Midway pushes Pan to feasibility

Midway Gold‘s (MDW-V, MDW-X) feasibility study for its Pan gold project in White Pine Cty., Nev., shows it’s viable to build at various gold prices.

At a gold price of US$1,200 per oz., the project has a net present value (NPV) of US$123 million, which blooms to US$344 million if gold is at US$1,900 per oz.

The internal rate of return (IRR) jumps from 32% to 79% and estimated payback drops from 2.5 years to 1.2 years, using the same price range. Both scenarios where calculated at a 5% discount and are after taxes.

The project even appears favourable at current gold prices. Using a gold price of US$1,725 per oz., Pan’s NPV is US$290 million and IRR is at 67%, with a payback of under a year and a half.

Gold is currently trading at US$1,775 per oz., down US$5 from yesterday’s close in New York.

Midway describes Pan as a bulk-tonnage, Carlin-style, sediment-hosted deposit with straightforward metallurgy. Situated 35 km southeast of Eureka and 80 km west of Ely, Pan is in the south end of the Battle Mountain-Eureka gold trend. It hosts three pits – South, North and Central – that are amenable to heap leaching.

The study, prepared by Gustavson Associates, shows the project boasts a start-up cost of US$99 million. That capex includes $8.2 million in working capital and a US$6.8-million contingency.  

Midway estimates that Pan could process 17,000 short tons a day for more than 8 years. With gold recoveries predicted at 75%, annual production should come at around 81,000 oz. gold. Operating cost to produce an ounce is US$585. That increases to US$842 per oz., if capital costs are included.

The costs are a bit higher than estimated in the prefeasibility study this April. Using a base-case price of US$1,050 per oz., it had pegged capital costs at US$79.25 million, including a 15% contingency. Total production costs came at US$666 per oz.

However, the feasibility study forecasts a higher annual production and better recoveries. 

Pan currently has proven and probable reserves of 48.3 million tonnes grading 0.56 gram gold per tonne for 864,000 oz. gold. When the measured and indicated category is included, the ounces equal 1.13 million, from 80 million tonnes grading 0.44 gram gold. (The company reports its resources inclusive of reserves.)

Going forward, Midway expects to complete 14,000 metres next year to further delineate the 39.6-sq.-km project. 

Mineralization at North Pan is open at depth and to the north, while South Pan remains open at depth and to the south and east.    

At presstime, Midway shares were flat at $2.08.