LSE- and TSX-listed SolGold on Monday published the results of a preliminary economic assessment (PEA) for the Alpala copper/gold/silver deposit at the Cascabel project, in northern Ecuador.
The study estimated a “low” start-up capital expenditure of $2.4-billion to $2.8-billion and a “high” net present value range of $4.1-billion to $4.5-billion, at an 8% discount, which the company said signified “outstanding financial metrics” for a project of its scope.
The internal rate of return was put at between 24.8% and 26.5%, depending on the production scenario selected.
The study has put forward four production cases, ranging from 40-million tonnes a year to 60-million tonnes a year, with an estimated mine life of between 49 years and 66 years.
Based on the 50-million-tonne-a-year mining scenario, the Alpala deposit is estimated to produce 207 000 t/y of copper, 438 000 oz/y of gold and 1.4-million ounces a year of silver in concentrate in the first 25 years of operations.
The project would produce high-quality concentrates (28.2% copper, 22.1 g/t gold and 65.7 g/t silver), which should deliver a sales premium for the concentrates, SolGold said.
"The SolGold board is excited by the opportunity demonstrated for the Alpala project, and that it continues to grow. The unusually low operating costs modelled are due to the relatively soft, fractured nature of the ore, resulting in enhanced caveability, a high degree of fragmentation in the cave and ease of crushing and millability, combined with low hydroelectric (consumption and unit) costs. The overall scale efficiencies also assist in the delivery of modelled low operating costs,” said CEO Nick Mather.
The operating cost over the life of the project is estimated at between $25.5-billion and $25.9-billion depending on the production scenario. Unit C1 operating cost over the life of the project is estimated at $0.90/lb copper after gold and silver credits and C1 production cost, estimated at $0.23/lb of copper after gold and silver credits.
SolGold holds an 85% interest in the Ecuadorian company which owns the Cascabel project, with Canadian junior Cornerstone Capital Resources holding a 15% share in that company.
Cornerstone CEO Brooke Macdonald said: "The PEA indicates a very financially robust project achievable with industry standard mining and metallurgical technology and benefiting from the well-established regional infrastructure. The implied value of Cornerstone's 22.8% direct and indirect stake is between $935-million and $1.26-billion, depending on which of the four mine production cases is selected."
The prefeasibility study is expected to be completed in December with a definitive feasibility study scheduled for completion at the end of 2020.