A recently completed preliminary economic evaluation concludes that the Lac Herbin gold deposit, 10 km east of Val d’Or, Que., can economically support a small underground operation for owner Alexis Minerals (AMC-V).
The study envisages mining at the daily rate of 500 tonnes to annually produce about 35,000 oz. of gold at a cash cost of US$224 per oz. over 5.3 years.
The study is based on a diluted inferred resource totalling 960,000 tonnes averaging 6.3 grams gold per tonne, for about 194,450 contained oz. of gold. The estimate includes a 30-metre crown pillar, 21% waste rock dilution, and a mining recovery factor of 90%.
Contractor Ross-Finlay also says that there is "good potential for further resource expansion.” Total inferred resources at Lac Herbin amount to just shy of 1.1 million tonnes running 7.3 grams gold.
The project’s total capital costs are pegged at $14.9 million, with about $9.5 million going toward underground exploratory development and bulk sampling, and $4.9 million for 12 months worth of pre-production work. Ongoing underground development costs are figured at $2.2 million per year; annual overhead costs are estimated at $1.9 million. Excluded are provisions for environmental reclamation and Quebec tax refunds (up to 47%), which may result from underground exploration expenditures.
The cost estimates assume that ore from Lac Herbin will be processed 1 km away at the dormant, 1,400-tonne-per-day Aurbel mill, which Alexis has an option to acquire.
Based on a gold price of US$400 per oz. and a Canadian-U.S.-dollar exchange rate of 1.33, the operation is projected to generate a pre-tax internal rate of return of 29%.
“What makes the project particularly attractive is the short lead time for start up and the low capital because an existing fully permitted plant and tailings facility is already at the site," said Alexis CEO David Rigg in a prepared statement.
Looking ahead, Alexis plans to develop a ramp from an existing portal developed in 1996. The ramp will allow for level development, delineation drilling and bulk sampling for metallurgical work. Also planned is a 2,000-metre surface drilling campaign aimed at providing geotechnical data.
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