Twin’s Atlanta profitable, says study

A final feasibility study on the Atlanta gold project, 60 miles east of Boise, Idaho, indicates the deposit is profitable as an open-pit mine and heap-leach operation.

“There are not that many companies that make the move from being an explorer. . . . That’s a real exciting moment for us,” says Hermann Derbuch, president of owner Twin Mining (TWG-T).

Twin commissioned Denver-based consulting firm Behre Dolbear for the study, which was based on resource drilling done by previous operators and a 2002 drill program done by Twin for metallurgical samples. The database depends on just over 200,000 ft. of drilling.

Behre Dolbear concluded there is a minable reserve of 13.7 million tons grading 0.06 oz. per ton at Atlanta, in two pits exploiting the Monarch and Idaho mineralized zones. Monarch, with a measured and indicated resource of 15.8 million tons grading 0.06 oz. gold and 0.16 oz. silver per ton, makes an open pit with proven and probable reserves of 8 million tons at an average grade of 0.07 oz. gold and 0.23 oz. silver.

The Idaho deposit has a measured and indicated resource of 12.1 million tons grading 0.04 oz. gold and 0.07 oz. silver, which converts to a minable reserve of 5.7 million tons at average grades of 0.04 oz. gold and 0.08 oz. silver per ton.

Taken together, the pits have a waste-to-ore ratio of nearly 3.5 and a mine life of five and a half years. During that time, 95,000 oz. gold and 200,000 oz. silver are expected to be produced, with gold production averaging 110,000 oz. in the first three full years of production.

Assuming the project’s environmental impact study is complete by mid-2005, production would start around the end of that year. To date, the U.S. Forest Service, which is the lead regulatory agency for the project, has had no significant objection to production plans.

Inferred resources of 11.4 million tons grading 0.04 oz. gold and 0.09 oz. silver per tonne at Monarch, and 5.3 million tons grading 0.03 oz. gold and 0.05 oz. silver at Idaho, were not included in the reserve. Conversion of some of these inferred resources near the bottom of the two pits is expected to extend the mine life.

Two other mineralized zones, Tahoma and East Extension, have inferred resources that potentially could provide more ore once the mine is in production.

The assumed mine design is for the two pits to feed a leach-pad operation with conventional cyanide heap leaching. Metallurgical testing showed average recoveries of 64% with little difference in recovery between Monarch and Idaho mineralization. Silver recoveries are expected to be around 50%.

Behre Dolbear has estimated the total production cost at US$188 per oz., including royalties. That incorporates pit-to-pad costs of US$1.90 per ton, plus processing costs of US$1.66 and administrative costs of US$1.02. Adding waste stripping costs, the tab comes to US$6.89 per ton of ore.

The study puts capital costs at US$28.6 million, plus US$9.4 million in sustaining capital. The operation would pay back capital in just over two years at current metal prices. Using the feasibility study’s base case, US$375-per-oz. gold and US$6-per-oz. silver, the payback period is 2.6 years and the project’s internal rate of return is 24.6%.

Twin has a 100% operating interest in the property. Two private companies, Monarch Greenback and Canadian American Mining, have a total 2.5% net smelter return, which accelerates slightly at higher gold prices. At the current gold price of US$425 per oz., the royalty is 3.1%.