US Gold (UXG-T, UXG-X) has completed a preliminary economic assessment on its Gold Bar project in Eureka County, Nev., that looks at producing 57,000 oz. gold per year from an open-pit mine and heap-leach operation over six years.
Cash costs are estimated at US$557 per oz. The pre-tax net present value (NPV) of the project is US$28.1 million when gold is US$850 per oz. and using a 6% discount rate. The internal rate of return (IRR) is 21%.
The company points out that using today’s gold price of US$1,150 per oz., the NPV would be US$104.8 million and the IRR would be 60%.
To build the mine, it would cost US$38.2 million initially, but over the life of the operation its capital costs amount to US$47.3 million. The payback period for those costs would be 4.7 years with gold at US$850 per oz.
US Gold would hire a contract miner to reduce capital expenditures.
The mine plan looks at extracting 13.1 million tonnes of ore grading an average of 1 gram gold per tonne — a total of 421,000 oz. gold overall.
The PEA used a resource estimate that was updated at the end of March this year.
Measured and indicated resources stand at 33.5 million tonnes grading 0.91 gram gold per tonne for 975,000 oz. gold.
Inferred resources stand at 1.3 million tonnes grading 0.54 gram gold.
US Gold says that the preliminary economic assessment (PEA), done by Telesto Nevada, does not consider many important engineering and regulatory factors and that further study is needed to make a production decision.
These factors will be looked at in a prefeasibility study, which US Gold is starting but hasn’t set a goal for completion yet.
The company plans to continue with exploration this year to expand current resources and find new zones of mineralization on the property.
US Gold has set an objective to do enough exploration work to increase the mine life at Gold Bar from six to eight years.
The project is located in the Battle Mountain-Eureka-Cortez gold trend in central Nevada.
US Gold is also working on the El Gallo silver project in Sinaloa state, Mexico. The company plans to complete a resource estimate and prefeasibility study by the end of 2010.
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