Galleon Gold delivers West Cache PEA with $150M capex

Galleon Gold (TSXV: GGO) has delivered its first preliminary economic assessment, including an updated resource estimate, for its West Cache gold project near Timmins, Ontario. The PEA examines a 2,400-tonne-per-day underground mine with a mine life of 11 years and toll milling.

The project has a pre-production capital expenditure of $150 million. Average annual production would be 85,500 oz. of gold with an estimated 873,200 oz. recovered over the life of the mine. The all-in sustaining cost would be US$987 per ounce.

Using a gold price of US$1,700 per oz. and after taxes, West Cache has a net present value at a 5% discount rate of $240 million and an internal rate of return of 26.7%. The payback period would be 3.3 years.

Galleon is also considering building an onsite mill, but only gave pre-tax NVP ($368 million), IRR (24.5) and payback (3.7 years) numbers.

The updated underground resource estimate using a 1.6 grams gold per tonne cut-off grade, is 4 million indicated resources grading 3.63 grams gold per tonne for 472,000 contained oz. and 11.8 million inferred tonnes at 2.87 grams gold per tonne for 1.1 million contained ounces.

Only the underground resource is considered in the current PEA. The September 2021 43-101 report included a pit-constrained resource as well.

“I believe West Cache has the potential to extend the life-of-mine beyond the initial 11 years by expanding the mineral resource downdip and along strike,” said Galleon president and CEO R. David Russell. “Our primary exploration goal for 2022 is to add high-grade gold ounces and expand the mineral resource through surface drilling. In early to mid 2023, pending permits, we plan to commence underground test mining the high-grade zone #9 area.”

Zone #9 returned the following high-grade results during a 2020 drill campaign: 7.16 grams gold per tonne over  9.7 metres, including 14.75 grams gold over 3 metres; 5.87 grams gold over 8.5 metres, including 10.1 grams gold over 2 metres; 7.44 grams gold over 10.7 metres, including 10.19 grams  gold over 2.9 metres; 8.68 grams gold over 10 metres, including 12.04 grams  gold over 2 metres; and 8.25 grams gold over 9 metres, including 19.7 grams gold over 1 metre.

Galleon has held 100% of the West Cache project since the acquisition of Explor Resources in 2019. The company is planning a prefeasibility study.