Corvus sees ‘excellent growth potential’ at Bullfrog

Preliminary economic assessments (PEAs) on standalone operations at Corvus Gold’s (TSX: KOR; US-OTC: CORVF) North Bullfrog and Mother Lode projects in southwestern Nevada suggest potential for the junior to be the first producer in the Bullfrog mining district, from first developing ‘high margin’ North Bullfrog, with a potential second operation at Mother Lode.

At North Bullfrog, the latest mine design calls for a low strip ratio, 43,300-tonne-per-day run-of-mine heap leach operation, mining four deposits, with a grinding circuit for gravity gold recovery from higher-grade areas. The heap leach portion of the operation would generate an average of 80,290 oz. gold in the first seven years of operations, while the mill would churn out a further 66,710 oz. gold annually, for estimated total production of 147,000 oz. per year in the first seven years of the 14-year mine.

With all-in sustaining costs (AISCs) pegged at US$727 per oz. in the first seven years, an initial capital cost of US$167 million and based on a US$1,500 per oz. gold price, the after-tax net present value estimate for this operation comes in at US$452 million, at a 5% discount rate, with a 47% internal rate of return.

A separate early-stage study for Mother Lode, 10 km from North Bullfrog, outlines an eight-year, 19,600 tonne per day open pit mine, with a heap leach pad for the oxide mineralization and a biological oxidation mill for the higher-grade sulphide mineralization. This operation would generate an average of 49,700 oz. gold annually from the heap leach and a further 121,800 oz. per year from the mill, for a total average output of 170,980 oz. annually.

With AISCs of US$677 per oz. in the first three years and an initial capital cost of US$406 million, the after-tax net present value estimate for the development stands at US$303 million, at a 5% discount rate and based on US$1,500 per oz. gold, with a 23% internal rate of return.

According to the news releases, North Bullfrog is the “initial mine development target for Corvus because of its expected low initial capital requirements, potential high margins and anticipated strong free cash flow generation, that could provide development capital for the company’s potential second mining project at the Mother Lode deposit.”

Jeffery Pontius, the company’s president and CEO, noted the significance of Corvus’ projects within the Bullfrog district.

“The North Bullfrog PEA study has highlighted a reemergence of the Bullfrog gold district, and, with Corvus Gold’s commanding land position, we believe we have the district’s dominant asset base with excellent growth potential for our shareholders,” he stated in the news release.

The company said in a statement that Mother Lode (MLP) could “provide Corvus with a future production growth option to increase its gold production profile in the Bullfrog mining district beyond its initial mining project at North Bullfrog. MLP could position Corvus for expanding organic production growth and possible further district consolidation of other assets.”

The company plans to continue with resource expansion work and discovery drilling on priority targets at both North Bullfrog and Mother Lode through next year.

In addition to the PEAs, Corvus released updated pit-constrained resource estimates for both North Bullfrog and Mother Lode, estimated at US$1,500 per oz. gold.

North Bullfrog is host to 24.7 million measured and indicated tonnes in the milling category, at 1.31 grams gold per tonne and 8.6 grams silver per tonne, with a further 167.5 million tonnes, at 0.2 gram gold per tonne and 0.65 gram silver per tonne, in this classification designated for heap leach extraction. Inferred resources stand at 420,000 tonnes for mill processing, at 0.97 gram gold and 7.96 grams silver, with an additional 67.3 million inferred heap leach tonnes, at 0.19 gram gold and 0.55 gram silver.

At Mother Lode, measured and indicated resources for milling stand at 21 million tonnes, grading 1.49 grams gold and 0.6 gram silver, with an additional 39.3 tonnes in this category for heap leaching, at 0.44 gram gold and 0.78 gram silver. Inferred resources add 2.9 million tonnes of millable material, at 0.9 gram gold and 1.77 grams silver, with a further 7 million inferred tonnes for heap leaching, at 0.4 gram gold and 1.26 grams silver.

— This article first appeared in the Canadian Mining Journal, part of Glacier Resource Innovation Group.