Bluestone completes feasibility study for Cerro Blanco in Guatemala

Bluestone Resources (TSXV: BSR; US-OTC; BBSRF) has released a feasibility study for its Cerro Blanco Gold project in Guatemala, located 160 km southeast of Guatemala City. 

The study forecasts an open pit mine at the project will produce a total of 2.6 million oz. gold over a 14-year mine life, compared to 2.44 million oz. over an eleven year mine life outlined in last year’s preliminary economic assessment.  

Average annual gold production is expected to come in at 197,000 oz. at an all-in sustaining cost of US$629 per oz., compared with the PEA’s 231,000 ounces at AISCs of US$642 per ounce. 

Initial capex in the feasibility study came in at US$572 million, up from the PEA’s estimate of US$548 million. 

At a 5% discount rate, the project would generate a post-tax net present value of US$1.04 billion and a post-tax internal rate of return of 30%.  

“The feasibility study highlights some of the best economics for a gold project seen in recent studies and is a major milestone on the path to the development of the Cerro Blanco mine,” Jack Lundin, the company’s CEO, stated in a press release, adding that “the low-cost, robust nature of the deposit will generate significant free cash flow” of about US$2.35 billion over the life of mine. 

The 3,900-hectare Cerro Blanco project is a classic hot springs-related low-sulphidation epithermal gold-silver deposit comprising high-grade veins and low-grade disseminated mineralization, the company says.  

The company anticipates it will receive approval of its environmental permit amendment before the end of the year.  

Following the approval, the company plans to construct a 35 km-powerline and a new access road to advance the project to production.  

Cerro Blanco has measured and indicated resources of 63.54 million tonnes grading 1.5 grams gold per tonne and 6.6 grams silver per tonne for 3.08 million contained oz. of gold and 13.44 million oz. of silver. Inferred resources add 1.67 million tonnes grading 0.6 gram gold per tonne and 2.1 grams silver per tonne for 31,000 oz. gold and 112,000 oz. of silver. 

Kevin MacKenzie who covers the company for Canaccord Genuity, commented in a research note to clients that the feasibility study “not only highlights an increasingly optimized project, but also provides an improved foundation from which to now advance the project towards construction.” 

Kerry Smith who covers the company for Haywood Securities has recommended accumulating shares at current levels. 

“Cerro Blanco has transitioned from a high-grade underground project to an open pit project with a considerably larger production profile and very attractive economics. Annual average gold production more than doubles from the old feasibility study for an underground mine, the project NPV more than doubles, while AISC remains in the lowest decile of the industry,” he wrote in a research note to clients. 

“Permitting of the expanded project remains on track and is progressing per the established timeline developed in consultation with project stakeholders and government ministries,” wrote MacKenzie.  

At presstime in Toronto, Bluestone shares were trading at $2.24 within a 52-week trading range of $2.27 and $1.28. The company has 150.15 million common shares outstanding for a market cap of $336.35 million.