P2 Gold (TSX-V: PGLD; US-OTC: PGLDF) shares jumped to a three-year high Tuesday after an updated preliminary economic assessment (PEA) for its Gabbs open-pit project in Nevada raised life-of-mine production as much as 20%.
Total estimated silver production is up 20.6% to 2.48 million oz. over last year’s PEA, while gold output rises 5.2% to 1.54 million oz. and copper up 12.1% to 213,000 tonnes. Mine life remains at 14.2 years. Gabbs is just south of the namesake town and about 515 km northwest of Las Vegas. It also sits on the gold and silver-rich Walker Lane trend that straddles the California-Nevada border.
“Life-of-mine production [increases are] a direct result of the improvement in metal process recoveries we’ve been able to achieve since the last PEA,” Joe Ovsenek, president and CEO of P2 said in a release. “Even using base case $2,350 gold, $29 silver and $4.50 copper, Gabbs would be a robust producer in Nevada, a top tier mining jurisdiction.”
While Gabbs is at a lower scale than other copper mines in Nevada – traditionally a gold hotspot – its mix of precious metals and copper gives it flexibility and aligns with industry and government trends favouring critical metals development.
Gold price momentum
The update was released the same day gold prices rose above $3,970 per oz., a historic high in a year when yellow metal prices have already broken numerous records.
71% value increase
The updated PEA also lifts the project’s post-tax net present value (at a 5% discount rate) 71.4% to $942.9 million and the internal rate of return by 11% to 33.8%.
Initial capital costs rise 4.7% to $382.7 million and the payback period has been cut to 2.4 years from three years, P2 said. Life-of-mine revenue rises 21.6% to $5.59 billion.
Gabbs hosts 49.8 million indicated tonnes grading 0.45 gram gold per tonne, 1.36 grams silver and 0.27% copper for 720,000 oz. contained gold, 2.17 million contained oz. silver and 297 million contained lb. copper.
Inferred resources total 112.2 million tonnes at 0.35 gram gold, 0.84 gram silver and 0.23% copper for 1.28 million oz. gold, 3 million oz. silver and 567.1 million lb. copper.
Staged heap leaching
The update leaves unchanged the mine plan which envisions an open pit and a staged heap leach and mill processing structure.
In the first, five-year stage oxide ores are to be heap leached and in the second, eight-year stage a hybrid heap leach and mill process is to be deployed. Higher-grade ore would be milled and lower grade would be heap leached.
P2 plans expansion and infill drilling to convert inferred resources to indicated as well as geotechnical drilling to refine pit wall angles and conditions for production plants.
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