Solitario Exploration & Royalty Corp.(TSE:SLR)(AMEX:XPL) and Ely Gold & Minerals (CVE:ELY) announced positive feasibility study results on the Centennial gold deposit situated on the Mount Hamilton property in Nevada.
The feasibility study demonstrates robust economics with excellent
potential for developing additional resources, the joint venture
partners said. Solitario and Ely began working together on the property
Assuming a gold price of $1,323 per ounce and silver at $25.34 per
ounce on a pretax, base case basis, the project has an internal rate of
return of 35 percent, net present value at a five percent discount rate
of $145.3 million and a payback period of 2.7 years, generating
approximately $226 million in cash flow over the mine's currently
anticipated eight-year mine-life.
At gold and silver prices of $1,700 and $33 per ounce, respectively,
the project is projected to generate nearly $390 million in life-of-mine
cash flow, Solitario said.
After tax on a base case basis, the project has an internal rate of
return of 25.4 percent, net present value at a five percent discount
rate of $83.1 million and payback of 3.2 years generating cash flow of
Initial capital costs are estimated at $71.9 million, including a contingency of $6.3 million.
Life-of-mine cash operating costs on a gold equivalent basis are
estimated at $535 per gold-equivalent ounce recovered, well below
world-average industry cash costs. On average, silver production
contributes approximately 11 percent to the overall project revenues,
the company said.
With a production rate at 8,500 tons of ore per day, average annual
gold production is seen at 48,000 ounces with silver output of 330,000
ounces for average annual gold-equivalent production of 54,000 ounces.
Average gold recovery is seen at 79 percent, with average silver recovery of 90 percent.
Solitario's president and CEO Chris Herald said: "Completion of this
comprehensive Feasibility Study represents the culmination of an
intensive one-year effort by our staff and SRK.
"With this study in hand, we are now moving forward with permitting
the mine, arranging project financing and adding new reserves.
"With its robust economics, we believe we will have an array of
financing opportunities available to us. Our mine plan is well conceived
from both an operational and environmental standpoint, however, we will
continue to evaluate a number of opportunities identified in the
Feasibility Study that have the potential to reduce capital and
"Additionally, we believe with a modest amount of infill drilling
marginal to the current reserves and confirmation drilling in the
historic Seligman pit area, we will be able to add several years of
additional low-cost production."
Development of the project will deliver "significant" economic
benefits to the local economy of White Pine County, Solitario said, with
an estimated 120 fulltime jobs.
With the completion of the feasibility study, Solitario will hold an
80 percent interest in Mount Hamilton LLC, a limited liability company
which holds 100 percent of the Mount Hamilton project assets.
Ely Gold will hold a 20 percent interest in the company. The
feasibility study has been prepared on behalf of the company by SRK
Ely Gold’s president and CEO, Trey Wasser, added: "The completion of
the Mt. Hamilton Feasibility Study is an exciting milestone for Ely
Gold. The project represents an important building block in our
corporate strategy of participating in North American precious metal
The Mount Hamilton gold project will be an open pit mining operation
with heap leach processing. The reserves are contained within a
well-defined ore body, displaying continuity of mineralization that will
be mined within a single open pit.
The Centennial deposit has a measured and indicated resource estimate
of 23.6 million tons at a grade of 0.022 ounces per ton containing
526,854 ounces gold and 3.15 million ounces of recoverable silver at a
grade of 0.133 ounces per tonne.
The companies said that the feasibility study resource and reserve
estimations demonstrate a potential to increase the size of the existing
Centennial deposit through step-out exploration drilling around the
east and southeast margins of the current pit configuration.
This mineralization falls entirely within a pit design based on
$1,600 per ounce gold and $40 per ounce silver and is situated
immediately adjacent to the reserve pit.
Drilling is planned in these areas with the objective to upgrade the mineralization to measured and indicated resources.
Solitario is also planning a drilling program to upgrade mineralization around the nearby historic Seligman pit area.
The Seligman deposit, situated approximately 2,000 feet north of the
planned Centennial pit, was partially mined in the mid-1990’s. About 310
drill holes defined a well mineralized, near surface gold deposit that
was abandoned due to low gold prices.
Solitario believes these two resource expansion programs may have the
potential to extend mining for three to four years, it concluded.