Amex posts ‘exceptional’ PEA for Perron gold project in Quebec

Amex Exploration (TSXV: AMX: US-OTC: AMXEF) stock jumped as much as 25¢ or 21% in trading this morning after posting what it called an ‘exceptional’ preliminary economic assessment (PEA) for its Perron gold project in Quebec.

The study outlines a 10-year open pit and underground mine that will produce 1 million oz. gold in total, and 124,000 oz. gold annually over its first five years. The initial capital cost is estimated at $229 million, plus sustaining costs of $230 million. 

The PEA gives the project a pre-tax internal rate of return of 59.5% and a net present value of $948 million (5% discount) with gold at US$2,000 per ounce. The all-in sustaining cost for Perron, near the town of Normetal, Que., is forecast at US$807 per ounce. The payback period is estimated at 1.5 years, based on pre-tax numbers. 

“This PEA marks an important milestone for Amex and reaffirms our view that our fully owned Perron project is a high-quality asset and has the potential of being a highly profitable stand-alone mining operation with minimal environmental impact,” Victor Cantore, Amex president and CEO, said in a release.  

While Amex stock rose 25¢ to $1.40 in early trading on the news, it closed at $1.17, down 3¢ on the day. The $150-million market cap stock has traded in a 52-week range of $1.05 to $2.08.

Cantore noted the study was based on data collected as of the end of June. Drilling outside of the defined resource has since returned high-grade results, he said.

“This successful additional drilling demonstrates the continuation of mineralization and the upside potential for further resource and mine life additions in the future as we progress exploration.” 

Amex is planning a mechanized underground mine, complemented by open pit production. An underground method of longitudinal longhole stoping with cement rockfill will be used.

Processing will occur at a rate of 1,750 tonnes per day. A gravity circuit will recover coarse gold before treatment in a carbon-in-leach (CIL) circuit followed by cyanide destruction. Tails will be thickened and stored in empty pits. Gold recovery is estimated to average 95% over the life of the mine. 

Construction of the mine and mill will take 18 months and employ 250 people, excluding contractors. A total of 164 permanent jobs will be created. 

Since the Perron gold project will have a production rate of less than 2,000 tonnes per day, it is not subject to an environmental impact assessment under provincial rules. Instead, Amex will apply for ministerial authorization.  However, the process demands hydrological studies, hydrogeological and geochemical analysis, as well as surface water, groundwater and other studies, plus wildlife inventories for certain species. 

Amex posted a resource in September of 4.3 million measured and indicated tonnes grading 4.28 grams gold per tonne for 594,100 oz. There are another 8.6 million inferred tonnes grading 3.8 grams gold for 1 million ounces. Numbers are for the combined open pit and underground material.