New Livengood PEA doubles mine life, production

VANCOUVER — International Tower Hill Mines’ (ITH-T) Livengood project near Fairbanks, Alaska, could produce half a million ounces of gold annually for 21 years, according to a new and improved preliminary economic assessment (PEA).

Tower Hill completed a PEA for Livengood last year, but that study only assessed the potential to turn the oxide portion of the deposit into a heap-leach operation. Now, the company has incorporated the large sulphide gold deposit into the economic study by adding a large milling and flotation circuit in the fourth year of operations.

The Money Knob deposit at Livengood is a near-surface, tabular gold zone that is almost perfectly suited for open-pit mining. An open-pit frame encompasses 600 million indicated tonnes grading 0.65 gram gold per tonne plus 48 million inferred tonnes averaging 0.64 gram gold, which represents almost three-quarters of the overall resource defined to date.

To mine the pit requires a strip ratio of just 1 tonne of ore to 1.07 tonnes of waste. For the first three years the operation would only tap into the oxidized rock, sending 100,000 tonnes of ore to be crushed and dumped on a valley-fill heapleach pile every day. In year four, the mill and flotation circuits would come on line; at that point, throughput to the heap leach would drop to 35,000 tonnes daily while the mill would start churning through 53,400 tonnes a day.

With metallurgical recoveries of 81% for the mill-float circuit and 76% for the heap leach, Tower Hill expects to produce 504,000 oz. gold annually from Livengood. By the end of its 21-year lifespan, the operation would have recovered 10.6 million oz. gold from Money Knob.

To build the first stage of the project, which includes the heap-leach facilities and all supporting mine infrastructure, is expected to cost US$635 million. Once the heapleach operation is up and running, Tower Hill would then need to invest another US$750 million to build the sulphide processing circuit. Combined, the full operation requires an investment of almost US$1.4 billion.

For that investment, Tower Hill should be able to produce an ounce of gold for US$560. Using a gold price of US$950 per oz., the Livengood project carries a net present value (NPV) of US$813 million, using a 5% discount rate, and should generate a 15.4% internal rate of return (IRR). Boosting the price of gold to US$1,200 per oz. lifts the NPV to US$2.3 billion and the IRR to 32.5%.

Tower Hill says it will now investigate several possibilities to increase the project’s value. The company will look at increasing throughput rates to boost production and take better advantage of economies of scale, improving the mining sequence to reduce operational costs, and adding certainty to cost estimates to reduce to 25% contingency included in the cost prediction.

And Tower Hill is by no means finished exploring at Livengood. The Money Knob deposit remains open to the west, to the southeast, and at depth. The company’s current drill campaign is focused on expanding the higher-grade Southwest zone, confirming the inferred resource extrapolation at depth, and infilling the drill pattern to upgrade the small portions of the Main and Sunshine zones that are still only inferred.

The deposit currently covers 3 sq. km. The gold-in-soil anomaly that initially led Tower Hill to the deposit, however, stretches across 12 sq. km, of which only half has been drill tested.

Money Knob is hosted in a thrust-interleaved sequence of sedimentary and volcanic rocks. Gold is related to a 90-million-year-old dyke swarm that cuts through the thrust stack. The net result is broad, flat-lying zones of stratabound mineralization around more vertically-continuous, higher-grade core zones.

Tower Hill has already started work on a prefeasibility study for Livengood, with hydrological studies, facility location studies, geotechnical studies, and environmental baseline data collection underway. The company is also continuing with metallurgical test-work in hopes of further optimizing recoveries.

The project, which is home to 789 million indicated tonnes grading 0.62 gram gold plus 229 million inferred tonnes averaging 0.55 gram gold for 19.7 million oz. gold, is located 110 road km north of Fairbanks, along the paved Elliot Highway.

On news of the new PEA, Tower Hill’s share price gained 12¢ to close at $6.56. The company has a 52-week trading range of $3.12-$8.35 and 67 million shares outstanding.