First blush numbers look good for Tyhee

Tyhee Development’s (TDC-V, TYHJF-O) Yellowknife gold project in the Northwest Territories should post a pre-tax internal rate of return of 21.3% and a pre-tax net present value (NPV) of US$145 million, the company says. The numbers were calculated based on a gold price of US$750 per oz. and a discount rate of 5%.

On an undiscounted basis, the NPV would be closer to US$236 million and at a base case gold price of US$900 per oz. gold, the NPV jumps to US$416 million, the company’s president and chief executive, Dave Webb, said in an interview.

The proposed combined open-pit and underground operation — at 3,000 tonnes per day — will recover an average of 165,000 oz. gold a year for the first seven years for a total of 1.15 million oz. gold.

Average operating costs should come in at about US$384 per oz. gold and initial capital costs, including a 30% contingency, are estimated to come in at about US$150 million, according to a preliminary assessment. Another US$26 million will be needed throughout the life of the mine as sustaining capital, the report found.

The preliminary assessment was calculated on the basis of a combined open-pit and underground operation at both the Ormsby and Nicholas Lake deposits with a central processing facility at Ormsby. It did not take into account the 80,000-oz. inferred gold resource at Tyhee’s Bruce Lake property, 50 metres north of the Ormsby zone.

Tyhee’s 100%-owned Yellowknife gold project hosts a measured and indicated resource of 11.2 million tonnes grading 3.52 grams gold per tonne for a total of 1.27 million contained ounces gold. It also has an inferred resource of 3.6 million tonnes grading 3.21 grams gold for 374,000 oz.

About 2 million tonnes of ore grading 3.08 grams gold would be extracted from the Ormsby pit, with an overall strip ratio of 5.9. The Nicholas Lake open pit would yield 470,000 tonnes grading 4.11 grams gold with an overall strip ratio of 6.26.

Underground operations, using a 2.5-gram gold cutoff, would extract 3.8 million tonnes grading 5.5 grams gold per tonne from the Ormsby zone and 1.4 million tonnes grading 6.16 grams gold from Nicholas Lake.

The project is made up of 66 sq. km of mining leases about 90 km north of Yellowknife.

According to the company’s web-site, the Ormsby deposit has been developed with 959 metres of decline, two subdrifts along mineralized zones, including 6,800 tonnes of stockpiled ore on surface. A total of 81,372 metres of core has been drilled, both surface and underground.

Development of the Nicholas Lake deposit consists of a decline and subdrifts in the A-2 Vein and A- 6 Zone at about 90 metres below surface. Mineralized rock from the subdrifts are stockpiled on surface. A total of 15,374 metres of drill core in 71 drill holes has been drilled from surface.

The Vancouver-based junior recently traded at about 40.5 a share and has traded between 32 and 82 over the last year.

Webb notes that at 40.5 a share and roughly 170 million shares outstanding, Tyhee’s market cap is about $70 million, roughly half the US$145 million discounted NPV estimate for its Yellowknife project.

“It all looks quite positive except for the markets,” Webb says. “In this market, nothing will move the stock. The financial markets are collapsing, banks in Canada and the U. S. are at decade lows. The market sucks and whatever we say isn’t going to change anything. . . All we can do is find more gold.”

Webb is confident that Tyhee’s exploration properties will lead them to even more of the precious metal.

“We’ve been publishing some really hot numbers from Clan Lake,” he says of the deposit, 33 km southwest of the Ormsby zone.

Results from Clan Lake include 78.8 metres grading 1.94 grams gold per tonne, including 33 metres of 4.39 grams gold and 21.5 metres of 10.39 grams gold at shallow depths.

At Goodwin Lake, 13 km southwest of the Ormsby zone, Webb notes that results have included 24.8 metres of 0.755 gram gold 6.6 metres of 6.42 grams gold, indicating the existence of both large, low-grade domains, as well as moderate- width high-grade zones.