Production Highlights for Q3 (compared to Q2, 2017):

  • Gold production increased 13 percent to 7,982 ounces (ozs);
  • Gold sent to pad increased by 45 percent, averaging 7,125 ozs per month;
  • Ore tons mined increased by 57 percent for the quarter, averaging over 810,000 tons per month (tpm);
  • Strip ratio decreased 56 percent to 0.54;
  • Ore tons crushed increased by 29 percent, averaging over 660,000 tpm;
  • Gold grade increased by 10 percent to 0.011 ounces per ton (opt) (combined ore and sub-grade overliner);
  • Gold ounces placed on the South Heap Leach Pad (SHLP) in Q3 represents 52 percent of the total gold to date; and
  • Production transitioned from the first starter cell (Section 1A) of the SHLP on to the main part of the pad (Section 1B).

"Gold production realized in Q3 was below expectation for the reasons outlined in our September 14th news release" stated Rye Patch President and CEO William C. Howald.  "The corrective measures put in place by management as described in that news release are now having a positive impact on improving gold output with the goal of realizing commercial production in Q1, 2018.  Other aspects of the mine are performing well above plan.  We are pleased with the improved fleet availability, mining and crushing rates, and the positive reconciliation in grade and tons with the resource block model.  In addition, the gold recovery is behaving as modelled." added Howald.

Mining, Ore and Overliner Placement

Mining, strip ratio and crusher rates continue to improve and are now consistently outperforming plan. During the period, a 57 percent increase in ore tons mined above plan was achieved, and an overall reduction in waste tons positively affected the strip ratio.

Ore tons crushed also showed a positive increase. The crusher averaged 660,000 tons per month during Q3. This is a 29 percent increase over the plan of 600,000 tons per month.

As outlined in the September 14, 2017, news release, ore and overliner are currently being stacked simultaneously. The operation expects to complete the overliner on section 1B of the SHLP by the middle of December followed by ore stacking only. As each section of overliner is approved, ore is stacked and readied for irrigation.

Gold Ounces Placed on SHLP, Gold Grade, and Gold Dore' Poured

A combination of the crusher exceeding plan and a gradual increase in combined grade has resulted in an increase of 45percent more ounces being placed on the pad in Q3 compared to Q2.  7,125 gold ounces per month were placed on average for Q3, and year to date, a total of 40,789 ounces have been placed.

Overall grade continues to increase, is up 10 percent this quarter, and will remain steady until the sub ore grade overliner is completed in December. (The overliner material is typically below ore grade as it is selected primarily because it meets strict design criteria as the rock that creates a drain blanket between the ore and the plastic liner.) The overall grade is expected to increase when placement of the overliner on Section 1B is complete.

The transition from the winter contingency pad, Section 1A, to the main part of the SHLP (Section 1B) has meant that we have been able to start building out larger cells, which will in turn lead to higher and more stable monthly recoveries. As a result, over half of all the ounces placed (52 percent) for the year on the SHLP occurred in Q3 (21,376 ounces from 1.98 million tons).

The first of the larger cells was placed under irrigation in mid-September and will begin to yield gold from the first part of its leach curve in October. As more of the larger leach cells are placed through to the end of the year and we begin to experience the layering impact of each cells' recovery curve, we anticipate that gold ounces and total recoveries will achieve commercial production goals by Q1, 2018.

Gold dore' production continues to demonstrate a positive upward trend with a quarter on quarter increase of 13 percent. The leach kinetics are showing consistency and tracking with the historical recovery data from the original Florida Canyon heap leach pad. As discussed above, the transition to the main Section 1B of SHLP will result in higher levels of production and fewer fluctuations month to month.

The spot price of gold during the third quarter ranged from US$1,212.20 on July 7, 2017 to a high of US$1,348.60 onSeptember 7, 2017. The average spot price for the quarter was US$1,277.84. As a result of the Company's forward sales contract, Rye Patch realized gold sales price of US$1,280.33 for the quarter.

Gold is sold into the forward sales contract when spot gold prices are below US$1,275, and sold in to the spot gold price when gold is above US$1275. The forward sale contract has a 5-year term with 150,000 sold forward. For the quarter, a total of 8,320.43 ounces of gold was delivered into the forward sales contract leaving approximately 130,000 ounces of gold remaining.