A preliminary economic assessment on an expansion at Richmont Mines Inc.'s Island gold mine in Ontario confirmed that an increase in underground mine and mill productivity to 1,100 tonnes per day will support production growth of 22% at low cash costs and a robust cash flow stream over the eight-year, phase-one period, requiring incremental capital of C$28.2 million.
The operation is expected to produce an average 125,000 ounces of gold per year, excluding the ramp-up period in 2017 and 2018, over an eight-year period.
All-in sustaining costs are estimated at C$835 per ounce with all-in costs of about C$910 per ounce. Mining unit costs will average C$129 per tonne and are expected to decline by up to 8% to C$28 per tonne once the mill reaches the 1,100 t/d run rate in late 2018.
The PEA outlined a posttax net present value of C$452 million, using a 5% discount rate and assuming a spot gold price of C$1,700 per ounce. Total project CapEx is estimated at C$68 million, which includes the C$28.2 million in incremental expansion capital.
The study primarily considered long-hole mining over four mining horizons down to a maximum depth of 1,000 meters using the current dual ramp system.
Richmont Mines will continue to evaluate the potential phase-two growth scenario with an aim to place the mine as a low cost producer with an annual production profile of between 150,000 ounces and 200,000 ounces over a mine life exceeding 10 years.
The company noted that the second-phase strategy is dependent upon the success of drilling programs to increase resources beyond 2 million gold ounces, net of mining depletion.
The Island property hosts proven and probable reserves containing 752,000 ounces of gold while measured and indicated resources contain 91,000 ounces and inferred resources contain 996,000 ounces.