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PEA on Tahoe Resources' La Arena II defines net present value of US$824M

A preliminary economic assessment for Tahoe Resources Inc.'s La Arena II project in Peru defined a posttax net present value of US$824 million, discounted at 8%, with a 14.7% internal rate of return and a 4.6-year payback period.

The company, which plans to advance the project to the pre-feasibility or feasibility stage, noted existing synergies between the La Arena II copper-gold porphyry project and its La Arena oxide gold heap leach operation, which produced 196,000 ounces of gold in 2017.

The La Arena II open pit mine is expected to produce an average 149,000 ounces of gold and 207 million pounds of copper per year over a 21-year mine life, with an additional 226,000 ounces of gold and 115 million pounds of copper to be recovered over a two-year preproduction period.

Operating costs are pegged at US$12.87 per tonne processed, with total cash costs to average US$600/oz of gold and US$1.55/lb of copper on a co-product basis, according to the Feb. 21 release.

Initial CapEx is estimated at US$1.36 billion, while sustaining capital over the life of the mine is expected to come in at US$1.09 billion. The base case in the study incorporates metal prices of US$3.30/lb of copper and US$1,300/oz of gold.

Tahoe Resources noted that the La Arena II PEA does not include an estimate of reserves due to the scope of the project changing considerably since the 2015 feasibility study.

The study did include an updated resource estimate, which outlined measured and indicated resources containing 5.6 million ounces of gold and 5.8 billion pounds of copper. Inferred resources contain 683,000 ounces of gold and 349 million pounds of copper.

The estimate uses cutoff grades of 0.10 g/t of gold for oxide material and 0.18% copper equivalent for sulfide material.

Tahoe Resources recently revised the terms of its revolving credit facility, which now consists of a US$175 million revolving credit facility and a US$25 million accordion feature.