Yamana Gold (TSX: YRI; NYSE: AUY; LSE: AUY) has approved development of the Wasamac gold mine with recent study results showing more reserves, higher annual production and increased cash flows than previous economic studies. The project is 15 km west of Rouyn-Noranda, Que.
The company expects to begin construction by mid-2024, after all permits and certificates of authorization are received, with first production slated for the final quarter of 2026.
The company acquired the Wasamac deposit and Camflo property and mill when it bought Monarch Gold in January. Since that time, it has used its due diligence study and update to the 2018 feasibility study to create a new feasibility study. Work done most recently will also form the basis for the project description for the environmental impact assessment.
Project economics include an after-tax net present value of US$470 million with an after-tax internal rate of return of 24% at a gold price of US$1,500 per oz. Initial capital requirements are US$416 million, including US$318 million for underground mine development and mobile equipment.
One of the most promising aspects of the Wasamac project, Yamana said, is sustained annual gold production of 200,000 oz. for years two through five and 169,000 oz. per year over the first 10 years of production. The estimated all-in sustaining cost is US$828 per oz.
Yamana has refined the geological model and boosted probable mineral reserves to 23.2 million tonnes grading 2.56 g/t gold containing 1.9 million oz. of recoverable gold. That material will support the first 10 years of production.
The deposit also hosts 5.8 million indicated tonnes grading 1.76 g/t gold for 326,000 oz., plus 4 million inferred tonnes at 2.01 g/t gold for 258,000 oz.
Wasamac will be an underground bulk mining operation with a minimal footprint. The use of an underground conveyor, electric mining equipment and high efficiency ventilation fans will substantially reduce carbon emissions from the project. Installing the conveyor, rather than using diesel trucks, will save an estimated 2,233 tonnes of carbon dioxide emissions per year.
A new mill will be built with an initial throughput of 7,000 tonnes per day, although that could be raised to the nameplate capacity of 7,500. A portion of the tailings will be returned to the mine as paste fill, and the remainder will be placed in a filtered dry stack storage facility about 6 km from the mill.
Yamana believes it can outline further reserves that would sustain a 200,000-oz. production level and support an additional five years of mine life. It plans to spend $15 million on a 120,000-metre infill and exploration drill campaign in 2021 and 2022. Another 10,000 metres will be drilled this year on the broader Wasamac property to delineate secondary zones and test extensions of the Wasa Shear.
The company has recently acquired the Francoeur, Arntfield and Lac Fortune gold deposit located only 6 km from the planned Wasamac mill. They, too, may provide additional mining opportunities in the future.
Development at Wasamac will be fully funded from available cash and cash flows.
Detailed information about the Wasamac project is posted with the latest corporate presentation at www.Yamana.com.
April 18, 2024
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