SPANISH MOUNTAIN GOLD LTD.
Management Discussion & Analysis
For the Period Ended September 30, 2022
Dated: November 25, 2022
Spanish Mountain Gold Ltd.
MD&A for the period ended September 30, 2022
The following is management’s discussion and analysis (“MD&A”) of the financial condition and results of operations of Spanish Mountain Gold Ltd. (the “Company”). This MD&A should be read in conjunction with the condensed consolidated interim financial statements, including the notes thereto, for the period ended September 30, 2022 and 2021 (“Financial Statements”) as well as the audited consolidated financial statements of the Company for the years ended December 31, 2021 and 2020.
The accompanying Financial Statements and related notes are presented in accordance with International Financial Reporting Standards (“IFRS”) and in accordance with International Accounting Standard 34, Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”). These Financial Statements, together with the following MD&A dated November 25, 2022 (“Report Date”), are intended to provide investors with a reasonable basis for assessing the financial performance of the Company as well as potential future performance. Please refer to the cautionary notices at the end of this MD&A, especially in regard to forward looking statements. All dollar amounts are in Canadian dollars unless otherwise noted.
Additional information relating to the Company including its Financial Statements may be found on the Company’s website at www.spanishmountaingold.comas well as under the Company’s profile on SEDAR at www.sedar.com.
These MD&A were reviewed by the Audit Committee and approved and authorized for issue by the Board of Directors on November 25, 2022. The information contained within this MD&A is current to the same date.
OVERVIEW
The Company’s September 30, 2022 Financial Statements reflect the financial position and results for the period then ended including those for its wholly-owned subsidiary, Wildrose Resources Ltd. (“Wildrose”). All material inter-company transactions have been eliminated.
The Company is an exploration stage company engaged in the acquisition, exploration and development of mineral properties. The Company’s primary asset is the Spanish Mountain property located approximately 180 kilometres (km) north of Kamloops, B. C. and 66 km northeast of the City of Williams Lake. The Spanish Mountain property refers to the contiguous mineral and placer claims the Company holds while the Spanish Mountain gold project (the “Project”) refers to the mineral resource that the Company has defined in an area within the property. The Company’s immediate focus is to advance the development of the Main Zone Reserve, which is comprised of the higher grade/ near-surface portion of the Mineral Resource. The Company also expects to conduct strategic resource drilling in order to further expand its multi-million ounce Mineral Resource.
The Company completed the Project’s Pre-Feasibility Study (PFS) along with a Mineral Reserve estimate and an updated Mineral Resource estimate in May 2021. The PFS is based on a 20,000 tonnes per day (tpd) milling rate to process the delineated Proven & Probable Reserves as a standalone open pit operation for 14 years. Details of the PFS are presented in the sections below. The NI 43-101 Technical Report for the PFS was filed on SEDAR on September 3, 2021.
Having defined a project with a multi-million ounce Reserve and robust economics, the Company has made the strategic decision to proceed with the environmental assessment and permitting process in order to reach the construction decision within a compressed timeline. The Initial Project Description (IPD) and Early Engagement Plan for the Project were submitted in March 2022 to the BC Environmental Assessment Office (BCEAO) and the Impact Assessment Agency of Canada (IAAC). Both the provincial and federal agencies accepted the documents within the same month without requesting amendments. With issuance of the Summary of Engagement by BCEAO and the Joint Summary of Issues and Engagement by IAAC on June 23, 2022, the early engagement period for the Project is now complete. Work is progressing on the Detailed Project Description and draft Application Information Requirements for submission in late 2022, which will commence the EA Readiness Decision phase.
The Company believes that active engagement with First Nations and other communities is critical for the success of the EA process and is pleased to support the full involvement of the First Nations. Prior to the submission of the IPD, management conducted pre-submission review with all three First Nations whose traditional territories
– 2 –
Spanish Mountain Gold Ltd.
MD&A for the period ended September 30, 2022
include the Project area. The Company signed an Engagement Protocol Agreement with Xatśūll First Nation in October 2021 and Lhtako Dené Nation in December 2021 and proceeded with the process of completing a Life-of- Mine Relationship Agreement with Williams Lake First Nation and the aforementioned Nations.
The Company has active field programs to support the ongoing environmental assessment/ permitting process and to further optimize the Project in a number of areas including metallurgical process, water management and treatment, environmental strategies and pit optimization. Any potential benefits from these initiatives will be captured in a feasibility study in due course. The key findings of these optimization exercises are as follow:
- Power line: a modified route for the power line may potentially lead to reductions of the overall permitting risks as well as the linear length by eight percent relative the proposed route assumed in the PFS. Specifically, the study investigates a viable route bypassing a populated area near Likely in order to reduce community impacts; the Construction Difficulty Analysis of the bypass concluded that 62% falls into the “easy” category and another 27% in the “medium” category. The technical team will continue to work with consultants and BC Hydro (the provincial utility) to refine the parameters for the new power line and address technical and permitting issues.
- Metallurgy: subsequent to the completion of the PFS, the Company’s technical team has continued to advance the metallurgical test work with Ausenco Engineering to further improve the gold recovery process and to develop detailed parameters for the flowsheet. Phase 1 of the exercise has successfully assessed the metallurgical performance of samples using conventional gravity, flotation, and leaching processes. In September 2022, the technical team commenced a field program to extract samples from five drill holes within the defined pit in order to complete variability sample testing and confirm the metallurgical performance with the optimized flowsheet. The samples have been shipped to BaseMet Laboratories (Kamloops, BC) for analyses which include concentrate generation for downstream testing such as oxygen uptake tests, dynamic settling tests, cyanide detoxification and carbon adsorption tests. Once the current metallurgical program is complete, the optimized flowsheet and the detailed processing configuration will form the basis for ore processing and the recovery of gold in the definitive feasibility study.
- Geotechnical: the Company has conducted a number of geotechnical programs to gather critical data for designing the pit and tailings facilities and will commence additional drilling programs in due course. To achieve efficiency in overall project costs and schedule, BCG Engineering was mobilized to conduct geotechnical work on three of the five holes drilled completed for the metallurgical program. The Company expects that the data from this exercise will give the technical team additional information to assess rock mechanics and to design a future program more effectively.
- Electrification: the Project’s location is supported by excellent infrastructure including an abundance of connectivity to the provincial power grids supplied with low-cost, renewable hydro power. Through the collaboration with BC Hydro (the provincial utility), the technical team has identified a number of opportunities that may potentially reduce capital and operating costs as well as green house gas emissions from the proposed mine. These opportunities include trolley assist trucks and equipment as well as various energy efficiency measures. The Company is actively assessing these opportunities with industry experts and in due course will provide more specific plans and the details for these initiatives.
As part of the renewal process for the Board of Directors, the Company appointed Lembit Janes, Garnet Dawson, Brent Bergeron, Peter Mah and Richard Orazietti as new directors. The biographies of the new directors are available on the Company’s website.
Spanish Mountain Gold Ltd.
MD&A for the period ended September 30, 2022
MINERAL ASSET
Spanish Mountain Gold Project, B.C.
The Spanish…
Read More:SPANISH MOUNTAIN GOLD : Management Discussion & Analysis For the Period Ended September 30, 2022
2022-11-25 20:03:03
