The results from the Kemess Underground feasibility study outline the development of an underground block cave operation with average annual production of 105,000 ounces of gold and 44 million pounds of copper at cash costs of $213 per ounce of gold, net of by-product credits, over a mine-life of approximately 12 years.
Feasibility Study Highlights
Highlights of the feasibility study, which employs base case commodity price assumptions of $1,300 per ounce for gold, $3.00 per pound for copper and $23 per ounce for silver and an exchange rate of US$/ CDN$1.00, are as follows:
- Average annual production of 105,000 ounces of gold and 44 million pounds of copper at a net cash cost of $213 per ounce of gold, net of by-product credits
- A total of 1.3 million ounces of gold and 563 million pounds of copper production over an approximate 12-year mine-life.
- Pre-commercial production capital cost of $452 million.
- Sustaining capital costs of $181 million during the life of the mine, including $35 million in closure costs.
- Pre-tax operating cash flow of $1.1 billion.
- After-tax net present value ("NPV") of $134 million based on a 5% discount rate.
- After-tax internal rate of return ("IRR") of approximately 10% with a 3.5-year payback on the initial capital cost from the start of commercial production.
- The project has significant leverage to higher metal prices. At $1,650 per ounce gold and $3.67 per pound copper, Kemess Underground is expected to generate an after-tax IRR of 18%.
- The envisaged Kemess Underground block cave operation would leverage the existing infrastructure and mill facilities at the Kemess South mine including an area previously permitted for tailings storage in the Kemess South Pit.
The after-tax, NPV and IRR for the Kemess Underground Project, using a range of gold and copper prices, are shown below.
Base Case Spot Prices 3-Year Trailing Prices Prices Au $/oz 1,300 1,488 1,650 Cu $/lb 3.00 3.68 3.67 Ag $/oz 23.00 28.80 30.75 NPV 0% (After tax) $MM 390 769 891 NPV 5% $MM 134 372 449 NPV 10% $MM (7) 151 202 IRR % 10% 16% 18%The Company intends to pursue strategies at Kemess that enhance intrinsic value, such as permitting and additional exploration outside existing reserves, to further develop the optionality of this asset.