ONTARIO – Pure Gold Mining of Vancouver has a positive preliminary economic assessment for its Madsen gold project in the Red Lake mining district. The base case suggests developing a portion of the resources using the existing mine workings, existing infrastructure and the mill and permitted tailings management facility. Ore will be mined to 600 metres below surface where it is accessible from the existing ramp.
The Madsen development has a pre-tax net present value (5% discount) of $104 million and an internal rate of return of 74% with a 1.5-year payback. Even after taxes, the project has an NPV (5%) of $76 million and an IRR of 62%, also with a 1.5-year payback. The base case uses a gold price of US$1,175 per oz and an US-to-Canadian exchange rate of $0.80.
Pre-production capital is estimated to be $20.1 million followed by sustaining capital of $39.2 over the 6.5-year mine life. A total of 58,000 oz will be produced from an average head grade of 8.3 g/t Au. All-in sustaining costs are estimated to be US$692 per oz.
Resources at Madsen include 3.24 million indicated tonnes at 8.93 g/t Au plus 788,000 inferred tonnes at 11.74 g/t. Contained gold is 928,000 oz and 297,000 oz, respectively.
A more detailed look at the PEA is available in the news release of April 20, 2016, posted at www.PureGoldMining.ca/news/.