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
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.
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
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
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.