International Tower Hill Mines (ITH-T, THM-X) has updated its preliminary economic assessment of the Livengood deposit, about 110 km north of Fairbanks, Alaska, where drilling continues to expand the deposit. The company plans to complete a prefeasibility study by the middle of November.
The PEA demonstrated pre-tax cash flows of US$3.1 billion and a US$1.2-billion net present value at a 5% discount rate at a base gold price of US$1,100 per oz.
In addition, an updated resource estimate has expanded the surface mine mineralization to 933 million tonnes grading 0.55 gram gold per tonne for 16.5 million oz. contained gold at a cut-off grade of 0.22 gram gold per tonne, plus 257 million tonnes grading 0.50 gram gold for 4.1 million oz. gold in the inferred category.
Highlights of the PEA include a 14.1% internal rate of return and a payback period of 4.9 years at US$1,000 per oz. gold.
Initial capital costs have been set at US$1.61 billion, including US$323 million in contingency and owner costs. During the first five years of production the average cash cost has been estimated at US$557 per oz., with an average US$703 per oz. life-of-mine cash cost.
The processing rate would be 91,000 tonnes per day using conventional semi-autogenous-grinding and ball milling followed by gravity and flotation circuits for concentration and carbon-in-leach gold recovery. Average annual production during the first five years is estimated at 664,000 oz. gold. Over a 23-year life, the mine would produce about 562,000 oz. gold a year.
In the 2012 fiscal year that started on June 1, the company plans to drill 28,000 metres of infill and step-out holes to test expansion potential laterally and at depth. A 10,800-metre geotechnical drill program is also underway to determine locations for site facilities.
“The geometry of the currently defined shallowly dipping, outcropping deposit enables development of a large-scale, low-stripping-ratio mine capable of generating significant production economies of scale,” the company outlined in its news
release. “The surface gold geochemical anomaly at Livengood covers an area 10 km long by 2 km wide, of which approximately one quarter has been explored by drilling to date.”
Surface exploration is also underway as new targets are developed to the east and west of the known deposit.
At presstime in Toronto, International Tower Hill traded at $8.15 within a 52-week range of $6.07-10.49 per share.
In New York, International Tower Hill traded at US$8.27 within a 52-week range of US$5.77-10.49.
New York-based Dahlman Rose & Co. analyst Adam Graf believes the company’s U.S.-listed shares will increase by 261% from their Aug. 24 close of US$8 per share, to US$28.86 within the next 36 to 48 months.
His forecast and “buy” rating on the stock were in place before the company reported the updated PEA on Aug. 23.
“Positive project economics allow Livengood to increase its potential to becoming a solid gold producer in North America,” Graf said in a note to clients at the end of August. “We are in the process of adjusting our figures to incorporate new guidance.”
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