McEwen Mining Inc. [MUX-TSX, NYSE] announced results of a Feasibility Study (FS) for its 100%-owned Gold Bar Project in Nevada. The key outcomes of the study include: Low initial capital of $60 million; Attractive IRR of 20% at current gold price; Average annual gold production of 65,000 oz; and Estimated average cash cost of $728/oz. The FS was prepared by SRK Consulting Inc. (SRK) of Reno, Nevada in accordance with the requirements of Canadian NI 43-101.
“Completion of this Feasibility Study is an important milestone. I believe Gold Bar will be the next mine we put into production. It includes the fundamental elements we consider important to investors when building a mine: Low capital and operating costs, and a reasonable rate of return in the current price environment. We can now move ahead with a high degree of confidence in the capital estimate and projected operating performance,” said Rob McEwen, Chairman and Chief Owner.
Highlights of the Feasibility Study:
- Estimated initial capital expenditures of $60 million
- Pay-back period of 3 years at $1,150/oz gold and 2 years at $1,300/oz gold
- After-tax IRR of 20% at $1,150/oz gold and 36% at $1,300/oz gold
- Average annual gold production of 65,000 oz at a cash cost of $728/oz
- Owner operated open pit mine with run-of-mine oxide heap leach processing
- Life-of-mine (LoM) ore production of 13 million tons at a diluted gold grade of 0.032 opt (1.1 gpt) resulting in 325,000 oz payable gold
- Updated in-pit resource estimate: 611,000 oz M&I and 111,000 oz Inferred
Gold Bar is planned as an open pit mine. Both run-of-mine (RoM) and screened and agglomerated oxide ore will be processed at a rate of approximately 8,000 tons per day on a conventional heap leach, and using an adsorption-desorption recovery (ADR) carbon plant producing a doré product. In order to maximize recovery and minimize project risk the ore handling method will be flexible depending on the ore characteristics. Ore from the Gold Ridge deposit will be processed as RoM. Ore from the Gold Pick and Cabin Creek deposits will be screened first and classified prior to leaching.
Initial capital is estimated at $60.4 million, including $4.8 million (8%) for contingencies. Additional capital expenses such as a heap leach expansion and reclamation and closure obligations bring the total LoM capital required to $79.4 million, including an additional $1.5 million (8%) for contingencies. The FS assumes an owner operated fleet of mining trucks and shovels and that all new equipment will be leased for this operation.
Operating costs were estimated based on process design criteria, equipment lease rates, labor, reagent, on-site power generation, fuel, explosives, maintenance, and other miscellaneous costs. All costs are in Q3 2015 dollars. Average cash cost and all-in cost are $728/oz and $995/oz respectively.
The Gold Bar Project in Eureka County, central Nevada, is located on both public lands managed by the Bureau of Land Management (BLM) Battle Mountain Field Office, and on patented lands. The BLM and the Nevada Division of Environmental Protection (NDEP) will be the primary regulatory agencies responsible for ensuring environmental protection as the Gold Bar Project progresses through permitting and approval processes. Formal notice from the BLM states our Record of Decision (ROD) for Gold Bar is expected in January, 2017. The company expects that all other applicable State and Local permits will also be acquired in that timeframe. Once received, the Company can begin construction, which is expected to take approximately 10-12 months to complete. The company has already secured approval from the State of Nevada for adequate water rights necessary to conduct mining activities. The approved water rights will be sufficient for life-of-mine operations.
The Gold Bar Project is located within the Battle Mountain-Eureka-Cortez gold trend. The property was previously mined from 1990 to 1994 by Atlas Precious Metals Inc. The nearest mines are Barrick Gold’s Ruby Hill (~25 miles to the Southeast – now closed) and its Cortez Mine (~35 miles northwest).
The updated NI 43-101 compliant resource estimate included in the FS was developed by SRK and is comprised only of gold resources that fall within the boundaries of a conceptual pit. Measured and indicated resources are 22,112,000 tons grading 0.95 g/t gold for 611,000 oz. Inferred resources are 4,624,000 tons of 0.82 g/t for 111,000 oz.
Refer to company website for complete press release.