Alexis improves Lac Herbin plan for Q2 start-up

After a bulk sample, updated resource and a revised feasibility study, Alexis Minerals (AMC-T) has decided to start commercial production at the Lac Herbin gold mine in Val d’Or by the second quarter.

The revised feasibility study gives the project an internal rate of return of 238%, up from 58% in the initial study that came out in August.

The net present value is $14.1 million with preproduction capital costs of $6.7 million.

Alexis expects to produce almost 30,000 oz. of gold more now at 83,600 oz. over three years instead of 18 months. The company plans to produce 27,000 oz. gold this year and 40,000 oz. gold thereafter at a cash cost of US$472 per oz.

A higher gold price was used in the updated study of US$850 per oz. for 2008 and 2009 and US$750 per oz. over the long term along with a revised exchange rate putting the Canadian and U.S. dollars at par.

Alexis president and CEO, David Rigg, has expectations for the project beyond the initial three years.

“The long term exploration potential is excellent and we expect the deposit to be typical of the larger and longer term operatiosn that characterize the Val d’Or gold camp,” Rigg said in a statement.

Proven and probable reserves have increased 52% to 364,000 tonnes grading 7.33 grams gold per tonne for almost 84,000 oz. gold.

Measured and indicated resources stand at 114,000 oz. gold while inferred resources total about 79,000 oz. gold.

With plans to drill 40,000 metres to 50,000 metres this year, the company has four drill rigs going right now with a fifth to be added in the second quarter.

Over the long term plan, the project has an NPV of 7%, equal to about $25.9 million with an IRR of 164%. Preproduction capital expenditures are expected to be $7.1 million and sustaining capital totals $13.4 million. Cash costs for this plan are a bit lower at US$460 per oz. gold.