US Gold ( UXG-T, UXG-X) has completed a preliminary economic assessment on its Gold Bar project in Eureka county, Nevada, that looks at producing 57,000 oz. gold per year from an open pit mine and heap leach operation over a period of six years.
Cash costs are estimated at US$557 per oz. The pretax net present value of the project is US$28.1 million when gold is US$850 per oz. and using a 6% discount rate. The internal rate of return is 21%.
The company points out that using today’s gold price of US$1,150 per oz., the NPV would be US$104.8 million and the IRR would be 60%.
To construct the project it would cost US$38.2 million initially but over the life of the operation it capital costs amount to US$47.3 million. The pay-back period for those costs would be 4.7 million with gold at US$850 per oz.
US Gold would hire a contract miner to reduce capital expenditures.
The mine plan looks at extracting 13.1 million tonnes of ore grading an average of 1 gram gold per tonne – a total of 421,000 oz. gold overall.
The PEA used a resource estimate that was updated at the end of March this year.
Measured and indicated resources stand at 33.5 million tonnes grading 0.91 gram gold per tonne for 975,000 oz. gold.
Inferred resources stand at 1.3 million tonnes grading 0.54 gram gold per tonne for 22,000 oz. gold.
US Gold points out that the PEA, done by Telesto Nevada, does not consider many important engineering and regulatory factors and that further study is needed to make a production decision.
These factors will be looked at in a prefeasibility study, which US Gold is starting but hasn’t set a goal for completion just yet.
The company plans to continue with exploration this year to expand current resources and find new zones of mineralization on the property.
US Gold has set an objective to do enough exploration work to increase the mine life at Gold Bar from six to eight years.
The project is located in the Battle Mountain-Eureka-Cortez gold trend in Central Nevada.
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