HALIFAX, NOVA SCOTIA–(Marketwire – Sept. 27, 2010) – Brigus Gold Corp. (“Brigus Gold” or the “Company”) (TSX:BRD)(NYSE Amex:BRD) reports that operations at its Black Fox Mine (“Black Fox”) continue to ramp-up with increases in gold production continuing quarter over quarter as a result of processing higher average grade ore through the period. The third quarter ending September 30, 2010 (“Q3 2010”) will be the best operational quarter for the mine since start up in May 2009 and higher production is anticipated again for the fourth quarter of 2010 (“Q4 2010”).
Q3 2010 Operating Performance
For Q3 2010, open pit operations will exceed targets for ore and waste moved from the Phase 1 open pit and over burden moved for the Phase 2 layback of the open pit. To date for the quarter, ore production from the open pit has exceeded target and contributed to increases in surface stockpiles. The positive results are attributable to high equipment availability and operator performance, better than expected material quality and favourable weather conditions.
The average gold head grade to the Black Fox Mill is forecast at 3.9 grams per tonne (“gpt”) for Q3 2010, which is approximately15% higher than the 3.4 gpt grade in the second quarter of 2010 (“Q2 2010”) and 44% higher than 2.7 gpt in the first quarter of 2010. Grade control practices in the open pit continue to improve and grades are expected to continue to meet plans moving forward.
The mill throughput rate for Q3 2010 is forecast at over 1,950 tonnes per day (“tpd”). The throughput rate was impacted by a 48-hour shutdown to replace an underperforming motor on the primary ball mill. Since the shutdown, the mill has consistently averaged over 2,000 tpd. Early in the quarter, mill recoveries suffered from high carbon attrition rates, directly related to receipt from a supplier of poor quality carbon. This problem was investigated and corrected but it took most of July to displace the carbon in circuit with fresh, better quality material. Despite mine production being in line with expectations, these processing issues have resulted in mill production shortfalls during the quarter. Gold production for the quarter is expected to be in the range of 21,000 to 22,000 ounces, which represents a 15% to 20% improvement over production levels of 18,028 ounces during Q2 2010.
In an effort to identify and evaluate short and long term performance enhancement opportunities with the mill, the Company retained Mackie and Associates and EHA Engineering consultants to carry out a review of the plant operation. The goal of the review was to provide recommendations for immediate improvements to recovery and throughput as well as to develop concepts and cost benefit analysis leading to opportunities for potential increased future throughput. The final report is being prepared and will be available in October 2010.
Total cash costs for Q3 2010 are anticipated to be within the Company’s estimated range of $500 and $550 per ounce of gold sold, compared with $532 per ounce for the first six months of 2010. Pre-stripping of the Phase 2 open pit, which will not commence mining of ore until 2011, are included in the Q3 2010 cash costs per ounce forecast in accordance with United States Generally Accepted Accounting Principles. Q3 2010 cash cost per ounce estimates include approximately $100 per ounce of Phase 2 open pit pre-stripping costs. Actual cash costs for the quarter will be reported with Q3 2010 financial results by November 15, 2010.
Initial underground production commenced, on schedule, in late August 2010. During Q4 2010, the Company expects intermittent ore will be produced from development headings while production faces are prepared. The focus for the underground mine crews continues to be completion of infrastructure to support an intended steady state underground mining rate of 800 tpd. This ongoing work includes developing a new, larger profile ramp to connect to the surface and replace the existing ramp. The new ramp will remove the haulage constraint experienced previously at the mine. The new ventilation and service raise is expected to be completed by January 2011. The long term mine plan continues to be optimized by Brigus Gold’s new management to provide for life of mine efficiency.
The current underground workforce includes 75 contract miners from Cementation Inc. and other mining contractors, plus 20 Brigus Gold employees. Brigus Gold’s workforce continues to grow, and will displace the majority of the contract workforce by mid-2011.
Gold production is expected to continue to increase quarter over quarter until steady state production is achieved with the underground portion of the mine producing at 800 tpd and the open pit moving to 1,200 tpd, down from the current open pit production rate of 2,000 tpd. Steady state production from underground is scheduled to occur in the second quarter of 2011.
Mine infrastructure facilities, including offices, warehouse, mine dry, core logging and sample preparation areas have been completed and are in service. A new maintenance facility is currently under construction on surface and will replace the temporary facility that has been used for the past two years. The new facility is expected be functional by early December 2010 and will provide for proper equipment servicing through-out the mine life.
Infrastructure upgrades, including completion of the new maintenance facility, are expected to be completed at a cost of $24.3 million, approximately $3.3 million in excess of the original plan. These additional costs will be partly offset by expected savings on overburden removal of the Phase 2 open pit development referenced earlier.
Underground Definition Drilling Confirms Ore Grade
Recent underground definition drilling below the 235 metre (“m”) level, has confirmed the reserve grade and zone of mineralization in the mine plan that will form part of the initial underground production. Ongoing underground definition drilling by Brigus has augmented previous drilling and highlights of assay results include:
— 759-016 : 8.54 gpt over 13.0 m, with 24.38 gpt over 4.1 m
— 759-012: 4.58 gpt over 15.3 m with 13.27 gpt over 3.3 m and 4.97 gpt over 6.1 m.
Surface Exploration Results
The exploration program at the Black Fox Complex, including the Black Fox Mine and contiguous Grey Fox-Pike River properties, has to date included the completion of 28 drill holes, totalling 10,387 metres (“m”), on the Contact Zone, Destor-Porcupine Fault Zone and four new targets. As of this date, assay results have been returned for 14 drill holes. (See the drill hole location map in the PDF of this news release on Brigus Gold’s website.)
The four new targets being drilled include the Historic Gibson Deposit, the Gibson Shear, School House Zone and the Hislop North Zone. All four of these targets lie within 1-km of the Contact Zone. These gold mineralized zones were identified as potential targets from an evaluation of historic exploration work, geophysics and geologic mapping, and have now been confirmed by drilling. All targets are located within 2-km of Brigus Gold’s existing Black Fox Mine and 37-km of the Black Fox Mill, providing the opportunity for rapid advancement.
Assay results from the first 14 holes have shown consistently good gold intercepts, similar to previous results from the Contact Zone, (all uncut with no true widths defined unless otherwise noted) including the following:
— GF10-73: 2.11 gpt over 22.94 m
— GF10-72: 2.3 gpt over 6.06 m
— GF10-71: 37.30 gpt over 1.0 m, 5.49 gpt over 0.95 m and 6.75 gpt over 0.45 m
Contact Zone/Hanging Wall (estimated true widths)
— GF10-70: 5.69 gpt over 0.89 m and 2.46 gpt over 6.01 m
— GF10-77: 3.53 gpt over 1.74 m with 5.28 gpt over 1.0 m
— GF10-78: 3.60 gpt over 3.07 m with 8.38 gpt over 1.31 m
Detailed assay results are available on the Company’s website at www.brigusgold.com.
Howard Bird, Brigus Gold’s Vice President of Exploration, said, “The surface drilling program at the Black Fox Complex continues to yield positive gold results. We are now undertaking an aggressive drill program to complement the high-interest gold results obtained from 2004-2005 deep drilling at the Black Fox Mine. We are generating a pipeline of regional exploration opportunities at the Black Fox Complex with excellent potential for new gold discoveries and we are focused on expanding known gold mineralization at the Contact Zone where an initial National Instrument 43-101 compliant resource estimate will be released during the fourth quarter. In addition, we are reviewing historical information from the past producing Stock underground gold mine, located at our wholly owned Black Fox Mill property, to determine the potential of identifying new resources with the obvious advantage of having an operating mill on site.”
Brigus Gold is preparing an initial National Instrument 43-101 compliant gold resource estimate for the Contact Zone based on limited drilling completed in 2009 and 2008. The Contact Zone has been intercepted along 850 m of strike and remains open on strike to the north, south and down dip. Based on 65 completed holes, the resource estimate will cover 435 m of the known 850 m strike length. Most of the 2008 and 2009 drilling was concentrated within 120 m of bedrock and the deepest drill hole, GF09-58, intersected the main lens at 222 m below surface grading a weighted average of 10.58 gpt over a true horizontal width of 3.7 m.
There are currently three drill rigs operating at the Black Fox Complex. One rig will complete 5,000 m of step-out drilling targeting the expansion of the Black Fox gold deposit along strike and down-dip where the deposit remains open for expansion. Two drill rigs are drilling the Contact Zone, the Destor- Porcupine Fault Zone, the Historic Gibson Deposit, the Gibson Shear, the School House Zone and the Hislop North Zone. A fourth drill rig will be added to test new exploration targets. This surface drilling program is expected to generate approximately 15,000 m of core by year-end.
Gold Mineralization Potential at Brigus Gold’s Black Fox Mill Property
Brigus Gold has commenced reviewing historical information from the past producing underground Stock Gold Mine located on our wholly-owned 24 square km Black Fox Mill property, and adjacent to the mill. The review will determine the potential of extending the known gold mineralized zones (shoots) down plunge at the Stock gold mine, as well as, to generate new drill targets. Similar to the Black Fox gold mine, the Stock gold mine is hosted by the Destor-Porcupine Fault Zone (“DPFZ”). The Stock gold mine comprises a 3-compartment shaft developed to a depth of 275 meters below surface. A production ramp extends from the 140 meter level to approximately 330 meters below surface. The Stock Mine was in production from 1989 to 1994 and also in 2000.
Following the completion of the Black Fox Mill Property data compilation and review, it is expected that a drilling program will be conducted on the Stock gold mine and surrounding targets such as the Discovery West Zone.
Geophysical Exploration Program
An airborne, high-resolution, magnetic geophysical survey was completed during the first week of September 2010 and final data results are expected in October 2010. The airborne survey covered the entire Black Fox complex, as well as the 24-square km Black Fox Mill property, where the past producing Stock gold mine is located. In addition, line cutting at the Black Fox Complex has commenced in preparation for the advanced Quantec Titan 24 geophysical system survey. This system detects conductive mineralization, disseminated mineralization, alteration, structure and geology resulting in the identification of prospective drill targets. The Titan survey was completed over the Black Fox Mine in 2004 and successfully defined the mine deposit.
Underground drilling was conducted by Azimut Drilling and surface drilling was conducted by Norex Drilling. Drilling was supervised by the Black Fox staff. All 2010 sample analyses reported herein were performed by Polymet Labs of Cobalt, Ontario, which is ISO 9001:2000 certified in North America, and by SGS Laboratories of Sudbury, Ontario, using standard fire assay procedures. Intercepts cited do not necessarily represent true widths, unless otherwise noted. Brigus Gold’s quality control checks include insertion of blanks and standards to ensure laboratory accuracy.
Vice President and Chief Operating Officer Richard Allan reviewed the operations information in this news release and Senior Exploration Project Manager John A. Dixon P. Geo reviewed the technical exploration information in this release as the Qualified Persons for the Company.
About Brigus Gold
Brigus Gold is a growing gold producer committed to maximizing shareholder value through a strategy of efficient production, targeted exploration and select acquisitions. The Company operates the wholly owned Black Fox Mine in the Timmins Gold District of Ontario, Canada. The Black Fox Mine is located in the Township of Black River-Matheson, Ontario, Canada. Brigus Gold is also advancing the Goldfields Project located near Uranium City, Saskatchewan, Canada, which hosts the Box and Athona gold deposits. In Mexico, Brigus Gold holds a 100 percent interest in the Ixhuatan Property located in the state of Chiapas, and an 80 percent interest in the Huizopa Joint Venture, an early stage, gold-silver exploration joint venture located in the State of Chihuahua. In the Dominican Republic, Brigus Gold also has a joint venture for the APV and Loma El Mate gold exploration projects.
Cautionary Note to U.S. Investors Concerning Estimates of Mineral Resources
This news release uses the term mineral “resources”. The Company advises U.S. investors that while these terms are defined in and required by Canadian regulations, these terms are not defined terms under the U.S. Securities and Exchange Commission (“SEC”) Industry Guide 7 and are generally not permitted to be used in reports and registration statements filed with the SEC. The SEC generally only permits issuers to report mineralization that does not constitute SEC Industry Guide 7 compliant “reserves” as in-place tonnage and grade without reference to unit measures. U.S. investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.
Non-GAAP Financial Measures
The term “total cash cost” is a non-GAAP financial measure and is used on a per ounce of gold basis. Total cash cost is equivalent to direct operating cost as found on the Consolidated Statements of Operations and includes by-product credits for payable silver production. The Company has included total cash cost information to provide investors with information about the cost structure of our mining operations. This information differs from measures of performance determined in accordance with GAAP in the United States and Canada and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. This measure is not necessarily indicative of operating profit or cash flow from operations as determined under GAAP and may not be comparable to similarly titled measures of other companies.
Cautionary and Forward-Looking Statements
This news release includes “Forward-Looking Statements” within the meaning of section 21E of the United States Securities Exchange Act of 1934, as amended. All statements regarding the increased quarterly gold production, average grade of gold, anticipated total cash costs, tonnes of material moved, expected mill throughput rate, in each case in Q3 2010, operational performance in Q4 2010, ore produced from development headings in the underground mine in Q4 2010, completion of the ventilation and surface raise and new ramp in respect of the underground mine, plans for the Company’s surface and underground exploration drilling programs and the results associated therewith, the amount of surface drilling, the addition of drill rigs operating at Black Fox Complex and the timing associated therewith, increase of Black Fox resources, matters relating to the geophysical survey of the Black Fox Complex and the timing thereof, release date of a National Instrument 43-101-compliant estimate for the Contact Zone, and additions to resources in 2011 are forward-looking statements and estimates that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from these forward-looking statements include environmental risks and other factors disclosed under the heading “Risk Factors” in Brigus Gold’s and its predecessor companies’ most recent annual report on Form 10-K filed with the United States Securities and Exchange Commission and elsewhere in Brigus Gold’s documents filed from time to time with the Toronto Stock Exchange, the NYSE Amex, the United States Securities and Exchange Commission and other regulatory authorities. All forward-looking statements included in this news release are based on information available to the Company on the date hereof. The Company assumes no obligation to update any forward-looking statements, except as required by applicable securities laws.
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