Kerr Mines Inc. [KER-TSX, KERMF-OTC, 7AZ1-FRA] on Tuesday April 10 announced the results of an independent Pre-Feasibility Study and resource update for its past-producing Copperstone Mine in Arizona. The resource update is in compliance with NI 43-101 standards of disclosure.
“On the momentum of a very successful 2017 Phase 1 exploration program and Pre-Feasibility Study, the company is pleased to confirm updated gold resources and positive economics at the company’s Copperstone Mine in Arizona,” Kerr said in a press release.
Highlights from the pre-feasibility study are as follows:
- Average annual sales of 38,347 ounces of gold.
- Initial capital of $22.7 million, which includes mine equipment capital lease.
- Payback of initial capital within 2.3 years of 2019 production start.
- Study life operating margin (EBITDA) of $89 million, internal rate of return of 40%.
- All-in sustaining cost of US$875 per gold ounce.
- Measured and indicated mineral resource of 1,124,800 tones averaging 7.63 g/t gold
- 276,100 ounces of contained gold in the inferred category.
- Proven and probable mineral reserves of 802,048 tonnes, averaging 6.79 g/tonne gold.
- 175,093 ounces of contained gold in the proven and probable category.
“The results of the prefeasibility display the strong-near term production opportunity for the Cornerstone Mine and robust returns for our investors. This is just the beginning,” said Kerr Mines President Martin Kostuik.
“The impressive exploration upside displayed by the 2017 Phase 1 program, the historical production of over 500,000 gold ounces and the potential to generate solid positive cash flows by identifying the first four years of gold production all point towards the opportunity of many more years, beyond the study timeframe of profitable production,” he said.
The Copperstone Mine produced nearly 500,000 ounces of gold between 1987 and 1993 from an open pit operation. Significant remaining infrastructure from that period includes offices, maintenance shops laboratory building, permitted tailings facility, processing facility and mill.
The mine is located in La Paz County, western Arizona, within the Walker Lane mineral belt. The property is accessible from Pheonix on Interstate 10 to Quartzsite and from Quartzsite on Route 95.
Gold in the area is commonly associated with hematite, chlorite, quartz, manganese oxide and copper oxide mineralization. In the case of Copperstone, the gold is not encapsulated in sulphides or silica, and the ores do not contain active carbon. This means the ores at Copperstone are not refractory.
Shares of Kerr Mines eased 6.25% or $0.015 to 22.5 cents late Tuesday morning. The stock trades in a 52-week range of 41 cents and 16.5 cents.
Having recently closed an oversubscribed private placement of $6 million, the company is currently looking at “non-dilutive financing options.” “Our intention is to finance the initial capital through corporate debt,” Kostuik said. Kerr is also planning an intense 2018 exploration program, which is designed to increase the mine life.