GALLEON GOLD, West Cache eyes minimum 11-year mine life with total operating costs estimated at $916 million

By Kevin Vincent
Better late than never. It’s not that Galleon Gold was never going to deliver a PEA (Preliminary Economic Assessment) of its highly prospective West Cache Timmins deposit, it just came a little later than the company would have liked.
In early January, the company delivered its much-anticipated PEA and the mine development plan outlines an 11-year life of mine based on known reserves.
“I am extremely pleased with the first economic valuation for West Cache, as the results from our PEA demonstrate that the project could support a profitable underground mining operation,” said R. David Russell, President and CEO of Galleon Gold.
Russell has reason to be excited. “The PEA incorporates the near-term option of using local toll processing, while also suggesting on-site processing becomes increasingly attractive with further growth in the project’s Mineral Resource.”
Galleon says mineralization has been planned to be extracted from 20 geological domains, over an area of 2.1 km x 1.2 km.  The deposit extends at depth over 1.0 km from surface, with extraction targets covering the entire vertical extent.  
The company says there are actually 4 mines in the works. “Due to the large extents of the Mineral Resource, it has been divided into four mining areas (Mines A-D) with separate portals.  Each mining area is further sub-divided into mining “Blocks” to increase available working faces and limit development requirements prior to commencement of production. Ramps developed from each portal will provide access to the Deposit. Extraction of mineralized material will use the longhole retreat stoping method with cemented hydraulic backfill. Sublevels have been planned at 30 m high intervals. Mining equipment will consist of 30 tonne trucks with 7 and 10 tonne load-haul-dump units,” said the company in its January 10 news release.
Production has been scheduled at 2,400 tpd which is equivalent to 880,000 tons per year.
Mining and development will be performed entirely by company personnel, with an owned equipment fleet.  Mining equipment will be leased over five-year terms. Processing will be performed at an offsite toll process plant in the Timmins area, with tailings backhauled from the process plant to the West Cache site for use as backfill.  A contractor will be engaged to transport mineralized material to the toll process plant and backhaul tailings.
Total operating costs are estimated at $916 million.
“Initial capital costs are estimated at $150 million and are relatively low for a project of this size since they do not include construction of a process plant or a tailings storage facility. The majority of initial capital costs will be for underground mine development since the Mineral Resource extends over a large area.  Infrastructure costs are minimal due to the close proximity of the site to Timmins, Highway 101 and an existing powerline. Sustaining capital is estimated at $199 million over the LOM and is primarily for mine development,” said the company.
The Mineral Resource Estimate was based on results of 557 holes and 210,000 metres of drilling including 213 holes for 46,380 metres of surface diamond drilling completed since the company acquired the project. Geological modeling undertaken as part of a Mineral Resource Estimate announced in 2021 identified un-assayed areas from historic drilling with significant gold potential by projecting known gold zones intersected in the 2020-2021 drill program.
Galleon undertook a re-log and sampling program as well as verified assay data from third party drilling in 2015-2016. These recent results identified additional areas of better geological continuity and were used to re-build the Mineral Resource model wire-framing and mine plan from a combined open pit/underground approach to the all-underground design plan used in the current PEA.
The results for the PEA, using the base case assumptions, indicate that the West Cache Project has both technical and financial merit.

The project’s next steps include:

• Infill drilling to increase near-mine Mineral Resources and convert Inferred Mineral Resources to the Indicated classification
• Additional drilling along strike and dip to extend mineralization as well as identify new high-grade shoots
• Deeper exploration drilling to test plunge and area between Zone #9 and West Deep
• Step-out drilling to test regional targets outside of the known Mineral Resource area– only 10% of the project area has been drill tested
• Continue baseline and permitting studies in support of bulk sample application
• Commence planning and studies for initial ramp engineering for bulk sample
• The financial details of the PEA was performed assuming a 5% discount rate. On a pre-tax basis the NPV5% is estimated at $378 million, IRR is 33.7 % and the payback is 3.0 years. On an after-tax basis the NPV5% is estimated at $240 million, IRR is 26.7 % and the payback is 3.3 years.

“Based on our geologic model, I believe West Cache has the potential to extend the LOM beyond the initial 11 years by expanding the Mineral Resource downdip and along strike,” said Russell.  
“Moreover, we have explored less than 10% of the Property and recent geological interpretations suggest we should be looking to pursue new exploration targets in untested host rock both north and south of the current Mineral Resource. Our primary exploration goal for 2022 is to add high grade gold ounces and expand the Mineral Resource through surface drilling.  In early to mid 2023, pending permits, we plan to commence underground test mining the high-grade Zone #9 area.”

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