O3 Mining prefeasibility outlines 10-year mine life, $435M capex for Marban gold project

O3 Mining (TSXV: OIII; US-OTC: OIIIF) has completed a prefeasibility study for its 100% owned Marban gold project, demonstrating its potential to become the next gold producer in the mining region of Val-d’Or, Que.

The study showed robust project economics including a post-tax net present value (at 5% discount rate) of $463 million and post-tax unlevered internal rate of return of 23.2%. The report assumes a long-term gold price of US$1,700 per oz., and an exchange rate of $1 to US77¢.

It also showed an increased production profile, from 115,000 oz. of gold as shown in the 2020 preliminary economic assessment to 161,000 oz. This is supported by a 50% increase in mill throughput, a 15% increase in peak mine rate, a lower cut-off grade of 0.3 gram gold per tonne, a lower strip ratio of 5.1 and increased mill gold recovery.

Initial capital spending is estimated at $435 million and includes mine pre-production, processing and infrastructure such as roads, power distribution, a tailings facility, ancillary buildings and water management. The capital intensity ratio (NPV/capex) is 1.1 per dollar invested.

The prefeasibility indicated a competitive all-in-sustaining cost of US$882 per oz., for a post-tax payback of 3.5 years with $760 million of free cash flow over a 10-year mine life.

“We are pleased with the results of our [prefeasibility] for the Marban Engineering project, which demonstrates the potential to be the next gold producer in the Abitibi region in Val-d’Or, Que., the next step in delivering on our promise to be in production by 2026,” said O3 Mining president and CEO Jose Vizquerra.

“With robust economics, Marban has shown itself to be a profitable standalone project,” Vizquerra said, adding that the study was a “key achievement” in an inflationary environment in which mining companies are seeing higher cost increases. 

The Marban project is located between the cities of Malartic and Val-d’Or in the Abitibi gold district of Quebec. The project area contains six past-producing mines, which collectively produced 585,000 oz. of gold between 1959 and 1992. O3 Mining’s land package, in the heart of these mining camps, covers 125 sq. km. and is located 12 km from the Canadian Malartic mine and along the same shear structure as Wesdome Gold Mines‘ (TSX: WDO; US-OTC: WDOFF)’s Kiena deposit.

Earlier this year, O3 updated the Marban resource using results of more than 500,000 metres of drilling, highlighting a total of 67.7 million tonnes in measured and indicated resources at an average gold grade of 1.09 gram gold per tonne for 2.4 million oz. of contained gold.

O3 shares were trading at $1.28 as of noon on Monday in Toronto. They have traded in a 52-week window of $1.36 and $2.53. It has a market cap of $87.6 million.