With estimated resources up about 50% over those reported in an April 2000 prefeasibility study,
A preliminary economic assessment points to measured and indicated resources of 7.8 million tonnes grading 5.79 grams gold per tonne, plus an inferred resource of 5.9 million tonnes. The study pegs the optimum production rate at 4,700 tonnes per day from a combination of open-pit and underground methods (nearly double the 2,500 tonnes per day envisaged in the April study).
The higher production forecast is a reflection of the Vault zone, which was discovered late last year about 5 km northeast of the four near-surface gold deposits on the property. The Vault deposit hosts an inferred resource of 7.5 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.
“The higher production rate evaluated in this study generates substantial projected cash flows, even at today’s low gold prices,” says Cumberland Vice-President Kerry Curtis. “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 using seasonal road and barge access. Meadowbank would primarily operate as a conventional, bulk-tonnage, predominantly 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, with two satellite pits exploiting the Goose and Vault deposits. The plan includes costs for underground access and development of deeper resources at the Vault and Goose Island deposits.
Production is projected to be 246,000 oz. annually and amount to slightly more than 2 million oz. An 8-year mine life is envisioned, and life-of-mine total cash costs are pegged at US$168 per oz.
In October, initial metallurgical tests on the Vault 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 would produce a 92.4% gold recovery rate. 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. Also, 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 program aimed at 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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