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(Wallace Refiners) – Spanish Mountain (TSXV: SPA) announced Tuesday the positive results of the pre-feasibility study (“PFS”) for the 100% owned Spanish Mountain gold project located in central British Columbia, Canada.
The PFS is based on a 20,000 tonnes per day milling rate to process the delineated Proven & Probable Reserves as a standalone open pit operation for 14 years.
The highlights of the PFS results include Proven & Probable mineral reserves of 2.3 million ounces (Moz) of gold and 2.2 Moz of silver. Measured & Indicated mineral resources of 4.7 Moz of gold and 6.8 Moz of silver demonstrated an increase of 0.6 Moz of gold from previous estimates due to optimization and an increased gold price assumption.
The PFS assumes life of mine (LOM) production of 2.1 Moz of gold and 0.9 Moz of silver over 14 years with average annual gold production of 183,000 oz (first 6 years) and 150,000 oz (LOM) with peak production of 210,000 oz in year 6.
The project’s pre-tax NPV(5%) is $848M, IRR is 25% and payback of construction capital in 3.2 years @ US$1,600 gold. Post-tax NPV(5%) is $655M, IRR is 22% and payback of construction capital in 3.3 years @ US$1,600 gold.
Post-tax average annual free cashflow from operations is $189M (first 6-yr) and $128M (LOM) @ US$1,600 gold. Post-tax LOM cumulative tax free cashflow from operations is $1,797M @US$1,600 gold. Initial capital cost is $607 million (US$461 million), including a contingency of $75 million.
The company noted that the PFS demonstrates the project’s potential to be a mining operation with a robust production profile (>150,000 oz per year) and profitability (AISC $801 per oz) over a mine life of 14 years.
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