GOLD PRODUCTION GROWTH - Feasibility Study Presentation January 21, 2021 - Harte Gold Corp.
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Feasibility Study Presentation
January 21, 2021
GOLD PRODUCTION
GROWTH
www.hartegold.com
@HarteGold
Harte Gold Corp
TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 1
Disclaimer Cautionary Statements Regarding Forward-Looking Information and Non-IFRS Financial Measures Certain information contained or incorporated by reference in this presentation of Harte Gold Corp. (“Hart Gold” or the “Company”), including any information relating to the Company’s strategy, the Sugar Zone Mine Property, plans or future financial or operating performance, constitutes “forward-looking statements”, within the meaning of applicable securities legislation. All statements, other than statements of historical fact, are forward-looking statements. The words "seek", "anticipate", "budget", "plan", "continue", “envisage”, "estimate", "expect", "forecast", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar words suggesting future outcomes or statements regarding an outlook identify forward-looking statements. In particular, this presentation contains forward-looking statements including, without limitation, with respect to: announcing Feasibility Study results in early Q1 2021; 2021E gold production of 60,000 to 65,000 ounces; achieving 800 tpd mine production in Q1 2021; increasing development rates to over 13 metres per day by Q1 2021; increasing the number of active mining areas to six by Q1 2021; estimates of total cash costs per ounce, AISC per ounce, projected capital, operating and exploration expenditures; mine life and production rates; estimated timing for continued development of and production from, the Sugar Zone Mine Property; anticipated gold productionfrom the Sugar Zone Mine Property; the relationship between the Company and BNP Paribas and Appian; and further exploration activities. Forward-looking statements are necessarily based upon a number of estimates and assumptions including material estimates and assumptions related to the factors set forth below that, while considered reasonable by the Company as at the date of this presentation in light of management’s experience and perception of current conditions and expected developments, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements and undue reliance should not be placed on such statements and information. Such factors include, but are not limited to: fluctuations in the spot and forward price of gold; the speculative nature of mineral exploration and development; changes in mineral production performance; exploitation and exploration successes; Company’s ability to attract and retain qualified candidates to join the Company’s management team and board of directors; diminishing quantities or grades of reserves and resources; increased costs, delays, suspensions and technical challenges associated with the development andconstruction of capital projects; operating or technical difficulties in connection with mining or development activities, including geotechnical challenges and disruptions in the maintenance or provision of required infrastructure and information technology systems; failure to comply with environmental and health and safety laws and regulations; timing of receipt of, or failure to comply with, necessary permits and approvals; uncertainty whether the Sugar Zone Mine Property targeted investments will meet the Company’s capital allocation objectives and internal hurdle rate; the impact of global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future cash flows; the impact of inflation; fluctuations in the currency markets; damage to the Company’s reputation due to the actual or perceived occurrence of any number of events, including negative publicity with respect to the Company’s handling of environmental matters or dealings with community groups, whether true or not the possibility that future exploration results will not be consistent with the Company’s expectations; risks that exploration data may be incomplete and considerable additional work may be required to complete further evaluation, including but not limited to drilling, engineering and socioeconomic studies and investment; risk of loss due to acts of war, terrorism, sabotage and civil disturbances; litigation and legal and administrative proceedings; business opportunities that may be presented to, or pursued by, the Company; risks associated with employee relations including loss of key employees; increased costs and physical risks, including extreme weather events and resource shortages, related to climate change; and availability and increased costs associated with mining inputs and labor. In addition, there are risks and hazards associated with the business of mineral exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold concentrate losses (and the risk of inadequate insurance, or inability to obtain insurance, to cover these risks). Many of these uncertainties and contingencies can affect our actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements are not guarantees of future performance. All of the forward-looking statements made in this presentation are qualified by these cautionary statements. Specific reference is made to the most recent Annual Information Form and in other filings of the Company with securities and regulatory authorities which are available on SEDAR at www.sedar.com for a more detailed discussion of some of the factors and risks underlying forward-looking statements that may affect the Company’s ability to achieve the expectations set forth in the forward-looking statements contained in this presentation. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law In this presentation we use the terms “EBITDA”, “cash operating cost” and “All-In Sustaining Cost” or “AISC”. These should be considered non-IFRS financial measures as defined in applicable Canadian securities laws and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. For additional information regarding non-IFRS financial measures used by the Company, please refer to the heading “Non-IFRS Measures” in the Company’s Management Discussion and Analysis for the three months ended September 30, 2020 and 2019, available at www.sedar.com. All dollar amounts stated are denominated in Canadian dollars ($) unless specified otherwise. All tonnages in metric, unless otherwise noted. TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 2
CORPORATE
OVERVIEW
TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 3
Platform For Delivering Long-Term Growth
• Prolific gold producing region of Ontario
• Operational turnaround in in 2020
• Feasibility study provides a compelling
multi-year production growth trajectory
• Massive district-scale land package
with untapped exploration potential
• Cleaning up the balance sheet for
maximum financial flexibility
Producing gold mine and significant land package (over 79,000 ha)
TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 4
Executing On Vision & Strategy
✓
Achieve operational excellence
1.
• Transformational change is underway – 800 tpd in Q1 2021
✓
Expansion to 1,200 tpd
2. • Feasibility Study provides a pathway for growth:
2023 and beyond
3.
Define exploration potential
• Exploration update and strategy: Mid-Q1 2021 2021
AND BEYOND
Capital Structure
4. • Continuing discussions with BNP: Underpinned by strong relationships
with both BNP and Appian, all options are being explored
Corporate Strategy
5.
• Define long-term strategic priorities
TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 5
Setting the Stage: Operational Summary
Sugar Zone mine posts a strong finish to 2020
Record quarterly production in Q4 2020 and guidance beat for FY 2020
• Q4 2020: Production of 10,835 ounces Au, highest quarterly period on record
• FY 2020: Production of 25,649 ounces Au exceeds upper range of 2020 guidance (20,000-24,000 ounces)
2020 Operating Summary
Unit FY 2020 Q4 2020 Q3 2020 Q1 2020
Ore Tonnes Processed tonnes 134,360 46,288 36,367 51,705
Ore Tonnes Mined tpd 526 514 473 575
Head Grade g/t Au 6.3 7.7 5.7 5.5
Recovery % 94.2% 94.9% 93.4% 94.0%
Gold Ounces Produced oz Au 25,649 10,835 6,218 8,597
The above table compares Harte Gold’s operating performance for Q4 2020 relative to the previous quarters of operations for 2020. In Q2 2020, operations were placed on temporary
care-and-maintenance due to the COVID-19 pandemic so is not considered an operating quarter.
TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 6
Managing Key Leading Indicators Key to Future Success
KPIs trending positively, setting the stage for growth in 2021
Mine Development Processed Grade
13.5 g/t Au
metres per day
11.4 7.7
7.1
9.2 5.7
Q3 2020 Q4 2020 FY 2021E Q3 2020 Q4 2020 FY 2021E
Mine Production Ounces Recovered
176
tonnes per day 800 oz Au per day(1)
124
473 514
89
Q3 2020 Q4 2020 FY 2021E Q3 2020 Q4 2020 FY 2021E
1. Product of mined production and grade divided by mine operating days
TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 7
FEASIBILITY STUDY OVERVIEW TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 8
Feasibility Study Highlights Positive Feasibility Study results for expansion to 1,200 tpd: ✓ Mine life: 9 years (2021 to 2029) ✓ Small incremental cost to expand: $21 million, of which a majority is to be spent in 2022 ✓ Production growth: 58% increase over 2021 estimates, achieving 98,700 oz/year, post expansion ✓ AISC reduction: US$1,025/oz, post expansion ✓ Expansion timeline: To start Q3 2021, with benefits of 1,200 tpd starting Q1 2023 ✓ Free cash flow growth: $96 million by 2023, 166% increase over 2021 estimates (analyst prices) ✓ NPV: Pre-tax NPV5% of $417 million, after-tax NPV5% of $332 million at analyst consensus prices ✓ Incremental IRR: 89% at analyst consensus prices TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 9
Updated Resource Modelling Underpins The Feasibility Study
Mineral Resource Estimate (September 30, 2020)
Classification Zone Tonnes (kt) Grade (g/t Au) Ounces (koz Au)
Sugar 1,315 15.53 657
Middle 1,326 8.95 381
Indicated
Wolf 162 6.13 32
Total 2,803 11.87 1,070
Sugar 891 10.98 314
Middle 844 8.21 223
Inferred
Wolf 132 7.04 29
Total 1,866 9.45 567
Mineral Reserve Estimate (December 31, 2020)
Classification Zone Tonnes (kt) Grade (g/t Au) Ounces (koz Au)
Sugar 1,994 7.59 487
Probable Middle 1,460 6.62 311
Total 3,454 7.18 797
TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 10Mine Design and Schedule
Mine design
• Deswik stope optimizer used to evaluate the resource block model
• Cut-off grade of 5.0 g/t Au used to evaluate the overall reserves and mine design
• Sills developed on 15 metre levels (Sugar Zone), 20 metre levels (Middle Zone)
Optimized underground development
• Decline and lateral waste and ore development were designed to efficiently access stoping blocks
• Costs determined by zero-base and historical methods. Key drivers include: labour, equipment availability and
utilization and UG infrastructure
TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 11Mine Design and Schedule
Middle Zone Sugar Zone North Sugar Zone South
Year
2021
2022
2023
2024
2025
2026
2027
2028
2029
TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 12Underground Development and Ounces Per Vertical Metre
Illustrative Comparison to Nearby Mines
Oz/vertical metre - Planned Ounces/vertical metre - cumulative
Vertical Metre
Oz Au per
~10,000
First 9 yrs @ 5.8 g/t Au
850 @ 7.2 g/t Au 944 Last 5 yrs @ 9.6 g/t Au 890 @ 9.6 g/t Au
0
Producing: Producing: Producing: Producing:
Sugar Zone
Island Gold
Eagle
Hemlo
Sugar Zone Mine Island Gold Mine Eagle Mine Hemlo
2 years 14 years 25 years 35 years
Vertical Development
(400)
7.1 g/t
(metres)
(800)
10.4 g/t 14.4 g/t
(1,200) Island
Deep Area
(1,600)
Mine Development Reserves Inferred Boundary
TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 13Ore Tonnes Processed and Grade
500,000 10.0
LOM grade: 7.2 g/t Au*
8.7
400,000 8.1 8.0
7.7
Processed Tonnes
7.1 6.9 7.0 7.1
6.6
Grade (g/t Au)
300,000 6.0
5.4
200,000 4.0
100,000 2.0
0 0.0
2021 2022 2023 2024 2025 2026 2027 2028 2029
800 tpd 1,200 tpd
TSX: HRT | FRANKFURT: H4O | OTC: HRTFF * Average recovery 94.3% over LOM 14Gold Production (Oz Au)
120,000 114,085 800,000
Recovered Annual Production (oz Au)
102,261
Cumulative Production (oz Au)
92,136 93,239 91,997
90,000 600,000
71,812
67,570
62,458
60,000 56,044 400,000
30,000 200,000
0 0
2021 2022 2023 2024 2025 2026 2027 2028 2029
TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 15Operating Cost Summary
• Total site costs: $221 per tonne, decreasing to $197 per tonne
Site Operating Cost Breakdown
post expansion
Mining Processing Site G&A
• Mining: 300 90 0
•
80 0
Unit haulage and backfill costs increase as operations 250 704
continue deeper in the mine 221
Unit Costs ($/tonne)
70 0
197
200 163 60 0
• Offset by economies of scale 58
43 50 0
122
• Processing: 150
43 34 40 0
• Decrease 22% on a per unit basis following expansion 100 30 0
420 20 0
• Site G&A: 120 120
50
10 0
• Decrease 25% on a per unit basis as a large portion of site 0 0
costs are fixed and will benefit with scale 2021 2023-2027 LOM
$/tonne $/tonne C$m
TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 16Expansion Capital Summary
• Expansion capital of $21.1 million incurred from mid-2021 to
LOM Expansion Capital Summary (C$m)
Q1 2023
Mill Expansion Mine Equipment Permitting
• Mill Expansion:
18.0 25
16.3
16.3 21.1
• Replace secondary cone crusher
16.0
2.3
Unit Costs ($/tonne)
•
20
Addition of a second ball mill 14.0
4.6
12.0
• Two additional rougher flotation cells and one cleaner cell 15
10.0
• Additional tailings thickener 8.0
14.0
10
• Expansion mine equipment: 6.0
2.5 16.3
4.0 2.3
2.3 5
• Additional 30 tonne haul truck 0.1
2.0
2.4 2.3
• Three additional LHD loaders 0.0 0
2021 2022 2023 LOM
• Ancillary equipment
TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 17Mill Expansion
Additional Process Plant Tailings
Equipment Highlighted Expanded Gold Thickener
in Blue Room
Additional Ball
Mill
Expanded
Expanded
Flotation Circuit
Crushing Circuit
TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 18Mine Sustaining Capital
LOM Total
• Underground Capital: paste distribution, mine ventilation,
($m)
underground shops and infrastructure.
Underground Capital 31
• Tailings and Water Management: Expansion of the North TMF,
construction of the South TMF and water management.
Tailings and Water Management 27
• Mine Equipment Maintenance: Overhaul and major component
replacement of the equipment fleet. Mine Equipment Maintenance 18
• Underground Electrical: Distribution of electrical equipment for Underground Electrical 14
ventilation, drilling and dewatering.
Paste Backfill 15
• Paste Backfill: Substitution of the existing ceramic disk filtration
system with a cloth disk filter. Reclamation / Closure Costs 8
• Reclamation / Closure Costs: Incurred at the end of mine life.
Other 11
Total Sustaining Capital 126
TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 19Underground Capital Development
6,000 Underground Development:
LOM total: 34,500 metres
LOM costs: $199 million
Annual Average: 3,800 m / year
5,000 Average development rate (2022+): 11.5 m / day
Development Metres (m)
4,000
3,000
2,000
1,000
0
2021 2022 2023 2024 2025 2026 2027 2028 2029
TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 20Production and AISC Profile
2023 to 2027:
120,000 114,085 Production: 98,700 oz Au 2,000
AISC: US$1,025/oz Au
102,261
Recovered Annual Production (oz Au)
92,136 93,239 91,997
71,812 67,570
90,000 1,500
1,430
56,044
Cash Cost (US$/oz)
1,354 1,336
62,458 1,117 1,157
1,074 1,048
60,000 1,002 1,000
884
30,000 500
0 0
2021 2022 2023 2024 2025 2026 2027 2028 2029
1
Gold Recovered (oz Au) AISC (US$/oz)
TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 21Project NPV5%
NPV5% Summary – Before Hedge, Debt and Corporate Costs Sensitivity Analysis – After-Tax (C$m)
US$/oz 2021 2022 2023 2024 2025+
Gold Price CAD:USD
Analyst Consensus Prices 1,938 1,871 1,782 1,735 1,624
Mine Costs Expansion Capital
Sustaining Capital
Pre-Tax NPV $549
After-Tax NPV5% (CAD Millions)
$450 $426
Project NPV5% (CAD Millions)
After-Tax NPV $476 $417
$417 $402 $420
$371
$329 $354
$332 $321 $350
$267
$332
$310
$250
$245 $254
Analyst US$1,600 US$1,700 US$1,800 US$1,900 $150
Consensus
-10% -5% Base Case 5% 10%
Flat Gold Price (US$/oz Au) + / - % Change in Input
TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 22Cumulative Free Cash Flow (After-Tax)
US$1,600 US$1,700 Analyst Consensus US$1,800 US$1,900
$600
$528
After-Tax Cash Flow, Cumulative (C$ MIllions)
$500
$467
$412
$400 $406
$341
$300
$200
$100
$0
2021 2022 2023 2024 2025 2026 2027 2028 2029
Cumulative after-tax, unlevered, before corporate costs and hedge payments
TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 23Opportunities to Further Enhance Value Not Factored Into NPV
• Expansion of near-mine mineralization along strike
• Step-out and infill drilling along strike at Sugar Zone South, Middle Zone and Wolf Zone to add additional sources of ore feed,
increasing overall ounces per vertical metre
• Expansion of mineralization at depth
• Infill drilling of Inferred Resources ta depth to extend mine life
• Cost optimization, particularly related to paste backfill vs. rockfill
• Complete a trade-off study analysis of continuing solely with rockfill as a primary backfill method, instead of paste backfill, with the
potential of further reducing operating and capital costs
TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 24SUMMARY TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 25
Significant Production Growth, Low Cash Cost Position
Market Capitalization(1) (C$M) 2021E Production(2) (koz Au) 2021E Cash Cost(2) (US$/oz Au)
Wesdome $1,281 Argonaut 255 Roxgold $592
Pure Gold $880 Victoria 195 Harte (2023E) $651
Victoria Calibre 188 Pure Gold $685
$815
McEwen 147 Wesdome $686
Argonaut $735
Roxgold 126 Mandalay $688
Calibre $644 (21%)
Wesdome 120 Victoria $695
Roxgold $556
Mandalay 117 TMAC $794
Karora $531
Harte (2023E) 102 Calibre $806
McEwen $484
Karora 101 Harte (2021E) $823
Americas G&S $389
TMAC 99 Argonaut $864
TMAC $284
Superior 91 +64% Americas G&S(3) $868
Mandalay $191 Americas G&S(3) Karora $882
85
Harte Gold $145 Pure Gold 68 Superior $981
Fiore Gold $115 Harte (2021E) 62 Fiore Gold $1,006
Superior $84 Fiore Gold 48 McEwen $1,167
1. Market data as at January 19, 2021
TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 2. Based on analyst consensus estimates of production and cash cost. Harte based on January 2021 Feasibility Study 26
3. Americas Gold & Silver shown on an AuEq basisSummarizing the Opportunity
Growing from a Solid Significant Minimal Capital Potential to Extend
Operational Base Growth Trajectory Cost to Expand Mine Life
• Significant operational • 2020: 25k oz • $21M (majority to be • Near-mine extension
improvement in 2020 • 2021E: 60-65k oz spent in 2022) drilling
• Exceeded 2020 • Post-expansion: ~100k oz • 89% incremental IRR • TT8 prospecting and
guidance for expansion project drilling
• Post-expansion AISC to
• Transition to owner- • $417M pre-tax NPV • Defined pipeline for
decrease to US$1,025/oz
operator complete long-term growth
• Further data compilation
TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 27THANK YOU! TSX: HRT | FRANKFURT: H4O | OTC: HRTFF 28
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