Constantine Releases Positive Preliminary Economic Assessment for Palmer Project

Table 1 – Summary of Economic Inputs and Results

1. Base case prices for copper, zinc, gold and silver are the average of three years past and projected two years forward by analysis of London Metal Exchange futures as of April 16^th, 2019.
2. Base case price for barite provided by third party barite industry experts, based on direct quotes from multiple wholesale providers in relevant oil basin markets (quoted short ton prices converted to metric tonne equivalent).
3. Net smelter returns are net of off-site costs including Treatment Charge/Refinement Charges, freight, and penalties, and exclusive of royalties.

Capital and Operating Cost Estimate Summary

The PEA is based on a capital cost summary with an estimated accuracy of +/- 25%, which is shown in the table below. Capital and operating costs were developed from first principles for construction, mining, processing, and administration using the mine plan, incorporating development rates, labour, materials, and consumables. JDS used vendor quotes on nearly all equipment.

Mining and Processing

The mine and processing plant have been designed for 3,500 tonnes per day. Initial material from the Palmer Deposit will be recovered at a rate of approximately 2,700 tonnes per day by underground longhole stoping mining methods. During the third year, production will commence at the AG Zone Deposit and increase total production to approximately 3,500 tonnes per day. Stopes will be filled with a combination of waste rock from development and paste backfill generated from the pyrite concentrate and de-sulphide tails. Mine access portals at multiple elevations are planned to maximize natural ventilation and dewatering of underground operations.

Diesel-powered mobile equipment will be used to conduct all underground mining activities. Underground crushing and conveying will provide low cost mineral transport from the Palmer Deposit to the processing facility. Mineralization from the AG Zone Deposit will be trucked via lateral underground access ramps to the underground crushing station at the Palmer Deposit.

The Project incorporates a standard 3,500 tonne per day comminution, flotation separation flow sheet including a primary underground crusher feeding a single semi-autogenous (“SAG”) mill, thence a ball mill, followed by selective two and three-stage flotation to produce three concentrate products (copper, zinc, barite) for shipment to offsite smelters. A fourth concentrate (pyrite) will also be produced for placement underground as paste backfill. Millsite foundation assessment and foundation design were completed by KCB.

Metallurgical assumptions for the Palmer Deposit are based on locked cycle flotation and grindability tests completed in 2018 that yielded high recoveries at a moderate grind size to separate copper, zinc and barite concentrates. The majority of precious metals report to the copper concentrate, yielding higher overall payable fractions. AG Zone Deposit metallurgical assumptions are a modification of Palmer Deposit parameters based on metallurgically focused mineralogy studies. Deleterious elements are projected to be below penalty level. Zinc present within the copper concentrate will incur a small penalty.

Concentrate Transport and Refining

Copper and zinc concentrates will be shipped by covered, dual-trailer, 40-tonne concentrate trucks to the port of Haines, Alaska where the concentrate trailers will be shuttled by barge to the existing ore-terminal located in Skagway for eventual loadout onto ocean going cargo vessels to Asian smelters. All-in cost for transportation from mine site to end destination for copper and zinc concentrates is $91 per tonne of concentrate.

Barite concentrate will be placed in one tonne ‘super sacks’ on site and transported by truck within intermodal containers to Haines and then barged to the ship-to-rail container terminal in Prince Rupert, British Columbia. The final destinations for the barite concentrate include both western Canada and mid-west US oil basins. All-in cost for transportation from mine site to end destinations averages $132 per tonne of barite concentrate, inclusive of trucking, barging, rail, re-handling and container leasing.

Barite is a high-density, stable and chemically inert mineral (barium sulfate, BaSO4) that is an important industrial mineral commodity predominantly used for drill mud in oil and gas drilling. It is one of 23 critical minerals listed by the United States Geological Survey that are defined as essential to economic and national security and vulnerable to supply chain disruptions due to reliance on foreign imports. At present, approximately 80% of the U.S. barite market is imported from foreign sources. The barite concentrate produced from the Palmer Project will be an end-user ready product that does not require additional processing or refining off site.

The trucking distance from the proposed mine site to the port facility in Haines, Alaska is 72 km, consisting of 22 km of gravel road and 50 km of paved highway. The barging distance from Haines to the existing ore terminal in Skagway is 25 km. Skagway is one of North America’s closest ports to Asia. Prince Rupert is located 400 nautical miles from Haines and is a major North American rail terminal.

Mineral Resources

The table below outlines the total Indicated and Inferred Mineral Resources for the Palmer Deposit and the AG Zone Deposit.

An NSR cut-off of $80 per tonne was utilized for inclusion of resources in the PEA. The PEA mine plan includes a combined total of 12.48 Mt from the two deposits. The RW Zone portion of the Palmer Deposit did not meet internal criteria for inclusion in the base case mine plan and represents a potential future opportunity.

Table 8 – Total Contained Metal for the Palmer Project (all deposits)

For details of the mineral resource estimate for the Palmer Project including the quality assurance program and quality control measures applied and key assumptions, parameters and methods used to estimate the mineral resource set forth herein please refer to the technical report entitled “NI 43-101 Technical Report and Updated Resource Estimate to include the AG Zone for the Palmer Exploration Project” dated effective December 18, 2018 (the “Palmer Technical Report”). The Palmer Technical Report is available on the Company’s issuer profile on SEDAR at www.sedar.com.

Tailings and Waste Rock

Tailings and waste rock management and water management facilities and assumptions were developed by KCB. These designs included a combined tailings management and waste rock storage facility on surface, non-contact water diversions and provisions for contact water collection and disposal. Site wide water management also includes collection, treatment (if required) and disposal of underground water that reports to surface, runoff from the Millsite and process water from the Mill.

An estimated 78% of tailings will be utilized as backfill, including all pyrite concentrate and over half of the desulfurized tailings. Residual desulfurized tailings requiring surface storage represents a relatively small fraction (15%) of total material mined and milled. The desulfurized tailings are classified as non-potentially acid generating.

Non-potentially acid generating (“NPAG”) waste rock from underground development will be stored on surface. Potentially acid generating (“PAG”) waste rock generated from underground workings will be disposed of underground as backfill. Some PAG waste rock will be stored temporarily at surface during the initial years of operation in a segregated lined facility until adequate space is available underground for disposal.

Conceptual designs for tailings and waste rock management alternatives were developed for 12 candidate sites. Filtered tailings with NPAG waste rock placed as outer containment berms in the same lined facility was selected as the preferred waste management method. Life of mine total tailings production requiring storage on surface will be approximately 1.83 million tonnes along with 1.10 million tonnes of NPAG waste rock.

Infrastructure and Other

The Project is located in the Porcupine Mining District of the Haines Borough, Alaska and benefits from well-developed infrastructure including existing road access to a year-round deep-sea port and proximity to an established mining community.

The town of Haines and surrounding rural communities (population 2,400) have been providing services, skilled labor, accommodations and equipment to support Constantine’s exploration activities and local placer gold operations. Residents also work at the nearby Kensington and Greens Creek mines. For the purpose of the PEA, it is anticipated that the majority of the mine’s workforce would reside in the local community. The mine plan will provide year-round stable employment in the region, a priority in community plans. The total direct workforce is expected to be 220 full time employees with approximately 40 additional fulltime contractor jobs for concentrate trucking, barging, and crew transportation.

Existing power lines extend to within a few kilometers of the Project; however, the local grid does not currently provide sufficient power to support the Project’s needs. The PEA includes installation of a 12.5 MW liquefied natural gas (“LNG”) power plant, using five CAT 2500 kW generators. The cost of power is estimated at $0.15/kWh exclusive of genset operating and maintenance labor costs, which are accounted for in project OPEX.

Environment and Closure

A combination of natural geological characteristics and deliberate design choices result in a project that will be a North American leader in low impact, environmentally conscious mine design. Environment protection and naturally sustainable closure were integral components in the mine design. Key features include:

• Small footprint, high-grade underground mine
• Low waste to ore ratio
• No permanent surface storage of potentially acid generating waste rock or tailings
• Pyrite selectively recovered to produce a de-sulfurized tailings product which is returned to the underground mine
• Majority of tailings returned underground for backfill, including all pyrite concentrate
• Tailings stored on surface represents only 14% (1.8 Mt) of all milled material (12.48 Mt) and consist of environmentally benign minerals (quartz, feldspar, mica, carbonate and chlorite).
• Avoidance of significant disturbance to wetlands or water bodies
• Upon closure cement portal plugs will be installed to seal underground workings and prevent mine water discharge to surface
• Utilizes existing resource access roads and overlaps areas of historic and current logging and placer mining
• Community consensus agreement and local and State land use management plans that support mineral development within the project area

The Company has made community engagement a priority and takes great pride in how the PEA mine design addresses the environmental concerns brought forward by project stakeholders. The Project design began with sustainability in mind, providing the foundation for responsible environmental and social closure. The Company will continue engaging in meaningful conversations with stakeholders as the Project moves forward.

Sensitivity Analysis

Sensitivity to the pre-tax NPV7% to changes to significant value drivers is shown below. The analysis demonstrates the Project is resilient to lower metal prices and higher costs. The Project is most sensitive to the price of zinc, with strong leverage to higher prices.

Project Opportunities

The PEA identifies several project challenges and opportunities that were addressed to a level satisfactory for this PEA and represent optimization opportunities for the next study level to further enhance project economics. These include:

• Palmer Deposit and the AG Zone Deposit are open at depth and potential is considered excellent for the discovery of additional zones within the greater Palmer District
• Preliminary metallurgical test work on the AG Zone Deposit is recommended to assess potential to enhance metal recoveries and grades, particularly for silver
• Future trade-off studies for off-site infrastructure such as an ore terminal in Haines or expanded hydro power capacity within the local grid.