The past-producing Madsen gold mine could be back in production by as early as May next year, current owner Pure Gold Mining reported on Monday, announcing the outcomes of a feasibility study for the project in Ontario’s Red Lake mining district.

The study contemplates an 800 t/d underground mining operation, which will produce 970 000 oz over its 12-year mine life. At peak production, the mine will produce 125 000 oz/y at a life-of-mine all-in sustaining cost of $787/oz.

Benefiting from significant existing infrastructure, the Madsen underground mine project would require only C$94.7-million in preproduction capital expenditure, Pure Gold reported.

On a pretax basis, the feasibility study calculated a net present value, using a 5% discount, of C$353-million and an internal rate of return of 43%, with a three year payback period.

The project has a probable mineral reserve of 3.5-million tonnes, at 9 g/t gold, containing one-million ounces.

“The Madsen-Red Lake orebody is an exceptional foundation on which to build a gold mining company. With access to existing infrastructure, a high-grade reserve, and exceptional growth potential, Madsen is one of the outstanding gold deposits in Canada,” stated president and CEO Darin Labrenz.

The study did not include the satellite resources of the Russet South, Fork and Wedge deposits and these were the subject of a preliminary economic assessment, which would be issued in the coming weeks.

With a feasibility study in the bag, Pure Gold would now advance the project towards development. It has already appointed Endeavour Financial as financial adviser to provide advisory services with respect to debt financing for the construction and development of Madsen.

As the Madsen project benefitted from existing environmental authorisations, the company said it expected to have all the required permits for production in place by the final quarter of 2019.

Assuming the project execution started in April, first gold would be expected by May 2020.