International Tower Hill Mines (ITH-T, THM-X) has updated the preliminary economic assessment of its Livengood deposit, about 110 km north of Fairbanks in Alaska, where drilling continues to expand the deposit. The company plans to complete a prefeasibility study by the middle of November.
The PEA demonstrated pre-tax cash flows of US$3.1 billion and a US$1.2 billion net present value at a 5% discount rate at a base gold price of US$1,100 per oz.
In addition, an updated resource estimate has expanded the surface mine mineralization to 933 million tonnes grading 0.55 gram gold per tonne for 16.5 million ounces of contained gold at a cut-off grade of 0.22 gram gold per tonne, plus 257 million tonnes grading 0.50 gram gold for 4.1 million ounces of gold in the inferred category.
Highlights of the PEA included an internal rate of return of 14.1% and a payback period of 4.9 years at US$1,000 per oz. gold. Initial capital costs have been set at US$1.61 billion, including US$323 million in contingency and owner costs. During the first five years of production the average cash cost has been estimated at US$557 per oz, with an average life-of-mine cash cost of US$703 per oz.
The processing rate would be 91,000 tonnes per day using conventional SAG and ball milling followed by gravity and flotation circuits for concentration and CIL recovery of gold. Average annual production during the first five years is estimated at about 664,000 ounces of gold. Over the 23-year life of the mine it would produce about 562,000 ounces of gold a year.
In the 2012 fiscal year that started on June 1, the company plans to drill 28,000 metres (infill and step-out holes) to test expansion potential laterally and at depth. In addition, a 10,800 metre geotechnical drill program is underway to determine locations for site facilities.
“The geometry of the currently defined shallowly dipping, outcropping deposit enables development of a large-scale, low stripping ratio mine capable of generating significant production economies of scale,” the company outlined in its news release. “The surface gold geochemical anomaly at Livengood covers an area of 10 kilometres long by 2 kilometres wide, of which approximately one quarter has been explored by drilling to date.”
Surface exploration is also underway as new targets are developed to the east and west of the known deposit.
At presstime in Toronto International Tower Hill was trading at $8.15 within a 52-week range of $6.07-10.49 per share.
In New York International Tower Hill was trading at US$8.27 within a 52-week range of US$5.77-10.49.
New York-based Dahlman Rose & Co. analyst Adam Graf believes the company’s U.S.-listed shares will increase by 260.8% from their Aug. 24 close of US$8.00 per share to US$28.86 within the next 36 to 48 months.
That forecast and his buy rating on the stock were in place before the company reported the updated PEA on Aug. 23.
“Positive project economics allows Livengood to increase its potential to becoming a solid gold producer in North America,” Graf wrote in a note to clients this morning. “We are in the process of adjusting our figures to incorporate new guidance.”
Be the first to comment on "International Tower Hill updates PEA"