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Alpala copper/gold/silver project, Ecuador – update

18th September 2020

By: Sheila Barradas

Creamer Media Research Coordinator & Senior Deputy Editor

     

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Name of the Project
Alpala copper/gold/silver project.

Location
Northern Ecuador.

Project Owner/s
SolGold, which holds an 85% registered and beneficial interest in Exploraciones Novomining that, in turn, holds 100% of the Cascabel project.

Project Description
A preliminary economic assessment (PEA) has suggested that the Alpala copper/gold/silver deposit at the Cascabel project has the potential to support a large-scale, low-cost underground block cave mining operation with the associated processing and project infrastructure facilities.  The operation will sustain commercial production over a mine life of more than 55 years, depending on the production scenario finally adopted.

Four production scenarios have been assessed. Case 1 involves a 40-million tonne-a-year mining operation with a life-of-mine (LoM) of 66 years, and Case 2a involves a 50-million-tonne-a-year mining operation with a staged ramp-up and an LoM of 57 years.

Case 2b involves a 50-million-tonne-a-year operation with a fast production ramp-up and an LoM of five years, while Case 3 involves a 60-million-tonne-a-year mining operation with an LoM of 49 years.

The production-rate scenario proposed for the base case is Case 2b.

The copper concentrator and gold recovery circuit proposed for Alpala is based on two parallel lines, with one line built for Phase 1 (ramp-up to 50% nameplate capacity) and a second line to reach 100% nameplate capacity in the case of the 40-million-tonne-a-year and 50-million-tonne-a-year mine production scenarios. Three parallel modules are considered for the 60-million-tonne-a-year scenario.

Metallurgical recoveries to the chalcopyrite copper concentrate for the first 30 years of operation are estimated at between 93.9% and 87.1% for copper, and between 85.4% (high grade) and 49.4% (low grade) for gold (50-million tonnes a year in staged ramp-up), depending on mill feed grades.

Based on the Case 2b scenario, the yearly metal production average for the first 25 years is estimated at 207 000 t of copper, 438 000 oz of gold and 1.4-million ounces of silver in concentrate.

The project will 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.

Potential Job Creation
Not stated.


Net Present Value/Internal Rate of Return
The project has an after-tax net present value, at an 8% discount rate, from $4.1-billion to $4.5-billion, and an internal rate of return ranging from 24.8% to 26.5%, depending on the production-rate scenario.

Payback on initial startup capital ranges from 3.5 years to 3.8 years after the start of construction, depending on the production-rate scenario.

Capital Expenditure
Capital cost estimates for the four cases assessed range from $2.4-billion to $2.8-billion.

Planned Start/End Date
Not stated.

Latest Developments
Franco-Nevada has advanced $100-million to SolGold under a net-smelter royalty (NSR) finance agreement.

The funding, which was first announced in May, will be used to advance the Alpala project through to a final feasibility study and development decision, as well as for the remainder of the Cascabel concession in northern Ecuador.

Franco-Nevada has advanced the $100-million minus the amount of outstanding principal interest under the $15-million secured bridge loan pursuant to the bridge loan agreement, which Franco-Nevada announced in May. The aggregate amount owing under this agreement has, therefore, been repaid out of the proceeds of the NSR financing. Accordingly, the company is not required to issue 12 220 000 warrants to Franco-Nevada that would have been required had the company elected to extend the maturity date under the  bridge loan agreement for a further four-month term.

In return for the royalty purchase price, Franco-Nevada has been granted a perpetual 1% royalty interest to be calculated by reference to the NSR agreement from the Cascabel concession.

The NSR financing can be upsized by $50-million at SolGold's election to a 1.5% NSR royalty interest on or before January 11, 2021

Key Contracts, Suppliers and Consultants
Wood (minerals processing, materials handling and project infrastructure components of the study); SRK Consulting (resource estimation), SRK Exploration Services (geology), Mining Plus (geotechnical, hydrogeology and mine planning), Knight Píesold (environmental and community studies), and EY (economic analysis).

Contact Details for Project Information
SolGold, tel +61 7 3303 0660 and email info@solgold.com.au.

 

 

Edited by Creamer Media Reporter

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