GoGold Resources (TSX: GGD; US-OTC: GLGDF) has released a preliminary economic assessment (PEA) for its Los Ricos North open-pit silver project in Jalisco state, Mexico, that forecasts an initial capital cost of US$221 million.
The study projects a 13-year mine life, an after-tax net present value of US$413 million (using a 5% discount rate) and an internal rate of return of 29%.
The PEA envisions total production of 68.9 million oz. of silver, 221,700 oz. of gold, 22.8 million lb. of copper 144.1 million lb. of lead, and 242.2 million lb. of zinc. The project should take 18 months to build. Provision is made for expansion capital of US$137 million and sustaining capital of US$6 million.
Average annual production is estimated at 8.8 million oz. silver-equivalent in years one through 12. About three-quarters of the ore will be mined from four open pits containing oxide mineralization, and the other one-quarter from a pit which contains only sulphide mineralization.
The PEA base case was completed using a price of US$23 per oz. for silver and US$1,800 per oz. for gold.
The indicated resource for Los Ricos North is 22.3 million tonnes at 1.66 grams gold equivalent per tonne (or 122 grams silver equivalent). The inferred resource is 20.5 million tonnes of 1.51 grams gold equivalent (111 grams silver equivalent).
The Los Ricos property has two areas of interest, one to the north and the other to the south. They are separated by about 25 km. An initial resource for Los Ricos South was announced in July 2020 and a PEA completed in January 2021.
GoGold’s stock lost nearly 7% to end the day at $1.60 on the news. The shares have traded between $1.37 and $2.71 over the past year.
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