BRITISH COLUMBIA – Spanish Mountain Gold of Vancouver says the preliminary economic assessment of its Spanish Mountain gold project 70 km northeast of Williams Lake is complete, and it is positive. The study examined a mine and mill that would produce 197,000 oz/year for 14 years of its 15-year life. Gold production in years one through three would be 268,000 oz at a mill head grade of 0.70 g/t Au. Cash costs during the first three years are estimated to be US$526/oz and over the life of the project to average US$774/oz.
Even at a conservative gold price of US$1,462 (three-year trailing average as of Nov. 1, 2012) the project has a net present value at a 5% discount of US$454 million. The internal rate of return would be 15% and the payback period 4.4 years. Using the Nov. 1 spot price of $1,716, the project has a NPV of US$887 million, and IRR of 23% and a 2.7-year payback period.
The pre-production capital expenditure for an open pit and conventional gold plant will total US$755.9 million. To develop the pit will cost US$127.7 million, to build the mill US$168.1 million, and to create the tailings and water management system US$69.1 million. The balance of the expenditures will go toward environmental, infrastructure, indirect costs, owner's cost and US$86.1 million for contingencies.
The Spanish Mountain project has measured and indicated resources of 216.22 million tonnes grading 0.46 g/t Au and 0.68 g/t Ag, or 3.18 million oz of gold and 4.73 million oz of silver. The inferred resource is 316.74 million tonnes grading 0.36 g/t Au and 0.65 g/t Ag.
The highlights of the PEA are posted at SpanishMountainGold.com.