Efforts to improve the economics of Marathon PGM’s (MAR-T) northern Ontario development project are starting to bear fruit. The company says that ongoing work to optimize a feasibility study completed last year has improved grades, tonnage and recoveries at the Marathon platinum group metals (PGM) and copper project, and boosted measured and indicated resources.
The latest estimate expands in-pit measured and indicated palladium and gold resources by 10.3% to 2.58 million oz. and 280,000 oz., respectively. Contained platinum is 5.4% higher at 769,000 oz., copper is up 8.3% to 625 million lbs. and silver is up 8.3% to 5.5 million oz.
Measured and indicated in-pit resources now stand at 101.9 million tonnes grading 0.79 gram palladium per tonne, 0.24 gram platinum, 0.08 gram gold, 0.28% copper, 1.68 grams silver and 0.006 rhodium at a net smelter return cutoff of $6.63 per tonne.
Marathon PGM has come up with a new block model for the resource that it says better reflects the trend of the mineralization at the Marathon project.
“This expanded resource is the base for a new mine plan and new resources currently under way,” said president and CEO Phillip Walford in a statement.
The company says metallurgical recoveries are also up 3% for palladium, 8% for platinum and 7% for gold.
A feasibility study completed late last year estimated Marathon’s net present value at $77 million, with an after-tax internal rate of return of 12.4% and put cash costs at US28¢ per lb. copper, net of credits. However, the study used metals prices that now seem overly optimistic. The base-case copper price, for example, was US$3.12 per lb. While a recent rally lifted prices to US$2.74 per lb. at presstime from a low of less than US$1.50 earlier this year, prices are still volatile.
The current resource used metal prices that are below current prices, with the exception of palladium.
The feasibility study envisaged a 22,000-tonne-per-day open-pit mine that would cost $386 million to build and could be in production by 2012. Production was pegged at 42 million lbs. copper, 201,000 oz. PGMs plus gold and 310,000 oz. silver annually over a 10-year mine life.
Marathon PGM is updating the feasibility to reflect better metallurgical recoveries, capital reductions and current metals prices.
The company’s shares were up 6¢ or 9% in afternoon trading at 71¢. The stock trades in a 12-month window of 25¢-$2.25.
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