emissions, well below the industry average of 1,980kg CO2-e/t Cu5. McEwen Copper's goal at Los Azules is to be carbon neutral by 2038, a target which is achievable through the use of emerging technologies and offsets Estimated site-wide water consumption of 137 liters per second(L/s) from years 1 to 10, increasing to 163 L/sfrom years 11 to 27, this compares to approximately 600 L/s6for a conventional mill producing copper concentrate 1.182 billiontonnes of mineralized material placed on heap leach pad with in-situ total copper grade of 0.46%and in-situ soluble copper grade of 0.31%7

The 2023 PEA Technical Report is prepared in accordance with the requirements set forth by Canadian National Instrument 43-101 ("NI 43-101") for the disclosure of material information and is intended to meet the requirements of a Preliminary Economic Assessment (PEA) level of study and disclosure as defined in the regulations and supporting reference documents. The effective date of the report is May 9, 2023. All currency shown in this report is expressed in Q1 2023 United States Dollars unless otherwise noted.

This study is preliminary in nature and includes 26%inferred mineral resources in the conceptual mine plan. Inferred mineral resources are considered too speculative geologically and in other technical aspects to enable them to be categorized as mineral reserves under the standards set forth in NI 43-101. There is no certainty that the estimates in this PEA will be realized.

Study Contributors

The 2023 PEA technical report was prepared by Samuel Engineering Inc., with contributions from Knight Piésold Consulting, Stantec Consulting International Ltd, McLennan Design, Whittle Consulting Pty Ltd, and SRK Consulting UK Limitedunder the supervision of David Tyler, McEwen Copper Project Director. The 2023 PEA technical report has been filed on SEDAR and on the Company's website.

2023 PEA vs 2017 PEA

The base case development strategy selected in the 2023 PEA is distinctly differentfrom that presented in the prior PEA published in 2017. In 2017, the strategy was to construct a mine with a conventional mill and flotation concentrator producing a concentrate for export to international smelters. The 2023 PEA proposes a heap leach (leach) project using solvent extraction-electrowinning (SX/EW) to produce copper cathodes (LME Grade A) for sale in Argentina or international markets. There are three principal reasons why the implementation strategy was changed to leach in the 2023 PEA:

1. Environmental Footprint: Fresh water consumption is reduced by approximately 75%(150 vs. 600 L/s). Electricity consumption is reduced by approximately 75%(57 vs. 230 MW). GHG emissions are reduced by approximately 57%(670 vs. 1,560 CO2-e/t Cu Scope 1&2), with paths to further reductions by implementing new technologies, with the goal of reaching net-zero carbon by 2038 with some offsets. Los Azules copper cathodes will thus be attractive to end-users seeking to measurably reduce their upstream environmental impacts. 2. Reduced Permitting Risk: When proposing any mega-project development, it is vital to understand the local standards and sensitivities around permitting. The Project uses technology (heap leach) that is in operation in San Juan today. It also eliminates tailings and tailings dams, conserves scarce water resources, and reduces the overall complexity of the mine, optimizing the permitting process. 3. Producing Cathodes: The leach process produces LME Grade A copper cathodes, which can be directly used in industry, including within Argentina reducing export taxes. This eliminates reliance on 3rdparty foreign smelters for the processing of concentrates into refined copper products. It also eliminates significant GHG emissions associated with transportation, and pollution associated with smelting. Counterparty and pricing risks are also reduced.

McEwen views the progress made with the 2023 PEA towards reducing our environmental footprint and greater environmental and social stewardship sets the Project apart from other potential mine developments, which appropriately justifies certain economic trade-offs. The primary trade-offs to achieve these environmental benefits is lower overall copper recovery, slightly higher unit costs, and less immediate cashflow due to extended leach cycles. Nevertheless, the leach project remains very robust. Furthermore, McEwen believes that some of these drawbacks can be mitigated by implementing developing technologies such as Nuton™, discussed below.

Property Description

The Los Azules deposit is a classic Andean-style porphyry copper deposit. The large hydrothermal alteration system is at least 5 kilometers (km) long and 4 km wide and is elongated in a north-northwest direction along a major structural corridor. The Los Azules deposit area is approximately 4 km long by 2.2 km wide and lies within the alteration zone. The limits of the mineralization along strike to the North and at depth have not yet been defined. Primary or hypogene copper mineralization extends to at least 1,000 meters (m) below the surface. Near surface, leached primary sulfides (mainly pyrite and chalcopyrite) were redeposited below the water table in a sub-horizontal zone of supergene enrichment as secondary chalcocite and covellite. Hypogene bornite appears at deeper levels together with chalcopyrite. Gold, silver, and molybdenum are present in small amounts, but copper is the economic driver at Los Azules.

A New Vision and Approach

We developed regenerative guiding principles to reframe the approach to sustainable innovation and set forth high-reaching goals that explore all facets of the mining processes considered for Los Azules. The project development seeks to significantly reduce the environmental footprint of mining operations and their associated GHG emissions by integrating the latest renewable and environmentally responsible technologies and processes. The Project aims to obtain 100% of its energy from renewable sources (wind, hydro, and solar) in a combination of offsite and onsite installations. The Project is also seeking to have long-term net positive impacts on the greater Andean ecosystem, local flora and fauna, the lives of miners, and of the other citizens of nearby communities, while contributing positively to the local and national economy of Argentina. Refer to the full 2023 PEA Technical Report for more information about our regenerative approach.

Metal Price Assumption

The copper price use in the 2023 PEA was $3.75 per pound (except for the mineral resource estimate), in line with analysts' consensus projections for long-term copper prices that range between $3.25 and $4.25 per pound, with a mean price of $3.75 per pound.

Study Highlights

This 2023 PEA development strategy begins with processing of resources associated with the oxide and supergene copper mineralization in the near surface portion of the deposit using heap leaching methods. This approach results in low average C1 costs of $1.07 per lb.Cu ($0.88 per lb.in the first 8 years) and an attractive 3.2-yearpayback period. Copper cathode production during the first 5 years of operation averages 401 million lbs. per year (182 ktpa), and average over the 27-year LOM is 322 million lbs. per year(146 ktpa).

A nominal copper cathode production capacity of 385 million lbs. per year (175 ktpa) is met or exceeded during the first 11 years of mining and was selected as the Base Case, with a smaller Alternative Casepresented at 275 million lbs. per year (125 ktpa) of copper cathodes. The 2023 PEA financial model does not include potential future development phases focused on primary copper mineralization found beneath the supergene copper layer but some of these opportunities are discussed in the report, including the potential of deploying Nuton™ technologies.

The processing facility will function through to the completion of mining in Year 23 with stockpile reprocessing and residual leaching operations to Year 27. Mining operations ramp up over the proposed mine life from approximately 80 million total tonnes per year to 150 million tonnes per year through the life of the project as copper grades decrease, and material movements increase.

Summary results for the Base Case and Alternative Case are provided in Table 1.

| Table 1: Summary Results | | | | | Project Metric | Units | Base Case 175 ktpa | Alternative Case 125 ktpa | | Mine Life | Years | 27 | 32 | | Tonnes Processed | Billion tonnes | 1.182 | 1.182 | | Tonnes Waste Mined | Billion tonnes | 1.366 | 1.366 | | Strip Ratio | | 1.16 | 1.16 | | Total Copper Grade | % Cu | 0.457% | 0.457% | | Soluble Copper Grade (CuSOL) | % CuSOL | 0.311% | 0.311% | | Copper Recovery (Total Copper) | % | 72.8% | 72.8% | | Soluble Copper Recovery(8) | % | 107% | 107% | | Copper Production (LOM avg.) | tonnes/yr | 145,820 | 123,060 | | Copper Production (Yr 1-5) | tonnes/yr | 182,100 | 136,100 | | Copper Production - cathode Cu | ktonnes | 3,938 | 3,938 | | Initial Capital Cost | USD Millions | $2,462 | $2,153 | | Sustaining Capital Cost | USD Millions | $2,243 | $2,351 | | Closure Costs | USD Millions | $180 | $180 | | C1 Cost (Life of Mine) | USD/lb Cu | $1.07 | $1.11 | | All-in Sustaining Costs (AISC) | USD/lb Cu | $1.64 | $1.67 | | Before Taxes | | | | | Net Cumulative Cashflow | USD Millions | $15,820 | $15,679 | | Internal Rate of Return (IRR) | % | 26.5% | 22.9% | | Net Present Value (NPV) @ 8% | USD Millions | $4,436 | $3,278 | | After Taxes | | | | | Net Cumulative Cashflow | USD Millions | $10,240 | $10,159 | | Internal Rate of Return (IRR) | % | 21.2% | 18.4% | | Net Present Value (NPV) @ 8% | USD Millions | $2,659 | $1,929 | | Pay Back Period | Years | 3.2 | 3.4 |

Sensitivity Analysis

The Base Case project economics are reasonably robust (>15% post-tax IRR) at a copper price above $3.00 per pound and are similarly resistant to an increase in LOM capital expenditure of up to 30% and an increase in operating expenses of up to 60%. Table 2 below shows the sensitivity of the Base Case project economics to the Copper Price (+/- 20%) on a post-tax basis. The project NPV8% is breakeven at a copper price of $2.34 per pound.

| Tables 2: Base Case (175 ktpa) Copper Price Sensitivity | | | | | | Sensitivity (%) | Metal Pricing | Post-Tax | | | | Copper Price | NPV | IRR | Payback | | | $ Cu/lb | $M | % | Years | | | -20% | $3.00 | $1,277 | 15% | 5.48 | | -15% | $3.19 | $1,624 | 17% | 4.84 | | -10% | $3.38 | $1,969 | 18% | 4.24 | | -5% | $3.56 | $2,314 | 20% | 3.68 | | 0% | $3.75 | $2,659 | 21% | 3.18 | | 5% | $3.94 | $3,003 | 23% | 2.90 | | 10% | $4.13 | $3,346 | 24% | 2.75 | | 15% | $4.31 | $3,689 | 25% | 2.61 | | 20% | $4.50 | $4,032 | 27% | 2.49 |

Table 3 below show the sensitivity of the Base Case project economics to initial and sustaining capital expenditure escalation on a post-tax basis.

| Table 3: Base Case (175 ktpa) Initial & Sustaining CAPEX Sensitivity | | | | | Sensitivity (%) | Post-Tax | | | | NPV | IRR | Payback | | | $M | % | Years | | | 0 | $2,597 | 21% | 3.18 | | 5% | $2,484 | 20% | 3.54 | | 10% | $2,372 | 19% | 3.94 | | 15% | $2,260 | 18% | 4.25 | | 20% | $2,148 | 17% | 4.56 | | 25% | $2,036 | 17% | 4.88 |

Table 4 below show the sensitivity of the Base Case project economics to operating expenditure escalation on a post-tax basis.

| Table 4: Base Case (175 ktpa) OPEX Sensitivity | | | | | Sensitivity (%) | Post-Tax | | | | NPV | IRR | Payback | | | $M | % | Years | | | 0 | $2,597 | 21% | 3.18 | | 5% | $2,496 | 21% | 3.28 | | 10% | $2,396 | 20% | 3.38 | | 15% | $2,295 | 20% | 3.49 | | 20% | $2,195 | 19% | 3.62 | | 25% | $2,095 | 19% | 3.75 |

Capital Costs Estimates

The Project includes the development of an open pit mine with muti-stage crushing and screening, a heap leach pad, and a copper solvent extraction-electrowinning (SX/EW) facility with a nominal production capacity of 175 ktpa copper cathodes. There is also a sulfuric acid plant and other associated infrastructure to support the operations. Initial capital infrastructure for the Base Case includes the following facilities:

Mine development and associated infrastructure Coarse rock storage and handling (crushing, conveying, agglomeration) Heap leach pads and conveyor stacking systems SX/EW facility Sulfuric acid plant On-site utilities and ancillary facilities including a construction camp Off-site infrastructure: power transmission line (outsourced), access roads, and permanent camp

The project initial capital costs are based on budgetary quotes for major equipment, recent in-house cost information and installation factors, and regional contractor inputs and facilities obtained between Q4 2022 and Q1 2023. The capital costs for the project are summarized in Table 5 and should be viewed with the level of accuracy expected for a preliminary analysis.

The approximate construction cost of the 132 kV power supply line to site is $155 million and has not been included in the capital estimate because it is assumed that YPF Luz, a large Argentinean power utility company, will be constructing the line at their expenses pursuant to a long-term renewable power purchase agreement.

| Table 5: Initial Capital Costs by Case | | | | Capital Cost | Base Case | Alternative Case | | 175k tpa Cu ($) | 125k tpa Cu ($) | | | Mining | $65,600,000 | $65,600,000 | | Ore Storage & Handling | $234,500,000 | $192,500,000 | | Heap Leaching | $158,500,000 | $142,100,000 | | SX/EW Facilities | $250,400,000 | $167,700,000 | | Acid Plant | $94,900,000 | $79,900,000 | | Ancillary Facilities | $23,300,000 | $23,300,000 | | Site Development & Yard Utilities | $126,300,000 | $112,200,000 | | Off-Sites | $167,400,000 | $167,400,000 | | Total Direct Costs | $1,120,900,000 | $950,700,000 | | Common Indirect Costs | $379,200,000 | $323,800,000 | | Owners Costs | $466,700,000 | $455,900,000 | | Subtotal | $1,966,800,000 | $1,730,400,000 | | Contingency | $495,000,000 | $423,100,000 | | Total Capital Cost | $2,461,800,000 | $2,153,500,000 |

Operating Costs Estimates

Table 6 summarizes the LOM project operating costs per tonne of material processed and per pound of copper produced.

| Table 6: LOM Cash Costs | | | | | | | Base Case 175 ktpa | Alternative Case 125 ktpa | | | | Description | LOM Cost/tonne ($) | LOM Cost/lb. ($) | LOM Cost/tonne ($) | LOM Cost/lb. ($) | | Mining | 4.14 | 0.56 | 4.27 | 0.57 | | Processing | 2.73 | 0.37 | 2.74 | 0.37 | | General & Administrative | 0.94 | 0.13 | 1.11 | 0.15 | | Selling Expenses | 0.15 | 0.02 | 0.15 | 0.02 | | LOM C1 Costs | 7.96 | 1.07 | 8.27 | 1.11 |

Royalties and Taxes

The 2023 PEA includes all government and private royalties on production, export taxes, as well as income taxes and banking taxes. Royalty calculations vary, however royalties and retentions based on net smelter return (NSR) total approximately 9.2%. In the financial model it was assumed that 10,000 tonnes per year of copper cathodes are sold within Argentina and consequently they are not subject to export taxes. 95% of VAT is assumed to be recoverable after two years. A 0.2% portion of the bank tax is recoverable in the following year.

Nuton Opportunity

Nuton LLC is a copper heap leaching technology venture of Rio Tinto that became a strategic partner in 2022. Its Nuton™ suite of proprietary technologies provide opportunities to leach both primary and secondary copper sulfides, providing significant opportunity to optimize the mine plan and the overall mining and processing operations. In addition, Nuton™ provides significant other benefits, such as lower overall energy consumption, allowing earlier conversion to renewable energy sources, and lower water consumption than conventional sulfide mineralization treatment processes.

Based on preliminary scoping testing, Nuton™ technologies offer the potential for copper recoveries of more than 80% from predominantly chalcopyrite, depending on the specific mineralogy make-up of the mineral resource. At Los Azules, Nuton™ has the potential to economically process the large primary sulfide copper resource as an alternative to a concentrator, with low incremental capital following the oxide and supergene leach, no tailings requirement, and a smaller environmental footprint. Producing copper cathode with Nuton™ on-site also has the advantage of simplifying outbound logistics for copper concentrates and offers a finished product to the domestic and international market.

The outcomes modelled using the Nuton proprietary computational fluid dynamics model, are very encouraging and indicate that unoptimized copper recovery to cathode from primary material should range from 73% to 79%. Furthermore, Nuton recovery from secondary material is high, ranging from 80% to 86%. This could provide a significant opportunity to optimize the mine plan and the need for selective mining, as simultaneous stacking of both secondary and primary mineralization will not impact on the copper recovery from either material type. Based on the current resource estimate, this could have a significant positive impact on the expected life of the mine, without significantly increasing the initial capital investment required.

Nuton is currently validating modelled data with column leach tests. Column leaching of the composite samples at their facilities is underway and expected to be completed in Q1 2024. Validation of the modelled results could be obtained much sooner, depending on the trends provided by the actual column leach results.

Earlier from High Tide Resources Corp.

TSX Venture Exchange Stock Maintenance Bulletins 2023-06-09
TNR Gold shares details behind latest share buy back program 2023-06-08
TNR Gold Announces Normal Course Issuer Bid 2023-06-01