VANCOUVER (miningweekly.com) – Canadian project developer Northern Vertex has filed a preliminary economic assessment (PEA) with securities regulators examining the merit of building an expanded operation at its 100%-owned Moss gold/silver mine, in Arizona.
First published in October, the PEA sets out the technical and economic viability of extending the Moss mine to include resources onto the company's bordering unpatented mining claims. The assessment builds on the company's Phase II feasibility study, published in June 2015.
The expanded scenario includes surface disturbance and an expansion of the mine facilities onto federal public lands administered by the Bureau of Land Management and would therefore require the submission and approval of a mine plan of operations.
"This PEA is further encouragement of the scalability of production in the initial years, as well as the potential longevity of the Moss gold mine. Eliminating the patented boundary constraints and increasing production to a peak of 60 000 gold equivalent ounces in year four, the PEA indicates that the Moss mine project has the potential to measurably improve the economics,” stated president and CEO Kenneth Berry in a press release.
Management, in consultation with its board, advisers and financial partners will review the merits of implementing the accelerated schedule at the Moss mine on an expedited basis. As construction of the Moss mine nears completion, management plans to conduct an aggressive exploration and resource expansion programme during the first two years of production, to further expand the existing resources.
The mine plan is based on the December 2014 mineral resource estimate of 15.48-million tonnes in the measured and indicated categories, grading 0.76 g/t gold and 9.3 g/t silver, above a cutoff of 0.25 g/t gold. This includes 8.04-million tonnes in the proven and probable reserve categories, grading 0.82 g/t gold and 9.28 g/t silver, for contained metal of 213 000 oz gold and 2.4-million ounces of silver. The project also hosts an inferred resource of 2.18-million tonnes grading 0.55 g/t gold and 5.6 g/t silver, above the same cutoff.
As in the Phase II feasibility study, the PEA assumes contract mining for the life-of-mine using a conventional truck and shovel fleet.
Based on price assumptions of $1 250/oz of gold and a silver price of $20/oz over the ten-year mine life, the PEA generates an after-tax net present value, using a 5% discount rate of $93-million, and a formidable internal rate of return of 52.5%. These numbers exclude the company’s access to significant tax pools.
The PEA capital cost is estimated at C$61.6-million inclusive of C$37.5-million in sunk costs for the construction of the Phase II mine.
The Moss mine, which is expected to produce its first doré before year-end, is expected to produce a total of 360 750 gold equivalent ounces (GEOs), at an all-in sustaining cost of $603/GEO.