VANCOUVER (miningweekly.com) – Peru-focused gold explorer and project developer Lupaka Gold has reported strong financial metrics in a new preliminary economic assessment (PEA) for an initial production scenario at its Invicta project.
The PEA evaluated the economic viability for the underground mining of indicated and inferred resources from the Atenea vein, located up to 130 m above the 3 400 Level, using a sub-level long-hole open stoping mining method, and supported by initial toll treatment processing options.
Prepared by a multidisciplinary team led by SRK Consulting, the PEA envisions a mine plan for 670 000 t of recoverable ore grading 8.6 g/t gold-equivalent (Au-Eq), producing about 185 000 Au-Eq oz within the initial six-year mine plan.
The PEA was based on an updated mineral resource statement of three-million tonnes in the indicated category, grading 5.78 g/t Au-Eq, using a 3.5 g/t cutoff, and 600 000 t of inferred resources grading 5.49 g/t Au-Eq.
The company expects the small operation to produce strong yearly average pre-tax cash flows of $10.2-million, or average annual after-tax cash flows of $8.2-million.
"We are highly encouraged by the robust economics contained in the PEA, which considers only a small portion of the total resource adjacent to Invicta's existing infrastructure. A combination of the high-grade, six-year initial mine plan and the relatively low capital start-up costs, results in immediate meaningful cash flows," president and CEO Will Ansley said in a statement.
Production, as outlined by the PEA, considers an average peak steady state rate of about 350 t/d. Production is expected to start this year following pre-production capital expenditures of $4.3-million.
Located about 120 km from Lima, Invicta is expected to produce annual payable metal of 26 700 oz Au-Eq, at all-in sustaining costs of $575/Au-Eq oz over initial six-year mine life.
The PEA calculated an after-tax net present value, applying a 5% discount, of $43.4-million.
Lupaka advised that to date, more than $12-million of capital has been spent by previous owners on development and infrastructure at Invicta, and management expects to start production in the second half of the year by using third-party mining contractors and using the existing adit and workings.
Invicta's approved EIA allows for mine production of up to 1 000 t/d, despite the current mining plan targeting only 350 t/d.
Next steps will include increasing the resource confidence level, expanding the resource base, and evaluating opportunities for the company to acquire or develop its own processing plant, Ansley added.