The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
New study improves economics of Alaska gold project; big hurdles remain
International Tower Hill Mines Ltd. has taken another step along the road to engineering the ideal mine for its Livengood gold project located some 70 road miles northeast of Fairbanks, Alaska.
In 2013, the company published a feasibility study outlining a 100,000-metric-tons-per-day operation that would average 577,600 ounces of gold annually, or 8.1 million oz. over an estimated 14-year mine life. The project, however, was estimated to cost about US$2.8 billion to develop and would not break even until gold prices approached US$1,500 per oz.
With an eye toward lowering the upfront capital needed to develop the proposed mine and bringing down projected operating costs, the development team at Tower Hill set out to optimize the operation outlined in the study.
The junior outlined results of an initial phase of optimization work in a Livengood pre-feasibility study released Sept. 8.
The enhanced Livengood mine involves a 52,600-tpd mill (about half the size originally contemplated) that would produce 6.8 million oz. of gold over a 23-year mine life, or roughly 294,100 oz. annually.
Capital costs to build this operation are estimated to be about US$1.8 billion, or about 34 percent less than the larger operation considered in the 2013 feasibility study. The operating costs also are 16 percent lower, decreasing to US$877/oz. in the current PFS from US$1,054/oz. in the 2013 study.
“We are pleased that our optimization study has resulted in lower cap-ex and op-ex costs projected over a 23-year mine life,” said International Tower Hill Mines CEO Tom Irwin. “Livengood’s fundamentals are compelling, with a substantial gold resource, favorable jurisdiction, proximity to infrastructure and great leverage to the gold price.”
Thanks to reduced cap-ex and op-ex costs, the all-in cost to produce an ounce of gold at Livengood is now estimated to be US$1,263. This is roughly 16 percent lower than the US$1,503/oz. calculated for the mine considered in the 2013 study.
The all-in cost metric – developed by the World Gold Council to more accurately illustrate the costs to mine an ounce of gold – includes both capital and operating expenditures when considering the per-gold-ounce mining costs of a project.
While heading in the right direction, the company hopes further optimization will push these costs even lower.
Feeding the mill material with higher gold grades through improved resource modeling and recovering more of that gold with improved metallurgical results are two areas identified for potential further optimization.
“We are committed to advancing our basic engineering and metallurgical work to further de-risk the project and prepare for future permitting,” said Irwin.
Tower Hill said continued optimization of Livengood is contingent on securing additional financing.
The company ended June with C$2.9 million in the bank, which is plenty to carry optimization work through the rest of this year but not enough to cover a large property payment due in January.
The coming bill is due to vendors which sold mining claims and related rights in the vicinity of the Livengood project to Tower Hill and includes all of the shares of Fairbanks-based Livengood Placers Inc. The claims surrounding the Money Knob deposit at Livengood were acquired to provide flexibility for placement of the facilities needed to develop a mine at Livengood.
To purchase the claims, Tower Hill paid the vendors US$13.5 million in cash in 2011 and agreed to make a contingent payment of US$23,148 for every dollar that the five-year average daily gold price exceeds US$720 per troy ounce.
The company calculates that this contingent payment, due in January, to be roughly US$14.7 million.
If this payment is not made, the vendors could take back the claims, which “could materially and adversely affect the results of the PFS and any subsequent feasibility study,” according to the company.
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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