With estimated resources up about 50% over those in an April 2000 prefeasibility study, Cumberland Resources (CBD-T) has received positive results from a preliminary economic assessment of the its Meadowbank gold project, 70 km north of Baker Lake in Nunavut.
Based on measured and indicated resources totalling 7.8 million tonnes grading 5.79 grams gold per tonne, plus another 5.9 million tonnes of inferred resources (about 41% of the total forecast — 10.9 million tonnes running 4.4 grams gold in the inferred category), the latest study pegs the optimum production rate at 4,700 tonnes per day from both open pit and underground designs. That’s nearly double the 2,500-tonne-per-day envisaged in the April study.
The boosted production rate is thanks to the addition of the Vault zone discovered late last year about 5 km northeast of the four near-surface gold deposits at Meadowbank. The Vault deposit hosts an inferred resource of 7.47 million tonnes grading 3.9 grams gold per tonne. Meadowbank’s remaining gold deposits are the Third Portage, North Portage, Bay Zone and Goose Island deposits.
Cumberland’s vice-president Kerry Curtis said, “The higher production rate evaluated in this study generates substantial projected cash flows – even at today’s low gold prices. We believe there are several opportunities including additional resources and capital cost savings through contract mining or selection of used equipment that will further improve the economics of the project.”
Similar to the prefeasibility study, the mine plan calls for year-round production, seasonal road and barge access. Meadowbank would primarily operate as a conventional, bulk-tonnage, open pit mine employing an owner operated fleet. The mining plan incorporates three pits; a single large pit would target the Third Portage and North Portage deposits while two satellite pits would operate on the Goose and Vault deposits. The plan also includes cost for underground access and development of deeper resources at the Vault and Goose Island deposits.
Running through an average of 1.7 million tonnes of ore per year, over 8.3 years, production would clip along at about 246,000 oz. annually and amount to slightly more than 2 million oz. over the mine’s lifespan. Life-of-mine total cash costs are pegged at US$168 per oz.
In October, initial metallurgical test work on the Vault gold deposit indicated a 92% recovery rate. Previous prefeasibility studies on the original four Meadowbank gold deposits concluded that initial gravity separation followed by flotation-concentration and on-site leaching produced 92.4% gold recovery rates. Metallurgical composites from the new Vault deposit have yielded average flotation gold recoveries of 87.1%. Using gravity-flotation processing the recovery rate jumps to 92.1%.
Based on a life-of-mine gold price of US$300 per oz. and discount rate of 5%, the project’s net present value is estimated at US$34.7 million. The internal rate of return (after tax) is 10.4% and the payback period comes in at 4.9 years.
When a gold price of US$275 per oz. is used at the same discount rate, the project’s net present value is more than halved to US$13.6 million. The internal rate of return slips to 7.2% and the payback period increases to 6.1 years.
Initial capital cost are estimated at $US123.5 million, with another US$13.2 million required for sustaining capital, assuming all new mining and processing equipment is used.
Looking ahead, Cumberland plans a $4.5-million, two-phase work program aimed at further improving the project’s economics by adding enough resources to support a 10-year mine plan. The company has also proposed a program of engineering and definition drilling to improve resource classification in preparation for a reserve estimation and a feasibility study.
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