Moneta Porcupine Mines (TSX: ME) has released a positive preliminary economic assessment (PEA) for the South West deposit at its Golden Highway project, near Timmins, Ontario.
The study outlines a 1,750-tonne-per-day underground mine that would produce an average of 76,000 oz. gold per year over a mine life of 11 years at all-in sustaining costs (AISCs) of US$747 per ounce. Mining would be via ramp access, using longitudinal longhole stoping methods.
With an initial capex of $144 million and sustaining capital of $136 million, the project has an after-tax net present value (NPV) of $236.4 million, using a discount rate of 5%. The internal rate of return (IRR) is estimated at 29.7%, with a payback period of 3.4 years. Over its mine life, the project is expected to generated after-tax cash flow of $371 million.
The study used a conservative base case gold price of US$1,500 per oz. and an exchange rate of US77 ?.In addition to an owner operated mine and mill scenario, the study also looked at a toll milling option, which would lower the initial capex to $64.5 million, the NPV to $197 million and increase the IRR to 43.8%.
Moneta Porcupine chief executive Gary O'Connor said in a statement that the project's "excellent" economics are afforded by its location in the prolific Timmins gold mining camp, and the existing infrastructure and experienced workforce.
"We will now be able to focus on expanding the adjacent deposits and discovering new zones of gold mineralization to continue to add value to the Golden Highway Project with a growing resource base," he said.
In addition to the South West deposit, Golden Highway hosts five other deposits and three new mineralized areas - Westaway, Halfway and South Basin. A first resource for Westaway is planned for this year.
Next steps for Moneta will include an infill drill program to upgrade the resource at South West. At a cut-off grade of 2.6 grams gold, South West holds 4.5 million indicated tonnes grading 4.07 grams gold per tonne for 592,400 oz. gold, and 9.6 million inferred tonnes grading 4.01 grams gold per tonne for 1.2 million ounces.
Total resources at Golden Highway's six deposits are 5.1 million indicated tonnes 4.12 grams gold for 676,900 oz. gold and 10.8 million inferred tonnes grading 4 grams gold for 1.4 million ounces.
- This article first appeared in The Canadian Mining Journal.