Alexis set for Q2 startup at Lac Herbin

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

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

The net present value (NPV) is $14.1 million, with preproduction capital costs of $6.7 million.

In the updated study, expected production is almost 30,000 oz. gold higher — Alexis now anticipates churning out 83,600 oz. annually over a mine life of three years. The feasibility originally outlined production for 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 operations that characterize the Val d’Or gold camp,” Rigg said in a statement.

Proven and probable reserves have increased by 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 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% (about $25.9 million) with an IRR of 164%. Preproduction capital costs are estimated at $7.1 million and sustaining capital costs total $13.4 million. Cash costs for this plan are a bit lower at US$460 per oz. gold.