VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 25, 2013) - Gold Canyon Resources Inc. (TSX VENTURE:GCU)(PINKSHEETS:GDCRF) ("Gold Canyon" or "the Company") is pleased to announce receipt of a positive Preliminary Economic Assessment (PEA) prepared by SRK Consulting (Canada) Inc. of Vancouver, British Columbia for its 100% controlled Springpole Gold Project in northwest Ontario, Canada. The PEA supports a conventional open-pit mining and milling operation. At a 5% discount rate and a US$1,300/oz gold price, the project's pre-tax net present value (NPV) is estimated at US$579 million with a pre-tax internal rate of return (IRR) of 25%, and a non-discounted payback of 1.7 years, other highlights include:

  • Initial capital cost of US$438 million
  • Payback period of 1.7 years (non-discounted)
  • Pre-tax NPV of US$579 million (US$1.03 billion at a US$1,600/oz gold price)
  • IRR (pre-tax) of 25.4% (36.9% at a US$1,600/oz gold price)
  • During full production, estimated 217,000 ozs and 1,200,000 ozs average annual gold and silver production, respectively
  • Estimated cash cost of US$636/equivalent ounce gold (eq.oz Au) and all-in cost of US$860/eq.oz Au
  • Strip ratio of 1.7

"We are very pleased with the outcome of this very important milestone," stated Troy J. Fierro, CEO and Director of Gold Canyon. "We evaluated numerous development scenarios before selecting the 20,000 tonne per day plan. Our goal was to minimize capital expense, provide for rapid payback, and achieve a high return on capital. This study meets these objectives and retains the potential for future organic growth."

Mr. Fierro further stated, "This PEA confirms our view that Springpole is a straightforward project whereby, large mineralized deposits with exceptional continuity and consistency allow for the application of proven, cost-effective mining and milling methods. Additionally, we have collected over two years of baseline data critical for project permitting, including data required for temporarily isolating and dewatering a small section of Springpole Lake. The Company looks forward to completing additional milestones as we advance the project towards a production decision."

PEA highlights (all costs in USD)
Total mineralized material mined 72.421 million tonnes
Average gold grade mined (undiluted) 1.25 g/t
Total gold produced 2,211,000 ounces
Average annual gold production (at full production) 217,000 ounces
Average silver grade mined (undiluted) 6.31 g/t
Total silver produced 11,658,000 ounces
Average annual silver production (at full production) 1,200,000 ounces
Strip ratio 1.7
Life-of-mine (LoM) 11 years
IRR (pre-tax) 25.4%
NPV @ 5% discount rate (pre-tax) $579 million
Non-discounted payback period 1.7 years
Net pre-tax cash flow $1,058 million
Cash Cost $636/eq.oz Au*
All-in Cash Cost (including initial & sustaining capital costs) $860/eq.oz Au*
Initial Capital Cost $438 million
Total Capital Cost (including sustaining) $544 million
Au recovery 80%
Ag recovery 85%
Long-term gold price $1,300/oz
Long-term silver price $25/oz
Note: *Eq.oz Au = Total Revenue/Au Price

The PEA summarized in this news release is intended to provide an initial review of the Company's Springpole Gold Project's potential and is preliminary in nature. The PEA includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA based on these mineral resources will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

The PEA is based on the project's most recent Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101") compliant mineral resource estimate that includes an Indicated Mineral Resource of 128.2 million tonnes grading 1.07 g/t gold and 5.7 g/t silver and an Inferred Mineral Resource of 25.7 million tonnes grading 0.83 g/t gold and 3.2 g/t silver at a cutoff grade of 0.4 g/t gold. This estimate is set out in an independent technical report, entitled "Mineral Resource Update for the Springpole Project, NW Ontario, Canada" (the "Technical Report"), dated November 30, 2012 with an effective date of September 19, 2012, which was prepared for Gold Canyon by Dr. Gilles Arseneau (P.Geo.), associate consultant with SRK Consulting (Canada) Inc., an independent Qualified Person as defined by NI 43-101. The Technical Report is available through the Internet under the Company's profile on the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) at and on the Company's website at

Project Description

The project is located in northwestern Ontario, Canada approximately 110 kilometers (km) northeast of Red Lake. A net smelter royalty (NSR) of 3% has been applied in the PEA; although, various royalty agreements allow for the royalty to be incrementally bought-down.

The construction phase of the project is scheduled for two years at an initial capital expense of US$438 million. Construction will include: project infrastructure, dike construction and dewatering activities, open pit development, procurement of mining and milling equipment, and mill construction. Dike construction and dewatering costs are estimated at US$53 million (US$37.7 million initial and US$15.3 million sustaining) and include cofferdam construction, dewatering, dredging of sediments, and fish compensation measures. Geotechnical drilling, bathymetry reports, and topographical surveys assisted in the cost estimation of the dike construction activities.


The pit was designed using Whittle Pit Optimization software that maximizes pit NPV based on various input parameters. Pit slopes utilized in Whittle varied from 35 to 50 degrees and produced an overall strip ratio of 1.7. The pit has three stages of development, with Stage 1 being the starter pit, which has higher than average grade. Material grading better than the internal net smelter return (NSR) cut-off grade of $13.67/t (approximately 0.41 g/t Au equivalent) was considered for open-pit mining and delivery to the mill.

The PEA assumes mining an average of 50,000 tonnes of material (mineralized and waste) per day from the open-pit. The forecast mine life is 11 years, during which time 72.4 million tonnes of mineralized material will be delivered to the mill and 120.8 million tonnes of waste rock will be deposited in the waste disposal facility.

The initial mining fleet envisioned for this mine plan includes three loaders/shovels (20-22 cu.m.), thirteen haul trucks (150 ton), three blasthole drills, and all necessary support equipment. Starting in year 6, major equipment will be replaced or overhauled.

Metallurgical and Processing

Metallurgical testing has been conducted through three programs including: 1989 Lakefield Research, 2011 SGS Mineral Services, and 2012/2013 SGS Lakefield. Based on these results and the relative low hardness, good consistency and poor integrity (soft nature) of the mineralized zones, the flowsheet is as follows:

  • Semi-autogenous grinding (SAG) mill
  • Ball mill - grind to 80% passing size of 70 microns
  • Gravity recovery
  • Carbon-in-Pulp (CIP)
  • Carbon stripping & electrowinning

Multi-stage crushing could be considered but handling the likely wet and incompetent feed will make slurry processing as soon as possible beneficial. From the metallurgical testing programs to date, it is anticipated that recoveries for gold and silver will average 80% and 85% respectively. One tailings disposal facility is envisioned for the project.


The Springpole Gold Project is located 110 km from Red Lake, Ontario and the nearest road and powerline (via a straight line) is approximately 17 km and 20 km respectively. There is currently no road access into the project; however, the company is awaiting approval to construct a road this year. Based on these conditions the following infrastructure is being proposed.

  • Road access
  • Shops, office, and camp
  • Water treatment facility
  • Power infrastructure
  • Internal roads and dumps

Capital & Operating Costs

The following life-of-mine capital costs are expected for the project:

(in million USD's) Initial Sustaining Total
Permitting & Owners 7.0 - 7.0
Mine 75.2 65.8 141.0
Processing 168.0 - 168.0
Infrastructure 111.5 5.5 117.0
Tailings Facility 38.4 - 38.4
Dike, Dewatering, etc. 37.7 15.3 53.0
Closure - 20.0 20.0
Total 437.8 106.6 544.4
Note: costs include contingencies which are variable ranging from 5% to 40% with a weighted average of approximately 15%.

The following life-of-mine operating costs (per tonne mineralized material) are expected for the project:

Mining $7.1/tonne
Processing $10.5/tonne
Tailings and Water $0.2/tonne
General Administrative $2.3/tonne
Total $20.1/tonne

Metal Price Sensitivities

The following metal price sensitivities are calculated pre-tax:

Metal Price (US$/oz)
Gold Price 1100 1200 1300 1400 1500 1600 1700
Silver Price 21 23 25 27 29 31 33
NPV (millions US$) 277 428 579 730 881 1032 1182
IRR (%) 16.1 21.0 25.4 29.5 33.3 36.9 40.3

Opportunities & Risks

Opportunities to improve the economics of the project are as follows:

  • Metallurgical test work has indicated that gold recoveries up to 90% are possible with a finer grind. Trade-off studies will be carried out to determine whether it's feasible to incorporate a finer grind process into the flowsheet.
  • Pit optimization work has identified larger pit shells that are economic with current input parameters. Whittle identified a number of potential pit shells and the company selected a specific pit shell because it provided higher grades, lower strip ratio, and reduced capital and operating expense. Although not necessary, the company plans to evaluate transitioning from 20,000 tonnes per day to higher throughput levels prior to developing the larger potential shells.
  • Recently completed geotechnical drilling for pit slope stability analysis may increase pit slopes angles over those used in this PEA.
  • There are other geophysical targets around the current resource, particularly to the southwest of the current resource. Additional drilling has the potential to add resources.

Risks associated with the project include as follows:

  • Permitting associated with the project could be longer than anticipated.
  • Construction management and cost containment during development of the project.
  • Significant decrease in metal prices prior to production.

Further risk factors are set out in the Company's continuous disclosure documents filed on SEDAR.

Next Steps

The following activities are recommended to advance the project towards production.

  • Perform additional metallurgical test work.
  • Initiate a prefeasibility study.
  • Initiate project permitting.
  • Consummate agreements with First Nations groups.
  • Convert remaining inferred resources to indicated resources.

Qualified Person

The PEA was completed by SRK Consulting (Canada) Inc. of Vancouver, British Columbia, pursuant to NI 43-101. The PEA was completed by, or under the supervision of Bruce Murphy, Maritz Rykaart, Mark Liskowich, Dino Pilotto and Adrian Dance, each independent Qualified Persons (as defined in NI 43-101). Mr. Troy J. Fierro, Chief Executive Officer and Director of Gold Canyon, reviewed and approved the technical and scientific information relating to the PEA contained in this press release. Dr. Quinton Hennigh, Ph.D., P.Geo., a Qualified Person pursuant to NI 43-101 who is acting as a technical adviser to, and a director of, Gold Canyon, is also responsible for approving the technical information in this news release that is not related to the PEA.

Gold Canyon will file the SRK Report on the Springpole Gold Project on within 45 days of the date of this news release.

Conference Call

A conference call to discuss Gold Canyon and the PEA will be held at 10:30 A.M. (Pacific Time) on Tuesday, March 26, 2013. Investors are invited to participate by connecting to the call using one of the following dial-in numbers:

Date: March 26, 2013
Time: 10:30 A.M. Pacific Time
Dial in Number: North American Toll-Free: 1-800-829-9048, or
Local / International: 1-913-312-0652 (use outside of North America)

About Gold Canyon Resources Inc.:

Gold Canyon is engaged in the acquisition and exploration of mineral and precious metals properties. The Company controls a 100% interest in the Springpole Gold - Horseshoe Island Gold, Platinum, Palladium Project and a minority interest in the Favourable Lake Poly-metallic property currently under option to Guyana Frontier Mining Corp. pursuant to an option and joint venture agreement entered into in December 2005 - all in the Red Lake Mining District of Ontario, Canada.

Through its wholly owned U.S. subsidiary, Gold Canyon Resources USA Inc., the Company controls a 100% interest in the Cordero Gallium Project situated in Humboldt County, Nevada, U.S.A.

Gold Canyon entered into a Rare Earth Element (REE) Joint Exploration Agreement with the Japan Oil, Gas and Metals National Corporation (JOGMEC) in January 2009.

Springpole is an alkaline intrusion hosting a gold system that represents a potentially new style of Canadian Archean Shield gold deposit. The Portage Zone is hosted by a trachytic porphyry intrusion displaying polyphase autolithic breccias that host gold mineralization. Other zones, including the East Extension and Main, consist of high-grade veins and pods hosted in diatreme breccias composed of intrusive and country rock fragments. These breccias surround the northwest and northern margins of the Portage Zone. The known mineralized zones underlie a total known area of about 4 square kilometers representing only about 15 percent of the greater alkaline intrusive complex which remains yet to be explored.

Additional information can be found on the Company's website:

Troy J. Fierro, CEO & Director

Cautionary Note to U.S. Readers Regarding Estimates of Measured, Indicated and Inferred Resources

This news release uses the term "inferred resources." We advise U.S. investors that while this term is recognized and required by Canadian regulations, it is not recognized by the SEC. "Inferred resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an "inferred mineral resource" will ever be upgraded to a higher category. Under Canadian rules, estimates of "inferred mineral resources" may not form the basis of a feasibility study or prefeasibility studies, except in rare cases. The SEC normally only permits issuers to report mineralization that does not constitute "reserves" as in-place tonnage and grade without reference to unit measures. The term "contained gold ounces" used in this news release is not permitted under the rules of the SEC. U.S. investors are cautioned not to assume that any part or all of a measured, indicated or inferred resource exists or is economically or legally mineable.

Cautionary Note Regarding Forward Looking Statements

This news release contains statements that constitute "forward looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 or "forward looking information" within the meaning of applicable Canadian provincial securities legislation (collectively, "forward-looking statements"). Forward-looking statements often, but not always, are identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "expect", "targeting" and "intend" and statements that an event or result "may", "will", "would", "should", "could", or "might" occur or be achieved and other similar expressions. Forward-looking statements in this news release include statements regarding the timing and nature of permitting studies, the timing and nature of infrastructure developments and construction, projections of future optimization, production timeline targets, the timing of negotiations with third parties, and the timing and nature of future exploration programs which are dependent on projections which may change as drilling continues, or if unexpected ground conditions are encountered. In addition, areas of exploration potential are identified which will require substantial drilling to determine whether or not they contain similar mineralization to areas which have been explored in more detail. The description of the extent of mineralized zones is not intended to imply that any economically mineable estimate of reserves or resources exists on any of Gold Canyon's projects.

The forward-looking statements that are contained in this news release are based on various assumptions and estimates by Gold Canyon and involve a number of risks and uncertainties. As a consequence, actual results might differ materially from results forecast or suggested in these forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, performance or achievements of Gold Canyon to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause the actual results to differ include; risks relating to fluctuations in the price of gold; the inherently hazardous nature of mining-related activities; uncertainties concerning resource estimates; results of exploration, availability of capital and financing on acceptable terms, inability to obtain required regulatory approvals, unanticipated difficulties or costs in any rehabilitation which may be necessary, market conditions and general business, economic, competitive, political and social conditions. These statements are based on a number of assumptions, including assumptions regarding general market conditions, timing and receipt of regulatory approvals, the ability of Gold Canyon and other relevant parties to satisfy regulatory requirements, the availability of financing for proposed transactions and programs on reasonable terms and the ability of third-party service providers to deliver services in a timely manner. Although Gold Canyon has attempted to identify important factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements, there may be other factors which cause actual results to differ. Forward-looking statements contained herein are made as of the date of this news release and Gold Canyon disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable securities laws. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

Contact Information:

Gold Canyon Resources Inc.
Richard Moritz
VP Corporate Communications
(604) 682-3234 or Toll free: 1 (888) 242-3234
(604) 682-0537 (FAX) or