Tuesday, 19 June 2012

International Tower Hill Mines to move directly into feasibility study for Livengood

International Tower Hill Mines (TSE:ITH)(AMEX:THM) provided Tuesday an update regarding the optimization review of its Livengood project in Alaska announced last month.
The company said it has decided that the "most efficient and cost-effective" path to permitting the project is to incorporate results from current engineering and metallurgical test work directly into a definitive feasibility study - which the company expects to complete in the first half of next year.
The gold miner has also implemented a cost reduction program, and is assessing "financial de-risking options", it said, including possible joint venture opportunities, for the development of the Livengood property. As a result, the company has decided to postpone much of its district-wide exploration drilling program started in May, and cut a portion of its condemnation drill program.
The mineral explorer said it will focus on completing all the necessary field work and drilling to support the feasibility study as well as the environmental work needed to keep the permitting schedule on track. It also said it believes it has enough funds to complete the revised 2012 work program.
Meanwhile, the company's board is reviewing a list of candidates for the position of CEO, after president and chief executive James Komadina resigned in the middle of May.
Over the past nine months, the company's management has been looking at all potential options for process and development of Livengood, with work focused on metallurgical testing aimed at defining the recovery process.
So far, International Tower Hill said the work has yielded "encouraging" results, and suggests the potential for a more efficient gold recovery system than the one proposed in the preliminary economic assessment (PEA) from last August.
As such, the company expects that the high level of this metallurgical work will allow it to bypass the preparation of a pre-feasibility study and move directly to the completion of a feasibility study in an effort to cut costs.
The miner said that "determining the most cost-effective extraction method is critical to the Livengood gold project's success, given its significant resource size but lower gold grade."
In February, 10,800 kilograms from roughly 3,000 samples selected from throughout the Livengood deposit were sent for the final stage of optimization testing, with results pending.
Remaining engineering work is focused on determining the secondary system that will be used to complete the gold recovery process.
The company said this has been narrowed down to either whole-ore cyanide-in-leach (CIL) or flotation-CIL, the proposed system in the August 2011 PEA. The whole-ore CIL process is being considered as it would be simpler in terms of operation.
Grinding studies have also begun, and may impact equipment selection, power demands and resulting operating costs, with initial work from testing a more extensive sample base showing potentially better grinding characteristics than those in the PEA last year, the company said.
A number of other trade-off studies and project design alternatives have been looked at over the last six months, including various grinding circuits, and heap leaching, among others.
The company said that the large mill concept has so far generated "superior" results to all alternatives.
New mine design work to re-assess cut-off grades and the grade to the mill, as well geotechnical work for surface facility sites is ongoing.
Once all work is finished, the company plans to start permitting discussions with various agencies and look at project financing work required to advance the project toward production.
International Tower Hill controls a 100 per cent interest in the Livengood gold project, 70 miles north of Fairbanks, Alaska.
The PEA last August yielded a base case net present value (NPV) of a whopping $1.2 billion, alongside a significantly expanded surface mine resource.
At a processing rate of 91,000 tonnes per day, the mine was estimated to have average annual production of 664,000 ounces of gold over the first five years, and 562,000 ounces over the 23-year life of the operation, making it potentially one of the largest single gold mines in North America.
Cash flows from the updated mine model, on a pre-tax basis, were calculated at $3.1 billion, lending to a net present value of $1.2 billion, at a 5% discount rate, and a 14.1% internal rate of return, with a payback period of 4.9 years.
The base case scenario, which also yielded a life-of-mine cash cost of $703 per ounce of gold, assumed a gold price of $1,100 per ounce.

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