ABCOURT MINE Inc.

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Ticker: ABI Abcourt Mines Inc is a emerging gold producer with 2 gold mines, 1 zinc-silver mine and several gold and zinc projects in Quebec, Canada.

The company has two operating segments, being the producing of a gold mine segment ( Shortly a second will be in active production) , and the acquisition, exploration and evaluation of mining properties.

All of the company’s activities are conducted in Canada, and generates majority of the revenue from producing of a gold mine segment.

Here is company info and share structure from their business presentation.

• Shares outstanding 290.9 Million
• Options 7.8 Million
• Warrants 290.9 Million
• Fully diluted 292.3 Million
• Market Cap 15 Million
• Actuel Share price $0.085
• 52 Weeks hight/low$0.05 – $0.10
• Actual gold production 18 000 Oz /year
  

  The Elder Mine and Tagami Property

  The Elder mine and Tagami Property is conveniently located 10 kilometres northwest of the mining community of Rouyn-Noranda, Quebec, and is 100% owned by Abcourt.  The Property comprises 36 contiguous claims, a mining concession and two mining leases.  There are royalties of 2% to 3% NSR payable on different parts of the Property.

  The surface plant includes an office, a service building, a hoist room and a shaft building. The mine is serviced to a depth of 794 meters (2,606 feet) by two shafts and several drifts on 16 levels. All mining equipment and required facilities are in place.

  Between 1984 and 1989, a total of $23 M was spent on this property by the Aunore Resources Inc – Nova Beaucage Mines Limited joint venture. The surface plant was installed and the necessary equipments were purchased. The mine was dewatered, 4,268 meters (14,000 feet) of old drifts were rehabilitated, the shaft was deepened 15 meters (50 feet), new stations were established on three upper levels, in no 2 shaft, that is the 4th, 5th and 6th levels, an ore pass and a waste pass system with loading pockets was established, 142 surface and 75 underground diamond drill holes were drilled, approximately 2,134 meters (7,000 feet) of new drifts were excavated, ventilation raises were driven and a few stopes were started. Approximately 13,200 metric tonnes of ore with a grade of 0.198 oz/mt of gold were extracted. Following a drop in the price of gold, the mine was closed and almost all mining equipment was sold, except important pieces of equipment like the hoist, compressors and the electrical distribution system.

  From 1995 to 2013, several surface drilling programs were completed and results obtained were used to revise the 43-101 resources. The revision of resources was completed by Mr. Jean-Pierre Bérubé, P. Eng. Mr. Bérubé is a Qualified Person under Regulation 43-101.  Based on these resources, a preliminary economic assessment report (PEA) was prepared to determine if additional exploration work was needed to increase resources before considering mine development before production.  The PEA prepared by Roche Ltd., Consulting Group (Roche) and independent consultants indicated that enough resources were available to continue with our exploration and valuation work.

  Commercial operations at the Elder mine started in January 2016. For results obtained since the start of commercial operations, please refer to the Company’s management’s discussion and analysis and financial reports filed on SEDAR and available on the Investors Relations section.

  On October 31, 2018, Abcourt filed on SEDAR an Update Report of Resources on the Elder Mine and Tagami Property prepared by Mr. Jean-Pierre Bérubé according to Regulation 43-101.

  Cross-section of the Elder mine.

  

  The ore in vein no. 1 is found in several quartz veins generally striking N-40o–E on surface but east-west at a depth of 305 meters (1,000 feet) in the mine and dipping on the average at 22o to the south-east, with the exception of the vein no 4 which is striking north-south and dipping 22o to the east. The CDR vein is located 4,500 feet (1,377 m) south of vein no. 1.

  Table of Resources and Parameters Used

  As of May 31, 2018, mineral resources in the measured and indicated categories were as follows:

  CATEGORIES		MEASURED			INDICATED			MEASURED + INDICATED			GOLD
  ZONE		TONNES	GRADE		TONNES	GRADE		TONNES	GRADE		OUNCES
  		(metric)	(g/t Au)		(metric)	(g/t Au)		(metric)	(g/t Au)		(Oz)
  ELDER
  VEIN 1		32,607	5.09		159,502	6.91		192,109	6.60		40,755
  VEIN 2		5,343	5.36		75,957	6.39		81,300	6.32		16,516
  VEIN 3		0	0.00		15,321	6.27		15,321	6.27		3,088
  VEIN 4		18,181	6.35		104,176	6.26		122,357	6.28		24,691
  VEIN 6		0	0.00		52,739	6.53		52,739	6.53		11,077
  SUB-TOTAL		56,131	5.52		409,695	6.57		463,826	6.45		96,126
  TAGAMI		0	0.00		174,258	6.22		174,258	6.22		34,848
  TOTAL		56,131	5.52		581,952	6.47		638,083	6.38		130,974

  The total measured and indicated resources for Elder and Tagami is 638,083 tonnes with a grade of 6,38 g/t.

  In addition, the inferred resources total 547,746 tonnes with a grade of 5.48 g/t Au.

  CATEGORY		INFERRED			GOLD
  ZONE		TONNES	GRADE		OUNCES
  		(metric)	(g/t Au)		(Oz)
  ELDER
  VEIN 1		119,276	5.41		20,749
  VEIN 2		75,051	5.70		13,755
  VEIN 3		43,847	5.37		7,571
  VEIN 4		102,169	7.89		25,920
  VEIN 6		39,808	5.36		6,877
  SUB-TOTAL		380,251	6.12		74,872
  TAGAMI		167,495	5.48		29,510
  TOTAL		547,746	5.93	104,382

  The technical parameters used for the calculation of the measured and indicated resources and the inferred resources were:

  • Density: 2.70 t/m₃, minimum thickness: 1.8 m
  • Lower cutting grade  = 3.45 g/t Au
  • Higher cutting grade = 31.1 g/t Au

  UPDATE OF PRELIMINARY ECONOMIC ANALYSIS PREPARED BY ROCHE, CONSULTING-GROUP (2012)

  Resources with a reasonable prospect for eventual economic extraction

  		MINERAL RESOURCES MEASURED AND INDICATED			RECOVERABLE RESOURCES 85%			40% DILUTION			RESOURCES AS DESCRIBED ABOVE
  		TONNES	GRADE		TONNES	GRADE		TONNES	GRADE		TONNES	GRADE
  		(metric)	(g/t Au)		(metric)	(g/t Au)		(metric)	(g/t Au)		(metric)	(g/t Au)
  MEASURED		56,131	5.52		47,711	5.52		19,084	0.00		66,795	3.94
  INDICATED		407,695	6.57		346,541	6.57		138,616	0.00		485,157	4.69
  TOTAL		463,826	6.45		394,252	6.32		157,700	0.00		551,952	4.51

  Here is the CIM definition of resources:

  “A Mineral Resource is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade or quality, continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling.”

  General

  A preliminary economical analysis was prepared according to the net present value method. This method is built on the basis of a constant dollar. There is no provision for inflation nor for taxes to pay. The mine is presently in exploitation, without debt. The internal rate of return was not used as the mine is operating and there is no initial investment. This update was prepared by Renaud Hinse, mining engineer. As resources did not increase by 100% or more, it was not necessary to have an independent person.

  Hypothesis

  The hypothesis used are indicated in the table below. The sensitivity analysis is made for variations in the price of gold of plus and minus 10%.

  DESCRIPTION	UNITS		VALUE
  Price		$US / ounce		1,230
  Exchange Rate		Cdn / US		1.30
  Discount Rate		Annual %		8

  The cost of royalties is already incorporated into operating costs.

  Technical Hypothesis

  DESCRIPTION	UNITS		VALUE
  Recoverable measured and indicated resources		Tonnes		551,953
  Annual rate of extraction		Tonnes / year		130,000
  Life of mine		Years		4.25
  Grade of mineralization		g/t Au		4.51
  Gold recovery in mill		%		97
  Net recoverable value		$ Cdn/t		224.74
  Annual gold production		Ounces		18,300
  Ongoing capital costs		$ Cdn/t		19.19
  Total operating costs per tonne		$ Cdn/t		191.24
  Gold refining		$ Cdn/oz		1.31

  Financial model and results

  A summary of the technical hypothesis is given in the table above. A total revenue at the mine of $124 M is expected, that is $224.74 per tonne. Ongoing capital expenditures, necessary in the course of mining, is estimated at $10.6 M, that is $19.19 per tonne of recoverable measured and indicated resources.

  Operating costs are $191.24 per tonne for a total of $105.4 M, including $6.89 per tonne of royalties for a total of $3.8 M. A working capital of about $2.5 M is necessary to cover about one month of operation costs, but this amount was already available on June 30, 2018.

  The financial analysis shows a net cash flow of $7.9 M before taxes and $4.1 M after taxes. The net present value, discounted at 8%, is $6.5 M before taxes and $3.5 M after taxes.

  Summary of project evaluation

  DESCRIPTION	EVALUATION BASE $ CDN
  Total mine revenue		124,000,000
  Ongoing capital expenditures		10,600,000
  Total operating expenses including royalties		105,600,000
  Net cash flow before taxes		7,900,000
  Net cash flow after taxes		4,200,000

  Quality Control and Assurance

  In its operations, Abcourt applies a procedure for the three methods of sampling used: drill core (series D), chips (series F) and broken muck (series M), to reconcile grade with the ounces produced at the Sleeping Giant mill. The lab is directed by a chief analyst with adequate experience in this domain. This lab maintains an internal quality control program. Assay results of blanks, duplicates and standards appear regularly (3/24) on assay reports.

  Check assays done for 15 chip samples (F) and 10 muck samples (M) done by an accredited laboratory (ALS-Chemex) indicate that the assay results from both laboratories have a very good coefficient of correlation (R2=0.975) for sample M18465.

  The Sleeping Giant Mine (gold)

  

  The Sleeping Giant Mine

  In June 2016, Abcourt completed the acquisition of the Sleeping Giant mine and mill and several other properties with excellent showings of gold.

  The Sleepy Giant property is 100% owned by Abcourt since its purchase in June 2016.  The property is located half-way between Amos and Matagami, in Abitibi, Quebec, in the territory covered by the Plan Nord of the Quebec government. It comprises four (4) mining leases covering an area of approximatively 458 hectares and 69 mining claims.  A royalty of $5.00/ton on the first 350,000 tons of ore extracted from the Sleepy Giant property is payable.

  Among the assets that Abcourt has acquired, there is a mill with a capacity of 700 to 750 tonnes of ore per day, or 250,000 tonnes per year. This capacity is adequate to treat the Elder and the future Sleeping Giant production. The process is carbon in pulp. There are also installations to deposit the mill tailings, underground infrastructures including two shafts and drifts, a mechanical shop, offices, a store, dries and mining equipment, surface installations, an important inventory of parts, five (5) mining leases and forty (40) adjacent cells and several other exploration properties.

  The treatment plant was restarted by Abcourt in August 2016 to process ore from the Elder Mine and custom milling to utilize the full capacity of the mill.

  In September 2018, a NI 43-101 resource calculation has been prepared by Jean-Pierre Bérubé, geological engineer. Mr. Bérubé is a qualified and independent person under National Instrument 43-101 and has relevant experience in this area.

  A summary of Measured, Indicated and Inferred Resources is presented in the following table:

  ZONE	MEASURED		INDICATED		MEASURED + INDICATED		INFERRED
  	Tonnes	Grade (g/t)	Tonnes	Grade (g/t)	Tonnes	Grade (g/t)	Tonnes	Grade (g/t)
  J			46,802	9.88	46,802	9.88	13,806	5.70
  D			37,920	8.64	37,920	8.64	10,948	9.60
  2			5,447	13.28	5,447	13.28	1,280	7.80
  3			40,510	9.54	40,510	9.54
  6			15,434	8.60	15,434	8.60	18,483	16.64
  7			31,199	10.42	31,199	10.42
  8			3,350	6.26	3,350	6.26	3,627	9.87
  8 Sig			18,434	9.59	18,434	9.59
  8N	2,993	15.50	11,368	10.44	14,361	11.49
  9			12,297	7.08	12,297	7.08
  15			15,664	13.86	15,664	13.86	13,619	8.07
  16			15,816	11.10	15,816	11.10	22,165	15.36
  18			9,497	14.33	9,497	14.33	2,096	10.80
  20			9,763	10.79	9,763	10.79
  30			8,418	10.09	8,418	10.09
  30 Parc			4,981	10.70	4,981	10.70
  30FW			6,155	8.43	6,155	8.43
  30HW			2,303	6.46	2,303	6.46
  30W			31,532	13.29	31,532	13.29	4,324	14.50
  30 Shadow			26,120	8.89	26,120	8.89
  50	2,020	6.93	10,182	10.67	12,202	10.05	1,434	13.40
  78H	5,902	12.28			5,902	12.28	1,290	7.00
  785N			112,440	14.27	112,440	14.27
  Total	10,915	12.17	475,633	11.17	486,548	11.20	93,073	0.00
  Rounded	10,900	12.20	475,625	11.20	486,500	11.20	93,100	11.85

  Calculation Criteria Used:

  • • Cut-off grade of 6.5 g/t Au. Some polygons under this cut-off grade were included to ensure the continuity of the zones.

  • • Price per ounce of gold at US $1,225 (3 years average) and an exchange rate of US $1 = Can $1.20.

  • • Maximum content: 60 g/t Au for core samples and 55 g/t Au for chip samples.  A grade of 32 g/t Au was applied for the polygons generated by the 2013-2014 drilling.

  • • Specific Gravity: 2.85 g/cm³ as used in previous resource estimates.

  • • Resources were evaluated from diamond drill samples and face samples using the polygon method applied to inclined longitudinal sections.

  • • The minimum true thickness of the veins is calculated from its dip; 1.6 metre for veins having more than 50° and 1.8 metre for those having less than 50°.

  • • The vein content is determined by the drilling intersection and the content of the adjacent material to meet a minimum thickness of 1.6 or 1.8 metre.

  • • One Troy ounce = 31.1035 grams. The metric system was used for these calculations (metres, tonnes and grams/tonne).

  • • Calculated tonnes have been rounded to the nearest hundred.  Differences in the calculation total are due to rounded figures as recommended by NI 43-101.

  • • ICM definitions and guidelines were used for this resource calculation.

  

  Plan view of level 665 showing drifts and cross-cuts in known mineralized areas and the geological context

  QUALITY CONTROL AND REPORTING PROTOCOLS:

  Considering the potential sources of errors that a laboratory may encounter in the context of large-scale sampling.  Previous owner, Aurbec Mines Inc. (“Aurbec”), introduced a Quality Assurance and Quality Control (QA/QC) program in 2013-2014. This program consisted of; 1) the use of a control laboratory (Agat) to verify the accuracy of pulps and rejects results; 2) the insertion of blanks to control the sources of contamination; 3) the insertion of pulps in renumbered core sample rejects whose gold content was known to evaluate the reproducibility of the results; and 4) insertion of Rocklabs certified referenced material.

  Core samples taken from diamond drill holes were split in two equal parts with a core splitter by Aurbec’s employees. One half of the carrot was prepared to determine its gold content while the other half was kept in the core box. The whole core from definition drilling samples was analyzed at the mine’s laboratory.

  The reception and preparation of samples at the mine’s laboratory was done according to the accepted standards of the industry. The steps of drying, grinding (80% passing 10 mesh), splitting and pulverization were followed to produce 200 grams of pulp of which 80% passes a 200-mesh screen. A pulp fraction weighing just under 15 grams (half assay-ton) was used to determine the gold content of each sample.  Although this quantity of pulp is one-half that used in the industry (one assay-ton) for gold determination made during exploration programs, it is considered sufficient when used for mining sites given the large number of samples taken by producing mines. The analytical method consisted of pyro-analysis with an atomic absorption finish. The method has a detection limit of less than 0.01 g/t Au.

  After having examined Aurbec’s internal protocol for controlling analytical results and compared 588 pulps and rejects made by an accredited external laboratory (Agat), the author is of the opinion that the manipulation, sampling and analysis of core samples, as performed at the mine’s laboratory, are consistent with current industry standards.

  Moreover, considering that:

  • • the gold mineralization of the VMS-type vein deposits (which includes the Sleeping Giant gold deposit) is, by its nature, distributed more homogeneously than the gold contained in the classical vein deposits;

  • • the validation work done by InnovExplo in 2013 from drillings carried out prior to 2013, in areas also targeted by the 2013-2014 drilling program, concluded that the drilling database was adequate and reliable; and

  • • the update of the diamond drillhole database was done by a qualified geologist having an extensive experience of the Sleeping Giant geology.

  The author’s report is of the opinion that the analytical results of the Sleeping Giant mine’s laboratory can be used safely for this mineral resource estimate.