Mr. Robert Quartermain reports
PRETIUM RESOURCES INC.: UPDATED PEA FOR BRUCEJACK HIGH-GRADE GOLD PROJECT
Pretium Resources Inc. has released the results from the National Instrument 43-101-compliant updated preliminary economic assessment for the high-grade gold and silver resources identified to date at its 100-per-cent-owned Brucejack project in Northern British Columbia. The PEA was prepared by Wardrop, a Tetra Tech company (Tetra Tech). All figures are shown in U.S. dollars, unless otherwise specified.
Highlights (base case using $1,100 per ounce gold, $21 per ounce silver and exchange rate of 93 U.S. cents to $1 (Canadian)):
- Base case pretax net present value (5-per-cent discount) of $2.262-billion;
- Mine life of 24 years producing an estimated 6.9 million ounces of gold
and 17.0 million ounces of silver;
- Average annual production of 325,000 ounces of gold over the first 12
years and 287,000 ounces of gold over the life of mine;
- Base case pretax net cash flow over the proposed mine life of $5.133-billion;
- Base case pretax internal rate of return of 29.8 per cent, with payback
estimated at 4.1 years;
- Estimated initial capital cost, including contingencies, of $436.3-million;
- Average operating costs of $170.90 (Canadian) per tonne milled over mine life.
SUMMARY OF BRUCEJACK HIGH-GRADE ECONOMIC RESULTS BY METAL PRICE
Base case(1) Spot prices at Feb. 17, 2012
Gold price (US$/ounce) $1,100 $1,733.60
Silver price (US$/ounce) $21.00 $33.46
Net cash flow $5.133-billion (pretax) $9.467-billion (pretax)
$3.357-billion (posttax) $6.185-billion (posttax)
Net present value (5.0% $2.262-billion (pretax) $4.330-billion (pretax)
discount) $1.454-billion (posttax) $2.808-billion (posttax)
Internal rate of return 29.8% (pretax) 43.4% (pretax)
25.0% (posttax) 36.5% (posttax)
Payback 4.1 years (pretax) 3.2 years (pretax)
4.2 years (posttax) 3.3 years (posttax)
Exchange rate (US$:C$) $0.93 $0.997
(1) Tetra Tech-adopted consensus forecast metal prices from the Energy
Metals Consensus Forecast (EMCF). The same base case metals prices
were used in the June, 2011, preliminary economic assessment of the
Brucejack project (see news release dated June 2, 2011).
The Brucejack high-grade project is planned to be mined as an underground operation with the Valley of the Kings and West zone, the two targeted lodes. The underground mine is planned to operate with a processing rate of 1,500 tonnes per day and mine a total of 11.8 million tonnes of mineralized material from the Valley of the Kings and West zone with an average mill feed grade of 18.9 grams per tonne gold and 59.3 grams per tonne silver.
Gold-silver dore will be produced using a combination of conventional bulk sulphide flotation, gravity concentration and cyanidation, with gold and silver recovery by the Merrill-Crowe process. A total of 6.9 million ounces of gold and 17.0 million ounces of silver is estimated to be produced over the life of the Brucejack project.
The total estimated initial capital cost for the Brucejack high-grade project is $436.3-million, an increase of 55 per cent over the June, 2011, PEA estimated capital cost. The increase in capital cost is primarily due to two factors. Underground development has been brought forward almost one year in order to access higher-grade ore earlier in the production schedule. As a result, preproduction mining costs have increased from $52-million to $128-million. In addition, mine site power is now planned to be supplied by tying into the electrical transmission grid at an estimated cost of $42-million. The estimated operating cost of electrical power supplied from the transmission line is six Canadian cents per kilowatt hour versus 33 Canadian cents per kilowatt hour supplied from diesel as contemplated in the previous PEA.
The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied that would enable them to be categorized as mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability. There is no certainty that the PEA will be realized.
The technical report for the PEA for the high-grade gold and silver resources at the Brucejack project has been filed on SEDAR and will also be available at the company's website.
Ian I. Chang, MASc, PEng, vice-president, project development, Pretium Resources, is the qualified person responsible for Brucejack project development.
PROJECTED PRODUCTION AND PROCESSING SUMMARY
Mine type Underground
Total production 11.8 million tonnes
Processing rate 1,500 tonnes per day
Gold Silver
Average mill feed grade 18.9 grams per tonne 59.3 grams per tonne
Average metal recoveries 95.7% 75.5%
Average annual production (ounces)
Years 1 to 12 325,000 444,000
Life of mine (24 years) 287,000 710,000
Total production (ounces)
Years 1 to 12 3.899 million 5.333 million
Life of mine (24 years) 6.878 million 17.030 million
CAPITAL COSTS SUMMARY
(in millions of dollars)
Direct costs $328.3
Indirect costs 58.2
Owner's costs 11.9
Contingencies 37.8
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Total capital cost $436.3
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OPERATING COSTS SUMMARY
Operating costs (C$/t milled)
Mining $103.6
Processing 37.7
General and administrative 19.26
Plant services 10.29
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Total operating cost $170.9
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Independent qualified persons
The qualified persons as defined by National Instrument 43-101 are independent of Pretivm and responsible for the updated PEA of the Brucejack project.
Qualified person Scope of responsibility
Hassan Ghaffari, PEng Capital cost estimate, project
Tetra Tech execution plan
Sabry Abdel Hafez, PhD, PEng Economic analysis
Tetra Tech
John Huang, PEng Mineral processing and metallurgical
Tetra Tech testing, infrastructure, process
operating cost estimate
Pierre Pelletier, PEng Environmental considerations
Rescan Environmental Services Ltd.
Tracy Armstrong, PGeo Geology, property: description,
P&E Mining Consultants Inc. history, geological setting, deposit
types, mineralization, exploration,
physiography, drilling, sampling,
adjacent properties
Caroline Vallat, PGeo Data verification
GeoSpark Consulting Inc.
Fred H. Brown, CPG, PrSciNat Site visit and mineral resource
P&E Mining Consultants Inc. estimate
H. Warren Newcomen, PEng Preliminary geotechnical design for
BGC Engineering Inc. underground workings
Hamish Weatherly, PGeo Water management
BGC Engineering Inc.
Lori-Ann Wilchek, PEng Waste management and leach plant
BGC Engineering Inc. tailings storage facility design
Peter Mokos, MAusIMM (CP) Mining, including capital and
AMC Mining Consultants (Canada) Ltd. operating costs estimates
We seek Safe Harbor.
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