Toronto-based gold and copper producer Dundee Precious Metals (TSX: DPM) has announced the results of a prefeasibility study on its Timok gold project in Serbia, as well as the decision to go ahead with a feasibility study.
The latest engineering study outlines an eight-year, 6,925t/d heap-leach open pit mine, producing an average of 80,000 gold oz. annually in its first six years of operation. All-in sustaining costs are estimated to average US$693 per oz. over the life of the mine, with US$211 million required in initial capital. Using a gold price assumption of US$1,500 per oz., the after-tax net present value estimate for this development stands at US$135 million, with a 21% internal rate of return.
Mining would take place over seven years, with residual gold production from the heap leach in year eight.
“The Timok project continues to advance as a potential future growth opportunity for Dundee Precious Metals,” David Rae, president and CEO of Dundee Precious Metals, said in a release. “With additional optimization opportunities to enhance the project and very encouraging exploration results, we believe Timok represents an attractive opportunity to provide organic growth in a region where we have had a presence for many years.”
The prefeasibility is based on mining of oxide and transitional material from the Bigar Hill, Korkan and Korkan West deposits, and incorporates three-stage crushing and material stacking onto a valley heap leach.
Based on a 17-month construction and startup timeline, Dundee currently expects a production startup in the first quarter of 2026. The feasibility is expected to be completed by the first quarter of 2022. Work is also underway on baseline environmental assessments for deliverables required under the Serbian permitting process. These include a Strategic Environmental Assessment, a site layout design, and a report on reserves. Once the Timok exploration licence expires in July, these studies will be required to secure site exploitation rights.
Dundee has also started baseline studies for the Environmental Social Impact Assessment (ESIA); the process is expected to be completed by the second quarter of 2024. Permits for mine facilities constriction would then follow in the fourth quarter.
Optimization opportunities for the feasibility include potential for capital costs reduction, as well as an assessment of mining additional oxide, transitional and sulphide mineralization.
Probable reserves at Timok total 19.2 million tonnes at 1.07 g/t gold, for a total of 662,000 gold oz. This includes an oxide component of 15.8 million tonnes grading 1.08 g/t gold. Additional resources, outside of reserves, feature 32.3 million indicated tonnes at 1.27 g/t gold and 900,000 inferred tonnes at 1.5 g/t gold.
With 14,000 metres of drilling planned for 2021, Dundee will focus exploration efforts on defining shallow oxide resources at the Chocolate and Chocolate South targets around Bigar Hill, with additional work planned for sulphide targets.
Highlights from infill and extension drilling completed at the Chocolate target in the last quarter of 2020 include 37 metres of 0.82 g/t gold and 8 metres of 2.96 g/t gold. Notable intercepts from Chocolate South include 40.5 metres of 2.83 g/t gold and 20 metres of 1.47 g/t gold.
Dundee Precious Metals holds the Chelopech and Ada Tepe mines in Bulgaria and a smelter in Namibia. This year, the two mines are expected to generate 250,000 to 295,000 gold oz. and 30 to 40 million lb. of copper at all-in sustaining costs of US$670 to US$750 per oz.