TORONTO (miningweekly.com) – Construction at TSX-V-listed Goldsource Mines' Eagle Mountain gold project, in Guyana, continues to progress well, with commissioning for Phase I production to take place during the fourth quarter.

The company explained on Tuesday that the first phase of the project entailed a 1 000 t/d openpit mine and gravity plant, with estimated preproduction capital costs of $4-million to $5-million and post-commissioning cash operating costs of $500/oz to $600/oz of gold.

The first phase’s capital requirement from the September 2014 preliminary economic assessment (PEA) was $5.9-million.

Goldsource had in September last year filed the positive results of a PEA on the Eagle Mountain deposit with Canadian securities regulators, saying it planned to take a four-pronged approach to developing the project over four years.

Phase 1 would target a milling rate of 1 000 t/d, ramping up to 4 000 t/d by its fourth year. The first phase of the openpit mine project entailed building a 1 000 t/d gravity plant, which was expected to deliver gold at a cash operating cost of $480/oz over the eight-year mine life. The all-in sustaining cost was expected to average $620/oz.

The company would use conventional openpit mining and downhill-gravity slurry to transport weathered saprolite ore for processing.

The study expected the strip ratio to be low at 0.9:1, while the operation would not require blasting or surface haulage.

The PEA estimated that the project would process about 7.3-million tonnes of ore at a head grade of 1.2 g/t, producing about 168 700 oz of gold at cash costs of $480/oz over the project’s life.

The conceptual approach entailed yearly output over four years of 5 600 oz, 14 400 oz, 21 600 oz and 28 800 oz of gold, respectively.

Eagle Mountain hosted 3.9-million tonnes, grading 1.49 g/t gold, for 188 000 oz in the indicated category and 20.6-million tonnes, grading 1.19 g/t gold, for 792 000 oz in the inferred category.

About 40% of the project’s overall ounces comprised saprolite, or weathered ore, which could allow Goldsource to fast-track operations through low-cost gravity processing.

Goldsource would have an inventory of about 162 000 oz of gold in its settlement ponds, owing to the gravity processing, that could potentially be milled at a later date.

Also not considered in the PEA were Eagle Mountain’s in-situ ‘fresh-rock’ resources of 2.3-million tonnes, grading 1.52 g/t gold, for 114 000 oz in the indicated category and 13.4-million tonnes, grading 1.13 g/t gold, for 486 000 oz in the inferred category. Resource calculations were modelled on a 0.5 g/t gold cutoff grade.

At an assumed gold price of $1 250/oz, Goldsource's PEA placed a 63% after-tax internal rate of return and a $46-million net present value at a 5% discount rate, on the project. Pretax undiscounted operating cash flow before capital expenditure was estimated at $123-million, while the PEA pointed towards a favourable sensitivity analysis for a potential dip in the gold price or recoveries.