TORONTO (miningweekly.com) – The TSX-V-listed stock of project developer Kaminak Gold was trading higher on Thursday after the company released the results of a feasibility study on its 100%-owned Coffee gold project in Canada’s Yukon territory, demonstrating robust economics in a $1 150/oz gold-price environment.

Prepared and led by JDS Energy and Mining, an established Yukon mine builder, in collaboration with a broad range of consultants, the study used an exchange rate of C$1 to $0.78, which gave the Coffee project a base case after-tax net present value (NPV) of C$455-million at a 5% discount rate and an internal rate of return (IRR) of 37%.

“This feasibility study firmly establishes the Coffee project as one of the world’s best undeveloped gold projects by value and margin, [which] works in the current gold-price environment. The Coffee project further benefits from being a simple, openpit, heap-leach mining opportunity, situated near infrastructure that delivers low all-in sustaining costs and pays back capital in under two years,” Kaminak president and CEO Eira Thomas told investors during a conference call on Thursday.

The proposed mine, located 130 km south of Dawson City in the Yukon Territory, would operate over an initial ten-year life-of-mine (LoM) with an average yearly output of more than 200 000 oz for the first five years, excluding an initial three-month ramp-up period and an average LoM output of 184 000 oz/y.

Construction and commissioning would cost C$317-million, with a LoM capital cost of C$478-million, including C$60-million in closure costs. The after-tax capital payback period was estimated to be two years.

The all-in sustaining cash costs, as defined by the World Gold Council, excluding corporate general and administrative costs, was estimated to be $550/oz of gold produced.

Kaminak planned to proceed with a 24-month permitting period, during which it would source funding through a combination of debt and equity, stated Thomas. Construction was slated to start mid-2018.

The feasibility study was based on a probable mineral reserve of 46.4-million tonnes grading 1.45 g/t, containing 2.16-million ounces of gold. Over the life of the project, 1.86-million ounces would be extracted at expected average metallurgical gold recoveries of 86.3%.

GOING FOR GOLD
The study proposed four openpits mined by conventional shovel and truck methods at a nominal ore-mining rate of five-million tonnes a year, for about ten years. A total of 312-million tonnes of material would be mined to produce 46.4-million tonnes of ore, providing a strip ratio of 5.7:1.

Run-of-mine ore would be crushed to a two-inch feed size and placed on a heap-leach pad. Gold would be extracted from the leachate by an adsorption-desorption-recovery carbon plant.

Kaminak planned to access the site using a 214 km single-lane gravel road from Dawson City. The cost associated with upgrading the existing road and building about 37 km of new road along the proposed 214 km route was estimated to be about $25-million. The mine would be powered by electricity generated on site by diesel generators and would be able to substitute natural gas at a later stage, should fuel prices increase.

Project construction time from site mobilisation to first commercial production of gold was estimated to be 18 months, excluding access road construction which would take about nine months.

Thomas noted that there was potential for resource expansion along strike and to depth, with two existing inferred gold resources (Kona North and Sumatra) and seven separate drill discoveries in the early stages of evaluation located near the proposed mine site, which contained more than 25 km of priority gold-in-soil anomalies remaining to be systematically drill-tested.

Thomas advised that the Coffee project was expected to have a significant impact on Yukon’s gross domestic output, generating more than $2-billion of gross revenue and contributing 480 permanent, high-paying jobs. She indicated that Kaminak enjoyed strong relations with all levels of the pro-mining Yukon government, including the local First Nations, with whom the company had collaborated since 2010.

Kaminak stock was trading at C$0.97 apiece in early afternoon trading on Thursday.