First Mining Gold (TSX: FF) has released an updated pre-feasibility study for their Springpole Gold project, found in Ontario. The revised study serves as an updated to the PFS that was originally released back in January 2021.
The updated study is based on a 30,000 tonne per day open pit mining operation, which is now expected to see an initial life of mine of 9.4 years, versus the prior 11.3 year life of mine estimate.
Average annual gold recoveries are expected to average 330,000 ounces of gold and 1.70 million ounces of silver over the first five years of mine life, while production is expected to average 281,000 ounces of gold and 1.47 million ounces of silver. Over the life of mine, total metal recoveries are estimated at 2.6 million ounces of gold and 13.8 million ounces of silver.
Under the prior model, estimated recoveries were 3.2 million ounces of gold and 18.1 million ounces of silver, with average annual production of 287,000 ounces of gold and 1.6 million ounces of silver.
Mining will see a total of 102.0 million tonnes of ore mined and 309.5 million tonnes of waste mined, resulting in a strip ratio of 3 to 1. Prior estimates had the strip ratio estimated at 2.36 to 1.
In terms of processing, the process plant is expected to include the standard crushing, grinding, and flotation circuits, followed by fine grinding of the flotation concentrate and separate agitated leaching circuits followed by a carbon in pulp recovery process and Merrill-Crowe circuit to produce dore bars. Grades are expected to average 0.94 g/t gold and 4.9 g/t silver over the life of mine, with recoveries of 86.0% and 86.2%, respectively.
As for costing, the first five years are anticipated to see cash costs of US$742 an ounce alongside all in sustaining costs of US$877 an ounce, net of by-products. Over the full life of mine, costs are expected to be slightly higher at cash costs of US$802 an ounce and an AISC of US$938 an ounce.
The 2021 study comparatively had predicted cash costs of just US$618 per ounce, and an AISC of US$645 an ounce.
Initial capital costs meanwhile are estimated at US$1.1 billion, alongside sustaining costs of US$323 million and closure costs of US$40 million. The prior model comparatively expected initial capital costs of US$718 million, sustaining costs of US$55 million, and closure costs of US$29 million.
Despite the lower production estimates under the revised model however, the economics have greatly improved for Springpole. Under the base case model, which is based on US$3,100 an ounce gold and a 5% discount rate, the project on an after tax basis is estimated to have a net present value of US$2.1 billion, alongside an IRR of 41% and a payback period of just 1.8 years.
The prior estimate had placed the net present value at US$955 million alongside an IRR of 29.4% and payback of 2.4 years, using a 5% discount rate and US$1,600 an ounce gold.
“”Since our original PFS was published in 2021, we have completed significant engineering work, the results of which have been reflected in the updated infrastructure and design plans that First Mining has carried through the Environmental Assessment process. At the same time, this study demonstrates the strong leverage to gold price the Project possesses, and clearly demonstrates the potential for Springpole to be one of the largest economic drivers in northwestern Ontario for a generation to come, delivering hundreds of jobs and careers in the region, significant contracting opportunities for regional and Indigenous businesses and more than $7 billion in gross domestic product, as well as generational opportunities and potential infrastructure improvements for the Indigenous communities in the area,” commented Dan Wilton, CEO of First Mining.
First Mining last traded at $0.365 on the TSX.
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