AuRico Metals Inc’s PEA for the Kemess East (KE) project in British Columbia, Canada was prepared in accordance with NI 43-101. KE is part of AuRico’s wholly owned Kemess property and is located some 1 km east of the company’s Kemess Underground (KUG) project and 6.5 km north of the existing Kemess South (KS) processing plant and infrastructure.
The KE PEA presents a stand-alone scenario which does not incorporate the economics of the KUG project. A positive feasibility study for the KUG project was released on March 23, 2016. The KE PEA evaluates the development of a low-cost panel caving operation to extract the KE resources, with all ore being processed at the existing KS processing plant over a 12 year mine life.
Based on the positive PEA results, the company plans to conduct a separate feasibility study, expected to be released in 2018, which will evaluate KUG and KE as part of an integrated development scenario. The combined feasibility study is expected to reflect further in-fill and expansion drilling planned at KE this summer and the resulting KE resource update expected in early 2018.
Commodity price and exchange rate assumptions include a gold price of $1,250/oz, a copper price of $3.00/lb, a silver price of $18.00/oz, and a C$/US$ rate of 0.75.
- Pre-tax undiscounted net cash flow of C$1,309 million
- Pre-tax NPV5% of C$670 million and IRR of 22.1%
- After-tax NPV5% of C$375 million, and IRR of 16.7%
- Total life-of-mine (LOM) production of 2.7 Moz of gold equivalent
- Total LOM production of 963,000 oz gold, 687 Mlb copper and 3.8 Moz silver
- LOM average annual production of 80,000 oz of gold, 57 Mlb of copper, and 318,000 oz of silver over 12 years
- LOM co-product all-in sustaining costs (AISC) of $744/oz gold and $1.79/lb copper
- Pre-production capital costs (including 15% to 30% contingency) of $245 million.
Chris Richter, President and CEO, stated, “The release of a PEA on Kemess East represents another important step forward in highlighting to the market the value of the large resource base on our Kemess property. Following the release of a feasibility study for Kemess Underground last year, the Kemess East PEA results demonstrate the potential for a second large, long-life gold-copper mine with attractive economics at Kemess. Both KUG and KE benefit from approximately C$1 billion in replacement cost infrastructure in place. Importantly, we think the opportunity to combine the Kemess Underground project with the Kemess East project could unlock a number of synergies and optimization opportunities and we look forward to an integrated feasibility study in 2018. The integrated study will also reflect drilling planned for this summer at Kemess East, where the deposit remains open to the north, south, and west.”