The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Junior seems reluctant to turn over multimillion-ounce Alaska gold asset to major; vows to assemble operations team in early 2010
International Tower Hill Mines Ltd.'s rapidly expanding Livengood gold project could prove to be the catalyst that transitions the Vancouver B.C.-based junior from explorer to producer.
"The Livengood project has potential to form a strong foundation for a new emerging North American gold producer," said Jeff Pontius, the company's president and CEO, in a Nov. 30 statement about a preliminary assessment the junior conducted on the economics of a heap leach operation at the Interior Alaska deposit.
Mining News asked Pontius to expand on the junior's plans for Livengood during a Dec. 10 interview.
"It's a pretty exciting asset, and we are not real excited to get rid of it right now," Pontius explained. "We definitely want to make sure we fully understand the full value that Livengood has to the company."
Heap leach economics
The preliminary economic assessment indicates that a heap leach operation at the Livengood gold project would produce 459,000 ounces of gold annually for 12.6 years, or a total of 5,783,813 ounces over the life of the mine, based on October resource calculations.
Drawing a US$700-per-ounce Whittle pit and using a 0.35-gram-per-metric-ton cutoff, the engineers that prepared the report calculated that the Livengood deposit contains an indicated in-pit resource of 308 million metric tons of ore with an average grade of 0.68 million ounces of gold per ton, or 6.7 million ounces. In addition the pit contains an inferred resource of 132 million metric tons averaging 0.71 g/t gold, or 3 million ounces.
The heap leach-only option proposes a mine rate of 178,000 metric ton per day. At a 0.78-1 strip ratio, 100,000 metric tons per day would be stacked on the heap leach pad. A recovery rate of about 60 percent is estimated for the heap leach process.
According to the PEA, the initial capital cost to build the heap leach operation would be about US$665, with an additional life-of-project sustaining capital of around US$297 million. The report estimates the cost to mine and process the ore, including general and administrative costs, to be US$6.20 per ton.
"This initial analysis of the Livengood deposit has demonstrated the strong economic potential of this new world-class gold deposit and has been a critical step in moving this project toward production," Pontius said.
Looking forward to a mill
While the company is excited about the results of the heap leach study, it is looking forward to reviewing the economics with a mill added into the scenario. A mill-heap leach PEA is due to be complete in early 2010.
About 40 percent of the Livengood ore is un-oxidized and was not included in heap leach assessment, but will be able to be processed with a mill. This will increase the economic gold resource at Livengood, lower the strip ratio and increase gold recoveries.
"Just the heap-leach component alone looks compelling, although all along we have been very keen on going for the mill because it certainly looks like the mill on an average basis is going to give us a 25 percent increase in recovery and at US$850 gold that is almost a wash with the heap," Pontius told Mining News. "The mill is going to be a very important component for us."
Early indications are that the combination of a mill and heap leach will lower the operating costs to about the mid-US$400-per-recovered-ounce-of-gold range, compared with the US$533 per ounce estimated for the heap-leach-only option.
Incorporating a mill is expected to bump the capital expenditures up by about US$400 million, or to nearly US$1.4 billion. The added expense of the mill facilities would be offset somewhat by the reduced size of the heap leach pad and facilities
A 40,000-ton-per-day, or Fort Knox-size, mill is considered to be a good fit for the 100,000 tons of ore per day mining rate proposed in the current economic assessment.
"It would be a big project, but the actual cap-ex per recovered ounce would probably stay pretty similar to what it is now, at about US$150 an ounce," Pontius explained.
Evaluating the possibilities
The data, so far, has the junior intrigued.
"The project is looking pretty compelling right now for us, even the heap leach part of it. The initial data we have coming out of the milling tests, the people we have working for us are pretty excited," Pontius said.
International Tower Hill Mines' recent listing on the Toronto Stock Exchange bodes well for the junior's ability to build a mine at Livengood. The company moved its stock from the TSX Venture exchange to the TSX Nov. 26.
"The listing of the ITH shares on the TSX is another significant milestone in the company's short history. We believe that the listing of our shares on the senior Canadian stock exchange will not only benefit our existing shareholders, but will also make our shares more attractive to institutional shareholders both in Canada and globally as we continue to advance our flagship Livengood project," Pontius said,
James Dartnell, investment advisor for Wolverton Securities in Vancouver, said the move to the senior exchange will give the junior better exposure to the broader markets.
"There is a lot more institutional money in Toronto as compared to Vancouver," Dartnell told Mining News Dec. 14.
The mining industry analyst said the experience of the people charged with building and operating a mine at Livengood will be a critical factor in the junior's ability to raise the capital required.
"The more experienced those people are, the greater amount of confidence it will instill in the market and in the investors," he said.
"It isn't the easiest thing to find people who know how to operate and they are worth their weight in gold," Dartnell added.
Pontius said International Tower Hill plans to hire an operations team in the first quarter of 2010, and called the action a key step in the company transitioning from explorer to producer.
"Their main job is going to be to get this project pushed down the feasibility path and the permitting path as fast as we can," the CEO said.
International Tower Hill has already begun the process of streamlining its permitting path. The company's staff met with state regulators Dec. 10 to help ensure that the company collects the essential baseline data needed to submit permit applications.
"They are well on the path to generating the information they are going to need to ultimately submit permit applications," said Jack DiMarchi, a project manager for the Alaska Department of Natural Resources.
Pontius said the company will continue to evaluate whether or not to build the mine itself as the operations team gains a better understanding of what it will take to build the asset.
"We are not drawing lines anywhere yet," he explained. "We are still keeping all of our options open.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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