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Galleon's PEA identifies 11 year "Life of Mine" for West Cache Timmins

Jan 12, 2022

 "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. "I am extremely pleased with the first economic valuation for West Cache, as 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 Gold Corp. has announced the positive results of an independent maiden Preliminary Economic Assessment ("PEA"), including an updated Mineral Resource Estimate prepared in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") for its West Cache Gold Project (the "Project" or the "Property"), Timmins. The PEA considers an underground mine utilizing Toll Processing for treatment of mineralized material over an 11-year mine life. All amounts are shown in Canadian dollars unless otherwise stated.

"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," added 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."

PEA Highlights - West Cache Gold Project 

  • Pre-Tax Net Present Value at a 5% discount rate ("NPV5%") of $378 million with Internal Rate of Return ("IRR") of 33.7%, 3.0 years payback at US$1,700/oz gold price
  • After-tax NPV5% of $240 million with IRR of 26.7% and 3.3 years payback 
  • 11 years Life of Mine ("LOM") plus two years of ramp-up. Production at 2,400 tpd
  • 940,200 ounces of gold mined over LOM with average annual production of 85,500 ounces. Recovered gold is estimated at 893,200 ounces over the LOM
  • Cash cost of US$814 per ounce and all-in sustaining cost of US$987 per ounce
  • Initial capex $150 million 
  • Alternative scenario for construction of on-site mill demonstrates positive economics (NPV5% $368 million, IRR 24.5%, payback 3.7 years on pre-tax basis)
  • Project is now progressing towards bulk sample of Zone #9 and Pre-Feasibility Study, including plans for upgrading and expanding the Mineral Resource 

Updated Mineral Resource Estimate Highlights (underground Mineral Resource at 1.6 g/t Au cut-off grade)

  • Significant increase in the grade and total ounces in the Indicated and Inferred Mineral Resource classifications 
  • Indicated Mineral Resource of 472,000 ounces (4,051 kt at an average grade of 3.63 g/t Au)
  • Inferred Mineral Resource of 1,088,000 ounces (11,788 kt at an average grade of 2.87 g/t Au)

PEA Financial Results Summary
The economic analysis was performed assuming a 5% discount rate. A summary of project economics is listed in Table 1. 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.

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