Interestingly, on the same day that Ramelius Resources canceled plans to expand its gold mine in Washington state, citing rising operating and capital costs, New Century Resources announced the pre-feasibility of reviving the veteran mount. was talking about Lyell copper and gold mines in northwest Tasmania.
Due to high costs over the past two years, Lamelius Resources (ASX: RMS) Phase 3 expansion of the Edna May gold mine in Washington is postponed.
Ramelius said the company expects higher operating and capital costs to outweigh the recent rise in gold prices, bringing the project’s bottom line to levels below Ramelius’ internal hurdles.
The news was welcomed by the market, with Lamelius shares falling 0.9% to $1.075.
Prices for mining contractors have risen “significantly” since the completion of the project’s scoping study in January 2021, according to Ramelius’ statement to the ASX on Monday, with higher estimated operating costs leading to cutoffs. The grade has increased and the overall pit has become smaller. .
A pre-feasibility study of the company’s project estimated a total maintenance cost of A$1,977 per ounce, a 28% increase from the scoping study’s estimate of US$1,540 per ounce.
The price of gold rose 13% to A$2,600 per ounce from the base price in the scoping study of A$2,300 per ounce, but the company said it was still outpaced by higher operating and capital costs. I said that there is.
CEO Mark Zeptner told investors that the company will continue to focus on providing cash flow from its current operations.
“Lamelius has many development options elsewhere in its portfolio and will instead consider deploying capital in those directions for better financial returns at a later date.”
The board has decided to put the project on hold, but the environmental permit will allow for a quick restart in a low-cost/high-gold-price environment in the future.
“Edna May’s ounces are not lost, but if financial gains don’t meet our hurdles, we won’t mine them just to fill our production profile,” he declared Monday. .
“But by completing the permit, the company maintains its voluntariness,” Zeptner said.
The company said it did not include the Edna May Stage 3 project, leaving its three-year production outlook unchanged.
“While the PFS remains unfinished, environmental permitting work will allow for a rapid reopening in a low-cost/high-gold-price environment in the future,” Lamelius said.
(Given the two-year gap between the scoping survey and yesterday’s announcement, higher costs were expected, especially due to rising energy costs and labor shortages due to Covid and lockdowns.)
Looking to the future, Ramelius said the previously released 3 Year Production Outlook remains unchanged as it did not include Edna May Stage 3 (capex or gold production).
The outlook is for the high-grade penny mine to start operations in the second half of 2022 to the second half of 2023, reducing all-in-sustaining costs (AISC) and enabling consistent gold production of 240,000-290,000 oz per year.
New Century Resources (ASX: NCZ) We have been talking for the better part of 16 months about the possible revival of Mt. bottom.
Pre-production capital expenditure is estimated at $279 million. New Century said in a statement Monday that using existing infrastructure at Mount Lyell, the mine plan’s objective is to minimize capital development and maximize return on investment by moving production forward as quickly as possible. I said yes.
New Century CEO Robert Cooper said on Monday that the release of the Mt Lyell PFS is an important milestone towards first production.
“This study clearly demonstrates that Mt Lyell is one of Australia’s largest and most attractive short-term copper projects, with operational metrics comparable to many current operations and significant scale and mine life. We have the resource scale to allow us to do that,” he said. .
“With a mine’s initial 25-year life and an overall resource base of over one million tonnes of copper and nearly one million ounces of gold, this project is a transformational and long-term prospect for low-carbon copper for us. It will be a sustainable source of energy, supporting the global transition to renewable energy and contributing to the decarbonization of the economy.”
The company said the feasibility study will be completed in the third quarter of this year. The question is whether the cost pressures that drove Lamelius’ decision will affect New Century’s plans for Mount Lyell, a more isolated operation near Queenstown in northwest Tasmania.
The potential development of a “low cost, long life” copper and gold business will allow NCZ to achieve a pre-tax net present value of $560 million, an internal rate of return of 22% and I said it would be $1.08 billion. .
It is expected to produce 555,000 tonnes of copper and 320,000 ounces of gold concentrate during this period.
The first decade of the mine’s life is expected to produce 27,000 oz of copper and 16,000 oz of gold per year.
During this period, 82% of production came from the Indicated Mineral Resources, with an additional 8% of the Inferred Mineral Resources drilled pending conversion to Indicated Mineral Resources.
The average C1 cost (mining and processing costs) is estimated at US$1.73 per pound of copper in the first decade, and the C1 cost over the life of the mine is US$1.89 per pound. Comex copper is now above $4 a pound.
In October 2021, New Century signed a two-year option contract to assess a potential restart at Mount Lyell.
If the option is exercised, it will acquire the Tasmanian copper mine that owns the Mount Lyell Project.
According to the news, NCZ shares rose more than 3.7% to close at 84 cents.