Romarco: 128K oz. gold per year in Haile feasibility

Vancouver – As promised last fall Romarco Minerals (R-V, RTRAF-O) has bumped up the scale of a planned gold mine at the past-producing Haile project, 100-km northeast of Columbia, South Carolina.

In an September scoping study Romarco had outlined a 4,000-tonne-per-day operation with a six year mine-life. But now in its first feasibility study of Haile Romarco describes a 7,000-tonne-per-day open-pit project with an eight year mine-life as a base-case.

The new plan has the mine producing about 128,000 oz. gold per year instead of the 105,000 oz. gold per year Romarco estimated in its scoping study.

Romarco would crush ore in-pit and use conveyers to transport the grind to flotation. With costs of electricity at only 4¢ per kwh Romarco would go with electric conveyers over conventional trucks for haulage as it results in a substantial savings of $80-per-oz. gold.

To recover gold from there Romarco plans on using flotation, carbon-in-leach and dry-stack tailings.

All told capital costs of the base case scenario come in at $150 million, though Romarco president and CEO Diane Garett notes this figure may shrink in an updated feasibility study that takes into account recent decreases in commodity prices. Romarco expects to release the update in April.

Based on $750-per-oz. gold the net present value of the project (discounted at 5%) is $161 million and the internal rate of return is 24%.

Mining, which would begin in three separate but eventually coalescing open-pits, would remove about 19 million tonnes ore grading 2.2 grams gold per tonne over the life of the mine (for 1.3 million oz. gold).

Romarco expects cash operation costs to run around $260-per-oz. gold and total production costs (after-tax etc.) to hit $450.

Romarco’s “upside case” also outlined a 12-year mine producing about 128,000 oz. gold per year as in the base-case but showing slightly better total production costs of $395-per-oz. gold.

Romarco also says it could expand the operation with another 7,000-tonne-per-day circuit, although it does not shed details on the plan.

In terms of exploration the company is planning a 22,000-metre drill program in 2009 to test below 300 metres.

As for the company’s rapport with locals and state officials, Romarco says it has “tremendous support”.

It says state and municipal politicians have visited the mine and it notes in a corporate presentation that locals are job-hungry as the unemployment rate is 18% state-wide, apparently the highest rate in the U.S.

It says it has support for lower property taxes, 4% instead of 10%.

And Romarco also highlights one quirky fact; the largest nearby population is a state prison.

Romarco has about $6 million in cash and on news of the feasibility study its share price held even at 27.5¢. It has about 200 million shares outstanding.