Toronto-based Central Crude (TSE) is working on an alternate mining plan for the Eagle River gold project following a recommendation from joint venture partner Hemlo Gold Mines (TSE) that production at the site be postponed. Although results of a final feasibility study suggest the property,in the Mishibishu Lake area near Wawa, Ont., could be mined profitably at current gold prices, thestudy recommends that production be deferred until costs are reduced and gold prices improve. While the study is based on a production rate of 700-800 tons per day, Central Crude President Richard Nemis says that by mining higher-grade ore at a lower rate, costs could be reduced enough to warrant production. Alternatively, the companies could wait for an improvement in gold prices to sell part of the production forward, he said. John Harvey, president of Hemlo Gold, could not be reached for comment.
At an estimated capital cost of $21.5 million, the project’s rate of return for a 700-ton-per-day operation ranges from 18.2% to 40.5%as the price of gold ranges from US$375 to US$425, the study suggests. Estimated production costs were not released.
Proven and probable reserves at Eagle River were recently upgraded to 2.24 million tons averaging0.25 oz. gold per ton, cut and fully diluted.
If a positive production decision is made, the feasibility study indicates that the Eagle River orecould be shipped to Hemlo’s Golden Giant mill.
Hemlo Gold holds a 60% stake in Eagle River, while Central Crude owns the remaining 40%.
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