Hod Maden Project — Pre-Feasibility Study

This Pre-Feasibility Study reports a proposed processing route for the Hod Maden gold-copper deposit in north-eastern Turkey, based on metallurgical testwork and designed for a throughput of 900,000 tonnes per annum.

Report context

This NI 43-101 Technical Report was prepared for Sandstorm Gold Limited, dated with information current to early 2018. The Hod Maden deposit is owned by Artmin, a company jointly held by Lidya Madencilik (70%) and Sandstorm Gold Ltd. (30%). The report presents a Pre-Feasibility Study (PFS) for the proposed development of a gold-copper mine at the Project location, approximately 20 km south of Artvin, Turkey. The study does not show actual operating history, as the site comprises an exploration camp with no mining commenced.

Processing route

Deposit characterisation and testwork approach

The Hod Maden deposit is characterised as relatively high sulphide epithermal veins. Sulphide minerals represent about 25% of the material in the mineralised zones. Gold mineralisation is associated with sulphides (pyrite, chalcopyrite and, in the south zone, some sphalerite) in brecciated veins set in a porphyritic andesite. The testing concept applied was to understand ore breakage parameters to liberate economic minerals and assess the response of froth flotation concentration techniques. The report states that there appears to be little gravity recoverable gold and the gold is essentially very fine in nature. Most gold is associated with sulphides, and that which cannot be concentrated into a copper-rich concentrate is described as quite refractory. The report notes that, given social sensitivities, the use of cyanide in leaching or other processes has been discounted.

Metallurgical testwork outcomes

Key findings from the testwork programme include: ore types are moderately tough with an average unconfined compression strength of 120 MPa; ore types are moderate hardness with a maximum Bond Ball Work index of 16.7 kWh/t; gravity recovery to a sulphidic concentrate averaged no better than 15%, and the concentrate was not upgradable to smelting feed.

Testwork investigated sequential flotation and bulk flotation followed by differential flotation. It was originally envisaged that a saleable pyrite concentrate could be produced from a copper concentrate tailing (or sequentially). However, it was discovered that the gold grade in the pyrite itself is quite low, meaning that even with high sulphur content pyrite concentrates, the gold grades were quite low and the payability of gold and net smelter return would be low after transport and treatment costs. Marketing opportunities were also considered low.

Given these findings, focus was applied to maximising gold recovery to copper concentrate. The testwork found that the circuit comprising milling to P80 106 µm, bulk flotation, milling to 38 µm, and bulk scavenger flotation provided the highest net gold recovery to copper flotation feed. Following regrinding of the bulk concentrate to P80 30 µm, gold recovery could be maximised to a +20% copper concentrate. The objectives in processing are to capture the copper minerals, gold associated with copper minerals, fine gold liberated from pyrite, and the pyrite containing higher concentrations of gold (essentially pyrite with gold on the surface of the crystals). Gold loss is essentially to the copper scavenger tailing, which can produce a high sulphur pyrite concentrate; however, due to questionable marketability of this material, a pyrite cleaning step has been excluded from the flow sheet at this stage. The report states that gold in the copper concentrate can be considered free milling, whereas the gold in tailing is refractory.

Although fine grinding maximises recovery, solid liquid separation of products is a challenge and will require larger equipment than would be benchmarked against a similar project. The copper circuit tailing contains significant gold and will be discharged into a conventional valley fill tailings storage facility for potential future exploitation. Low sulphide bulk flotation tailings will be used for paste backfill, requiring a filtration application. The fineness of the bulk tailing causes high cement addition demand to reach target backfill strength.

Overall recovery is predicted at 77% for gold and 94% for copper to concentrate. The report notes there is potential to increase recovery (up to 93% for gold) by the application of a leach and recovery circuit to treat flotation tailings, which is subject to a deferred study and capital project.

Proposed process plant design

The process design has been based on metallurgical testwork, experience and knowledge gained from operations treating similar ore types, designs included in previous studies for the Project, and overall project parameters. The process plant is designed to treat 900,000 tonnes per annum. The treatment plant design is based on proven gold and copper recovery technology and incorporates the following unit operations:

• Single stage crushing incorporating a single toggle jaw crusher in open circuit with a target crushed product P80 of 76 mm
• A crushed product storage bin with facilities to manually create and reclaim stocks by front end loader to feed the mill during periods when the crushing circuit is offline or to adjust SAG mill feed charge grading
• A primary SAG mill in closed circuit operation with cyclone classifiers to produce a cyclone overflow product with P80 of 106 µm
• Bulk flotation roughing
• A secondary ball mill in closed circuit operation with cyclone classifiers to produce a cyclone overflow product with P80 of 38 µm
• Bulk flotation scavenging and a single stage of cleaning
• Regrinding of bulk flotation concentrate in a conventional ball mill in closed circuit operation with cyclone classifiers to produce a cyclone overflow product with P80 of 30 µm
• Copper rougher/scavenger flotation (scavenger concentrate back to regrind)
• Three stages of copper cleaning
• Concentrate thickening, dewatering (filtration) and bagging
• Bulk flotation tailing (low sulphide tailing) thickened and pumped to Maden Valley dewatering and paste plant; sulphidic tailing (bulk scavenger cleaner tailing, copper scavenger cleaner tailing) thickened and pumped to the tailings storage facility in Saliçor valley
• Dewatering of low sulphide tailing (filtration), which will be either mixed into cemented paste and returned underground (either directly from the filtration plant or recycled via an intermediate stockpile) or co-disposed with mine waste
• Reagents mixing, storage and distribution facilities
• Services and ancillary processes

Bagged concentrate will be transported to Hopa Port on flat bed trucks. The report includes a schematic diagram of the intended concentrate only plant flow sheet.

Tailings and waste management

The tailings management system will consist of two distinct facilities. Sulphidic tailings will be discharged into a standard high-wall valley fill facility (downstream construction) on the northern side of the Saliçor Valley. As this material is likely to be Potential Acid Generating, it will be lined with 2 mm HDPE as per Turkish regulations. Deposition will be subaerial via spigots and conductor pipes on the inner embankment. Water decanted off this dam will return to the process water system. A toe dam will be installed at the base of the dam to collect embankment runoff.

Low sulphide tailings that are not returned underground (between 30,000 and 50,000 tonnes per annum) will be placed into a mixed tailings and waste facility located on the northern side of Maden Valley. This facility will also be lined and any drainage captured in a toe dam and pumped into the process water or water treatment systems.

All development waste, apart from that sourced during the North portal and initial year of decline development, will be hauled to the primary surface waste dump located within the south valley. Waste material will be hauled via the main decline and co-disposed with non-sulphide tailings. Material designated as Potential Acid Forming will be placed within designated cells within the waste dump to minimise acid mine drainage. Non-sulphide tailings will be used in the cemented backfill cycle as required, with excess capacity directed to the surface waste dump.

Key reported parameters

Technical qualifications

This Pre-Feasibility Study presents capital and operating cost estimates with a targeted accuracy of within -20% to +25% for initial capital expenditure. Costs are presented in United States dollars based on prices in effect during the first quarter of 2018 and do not include any escalation factors. The metallurgical testwork outcomes are based on laboratory testing interpreted for subsequent metallurgical design; the report notes that further metallurgical testing is required before advancing the Project to production. The report states that the implementation schedule for the plant and infrastructure is based on a 76 week design and construction period, with first concentrate production targeted for Week 82. The mineral processing and recovery methods described are based on testwork, experience, knowledge from operations treating similar ore types, and designs from previous studies.

*Source: Hod Maden Project Pre-Feasibility Study NI 43-101 Technical Report, Sandstorm Gold Limited, 2018. Mineral Processing and Metallurgical Test Work, Recovery Methods, and Capital and Operating Costs sections.*