Dalradian reports feasibility study results for Curraghinalt gold project in Ireland
Dalradian Resources announced the results of the independent Feasibility Study (FS) for its 100% owned Curraghinalt Gold Project in Northern Ireland.
Unless otherwise stated, all dollar amounts are quoted in U.S. dollars ("$").
"The Feasibility Study outlines a project with high expected profitability and returns and demonstrates the strong economic case for advancing Curraghinalt to development. One of the project's main competitive strengths is the high reserve grade, which would place it in the top 10% of gold mines world-wide(1). What is also very encouraging is that there are multiple opportunities to enhance the economics and extend the project life.
We are particularly pleased that our test-mining showed the viability of mechanized underground mining methods for this deposit and returned consistently higher grades than those predicted by the resource model. The FS sensitivities demonstrate considerable potential for grade upside, such that a 20% grade improvement increases after-tax NPV by 64% and after-tax IRR by 39%."
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Feasibility Study Highlights
- Net Present Value ("NPV") of $301 million (CDN$402 million) after tax (at a 5% discount rate) and
Internal Rate of Return ("IRR") of 24.4% after tax, at an assumed gold price of $1,250/ounce
- Proven & Probable Mineral Reserves of 1.44 million ounces of gold and 0.66 million ounces of silver (5.24 million tonnes at 8.54 g/t Au and 3.9 g/t Ag), a subset of the Measured and Indicated Resources of 2.10 million ounces of gold (5.61 million tonnes at 11.61 g/t Au). The FS excludes Inferred Resources of 2.31 million ounces of gold (7.13 million tonnes at 10.06 g/t Au)
- Life of mine ("LOM") production of approximately 1.36 million ounces of gold and 0.38 million ounces of silver over an initial 10.5 year mine life using an average overall gold recovery of 94.3%
- Average annual gold production of 130,000 ounces in first 10 years with an average LOM total cash cost of $556/oz and a LOM all-in sustaining cash cost ("AISC") of $674/oz
- Estimated initial capital cost, including contingency, of $192.0 million with payback of 4.0 years, and LOM sustaining capital costs of $165.1 million
- At year five, production increases above 150,000 oz/yr, with peak production achieved in year 7, at 170,000 ounces. There is potential to maintain this higher rate of production beyond year 7 with conversion of existing Inferred Mineral Resources
- Curraghinalt will be operated using automation, mechanized underground mining methods and best-in-class processing. The dry stack tailings from the process will not have not come into contact with cyanide.
- Creation of several hundred new jobs: during the 18-24 month construction period, direct employment is estimated to be at least 300; once the mine is in operation, it is expected to employ at least 350 people in permanent positions
Project Enhancement Opportunities
There are numerous opportunities to further enhance Curraghinalt project economics including:
- Enhancement of the deposit grade via tighter drill spacing and detailed definition of high grade ore shoots within mineralized zones.
- Mine life extension from (i) conversion of Inferred Resources to Measured and Indicated Resources and then into reserves with infill drilling and (ii) overall resource and reserve growth from step-out drilling along strike and at depth combined with exploring the potential for new veins parallel to the those already defined
- Reduction of operating costs with additional geotechnical programs to maximize long-hole mining methods
- Ore sorting technology to increase the grade and reduce the tonnage of material entering the processing plant. Test work is currently underway and shows positive preliminary results, with final results expected in H1 2017.
The FS was prepared under the direction of JDS Energy & Mining Inc. ("JDS"), an international engineering firm with extensive experience in both the construction and operation of mining projects. The study was supported by SRK Consulting, and is being summarized into a Technical Report (the "Dalradian Technical Report") to be filed on SEDAR in accordance with NI 43-101. The FS confirms that the Project is expected to support an economically viable and robust, high grade underground gold mine.
Economic Benefits to Northern Ireland
The FS confirms that development of Curraghinalt is expected to provide substantial economic benefits to Northern Ireland at the local, county and national levels, including:
- During the 18-24 month construction period the project is expected to generate direct employment of at least 300 people
- When the mine is in operation, it is projected to directly employ at least 350 people in permanent positions, excluding any contractors and support staff
- It is estimated that the mine will pay annual wages of approximately $26 million (£21 million) to direct employees
- We believe the project will also generate several hundred indirect jobs with suppliers of products and services to support mine operations
- Based on a gold price of $1,250 per ounce, the Project is anticipated to generate average payments annually to the Government totalling approximately $21 million (£18 million) in the form of income tax, corporate tax and national insurance contributions
- Training and skills development aimed at maximizing local employment at the project
- Expected improvement of local and regional infrastructure
- Continuation and increase of existing community investment programs, small business development and support of cultural development
Note that according to regulations a feasibility study is only permitted to incorporate Measured and Indicated resources in its calculations. Measured and Indicated Mineral Resources represent less than 50% of total Mineral Resource ounces identified to date at the deposit. However, the Environmental and Social Impact Assessment ("ESIA") and Planning Application will take into consideration the Inferred Mineral Resource with a view to permitting a mine with a life of greater than 20 years.
FEASIBILITY STUDY DETAILS
The Curraghinalt gold deposit is an orogenic gold system consisting of a series of moderately to steeply dipping, structurally controlled, high-grade gold bearing quartz-carbonate veins. The deposit remains open in all directions. The Mineral Resource estimate incorporates information from 175 infill drill holes (51,215 metres) and underground samples from new and existing drifts along the T17, Sheep Dip, 106-16, V-75, Slap Shot and No. 1 Vein Zones. The Measured Mineral Resources are higher grade than the Indicated and Inferred Mineral Resources.
The current Mineral Resource estimate consists of 2.1 million ounces of contained gold in the Measured and Indicated categories (5.61 million tonnes at 11.61 g/t) and 2.3 million ounces of contained gold in the Inferred category (7.13 million tonnes at 10.06 g/t gold).
Mineral Reserves and Mining
The estimated Mineral Reserves, presented by reserve class, are shown in the following table. The overall diluted gold grade of the mineralized material going to the mill is estimated at 8.54 g/t.
Source: Company Press Release