White Gold’s (TSXV: WGO) first economic study of its namesake Yukon project describes a nine year open pit mine worth C$1.9 billion after tax, despite being built on barely two-thirds of the ounces the company has already drilled off.
The maiden preliminary economic assessment puts the after-tax net present value at C$1.91 billion using a 5% discount rate, alongside a 38% internal rate of return and a payback period of 1.7 years. Those figures rest on a flat gold price of US$3,600 per ounce. Life of mine after tax free cash flow is estimated at C$2.69 billion.
The plan calls for open pit mining at four deposits, including Golden Saddle, Arc, Ryan’s Surprise and VG, feeding a 12,000 tonne per day carbon-in-leach mill.
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Over 9.4 years, the mine would process 41 million tonnes at an average grade of 1.54 grams per tonne gold, with a recovery rate of 87% and a strip ratio of nine to one. Total payable production is 1.77 million ounces, averaging 188,000 ounces a year and 223,000 ounces annually over the first five years.
Initial capital is pegged at C$1.05 billion, including C$139 million in contingencies. Sustaining capital adds C$326 million and closure costs another C$146 million, for total capital of C$1.52 billion.
Operating costs work out to C$74.23 per tonne processed. Cash costs are estimated at US$1,290 per ounce and all in sustaining costs at US$1,480 per ounce.
The mine plan notably uses less than two thirds of the current resource, leaves out the QV deposit and assigns no value to the higher-grade underground material at Golden Saddle, where indicated resources exceed 1.1 million ounces at 2.84 g/t gold.
“Few gold projects anywhere offer this combination of scale, potential returns, favourable jurisdiction and upside,” Chief Executive Officer David D’Onofrio said, adding that the project has moved “from a conceptual exploration idea towards a development asset.”
White Gold plans to drill 15,000 to 20,000 metres this year with three rigs, and will run further metallurgical testing on Arc and Ryan’s Surprise, where recovery is assumed at 72%. Baseline environmental work is also underway ahead of permitting.
White Gold last traded at $1.94 on the TSX Venture.
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