Gold Mountain Mining Corp. [GMTN-TSXV; GMTKNF-OTCQB; 5XFA-FSE] on Friday May 14 released a NI 43-101-compliant resource estimate for its 100%-owned Elk gold project near Merritt, southern British Columbia. The announcement follows the completion of a Phase 1 drill program, consisting of 8,739 metres, and costing $1.9 million. All 41 holes hit mineralization, the company said in a press release.
Gold Mountain said the estimated resource at Elk has increased to 651,000 ounces gold measured and indicated at 6.1 g/t gold and 159,000 ounces inferred 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.
Gold Mountain shares advanced on the news, rising 3.4% or $0.07 to $2.13 on volume of 131,020. The shares trade in a 52-week range of $2.73 and $0.76.
Gold Mountain is focused on resource expansion at the Elk gold project, a formerly producing mine located 57 km from Merritt.
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.
Although nine separate vein zones have been discovered on the property, the most significant one is the known as the Siwash North zone.
On Friday, the company said several factors have contributed to the change in the resource estimates. It said the primary factors affecting that change are the addition of 41 new diamond drill holes, discovery of new mineralized intercepts that were not sampled from historic drill cores, changes to the pit shell parameters and changes to the vein model interpretation.
News of the resource increase comes after the company received permission from the B.C. government to begin construction upgrades required to put the mine back into production.
The Elk Gold project is envisioned to be developed as a conventional open pit mine. The operation will begin as a 70,000 tonne/year toll milling operation for three years. During year three, it is expected 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.