Canada's Argonaut Gold (TSX: AR) announced the results of an updated NI 43-101 compliant preliminary economic assessment (PEA) for its 100%-owned La Colorada gold-silver project in Mexico.
Using base case prices of US$1,500/oz gold and US$20/oz silver, the project has a pretax NPV of US$278mn using a 5% discount rate and a pretax IRR of 249%, while pretax cash flow from operations is estimated at US$349mn over the 9-year minelife, Argonaut said in a statement.
Initial capital expenditure for the project is estimated at US$14.5mn with sustaining capital of US$11.7mn.
Development will be fully funded by internal cash balance and ongoing cash flow from operations, CEO Peter Dougherty said, adding: "The necessary permits are in hand for us to begin production in the second quarter of 2012."
Production is expected to average 53,000oz of gold equivalent over the mine life at estimated cash operating costs of US$620/oz, net of silver byproduct credits.
Total processed indicated and inferred resources includes 35.5Mt containing 796,000oz gold and 11.6Moz silver at average grades of 0.69g/t and 10.2g/t, respectively.
Total recovered ounces are expected to reach 480,000oz of gold equivalent, utilizing anticipated recoveries of 55% for gold and 27% for silver.
Throughput is estimated at 4Mt/y from an open-pit mine, with a recovery process using cyanide heap leaching, followed by carbon adsorption/stripping and electrowinning to produce doré bars.
The updated PEA was completed by SRK Consulting.
Argonaut acquired La Colorada, along with the San Antonio gold project, through the acquisition of Pediment Gold last February.
The firm also has the El Castillo mine and La Fortuna project in Mexico.
To read the full statement, go to this link