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Spanish Mountain PEA pegs posttax NPV of C$482M for First Zone

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Spanish Mountain PEA pegs posttax NPV of C$482M for First Zone

A preliminary economic assessment on the First Zone of Spanish Mountain Gold Ltd.'s namesake gold-silver project in British Columbia estimated a posttax net present value of C$482 million, using a 5% discount rate, with an internal rate of return of 19%.

Initial CapEx for the base case is pegged at C$507.1 million, with a 3.7-year payback period, the company said April 10. Sustaining capital is estimated at C$193.5 million.

The Spanish Mountain mine is expected to produce 2.2 million ounces of gold and 1.5 million ounces of silver over a 24-year mine life, with all-in sustaining costs of US$659 per ounce.

The study was based on a processing rate of 20,000 tonnes per day and assumed life-of-mine prices of US$1,250 per ounce of gold and US$18 per ounce of silver.

The mine plan included 178 million tonnes of mill feed, comprising measured and indicated resources, and 257.1 million tonnes of waste, including about 21 million tonnes of inferred material within the pit.

Spanish Mountain noted that the remaining resource, known as the Second Zone, was not incorporated in the PEA and has the potential to benefit from the infrastructure, equipment and labor put in place with the development of the First Zone.

A 2012 PEA using the entire Spanish Mountain resource outlined a posttax net present value of C$295 million, using a 5% discount rate, with a 12% internal rate of return and a 4.4-year payback period. The previous study estimated initial CapEx of C$764 million and a 14-year mine life.