Acadian Gold looks at Scotia startup

Acadian Gold (ADA-V) is hoping to move to early production at the Scotia Zinc project near Gays River, N.S., after receiving results of a recent feasibility study.

The project, which Acadia acquired from HudBay Minerals (HBM-T) in June for $7.5 million, already has a mill, which would need to be refurbished. Some permits must be updated but the only other physical work needed before open-pit mining could start is pre-stripping.

The study, by Halifax-based consulting firm MineTech International, calculated a reserve of 4.6 million tonnes grading 3.6% zinc and 1.7% lead, within a measured and indicated resource of 5.2 million tonnes at an average 4.1% zinc and 2% lead. Another 1.8 million tonnes is inferred, at grades of 3.1% zinc and 1.1% lead.

The deposit, hosted in carbonate rocks, has a near-surface zone where open pit mining is planned, and a moderately dipping deeper zone that could be mined from underground starting in the sixth year of mining. The underground mine would have decline access rather than a shaft.

The property has a 1,350-tonne-per-day mill, which in previous operation handled daily throughputs of up to 2,000 tonnes. About $11.9 million, including a $6-million contingency provision, will be needed to refurbish the mill and bring the project into production.

Cash production costs are expected to be around US34 per lb. (US$750 per tonne) zinc. The project would produce 18,000 tonnes zinc and 7,500 tonnes lead annually.

Cash flow models show a net present value of $74 million at an 8% discount rate, with an internal rate of return of 76%. That model assumed prices of US$2,430 per tonne (US$1.10 per lb.) for zinc and US$880 per tonne (US40 per lb.) for lead.