McEwen Mining Inc. [MUX-TSX, NYSE] on Thursday December 31 released results of a positive feasibility study for its 100%-owned Fenix Project in Sinaloa, Mexico.
“The Fenix feasibility study envisions a 9.5-year mine life with an attractive after-tax IRR (internal rate of return) of 28% using US$1,500 per ounce gold and US$17 per ounce silver. At current gold and silver prices, the project’s after-tax IRR and the NPV (net present value) more than triples versus the base case,” the company said in a press release.
The project will incorporate an environmentally progressive method of tailings management, using in-pit storage that creates multiple benefits, most importantly a secure containment of tailings enabling better reclamation results.
“Average annual production is projected at 26,000 ounces of gold in Phase 1 and 4.2 million ounces of silver equivalent in Phase 2. The critical path environmental permits are in hand for the first phase of production. Our next steps will involve detailed engineering, assessment of procurement options, and the evaluation of financing alternatives,” said McEwen Chairman and chief owner Rob McEwen.
On Thursday, McEwen shares were down 1.6% or $0.02 to $1.26. The shares are currently trading in a 52-week range of $2.02 and 76 cents.
Fenix is part of the El Gallo Complex, which covers 1,700 km2 of mineral claims, and has gold and silver deposits located within a 13-km radius. From January 2013 to June 2018, El Gallo operated as an open pit, producing 281,000 gold equivalent ounces.
However, due to the transition to deeper sulphide mineralization that is not amenable to heap leaching, mining and crushing activities ceased in the second quarter of 2018.
The company has said residual heap leaching will continue to produce gold for several years.
McEwen has said the Fenix project offers low upfront capital requirements by utilizing existing infrastructure at the nearby El Gallo Gold Mine. The estimated initial capital spend for phase 1 is estimated at US$42 million.
According to the feasibility study, the all-in-sustaining cost for phase one is estimated at US$1,04/oz. Fenix and El Gallo are estimated to host a combine resource of 14.5 million tonnes, grading 41.98 g/t silver, and 0.45 g/t gold in the measured and indicated category. That amounts to 19.5 million ounces of silver and 208,000 ounces of gold.