BRITISH COLUMBIA – The preliminary economic assessment of the Kemess underground development owned by Northgate Minerals of Vancouver is positive. The nearby Kemess South open pit near Smithers ran out of ore earlier this year, and the 52,000 t/d flotation concentrator is available to treat underground ore.
The PEA projects an underground mine life of 12 years, based on a gold price of US$1,000 per oz. Annual production would be 95,000 oz of gold at a net cash cost of $115 per oz and 41.4 million lb of copper. The project carries pre-tax net present value of $115 million at a 5% discount rate. The pre-tax operating cash flow could be $1.1 billion, and the pre-tax internal rate of return is expected to be 10%.
Using figures of $1,500/oz gold and $4/lb copper, the study would give the Kemess underground project a pre-tax operating cash flow of $2.1 billion, a pre-tax NPV of $755 million, and a pre-tax IRR of 27%.
The Kemess underground has a pre-production capital requirement of $437 million and a sustaining capital requirement of $286 million during the life of the mine.
The base case for the PEA uses an indicated resource of 136.5 million tonnes grading 0.29% Cu and 2.10 g/t Au plus an inferred resource of 6.0 million tonnes at 0.22% Cu and 1.65 g/t Au.
Northgate says the deposit will be mined at a rate of 24,000 t/d using automated, trackless block caving. Crushed ore will be conveyed to the surface and transferred to a 4.7-km overland conveyor to the existing mill.
A more detailed look at the PEA is available at www.NorthgateMinerals.com.