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Allied Nevada announces improved mine plan, economics

22nd February 2013

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – Allied Nevada, which operates the Hycroft silver/gold mine near Winnemucca in north-west Nevada, on Friday announced an updated mine plan and economics for the operation, which it is busy expanding.

The New York- and Toronto-listed company said the revised mine plan supports a 19-year operating life that would exploit the current National Instrument 43-101-compliant proven and probable reserves of 11.9-million ounces of gold and 509.6-million ounces of silver, contained in 1.1-billion tons grading 0.011 oz/t gold and 0.46 oz/t silver.

The new mining plan resulted in an after-tax internal rate of return of 77.4% for the life of the mine and a net present value of $2.7-billion when using a 6% discount rate.

The new plan for the ten-year horizon that spans from the expected start of milling operations in 2015 to the last full year of mining in 2024, provided for yearly gold production of about 552 000 oz and 25.5-million ounces of silver.

The company said the initial capital of $1.24-billion remained unchanged, and the company had already committed $634.7-million (51% of total), which was 5% below the estimate. The 5% difference had been allocated to contingency, which had increased to $97-million, from $65-million, representing 16% of the remaining capital to be committed of $608.3-million.

The yearly mining rate was reduced to 190-million tons a year from 235-million tons a year beginning in 2014, as a result of the successful 2012 infill drill programme optimising the mine plan.

The life-of-mine strip ratio was also reduced to 1.15:1 from 1.26:1.

Allied Nevada expects to produce gold at a cost of $146/oz a year, with silver as a by-product credit.

No significant changes have been made to the 130 000 t/d mill and flotation plant.

The Allied Nevada project is part of an overall $1.2-billion expansion that would almost triple the mine’s recovery and production rate for gold and silver by 2015.

Allied Nevada has various exploration sites throughout Nevada. The company’s Hycroft openpit mine is located about 80 km west of Winnemucca and, with the implementation of the expansion, is expected to be one of the largest gold producers in the US and among the largest silver producers worldwide.

Gold and silver sales at Hycroft were expected to increase to about 225 000 oz to 250 000 oz of gold and 1.5-million to 1.8-million ounces of silver this year.

The company’s stock traded 6.19% lower at C$19.85 apiece on Friday on the Toronto bourse.

Edited by Creamer Media Reporter

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