The joint venture partners in Peak Gold have published the preliminary economic assessment (PEA) for the gold project, near Tok, Alaska, detailing the “attractive” economics of the openpit operation at a gold price of $1 250/oz.
Using the base case gold price and a silver price of $17/oz, the PEA yielded a pre-tax net present value (NPV), using a 5% discount, of $393-million and an internal rate of return of 37%.
The Peak Gold mine will operate for eight years, processing 9.3-million tonnes at an average grade of 3.99 g/t gold and 11.7 g/t silver, recovering 1.09-million ounces of gold and 1.996-million ounces of silver over that time.
The study estimates that the life-of-mine (LoM) cash cost will be $428/oz of gold recovered and $470/oz gold recovered including sustaining capital.
Initial development costs equate to $294-million and sustaining capital and closure costs take the total LoM capital requirement to $340-million.
Nasdaq-listed Royal Gold owns a 40% interest in the Peak Gold project, with Contango Ore holding the balance.
“The results of the PEA are a significant milestone and show that the Peak Gold project is one of the most interesting emerging gold projects in the United States,” commented Royal Gold president and CEO Tony Jensen.
“The combination of robust grade, near-surface open-pit resource, and a large and prospective land package located close to existing infrastructure, makes the Peak Gold project unique. Royal Gold is committed to this exciting project over the long term and will focus on opportunities to realise the value of our interest in a manner more closely aligned with our core business model.”
The company said that several opportunities had been identified that could enhance the project considered by the PEA, including expanding the mine through delineation or development of additional mineral resources; pit slope steepening to improve the assumed waste to mill feed strip ratio; optimising the assumed mine plan and development schedule and potentially recovering copper.
The PEA was prepared by JDS Energy and Mining of Vancouver.