Northern Vertex Mining (CVE:NEE) has today unveiled its long-awaited preliminary economic assessment report for its Moss gold-silver project in Arizona, showing a whopping 118 percent internal rate of return (IRR), pre-tax.
The NI 43-101 report, which is based on the updated resource estimate the company put out earlier this month, looks at the economics of open pit mining and heap leach processing for the Moss project.
Using a gold price of $1,500 an ounce, the project was estimated to have a net present value of $110 million, pre-tax, at a 5 percent discount rate, with an IRR of 117.9 percent.
Capex was projected at $26.6 million, with a payback period of 15 months before tax.
Cash costs per gold equivalent ounce were pegged at $490 an ounce, for a mine with a life of five years producing at 5,000 tonnes per day for 42,000 ounces of gold equivalent per year.
Northern Vertex has the right to earn a 70 percent interest in the property from Patriot Gold Corp by spending $8 million and preparing a feasibility study. It has spent a total of $5.6 million so far.
"The results from this preliminary economic assessment are positive and show the potential economics associated with the Moss Mine Gold-Silver project," said the company in a statement on Thursday, citing president and CEO Dick Whittington.
The Moss project has a three-phase mine development plan, which is designed to move the project forward from conceptual design and lab test work to on-site pilot plant testing and then onto operations, the latter of which would be dubbed phase II.
The third phase, which the company says is conceptual only and will depend on the success of phase II, would involve mine life extension or expansion, and is not included in the preliminary economic report released today.
The first phase, which will involve pilot plant testing, has been recommended by the technical report, Northern Vertex said Thursday. If it is successful, the company can assess the feasibility of moving forward with operations subject to required financing. The anticipated operating period for phase I is 15 months.
"We believe that there continues to be upside in maximizing results from the in-field operations, from possible pit expansions as a result of the mine exploration programs and of course, possible Mine Life Extension or Expansion (Phase III)," added Whittington in the statement.
"We look forward to advancing the project towards mine operations and to creating both shareholder value and stakeholder value in the Bullhead City Region."
The economics report is based on an updated resource that includes 12.6 million tonnes of measured resources and 9.98 million tonnes of indicated resources, for a total of 653,600 measured and indicated gold equivalent ounces.
The company also said Thursday that overall metallurgical data shows that ore from the project is "readily amenable to agglomeration - heap leach cyanidation processing", with recoveries ranging from 75 to 84.6 percent for gold and from 61.3 to 76.6 percent for silver.
"Although positive results have been obtained to date, additional metallurgical test work will be required," the junior explorer said in its release today.
The PEA report recommended continued exploration at the site to further define mineralization, with the deposit still being open at depth and to the west. The recommended program includes an additional 2,200 metres of drilling, Northern Vertex said, with total costs for the campaign estimated at $562,000.
At a higher $1,700 an ounce gold price, the economics of the project boast an IRR of 150 percent, with a net present value of $137 million pre tax, at the same 5 percent discount rate.
Shares of the company were halted Wednesday prior to the news release today, and resumed trading immediately after the release early this morning. Northern's stock is now trading at $1.02 on the TSX Venture Exchange.