TORONTO (miningweekly.com) –  An updated prefeasibility study (PFS) on Canadian project developer True North Gems' Aappaluttoq ruby and pink sapphire project, in south-west Greenland, has presented positive results, revealing that the project has an after-tax net present value at an 8% discount rate of $171-million.

The mine, which would cost only $25-million to build and sustain, would have an internal rate of return of 122%.

The after-tax capital payback period was pegged at 1.8 years, while the operation was expected to produce 87.5-million carats of rough gemstones at an all-in cash cost of $3/ct expected over its nine-year life.

"The company is extremely pleased with the completion of this PFS and the strong economic findings. It confirms our long-held confidence in the Aappaluttoq project and its potential to be developed successfully into a long-term sustainable profitable operation, delivering lasting benefits to the people of Greenland, our shareholders and the international gemstone markets," True North president and CEO Nicholas Houghton said.

True North started construction of the project in September.

The global ruby market had been estimated at around $2.1-billion. The Aappaluttoq mine would be the world's first ethically sourced commercial ruby mining operation.

According to a 2011 technical report, the project contemplated an openpit mine, which would produce up to 25 000 t/y of ore and 430 000 t/y of waste, on a seasonal basis.

A rough corundum concentrate would be produced at the mine site and shipped 160 km north for further processing at the company’s facility in Nuuk. The final product would be a mix of rough ruby/sapphire, along with cut and polished rubies and sapphires.

Despite the prices of gemstones varying greatly depending on quality, True North said rubies and pink sapphires price could fetch $7/ct on average.