Company description
The Gabbs property is situated in the north-western end of the Fairplay Mining District,
between Reno and Las Vegas in Nevada, US. The area has been extensively (if intermittently)
explored since the late 19th century. However, an appreciation of its prospectivity
may be gleaned from the adjacent Paradise Peak deposit (a high-sulphidation, epithermal
gold-silver-mercury deposit discovered in 1983), which was mined by FMC from 1985
to 1993 and produced 1.46Moz gold, 38.9Moz silver and 457t mercury.
History
The earliest recorded work on the Gabbs property was in January 1888, when John Sullivan
discovered a ‘ledge’ of gold more than 266m in length and 61–123m wide. A 30m shaft
with accompanying crosscut was excavated at the time and the Sullivan claim was patented
(as the ‘Sullivan Lode’) in 1905. Relatively little history was subsequently recorded
on the project until 1967 when it was acquired by Omega Resources. It then passed
through a number of hands until 1970, when McIntyre Mines optioned the property and
completed 16 drill holes, before passing it on to Homestake in 1971, which completed
an additional 16 holes.
From 1971 until 2010, exploration activities were carried out by a number of operators,
including Cominco, Placer American, Glamis Gold, Gwalia Gold and, lastly, Newcrest,
which completed 24,765m of drilling in 87 holes (average 284m/hole). In conjunction
with petrographic studies, extensive rock and soil geochemical sampling, mapping,
ground magnetics and induced polarisation (IP), Newcrest also produced a mineral resource
estimate for Sullivan of 33.1Mt at 0.55/gt Au and 0.25% Cu that contained 0.6Moz Au
and 83kt Cu. While encountering anomalous areas however, the geophysical surveys identified
no clear, ‘bulls-eye’ anomalies typical of large, mineralised porphyries and hence
Newcrest sold the property again in 2010.
Up to this point (2011), approximately 500 drill holes had been completed on the property
in total, of which approximately half targeted the Sullivan deposit. In addition to
the orientation induced polarisation survey, historical geophysical work also included
regional gravity surveys and a property scale ground magnetic survey, which showed
that the Sullivan and Lucky Strike zones (see Exhibit 3, below) were associated with
prominent magnetic highs that were open at depth. At the same time, re-interpretation
of the ground magnetic and historical IP data identified features that were indicative
of the source for the surface mineralisation.
In February 2021, P2 entered into an agreement with Borealis Mining Company, LLC (an
indirect, wholly-owned subsidiary of Waterton Precious Metals Fund II Cayman, LP)
to acquire the Gabbs property. In July 2021, it then staked 66 new claims to expand
the property southwards and, in February 2022, staked an additional 122 lode claims
to expand it once again, albeit this time predominantly northwards. Simultaneously,
it completed a Phase I drilling programme in 2021 and a Phase II drilling programme
in 2022. The Phase I drilling programme comprised four diamond drill holes totalling
580m and 27 reverse circulation (RC) holes totalling 4,120m with the objective of
testing the full thickness and lateral extent of the mineralisation and determining
the geologic constraints of the Sullivan Zone. The Phase II programme, in 2022, comprised
20 RC drill holes totalling c 4,000m (13,123 ft) and focused on extending the Sullivan
and Car Body zones and infilling and extending Lucky Strike.
Concurrent field mapping and prospecting by P2 located numerous showings and historical
shafts, pits and trenches that overlay some of the interpreted deep-seated sources.
In a further attempt to define these targets, a Natural Source Magneto Telluric (NSMT)
survey was run over the project totalling 25.7 line kilometres, covering the (then)
four known zones of mineralisation and the prospective source locations between them.
The initial interpretation of the three-dimensional NSMT inversion model identified
a high-priority area in the centre of the property that hosts a gold-copper porphyry
exploration target. This area is below the Gold Ledge Zone (see Exhibit 3) and confirms
the two-dimensional interpretation of the NSMT inversion model. For the moment however,
an additional permit is required in order to drill it. In the meantime, in 2021, P2
contracted P&E Mining Consultants of Brampton, Ontario, to prepare an updated mineral
resource estimate for the property, based on 397 historical drill holes, 87 Newcrest
drill holes and 10 other St Vincent Minerals RC drill holes, but incorporating updated
economic assumptions. The result was a pit-constrained mineral resource estimate (reported
using a cut-off of 0.24g/t Au for oxide material and 0.30g/t AuE for sulphide material)
of 26.2Mt of oxide mineralisation at an average grade of 0.72g/t AuE and 46.9Mt of
sulphide mineralisation at an average grade of 0.82g/t AuE to give a total of 1.84Moz
AuE contained within 73.1Mt at an average grade of 0.54g/t Au and 0.26% Cu.
In 2024, P2 contracted Kappes, Cassiday & Associates, Welsh Hagan Associates and P&E
to prepare an NI 43-101 compliant PEA on the Gabbs Project, including an updated mineral
resource estimate based on 547 drill hole records, comprising 397 ‘historical’ drill
holes, 87 Newcrest drill holes, 10 St Vincent RC drill holes and four diamond and
49 RC P2 drill holes.
The report envisaged a joint heap leach and mill/float operation and was conducted
on a constant Q224 US dollar basis at a gold price of
US$1,950/oz and a copper price of
US$4.50/lb (
US$9,921/t). It was signed off in July 2024 and effective from May 2024. The mineral resource
effective date was April 2024. Its salient features were as follows:
- A pit constrained resource of 2.0Moz Au and 864.1Mlb Cu contained within 112.2Mt at
average grades of 0.38g/t Au and 0.24% Cu (split 31%:69% indicated:inferred by tonnage)
at a cut-off of 0.27g/t AuE for oxide material and 0.36g/t AuE for sulphide material.
- Nominal throughput of 9.0Mtpa for 14.2 years to produce an average 104koz Au and 13kt
Cu per year at an average life of mine stripping ratio of 3.19.
- Total operating costs of
US$19.24 per tonne of ore processed, which translated into cash costs on a by-product basis
of
US$493/oz and an all-in sustaining cost (AISC) of
US$1,234/oz.
- Initial capital costs of
US$380m (including working capital), total life of mine capital costs of
US$851m and closure costs of
US$56m.
- A pre-tax IRR of 23.1%, a post-tax NPV5 of
US$550m and a pay-back period of three years.
One year later, in October 2025, the PEA was updated. The mine plan was left unchanged
from the May 2024 PEA. However, metal process recoveries were improved to reflect
the results of P2’s ongoing metallurgical programme. In addition, mining operating
costs were increased by c 1%, mining capital costs (both initial and sustaining) by
7.25%, processing operating costs by 14% and processing capital costs by 2%. In deference
to price moves in the metals markets, the October 2025 PEA was also conducted at updated
base case precious metals prices. However, sensitivities were run at the May 2024
PEA’s metals prices and at spot prices in order to provide comparison and context
for the update.
A comparison of the May 2024 PEA and the October 2025 PEA is provided in Exhibit 1,
below. In addition to the changes in metals prices, readers’ attention is drawn to
the change in production (a function of improved metallurgical recoveries), modest
capital cost increases and slightly higher AISC cost increases (which rise with royalties
and therefore also metals prices).
