The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Feasibility study shows strong economics for Yukon operation North of 60 Mining News – July 19, 2019
Core being collected from drilling at BMC Minerals' Kudz Ze Kayah project. An expanded and upgraded resource resulting from this drilling formed the foundation for a feasibility study that outlines robust economics for mining a rich zinc-copper-lead-silver-gold deposit on this project in southeastern Yukon.
The economics of mining the zinc-rich ore at BMC Minerals Ltd.'s Kudz Ze Kayah (KZK) project in southeastern Yukon are robust, according to a feasibility study released on July 15.
This engineering and economic study details a mine at KZK that is expected to produce an average of 235 million pounds of zinc, 32 million lb of copper, 56 million lb of lead, 7.8 million ounces of silver and 56,500 oz of gold annually, over an initial nine-year mine life.
This operation is based on 15.7 million metric tons of probable reserves averaging 5.8 percent (915,000 metric tons) zinc, 0.9 percent (135,800 metric tons) copper, 1.7 percent (265,700 metric tons) lead, 138 grams per metric ton (69.5 million ounces) silver and 1.3 g/t (666,000 oz) gold.
These reserves are found in ABM, one of several base and precious metal-rich volcanogenic massive sulfide (VMS) deposits identified in the KZK district, on properties either owned or optioned by BMC Minerals.
The feasibility study envisions a 2-million-metric-ton-per-year operation that mines ore both from an open-pit and underground.
Pre-production capital costs are estimated at US$381 million, including owner and indirect costs of US$95 million and US$36 million contingency. When you factor in US$206 million of sustaining capital and closure costs, the overall costs to build and operate the mine detailed in the feasibility study is US$587 million.
Once in operation, this mine is expected to generate US$4.06 billion in overall revenue, or US$3.09 billion in net revenue, based on US$1.10/lb zinc, US95 cents/lb lead, US$3.15/lb copper, US$18.09/oz silver and US$1,321/oz gold and a currency exchange rate of C$1 to US78 cents.
At these prices, zinc would account for 32 percent of the net revenue and silver would contribute 28 percent. Copper (17 percent), gold (15 percent) and lead (8 percent) would also be significant contributors to the revenue.
Based on these metrics, the mine at KZK is expected to have an after-tax net present value (7 percent discount) of US$527 million and generate an after-tax internal rate of return of 39.6 percent.
"The feasibility study confirms the Kudz Ze Kayah Project is expected to have high grades, high precious metals content, high margins and low costs with strong cashflows resulting in an anticipated capital payback within two years of production commencing," said BMC Minerals President Scott Donaldson.
BMC is currently anticipating that the KZK Mine will have its first concentrates ready to deliver to world markets in the first half of 2022. This timeline is based on the anticipated delivery of the requisite quartz mining license in 2020 and 20 months to build the mine.
The company submitted its mine development proposal to the Yukon Environment and Socio-Economic Assessment Board (YESAB) in 2017, initiating the permitting process for the proposed mine.
BMC has also been working closely with Ross River Dena Council, one of five Kaska Dena First Nations.
Overall, the Kaska Dena Traditional Territory is a 24-million-hectare (93,000 square miles) expanse that covers parts of southeastern Yukon, southwestern Northwest Territories and northern British Columbia.
Earlier this month, Ross River Dena Council announced the completion of an independent environmental assessment review of KZK.
"The Ross River Dena Council is proud of the work undertaken by our wholly owned company, Dena Cho Environmental, in completion of the environmental assessment review and we look forward to continuing our positive working relationship with BMC in the upcoming year," said the Ross River Dena Council Chief Jack Caesar.
Providing more than 400 direct jobs and significant other benefits, BMC Minerals believes that the Kudz Ze Kayah Mine can deliver a positive legacy to the communities and the Yukon as a whole.
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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