Tanzanian Gold Unveils Significant Exploration Potential And Strong Financial Results

Tanzanian Gold Corporation (TSX:TNX) has unveiled strong results for the fourth quarter (Q4 2021) and year end 2021.

Major Highlights Include:

Significant Exploration Potential: Discovery of two new gold bearing shear zones in the Buckreef West and Anfield Zones. Assuming successful exploration results from ongoing diamond drilling, both new zones and the Buckreef Main Zone have the potential to significantly add to the 2.0 million ounces of gold in the measured and indicated mineral resources category and 0.6 million ounces of gold contained in inferred mineral resource category.
Low Cost, High Return Production Expansions: The capital cost of the 360 tpd gold processing plant expansion was $1.6 million, which is expected to increase production to 750-800 ounces of gold per month¹ at a total average Cash Cost² of US$725-825/oz once steady state processing has been achieved. Assuming a gold price of US$1,750 per ounce, the project exhibits a quick capital payback and high operating return. The 1,000+ tpd expansion is estimated to have a capital cost of approximately US$4.0 million, with a targeted completion in calendar Q2/Q3 2022. The 360 tpd gold processing plant expansion was completed in-house in approximately 5 months, on-time and on-budget.
Improved Liquidity Profile: Recapitalization of the Balance Sheet and execution of low-cost, high return gold production expansion projects.
De-risked Production: Achievement of +90% recovery rates in the gold (oxide) test plant.
Simple Processing Technology: Preliminary metallurgical test work on the sulphide project indicates a straightforward flowsheet similar to the CIL plants currently in operation and at comparable gold recovery rates.
Solid ESG Credentials: Buckreef Gold: (i) is connected to the national electricity grid which primarily sources electricity from hydroelectric facilities; (ii) recycles all water and has no water discharge from operations; (iii) focuses on maximising local content; (iv) exhibits a ‘100 mile diet’ by sourcing food locally; and (v) CSR activity is focused on local education and health programs in partnership with regional and district councils for ‘win-win’ solutions.
High Performing Team: Reset of the management team with significant mining backgrounds from high performing organisations, including 100% Tanzanian team on the ground at Buckreef Gold.

“We closed 2021 on a strong note. Buckreef Gold has been repositioned to have significant exploration potential with an increasing production profile,” CEO, Stephen Mullowney,said.

“We are enthusiastic about continually developing our ‘high return – low cost’ projects and are very excited about the drilling prospects at Anfield and Buckreef West. The 1,000+ tpd mine plan only represents approximately 10% of existing measured and indicated resources. Consequently, we have considerable expansion potential, particularly in the Buckreef Main Zone ‘sulphides,’ which accounts for approximately 90% of our current measured and indicated mineral resources.

“The company has a safety-first, high-performance culture in which we invest in the well-being of employees and the community in which we operate. Along with our rejuvenated, results oriented, experienced and energetic new team, I am extremely excited for 2022.”

Fiscal 2022 Outlook

The 360 tpd processing plant is expected to increase production to 750-800 ounces of gold per month at a total average Cash Cost of US$725-825/oz once steady state processing has been achieved.
Operating cash flow from the larger 360 tpd processing plant is anticipated to mitigate the negative operating cash flow at Buckreef Gold from the testing period of the 120 tpd test processing plant. Anticipated cash flow generated from the larger plant will be reinvested in Buckreef Gold with a focus on the following value enhancing activities: (i) exploration and drilling; (ii) additional capital programs focused on growth and efficiencies; and (iii) enhanced CSR/ESG programs.
Buckreef Gold will advance and construct a 1,000+ tpd operation while simultaneously operating the 360 tpd operation. Project capital expenditures for an expanded 1,000+ tpd processing plant are estimated to be approximately US$4.0 million with a targeted completion in calendar Q2/Q3 2022. Buckreef Gold has procured two additional 360 tpd ball mills (from the same manufacturer). The two additional ball mills have been shipped and scheduled to arrive in Tanzania by calendar year end. The 1,000+ tpd operation is expected to be capable of producting 15,000 – 20,000 ounces of gold per year based on the initial mine plan and grade profile.
The anticipated increase in cash flow from the 1,000+ processing plant will fund value enhancing activities at Buckreef Gold, which are similar to those mentioned above for the 360 tpd processing plant, including but not limited to: (i) further expansion of the exploration program in the Buckreef Main Zone, Buckreef West and the newly discovered Anfield Zone, which if successful, may expand mineral reserves and mineral resources; and (ii) additional capital expansion programs to increase the Company’s production profile; and (iii) further investments in CSR/ESG initiatives.
The company has retained STAMICO for diamond drilling services for a 10,000m programme, which will cover:
- PQ/HQ size holes for testing metallurgical variability in the top 150 meters of the sulphide deposit;
- Infill drilling on the inferred mineral resource, which if successful will upgrade that resource to the measured or indicated mineral resource category, and;
- Exploration of the Main Zone deposit to the north-east / south-west, and to commence drilling on the recently discovered Anfield Zone.

Metallurgical testing for sulphide project development moved to variability testing of the first five to seven years of production and will continue into 2022, including tailing characteristics for dry stack tailings. Geotechnical and groundwater work will continue on identified areas (i.e. plant, tailings, waste rock storage facility). To date, the metallurgical programme of 18 holes (2,337m) has been completed and the holes are being logged in preparation for shipment for metallurgical testing. The drill programme has now switched to the exploration phase.
The land compensation process is expected to be completed by the end of calendar 2021 and has been fully accrued in the company’s financial statements. As of November 29, 2021, approximately 95% of project affected persons have been paid representing 91% of the overall dollar amount.
Geological work has commenced in evaluating the full extent of exploration potential at the Buckreef Project. Analysis of Inferred Mineral Resources, exploration targets, advanced exploration, geophysical data, geochemical data, and grassroots exploration through to conceptual targets have been evaluated. The company will provide updates on its exploration targets and strategy which will be finalised and provided in Q1-2022, including the Anfield Zone.
The company will continue a review of its broader exploration portfolio and strategy to meet core strategic objectives, including consideration of acquiring new licenses and/or partnerships. The Buckreef Project licenses cover highly prospective ground with many geochemical and soil anomalies. The company is located in highly favorable Archean geological terrane in the prospective and producing Lake Victoria Greenstone Belt, where numerous anomalous gold bearing shear zones have been identified.

Accomplishments During Fiscal Year Ended August 31, 2021

Operations

Buckreef Gold reported zero lost time injuries, zero medical aid incidents and had no COVID-19 related cases in 2021. There were also no reportable environmental or community related incidents in 2021.
During October 2021, the Company completed construction of a 360 tpd processing plant expansion. Buckreef Gold also continued to operate the 120 tpd processing plant subsequent to concluding the test period, which achieved a 90% gold recovery rate as reported in September 2021. The existing 120 tpd processing plant has been integrated into the new processing plant circuit as a ‘regrind mill’. The new processing plant construction was completed in line with the scheduled completion date of late September/October 2021 at a capital cost of US$1.6 million, also within guidance. The run-of-mine mill feed commenced on November 6th, 2021 and continues to ramp up throughput. The 360 tpd throughput is expected to increase production to 750-800 ounces of gold per month at a total average Cash Cost of US$725-825/oz once steady state processing has been achieved. The 360 tpd processing plant was completed by the Buckreef Gold and TanGold teams in conjunction with key consultants/contractors, including: (i) Ausenco; (ii) Solo Resources; and (iii) CSI Energy Group. Anticipated operating cash flow from the new processing plant is expected to mitigate the negative cash flow from the testing period of the 120 tpd test processing plant.
Buckreef Gold will continue with plans and construction to advance a 1,000+ tpd operation while simultaneously operating the 360 tpd operation. It was determined that the most cost effective and timely approach to building a 1,000+ tpd processing plant was to self-construct this operation, in effect, as an expansion to the 360 tpd processing plant. Project capital expenditures for an expanded 1,000+ tpd processing plant is estimated to be approximately US$4.0 million, which includes an upgraded elution circuit and other capital equipment to accommodate the increased throughput. Ausenco has been retained as TanGold’s owner engineer and the process circuit will be primarily locally sourced and constructed by the same local teams in a manner similar to the 360 tpd processing plant expansion. The targeted completion of the 1,000+ tpd operation is calendar Q2/Q3 2022 and is expected to produce 15,000 – 20,000 ounces of gold per year based on the initial mine plan and grade profile.
The operation of the 120 tpd test plant continued in the fourth quarter 2021, operating seven days a week with two 12-hour shifts. Through the testing phase, objectives related to oxide mill feed grind, processing of clays, retention times and optimized recovery rates have been achieved. Consequently, the testing phase concluded in September 2021. The 120 tpd test plant produced 396 ounces of pure gold in the fourth quarter and 1,836 ounces of pure gold on a year-to-date basis.
During the year ended August 31, 2021, the company attained recovery rates of 90% on a consistent basis at the 120 tpd oxide test plant. During the test phase, the company established that a grind size of 80% passing 75 microns and a retention time of approximately 30 hours led to consistent gold recovery of greater than 90%.
Through its testing programme in 2021, Buckreef Gold has been able to substantiate the grade control block model, confirm forecasted operating cost inputs such as mining and processing costs for 360 tpd and 1,000+ tpd oxide mining operations, and develop a comprehensive understanding of oxide mill feed grind, processing of clays, retention times and how to optimise recovery rates. This knowledge has been applied to the design of the 360 tpd and 1,000+ tpd mine operations, substantially de-risking these operations.
During the year the company hired a Tanzanian mining contractor (FEMA) on a two-year contract to mine ore, waste and a tailings storage facility at Buckreef. During October and November 2021, the company, through FEMA, successfully and safely completed two blasts in high grade areas where transitional ore reached near surface enabling access to high grade ore blocks.
During the year, TanGold through Buckreef Gold hired a surveying consultant (Property Matrix Company Limited) to commence the land compensation process required under Tanzanian mining law. The land compensation survey has been completed, and to date, the land compensation process is approximately 90% complete. Land Compensation has been fully accrued and is anticipated to be finalized by the end of calendar 2021.
As previously disclosed, TanGold and STAMICO agreed in principle to amendments to the Buckreef Joint Venture Agreement to bring the JV Agreement in line with recent changes in Tanzanian mining laws and to modernise the working arrangement between the parties (the original JV Agreement was entered into in 2011). Discussions between the company and STAMICO remain ongoing and are expected to continue.

Sulphide Development and Exploration

Favourable Metallurgical Test Results: The company announced updated and highly favorable metallurgical test results from the sulphide component of the Buckreef mineral resource. Three diamond drill core samples were taken from the fresh rock (‘sulphide’ mineral resource) of the Buckreef deposit for the purposes of metallurgical test work. Highlights include:
- The following intercepts and gold recoveries have been confirmed in the report:
  - MC01: 0.54 g/t Au over 78.88m – 94.1%
  - MC02: 19.4 g/t Au over 27.99m – 95.4%
  - MC03: 1.71 g/t Au over 52.53m – 85.3%
- A straightforward flowsheet consisting of:
  - Primary grinding to P80 = ~100-150 µm
  - Rougher flotation
  - Regrind of the rougher concentrate to ~15-20 µm (P80)
  - Cyanide leaching of the reground flotation concentrate
  - Cyanide leaching of the flotation tailing
- No refractory association of gold with arsenic sulphide was detected;
- The samples tested did not exhibit any preg-robbing or other refractory characteristics;
- Clean tailings, high probability of mine tailings not being acid generating, confirming the approach of dry stack tailings going forward; and
- Further opportunities to improve gold extraction from MC03 have been identified through diagnostic leach testing.

Buckreef West Discovery: The Company announced the discovery of Buckreef West, which lies in close proximity to the Buckreef Main Zone, defining a near vertical shear zone, over a strike length of 400m, with interpreted gold mineralisation shallowly plunging to the northeast. The mineralised zone remains open to the south and at depth. Highlights include:
- Shallow depth: All reported intercepts are at shallow depth on a well-defined structure which is interpreted as a splay off the Buckreef Main Zone;
- Open at depth and along strike: Over 400m of strike length has been drilled to date and the deposit remains open at depth and along strike in both directions; and
- Select intercepts:
  - Hole BWDD017 intersected 4.57m @ 6.4 g/t Au from 44.9m;
  - Hole BWDD015, on the same line as Hole BWDD017, had two intersections: 2.18m @ 1.24 g/t Au from 86.9m and (ii) 2.49m @1.3 g/t Au from 105.1m;
  - Hole BWDD012 intersected 5.57m @ 4.95 g/t Au from 98.4m and 4.0m @ 2.19 g/t Au from 92.0m;
  - Hole BWDD013, on the same line as Hole BWDD012 intersected 1.5m @ 2.2 g/t Au from 59.5m;
  - BWDD0018 intersected 7.0m @ 2.03 g/t Au from 44.0m and 3.85m @ 2.86 g/t from 56.0m; and
  - BWDD0031 intersected 2.5m @ 7.29 g/t Au from 46.1m.
Anfield Zone Discovery: The company announced that it has made a new discovery of three closely spaced parallel, gold bearing structures at Buckreef, collectively now known as the Anfield Zone. Follow-up field work and diamond drilling is planned for 2021 and 2022. Highlights include:
- The new prospective gold mineralised zones, totaling a combined 2.9-kilometer (km) strike length were identified through geological (field) mapping, sampling and examination of artisanal workings. Collectively, they have been named the Anfield Zone;
- Grab samples of mineralized bed (fresh) rock have been assayed, with highlights of:
  - 37.52 g/t
  - 28.55 g/t
  - 14.42 g/t
- Located approximately 500m to the east of the Buckreef Main Zone; and
- Aligns with and trends towards the Eastern Porphyry Mineral Resource.