The current strong gold price environment, robust projected economics and quick payback creates an attractive opportunity for TSX-listed Ascot Resources to build its mine in the Golden Triangle, British Columbia, president and CEO Derek White said on Wednesday.
Announcing the outcomes of a feasibility study into the combined Premier and Red Mountain projects, near Stewart, he said that with a capital outlay of C$147-million, the company could feed the Premier mill at 2 500 t/d to produce about 1.1-million ounces of gold and three-million ounces of silver over eight years.
The study is based on a proven and probable reserve of 6.2-million tonnes from the project. In addition to the reserves, the company has inferred resources of 5.1-million tonnes at 7.25 g/t at Premier, with about 2.2-million tonnes of this resource material at similar grade, near the planned development, which may potentially be converted to reserves during operations.
The base case delivered an after-tax net present value (NPV), at a 5% discount, of C$341-million and an internal rate of return (IRR) of 51%, with an after-tax payback period of 1.8%.
Assuming a spot gold price of $1 710/oz, the project economics increase to an after-tax NPV of C$602-million and an IRR of 78%.
LoM operating costs are estimated at C$145/t processed, or $642 a payable ounce produced and LoM all-in sustaining costs of C$174/t processed, or $769 a payable ounce produced.
“The study focused on maximising the project economics, which involved optimising mining methods and development to reduce operating cost per ounce. The result of this optimisation was a conversion of 64% of indicated resources to reserves at Premier. Management believes that future underground drilling will help to improve conversion of some of the remaining inferred resources and improve annual production rates.
“Management’s next steps will be focused on advancing this exceptional gold project with all our stakeholders while continuing to grow our mineral resources and reserves to enhance value through further drilling and delivering a number of identified opportunities,” said White.
The potential value enhancement opportunities identified beyond the scope of the study include reduced mining dilution and development capital by optimising shallow angle mining, conversion of about 2.2-million tonnes of resources in the inferred category and reduced process capital and operating cost by introducing process enhancements.
The study is based on four underground mining operations feeding a centralised 2 500 t/d processing facility, located at Premier. The four mining operations known as Silver Coin, Big Missouri, Premier and Red Mountain will be sequenced over an eight-year period.
The existing processing facility will be refurbished within a construction period of about 40 weeks. The process plant will use conventional crushing, grinding and gravity circuits followed by a standard carbon-in-leach process to produce a gold doré.
Premier has an existing tailings storage facility and water treatment plant, and is adjacent to the Long Lake Hydro power plant, which currently supplies Pretium’s Brucejack mine and connects to the BC Hydro grid.