Positive economics for Midas’ Golden Meadows

Midas Gold (MAX-T) has outlined a positive preliminary economic assessment (PEA) for its Golden Meadows project in Idaho, 153 km northeast of Boise, the state capital.

“It’s a very mining friendly jurisdiction,” says Stephen Quin, Midas’ president and CEO, on a conference call.

In the north lies the Coeur d’Alene district, which hosts silver-lead-zinc mineralization and an extensive production history. In the southeast, there’s a phosphate mining district with large-scale operations. In the centre, there’s a copper-gold-molybdenum belt, where the Golden Meadows property is located, says Quin.

The primarily gold property has been mined from surface and underground for nearly 100 years and has seen noticeable disturbance and environmental impact, states Quin, noting the PEA has studied options to reduce effects of its proposed mining activities and to leave the site with better fisheries and wetlands.

The study envisages using conventional open-pit methods to mine the three deposits –Yellow Pine, Hangar Flats and West End – all lying within 3 km of each other.

The deposits contain gold resources with zones of antimony and silver mineralization. Midas is considering employing different metallurgical processes to treat the deposits’ oxide and sulphide mineralization that would feed a 20,000-tonne-per-day plant.

The oxide material is amenable to milling, followed by vat leaching to extract gold and silver only. The study recommends treating the milled sulphide mineralization with sequential flotation to generate two products: an antimony concentrate that would be shipped to a third-party smelter and a gold concentrate that would be further processed to produce gold-silver doré.  

“The bottom-line is, it’s a 20,000-tonne-a-day operation, with a single circuit gyratory-SAG-ball mill, with floatation of sulphides producing when the [antimony] grade is high enough, an antimony concentrate first, and for the entire life of the project a gold floatation concentrate,” Quin explains on the call. “The antimony will be shipped off site, and the gold concentrate will be processed on site with a concentrate only autoclave facility.”  

The cost to take Golden Meadows into production is US$1.18 billion, including initial capital costs of US$879 million and US$303 million in sustaining capital.

The PEA envisions recovering 101 million tonnes grading 1.72 grams gold and 0.08% antimony to produce on average 348,000 oz. gold and 6.4 million lbs. antimony per year throughout the mine’s 14.2-year life.

Life of mine cash costs come in at US$425 per gold oz. net of byproduct credits.

However, during the first eight years, the company expects to see higher annual production and lower cash costs as it plans to mine the larger and higher-grade Yellow Pine deposit first.

Explaining the mining sequence, Quin says, the Yellow Pine ore would be mined first because it presents the highest grade, lowest strip ratio, and the best metallurgy, plus the highest byproduct credits out of the three deposits.

Sulphide gold grades average 1.65 grams gold at Yellow Pine, 1.61 grams gold at Hanger Flats and 1.44 grams at West End.

Midas plans to process some ore from Hanger Flats in years 3 to 5, but will defer mining most of that deposit until the last two to three years because it has the highest strip ratio, notes Quin. The majority of West End, the lowest-grade deposit, would be mined towards the tail end, from years 9 to 13.

Using a 5% discount rate and US$1,400 gold price, Golden Meadows has a post-tax net present value of US$1.48 billion and internal rate of return of 27.2%, with payback expected within 3 years.

The project will also largely benefit the local community, says Quin, adding the company is already Valley County’s largest private employer.

“The PEA really illustrates the importance of this project to the local area which is two of the highest unemployment counties in Idaho, Valley County and neighbouring Adams County,” says Quin, adding both have jobless rates hitting nearly 17%.

The proposed mine should create 400 direct jobs over its 14-year life. Once up and running, Golden Meadows is anticipated to generate US$1.2 billion in taxes. “This is a very significant project on an Idaho-scale,” comments Quin.

Midas aims to update the project’s resource early next year, before putting out an updated PEA or a prefeasibility study.

Whatever the document ends up being, says Quin, it should support the start of the permitting process in the latter half of next year. 

The company estimates that it will require over 50 permits before it can get the show on the road.

On the PEA news, Midas gained 5% to close Sept. 5 at $3 apiece.