Lake Shore Gold (LSG-T) has released a new technical report on its Timmins mine to be included in a circular being mailed to West Timmins Mining (WTM-T, WTMNF-O) shareholders.
Lake Shore and West Timmins agreed to merge in August. The two companies already had a 60-40 joint venture for the Thunder Creek gold project in Timmins and this deal will consolidate that with Lake Shore’s nearby Timmins mine and 1,500-tonne-per-day Bell Creek mill.
The latest reserve estimate for the Timmins mine is 3.4 million tonnes grading 7.52 grams gold per tonne for 812,000 oz. gold, and gives the company a 7.5-year mine life.
Production over that time will peak at 120,000 oz. per year at a cash cost of US$322 per oz. using current estimates.
The report did not consider all of the known opportunities for cost reduction or value optimization, but the company noted it will still be pursuing these.
An additional $33 million in capital is needed in 2010 to bring the Timmins mine into commercial production by the fourth quarter.
According to the latest report, the mine has an internal rate of return of 240% using a gold price of US$950 per oz. and an exchange rate of US$1.15. The IRR was also based on the $62 million of capital needed next year.
Lake Shore plans to continue an aggressive exploration program to increase reserves, expand the project’s life and improve economic returns. The company also wants to move fast on Thunder Creek so it can benefit from the Timmins mine infrastructure.
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