Artemis Gold feasibility study outlines $645M initial capex for Blackwater in BC

Artemis Gold (TSXV: ARTG; US-OTC: ARGTF) has released a feasibility study for its Blackwater gold project, 150 km southwest of Prince George, B.C.

The numbers give it a net present value at a 5% discount rate of $2.15 billion after taxes, and a post-tax internal rate of return of 32%.

In the first five years of operation, Blackwater will produce 321,000 oz. of gold annually at an all-in sustaining cost of US$576 per ounce. Over the 22-year life of the mine, production will average 351,000 oz. of gold at an AISC of US$672 per ounce.

The project has an initial capital estimate of $645 million, but it will pay for itself in the first 2.3 years of production.

Artemis produced a prefeasibility study last year based on a staged approach that reduced the initial cost and improved the economics compared with a previous feasibility by New Gold (TSX: NGD).

The new study improves upon the earlier assumptions in several key ways. Blackwater will be developed in three phases. The first phase throughput has been increased 9% to 6 million tonnes per year. A commitment has also been made to replace diesel and propane-powered equipment during the first phase of development and reduce project’s carbon footprint.

The second and third phases of expansion will be streamlined and accelerated. Mineral processing plant capacity will be upped to 9 million tonnes per year in year five (phase 2) and 15 million tonnes per year in year ten (phase 3). The ultimate throughput for the mill will be 20 million tonnes per year with two processing trains, rather than three as suggested in the prefeasibility study.

The open pit plan has been optimized in the feasibility study and the average grade increased to 1.63 grams gold per tonne over the first five years of mining.

The feasibility resource estimate is virtually unchanged from the earlier study.

Using a cut-off grade of 0.2 gram gold-equivalent per tonne, measured and indicated resources stand at 596.8 million tonnes grading 0.61 gram gold per tonne and 6.4 grams silver per tonne for 11.7 million oz. of contained gold and 122.4 million oz. of silver. Inferred resources total 16.9 million tonnes grading 0.45 gram gold per tonne and 12.8 grams silver per tonne for 246,000 oz. of gold and 6.9 million oz. of silver.

“Artemis continued its track record of delivering project milestones as guided with the release of the Blackwater feasibility study that advances engineering of the project and continues to remove risk associated with the build,” Andrew Mikitchook, a mining analyst at BMO Capital Markets, commented in a research note. “The study largely mirrored the 2020 prefeasibility study, with some adjustments to the production profile adding ounces earlier in the mine life.”

Pierre Vaillancourt of Haywood Securities said the study delivered “solid economics” and puts the company “on track to have the project fully permitted and financed to start construction in 2Q22.”

“Economics remain compelling, even after incorporating higher initial development capital and ESG requirements,” he commented in a research note to clients. “Although the stock has declined 21% since July as a result of the weaker gold price environment, the company has executed well, and we believe the achievement of permitting, financing and construction milestones should help to re-rate the stock.”