Idaho-focused junior explorer Freeman Gold (TSXV: FMA OTCQX:FMANF) received a sizeable boost on Monday following the release of an initial preliminary economic assessment (PEA) on the company's 100% owned Lemhi project.
Its shares rose by 11.5% as of noon EDT, for a market capitalization of $19 million. Still, the stock is hovering near its 52-week low, which it hit in late September.
The PEA outlines a low-cost open-pit operation with an estimated annual production of 75,900 oz. of gold over a 11.2-year mine life. Gold output over the first eight years is expected to average over 80,000 oz.
The production strategy outlined in the PEA, says Freeman, consists of a phased development with an increase in throughput during the fifth year of operation, with a flowsheet utilizing a carbon-in-leach processing facility.
Using a base case gold price of US$1,750/oz., the project's after-tax net present value (at 5% discount) is calculated at US$212.4 million with an internal rate of return of 22.8%. At the spot gold price of US$1,932.50/oz., the NPV increases to US$295.6 million, with the IRR rising to 28.6%.
The Lemhi mine would have initial capital expenditure of US$190 million. Life-of-mine cash costs are estimated at US$809/oz., while all-in sustaining cash costs are pegged at US$957/oz.
"Lemhi represents a unique opportunity for the investment community to participate in a deeply discounted gold project that remains open on strike and trades at 6% of after tax NPV at US$1,750 gold and less than 5% at spot price," said Paul Matysek, executive chairman of Freeman Gold.
"This will certainly be attractive to gold mining developers and producers who see value in having an operation almost entirely on patented ground, a sub US$1,000/oz. AISC, a life of mine production over 850,000 oz., that is highly leveraged to gold price in a leading mining jurisdiction."
The Lemhi property comprises 30 square kilometres of highly prospective land in south-central Idaho, hosting a near-surface oxide gold resource of 30 million tonnes grading 1.0 gram per tonne in the measured and indicated category, plus 7.6 million tonnes at 1.0 g/t inferred.
According to Freeman Gold, its Lemhi deposit is already one of the highest-grade oxide, near-surface gold resources in the US. The company is currently focused on growing and advancing the project, which it has been drilling since 2020, towards a production decision.
THIS ARTICLE WAS ORIGINALLY P0STED ON MINING.COM