Gold Mountain rallies on B.C. mine PEA
Gold Mountain Mining Corp. [GMTN-TSXV, GMTKNF-OTCQB, 5XFA-Frankfurt] on Thursday released an updated preliminary economic analysis for its 100%-owned Elk gold project near Merritt, British Columbia.
The announcement follows the recent release of a National Instrument 43 101-compliant resource estimate for the project, which in turn came after the completion of a phase 1 drill program, consisting of 8,739 metres, and costing $1.9 million.
Gold Mountain said the estimated resource at Elk has increased to 651,000 ounces gold in the measured and indicated category at 6.1 g/t gold and 159,000 ounces in the inferred category at 4.8 g/t. The latest estimate marks a 43% increase in measured and indicated resources and a 67% rise in the inferred resource compared to previous estimates.
The preliminary economic assessment (PEA) contemplates an initial 19,000-ounce-per-year mine that ramps up to 65,000 ounces of annual production in years four to 11. The PEA also envisages that for the life of mine, mineralized material from the Elk project will be mined by a contract partner and then delivered to New Gold Inc.’s (NGD-TSX, NYSE American) New Afton mine, which is located about 130 kilometres from the Elk mine site.
Gold Mountain shares advanced on the news, rising 6.4% or $0.14 to $2.32 on volume of 236,550. The shares trade in a 52-week range of $2.73 and $0.76.
Gold Mountain is a B.C.-based gold and silver exploration and development company with a focus on resource expansion at the Elk gold project, a formerly producing mine located 57 kilometres from Merritt in south central B.C.
The company is the product of a business combination between Bayshore Minerals Inc. and Freeform Capital Partners Inc. that was completed in December, 2020. As part of the qualifying transaction, Freeform changed its name to Gold Mountain Mining.
The Elk project is a past producing mine with much of the required surface infrastructure still in place that is required to restart operations.
It is situated within the Similkameen Mining District and consists of 27 contiguous mineral claims and one mining lease covering 16,566 hectares.
The Elk Gold project is envisioned to be developed as a conventional open pit mine. The operation will begin as a 70,000 tonne per annum toll milling operation for three years. During year three, it is expected that a mill will be constructed on site. During the initial three years of mine life, mineralized material will be trucked and toll-treated at a processing facility nearby.
Total life of mine capital costs are anticipated to be $60.3 million, an amount that includes capital costs for the operation and associated owner costs. The estimated capital cost for purchase and assembly of the modular processing plant is $23.8 million. Reclamation and closure activities are expected to cost about $10 million.