Alexis looks past Lac Herbin feasibility

With a recent feasibility study, Alexis Minerals (AMC-V, AXSMF-O) has been given the go-ahead for 18 months of gold production at Lac Herbin, a past-producing gold mine in Quebec’s Val d’Or camp, but the company is planning beyond a year-and-a-half timeframe.

Alexis president and CEO David Rigg describes Lac Herbin as “not (National Instrument) 43-101-able.” By this he means that the complexity of the deposit has been a challenge in building the resource.

Even the feasibility study points out that low resources and long mine lives have been a standard for many mines in the area.

According to the study, Lac Herbin is economical and could produce up to 40,000 oz. gold per year with an estimated cash cost of US$389 per oz. with an internal rate of return of 48%.

“If I could look into my crystal ball over the long term of this deposit. . . I’ll be looking to prove over a million ounces,” Rigg said in a recent conference call.

The company was also recently given conditional approval to list on the Toronto Stock Exchange in an attempt to become more visible to investors in Europe and North America.

Alexis needs $6.5 million for capital costs for the Lac Herbin project, which would generate a net cash flow of $5.8 million with a 15-month payback period.

The company plans to start production in January at a rate of 640 tonnes per day, five days a week at the 1,400-tonne-per-day Aurbel mill.

A 4-year production model was also done to demonstrate the upside potential from ongoing delineation of inferred resources. Under the 4-year model, annual production would be maintained at 40,000 oz. per year at a cash cost of US$394 per oz. with a net cash flow of $20 million and an IRR of 78%.

The numbers used in the study did not include a series of impressive drill results from the 2007 drill program that doubled the company’s share price earlier this year. Only figures up to the end of 2006 were used.

Rigg says the company wanted to get some updated information out to the market so it could start production while expanding resources.

Current measured resources are 34,600 tonnes grading 8.02 grams gold per tonne with 460,000 indicated tonnes averaging 7.81 grams and a total of 125,000 oz. gold. The inferred resource is 678,000 tonnes grading 7.69 grams gold per tonne for a total of 167,000 oz. gold.

Alexis will mine using a main ramp to access the levels and local smaller secondary ramp to access sub-levels.

The company has three diamond drills in action with plans to do another bulk sample by the end of the year to gather more information about the deposit. So far, it shows similarities to other vein-type deposits in the Val d’Or area. It contains multiple mineralized zones showing strong vertical and horizontal extensions.