A new study shows that Paramount Gold and Silver’s (PZG-T, PZG-X) past-producing Sleeper gold mine, 40 km from Winnemucca, Nev., could be revived to produce 172,000 oz. gold and 263,000 oz. silver per year over 17 years.
Previous operations exploited high-grade veins at Sleeper, but the current preliminary economic assessment shows plenty of potential in low-grade material at current gold prices.
The study looked a 30-million tonne per year, open-pit, heap-leach operation producing a gold-silver dore. With initial capex pegged at US$346 million, and total life-of-mine capital costs at US$688 million, Sleeper’s pre-tax net present value (NPV) was estimated at US$695 million and its internal rate of return (IRR) at 26.8%, using a discount rate of 5%. The operation could generate cash flow of US$1.2 billion, with life-of-mine cash costs estimated at US$767 per oz.
Increasing the gold price from a base case of US$1,384 per oz. gold to US$1,618 per oz. (the spot price on July 3) increases the NPV to US$1.2 billion, cash flow to US$1.9 billion, and the IRR to 40%. (The silver price used in both scenarios was US$26.33 per oz.)
The study, conducted by Scott E. Wilson Consulting, also looked at combining a heap-leach operation with a conventional milling operation to treat sulphide ore, but determined that a heap-leach only operation was the better option.
Based on testing and historical metallurgical information, heap leaching will recover 78% of the oxide gold and 55% of the sulphide gold, as well as 10% of the silver (in oxides or sulphides).
Measured and indicated resources at Sleeper total 241.5 million tonnes grading 0.39 gram gold and 4.2 grams silver for 3 million oz. gold and 32.6 million oz. silver. Inferred resources add 124.5 million tonnes grading 0.34 gram gold and 3.08 grams silver for 1.4 million oz. and 12.3 million oz. silver.
Roughly 20% or so of the resource is contained in oxide material, the rest in sulphides. (The estimate used a cutoff grade of 0.1 gram gold for oxides and 0.2 gram for sulphides.)
Mine dumps left over from previous mining add 22.4 million tonnes of additional inferred resources grading 0.3 gram gold and 2.39 grams silver for 216,000 oz. gold and 1.7 million oz. silver. Metallurgical recoveries from the mine dump material was the same as recovery from the oxide material (78% for gold and 10% for silver).
Not included in the PEA were zones with low gold recovery in cyanide leach tests: the Westwood zone and tailings.
The Sleeper deposit sits on the edges of the large Range Front fault system, which served as a conduit for acidic, gold-bearing solutions responsible for the mineralization found in volcanic rocks.
The company is also exploring high-grade targets on the 192-sq.-km property, in Humboldt Cty. Paramount acquired Sleeper, which produced 1.7 million oz. gold and 2.3 million oz. silver from 1986 to 1996, in 2010.
Paramount also recently reported drill results from its San Miguel gold-silver project in northwestern Mexico. The program, which returned up to 24.1 metres of 6.57 grams gold and 3.46 grams silver, was designed to test the continuity between the La Union and Santa Clara deposits, and will be followed by definition of higher-grade zones. The testing confirmed that the mineralization is continuous and that the 7.5-km-long Guazapares Megastructure is one of the longest continuous structures in the Siera Madre Metallogenic belt.
A resource update for San Miguel is slated for August.
Paramount shares shed a few cents on the news, trading at $2.35 apiece in a 52-week range of $1.98-3.20. The company has 147.4 million shares outstanding. Paramount closed a $21.4-million financing in March, selling 10.4 million common shares (no warrants attached) at $2.05 per share.
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