Auryn Resources Inc. [AUG-TSX, NYSE American] has released positive results from an independent preliminary economic assessment (PEA) and an updated resource estimate for its 100%-owned 7,500-hectare Homestake Ridge gold project located in the prolific Iskut-Stewart-Kisault gold belt in the Golden Triangle region of northwestern British Columbia, Canada.
The PEA demonstrates the project’s potential to become a high-grade, small footprint, underground gold mine with positive economics and upside potential from both a rising gold price and prospective expansion.
Ivan Bebek, executive chairman and director, said, “This is an early look into the Homestake Ridge high-grade gold project’s current value, which demonstrates a highly profitable deposit with a low capex in an established mining jurisdiction, and importantly, it is open for considerable expansion.
“We took a conservative approach in our study to see the project’s resilience at $1,350 [per ounce] gold, which generated a 23.6% internal rate of return, however, at $1,620 [per ounce] gold the project generates an IRR of 32% and an NPV of over $173-million.
“The Homestake Ridge gold project is a valuable part of our portfolio, which also includes multiple Tier 1 exploration opportunities, such as Sombrero and Curibaya in southern Peru and Committee Bay in Northern Canada. We are very much looking forward to advancing our portfolio as we continue to see improving metal prices.”
Other metrics include preproduction costs of US $88 million, All-in sustain costs of US$670/oz, after-tax payback period 36 months, life-of-mine 13 years, average LOM payable production 45,400 AuEq ounces, LOM production 590,040 AuEq ounces, and mining at 900 tonnes per day.
The NI 43-101 compliant PEA is preliminary in nature in that it includes inferred mineral resources.
The updates resource estimates include Indicated reosurces of 165,993 oz gold, 1.8 million oz silver, 2.87 million lbs copper, and 1.25 million lbs lead. Inferred resources stand at 816,719 oz gold, 17.8 million oz silver, 15.87 million lbs copper and 17.34 million lbs lead.
PEA project overview
To date the project has been investigated with more than 275 drill holes, totalling more than 90,000 metres. In addition to the three known zones of mineralization, multiple exploration targets remain to be tested.
Mining would commence in the larger Homestake Main zone first, followed by the Homestake silver zone around year six and finally the South Reef zone. The material would be treated in a conventional crushing, grinding and flotation plant to produce a copper concentrate, a lead/zinc concentrate and finally Au-Ag dore from cyanide leaching of regrind tailings.
Mining and processing
Auryn Resources has six projects, including two flagships, the Committee Bay high-grade gold project in Nunavut and the Sombrero copper-gold project in southern Peru.
On April 15 Auryn shares were up $0.01 to $1.58.