TSX-listed Marathon Gold has published the results of the prefeasibility study (PFS) for the Valentine gold project, in central Newfoundland, which support an openpit mining operation with low initial capital cost and high rate of return over a 12-year mine life.
“The Valentine project is expected to be Atlantic Canada’s largest gold producer,” Marathon Gold president and CEO Matt Manson said on Monday.
The mine will deliver average gold production of 175 000 oz/y in the first nine years from the processing of high-grade mill feed, and 54 000 oz/y in the final three years from the processing of low-grade stockpile.
The mill will operate at 6 800 t/d during the first three years, based on gravity-leaching, expanding to 11 000 t/d in the fourth year, based on gravity-flotation-leaching with life-of-mine (LoM) average gold recovery estimated at 93%.
The LoM average total cash costs are pegged at $633/oz and all-in sustaining costs at $739/oz.
Valetine has proven and probable mineral reserves of 1.87-million ounces (41.05-million tonnes at 1.41 g/t gold).
The study calculated an after-tax internal rate of return of 36% and a net present value (NPV), using a 5% discount, of C$472-million, based on a gold price of $1 350/oz gold, increasing to 49% and C$671-million if using a gold price of $1 550/oz.
The initial capital expenditure (capex) required for the Valentine project is estimated at C$272-million, yielding an after-tax NPV/capex ratio of 1.74. The project has a payback period of 1.8 years.
“The Valentine prefeasibility study released today presents a high value, low capex project with a strong gold production profile and high operating margins. We have taken the approach of identifying the optimum starting point for mining at Valentine, emphasising highest rate of return and lowest risk, while recognising that the large resource inventory and extensive exploration potential along strike and at depth offers plenty of opportunity for mine life extension.
“Our mill expansion strategy is supported by internal cash flow using a conservative gold price assumption, and the project carries strong project financing attributes, including a fast payback,” said Manson.
The company will now turn its attention to the submission of its environmental impact statement, expected later this year, and the start of feasibility-level studies.