Goliath looks good to Treasury

Treasury Metals (TML-T) has a mine on its hands.

According to a preliminary economic assessment the company’s wholly owned, flagship project, Goliath, can, even at this relatively early stage, supply a modest return on investment.

Using a US$850 per oz gold price the after-tax net present value (NPV) for the project came in at $23 million and the internal rate of return (IRR) came in at 15%. A discount rate of 5% was used in those calculations. The payback period was calculated as being four years.

“This initial analysis of the Thunder Lake gold deposit, which only contemplates about 50% of the current contained ounces, already demonstrates its economic potential and provides us with the parameters necessary to develop the project and increase its economic profile,” Scott Jobin-Bevans, Treasury’s president and chief executive said in a statement.

The study was done by A.C.A. Howe International Limited and considers surface and underground mines with stand-alone milling complex at the site which sits 20-km east of Dryden in northwestern Ontario.

A future mine could produce an average of 48,000 oz. of gold per year and 390,000 oz of gold over 8.5 years at a production. It would reach those levels by milling 1,500 tonnes of ore per day.

The study says it would cost Treasury $76 million to build the mine, with life of mine capex climbing to $117 million.

With the positive results, Treasury says it will push on towards feasibility. It says it has already begun infill drilling to upgrade inferred resources to indicated resources.

It will also look to expand the surface and underground resources along strike to the west and northeast of the deposit where we have seen excellent historical high-grade intercepts.

“We will also continue to target the potential high-grade underground resources below 800 metres depth where our recent drilling has shown excellent potential,” Jobin-Bevans said.

Surface and underground indicated resources for the project stand at 3.4 million tonnes grading of 2.5 grams gold for 270,000 oz. while inferred resources total 10.6 million tonnes grading of 2.7 grams gold for 930,000 oz. of gold.

Those numbers were arrived at using a cut-off grade of 0.5 grams gold per tonne for surface resources, which are defined as less than 100 metres deep, and 2 grams gold per tonne for underground resources.

The estimate doesn’t include results from the 10,000 metres of drilling done so far this year.

In Toronto on July 14 the company’s shares were off a penny to 34¢ on 32,000 shares traded. They had, however, run up 6¢ the day previous, closing at 35¢.