The update to Leagold Mining Corp.'s (LMC:TSX.V; LMCNF:OTCQX) feasibility study on its Santa Luz project in Brazil showed strong economics. "With a high internal rate of return (IRR) and low costs, Santa Luz is a very attractive project," said CEO Neil Woodyer.
In the study, conducted by RPA Inc., Proven and Probable open-pit mineral reserves were updated to 28.2 million tons at 1.39 grams per ton grade containing 1.26 million ounces of gold. The consulting firm outlined an IRR of 47% and a net present value 5% of $149 million for the Santa Luz project. After-tax cash flow would be $302 million, using a $1,200 per ounce gold price, according to a recent press release.
The mine is projected to produce 1.06 million ounces over an 11-year mine life at an all-in sustaining cost of $856 per ounce. Initially, during phase 1 of the life of mine, the open-pit strip ratio would be reduced, "which allows for future decision points that may also include further upside potential from underground mining," Woodyer noted.
Capital cost to complete and restart the mine would be $82 million, including $12.3 million of working capital and first fills.
"The impressive results demonstrate the potential for Santa Luz to be a strong cash flow generator with potential to add over 100,000 ounces per year production following a short 10-month construction period," said Woodyer.
Because Santa Luz is a past-producing mine, all the major infrastructure to restart mining is already in place. The only new construction needed is retrofitting the plant for resin-in-leach gold recovery versus its previous design, which was for carbon in leach. Further, major equipment needed for the project is already on site, according to the company.
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