Paramount Gold Nevada Corp. [PZG-NYSE American] released the results of the Feasibility Study for its 100%-owned Grassy Mountain Gold Project in eastern Oregon. The Study outlines an underground mining operation with exceptional economic viability yielding strong NPV and IRR results, low initial capital and low all-in sustaining costs (“AISC”) that generate substantial cash-flows over the life of mine.
The base case was conducted using two-year trailing gold and silver prices per ounce of $1,472 and $16.96 respectively. Highlights of the NI 43-101 Technical Report in the base case scenario includes a Pre-tax IRR of 27.9% and a NPV5% of $123M which increase significantly to 44.7% and $238M at $1,900 gold. After-tax IRR is 26.0% and NPV5% of $105M which increase significantly to 40.9% and $195M at $1,900 gold.
Life of mine cash costs are $583 and AISC is $671/oz of gold. The initial CapEx is $97.5M that includes $10.1M of estimated contingencies, $25.6M of sustaining CapEx and $6.3M closure costs for a 750 tpd mine and milling operation.
The FS contemplates an Initial 8-year mine life producing 362,000 ounces of gold and 425,000 ounces silver with annual production of 47,000 ounces of gold and 55,000 ounces of silver. There are exceptional average gold and silver recoveries of 92.8% and 73.5 % respectively.
After-tax payback is 3.1 years; and total free cash flow is $165M (Post-tax).
“This study is everything we had hoped for, including important improvements over the preliminary feasibility study we completed a little over two years ago. Paramount can now satisfy the remaining permitting requirements identified by the State of Oregon and the Bureau of Land Management in Paramount’s recently submitted Consolidated Permit Application and Plan of Operation. We are very close to realizing our goal of building Grassy Mountain into a modern and environmentally friendly mine, leveraging the industry’s best practices and technologies,” stated Glen Van Treek, President and COO. “Our focus now is to add resources to extend mine life and generate further economic returns for our shareholders,” he said.
The FS was completed by a group of industry leading consulting firms led by Ausenco Engineering Canada Inc.