Dynasty Metals gets positive assessment for Zaruma

Vancouver — A positive preliminary assessment on Dynasty Metals & Mining’s (DMM-V, DMMIF-O) Zaruma gold project in southwestern Ecuador reviews development of a profitable mining operation and recommends advancing it to the feasibility stage.

The independent study models an underground mining operation, developed in two stages, using a flotation concentrator with a Merrill Crowe or carbon-in-pulp plant. Stage-one mining would see extraction and processing of about 2.4 million tonnes of ore averaging 13.9 grams gold per tonne over 10.5 years. The second stage would see about 1.7 million tonnes of ore grading 12.7 grams gold processed over four years, and assumes an upgrade of at least half of the current inferred resource to the indicated level.

A 1-year payback is projected for the proposed mine along with a US$467-million operating surplus (pretax, undiscounted cash flow), yielding an annualized internal rate of return of about 116% over the estimated 14.5-year mine life. Direct capital spending of US$25 million is estimated to place the deposit into production.

Over its lifespan, the mine is expected to produce 1.5 million oz. gold at an operating cost of US$181 per oz. Metallurgical recoveries for gold are expected to be 87%.

Dynasty recently secured rights to purchase the 3% net smelter royalty (NSR), held by the Ecuadorian subsidiary of Iamgold (IMG-T, IAG-N), covering the current Zaruma resource. The company can purchase half the NSR for US$1 million within 18 months and the balance for US$5 million within 30 months. In addition, Iamgold will waive any royalty on the first 10,000 oz. of gold production to assist in Dynasty’s plan to operate a pilot plant during its feasibility program.

Ecuador’s corporate income tax rate is currently at 25%; the government does not collect federal or provincial royalties.

Shares of Dynasty Metals & Mining rose 36 to close at $6.30 apiece following the assessment announcement. With 24.4 million shares outstanding, the company posts a $154-million market capitalization.