Following the recent resolution of certain permitting matters, Royal Oak Mines (TSE) is free to proceed with construction of the Kemess gold-copper project in British Columbia.
The Project Approval Certificate (formerly known as the Mine Development Certificate) is now in hand, and Royal Oak expects the mine to be in production by April 1998.
The company has already completed roughly 30% of the project’s engineering, and purchase orders for long-delivery items (including the crusher, grinding mills and flotation cells) have already been placed.
Royal Oak will award construction contracts for the plant and infrastructure facilities in the near future, and construction is expected to begin in early June.
The capital cost of the planned 50,000-ton-per-day mine and mill is estimated at $390 million, including contingency and startup costs.
Roughly $166 million of the total cost will be funded by the government of British Columbia under the terms of an economic assistance and compensation package related to the province’s 1993 expropriation of the Windy Craggy project in northern British Columbia.
Royal Oak plans to fund the balance of the capital cost from existing cash in the treasury, future operating cash flow and debt.
Annual production from Kemess is projected at 213,000 oz. gold and 58 million lb. copper for a total of 450,000 gold-equivalent ounces. The cash cost of production is estimated at US$175 per gold-equivalent oz. based on a copper price of US$1 per lb.
Minable reserves at Kemess are estimated at 221 million tons grading 0.22% copper and 0.018 oz. gold per ton, giving the mine a 20-year life at planned production rates.
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