- Now that a new PEA has been completed, what are the next steps?
- Given the Company’s resource having a relatively low average grade, is it fair to assume that it requires a much higher gold price in order to be economically feasible?
- Does the metallurgical recovery process prove to be a challenge in recovering gold from the resource?
- Does the mine tailing accident near your project area create big hurdles for your project?
1. Now that a new PEA has been completed, what are the next steps?
We believe that the latest PEA has convincingly validated our new Two-Zone project approach. The thesis is straight forward: Within the multi-million ounce resource, the high grade material alone would generate robust returns, the lower grade ones would add development flexibility (by expanding and extending production) and further values over time. Our next steps will be to further improve the mine plan defined in the PEA and de-risk the strategy. The PEA, by design only processed Measured & Indicated resource and therefore treated roughly 21 million tonnes of Inferred resource as “waste”. A logical first step would be to drill this portion to M&I categories. If successful, many more ounces can be added to the First Zone’s mine plan and the strip ratio can be improved as well. We are investigating this as well as a few programs that will de-risk and add values. .
2. Given the Company’s resource having a relatively low average grade, is it fair to assume that it requires a much higher gold price in order to be economically feasible?
This is a popular assumption: resources with lower average grade requires high metal price to be economic. This is only a half truth! Yes, lower grade means lower “revenue” per tonne of resource. But economic returns must also factor in the “cost” side of the equation. Our many studies have demonstrated our project’s cost advantage given our excellent infrastructure and proximity to labour, suppliers and grid power. With the focus approach (lower throughput/ lower impact) adopted in our new PEA, our project’s economics have gotten even better. Compared to the 2012 PEA for the entire resource, the NPV for the First Zone alone has gone up 63% even with an assumed gold price that is US$210 lower. IRR has improved more than 50% (from 12% to 19%). We don’t try to compete on average grade but we are very competitive on economics and the size of our ever expanding resource!
3. Does the metallurgical recovery process prove to be a challenge in recovering gold from the resource?
We are aware of UNSUBSTANTIATED rumours about challenges in liberating gold for recovery in the metallurgical process hence the overall recovery from the ore is expected to be very low. The truth is ever since Dr. Morris Beattie’s (a highly respected metallurgist with 40+ years of experience; formerly COO & CEO) involvement in the project since 2009, the metallurgical process is one of the technical areas where we have the highest level of confidence. The high level of gold recovery (approximately 90%) has been substantiated with extensive sample testing. In fact, the new PEA has shown significant improvement to processing: a streamlined and more cost effective flowsheet while maintaining a high level of recovery.
4. Does the mine tailing accident near your project area create big hurdles for your project?
We have a long history of community engagement and transparency in operating our business. Community members have direct access to senior management to express any concerns they have about our project. We have not received any negative feedback regarding our project or the way we run our business in the aftermath of the accident. More importantly we believe that there are many significant differences in our proposed tailing design and water/ discharge management so that community’s concerns can be adequately addressed. The new PEA has incorporated our proposed design and water management strategy. At this point, changes in the permitting process in light of the accident do not appear to have materially impacted our project.