ONTARIO - Toronto-based Rainy River Resources' preliminary economic assessment (PEA) of its property 50 km horthwest of Fort Frances is positive. The study outlines a new open pit and underground producer that would have life-of-mine average annual production of 329,000 oz of gold and 497,000 oz of silver. Over the 13-plus-years of production, the average cash cost net of silver credits is estimated to US$533/oz of gold.
The PEA uses base case metal prices of US$1,200/oz for gold and US$25/oz for silver. That assumption puts the pre-tax net present value at $$786 million, with an internal rate of return of 19.4% and a payback of 3.4 years. The best case scenario, with gold at $1,800 and silver at $40, would boost the NPV to US$2.66 billion and the IRR to 45.0%.
Development of an open pit has a pre-production capital requirement of $681 million (including a contingency of $103 million) and sustaining capital of $598 million. Underground pre-production costs would be a more modest $67 million, if development begins in 2015. Sustaining capital for the underground mine would be $110 million. Pit production could be as early as 2H 2015, and underground production would follow in 2H 2018.
Total measured and indicated resources at the Rainy River project are 117.46 million tonnes grading 1.16 g/t Au and 2.42 g/t Ag. There is also an inferred resource of 77.44 million tonnes at 0.94 g/t Au and 2.83 g/t Ag.
Additional details of the PEA are available at www.RainyRiverResources.com.
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