Shares in Minera Alamos (CVE:MAI) raced higher Thursday as it described as "excellent" a preliminary economic assessment (PEA) for its La Fortuna open-pit gold project in Mexico, which showed robust economics.
The pre-tax NPV (net present value) was put at US$103.8mln (C$134.8mln) at a discount rate of 7.5% and IRR (internal rate of return) of 122%. The report put pre-production capital costs at US$26.9mln (C$34.9mln) with a pre-tax payback period of nine months.
Minera's aim is to have three gold mines up and running in Mexico in around as many years, potentially generating 150,000 ounces of gold per year. La Fortuna is one of them. The Santana gold project and the Guadelupe De Los Reyes heap leach project are the others.
"This PEA represents a key milestone for the company as we begin to deliver to the market's attention the underlying project economics of our development pipeline that focuses on cost-efficient and targeted production that can incrementally build a significant production profile over time," said Doug Ramshaw, the group's president.
"With the recently submitted commercial permit applications at the Santana project and ongoing work at the company's Guadalupe de los Reyes project we are aggressively expanding our activities on multiple fronts.
"We continue to envision a plan whereby targeted production from the development of the Santana project will support the modest capital requirements of the La Fortuna operation."
The PEA is based on a five-year mine life based on initial resource 'starter pit' with 2 Mt (million tonnes) of mineralisation, processed at 1,100 tpd (tons per day) average processing rate.
It sees 215,000 ounces of gold, 1.1Moz (million ounces) of silver, and 5,000 tonnes of copper produced in concentrates.
Using metals prices of US$1,250 per ounce gold, US$16per ounce silver, and US$5,725 per tonne copper, all-in sustaining costs (AISC) were put at US$440 per ounce [net of by-product credits].
All drilling, mining, crushing operations at the project will be undertaken by an open pit mining contractor and material will be stockpiled and crushed prior to being transported to the process plant.
The firm has bought a used 2000 tpd (tonnes per day) processing facility that has been used as the basis for the Fortuna project processing facilities.
"The simplified gold recovery process outlined in the study represents a conservative starting point that is well suited to the initial project resource which, to date, has been based exclusively on previously drilled mineralization," said Darren Koningen, the firm's chief executive.
"As our engineering work progresses we continue to find opportunities to reduce the initial project capital requirements and improve overall project economics.
"Coupled with our strategic partnership with Osisko Gold Royalties that includes an option to provide a significant portion of the project capital requirements in return for a project royalty, these additional optimizations will greatly reduce the upfront funding requirements of this already low capital cost operation."
Shares in Toronto raced up over 14% to C$0.12.