Spanish Mountain Gold Ltd. [SPA-TSXV; SPAZF-OTC; S3Y-FSE] reported positive results of the prefeasibility study (PFS) for the 100%-owned Spanish Mountain gold project located in central British Columbia, Canada. The PFS, prepared in accordance with NI 43-101 Standards of Disclosure, delineates a Mineral Reserve within the near-surface/higher-grade portion of the Mineral Resource. All dollars figures are Canadian (CAD) unless otherwise noted. Certain key economic metrics are stated in USD to facilitate comparison with projects/mines globally.
Proven & Probable Mineral Reserves are 2.3 million ounces (Moz) of gold and 2.2 Moz of silver. Measured & Indicated Mineral Resources are 4.7 Moz of gold and 6.8 Moz of silver, an increase of 0.6 Moz of gold from previous estimates due to optimization and an increased gold price assumption. This increase in Mineral Resources does not yet reflect the drilling results from the 2020 winter program due to industry-wide delays at assaying laboratories. These results will be incorporated in a future resource update.
Life-of-Mine (LOM) production is 2.1 Moz of gold and 0.9 Moz of silver over 14 years. Average annual gold production is 183,000 oz (first 6 years) and 150,000 oz (LOM) with peak production of 210,000 oz in year 6. Average all-in-sustaining cost (AISC) of production: US$707/oz (first 6 years) and US$801/oz (LOM)
Pre-tax project economics: NPV5% of $848M, IRR of 25% and payback of construction capital in 3.2 years at US$1,600/oz gold (Base Case); NPV5% of $1,209M, IRR of 31% and payback in 2.7 years at US$1,800/oz gold.
Post-tax project economics: NPV5% of $655M, IRR of 22% and payback of construction capital in 3.3 years at US$1,600/oz gold; NPV5% of $888M, IRR of 27% and payback in 2.8 years at US$1,800/oz gold.
Post-tax average annual free cash flow from operations is $189M (first 6-yr) and $128M (LOM) at US$1,600/oz gold; $220M (first 6-yr) and $153M (LOM) at US$1,800 gold. Post-tax LOM cumulative tax free cash flow from operations : $1,797M at US$1,600/oz gold; $2,140M at US$1,800/oz gold
An initial capital cost of $607 million (US$461 million), including a contingency of $75 million
The PFS is based on a 20,000 tonnes per day (tpd) milling rate to process the delineated Proven & Probable Reserves as a standalone open pit operation for 14 years. The proposed mine is expected to be owner-operated using a conventional open-pit mining method to produce a total of 96 million tonnes (Mt) of ore with an average diluted gold grade of 0.88 g/t for the first six years and 0.76 g/t LOM.