Mayfair Gold (TSXV: MFG) has finally delivered a pre-feasibility for their Fenn-Gib gold project in the Timmins region of Ontario, which was previously guided to be released last year. The new study has outlined a net present value (5%) of C$652 million for the project alongside an IRR of 24% and a payback of 2.7 years at US$3,100 an ounce gold.
At current spot prices, pegged as US$4,450 gold, that net present value (5%) rises to C$1.37 billion, while the internal rate of return moves to 38% and the payback period falls to 1.7 years.
Those figures are based on an operation that would produce on average 71,336 ounces of gold over the first six years of mine life, and 64,096 ounces of gold a year over the planned 14.3 year life of mine. Production over the life of mine is estimated at just 1.04 million ounces, leaving room for future extensions of mine life given the 4.3 million ounces indicated resource that exists at Fenn-Gib.
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“This strategy allows Mayfair to advance Fenn-Gib without requiring excessive up-front capital with substantially lower execution risk as compared with a large-scale development. We believe the permitting process can be advanced quickly, positioning the Project for timely development within the current gold cycle,” commented Nick Campbell, CEO of Mayfair Gold.
The proposed open pit project is expected average grades of 1.29 g/t gold over the life of mine, while averaging slightly higher at 1.47 g/t gold over the initial six years of mine life. Recoveries meanwhile are to average 88.3%.
Mayfair is to produce those ounces at a cash cost of $1,203 an ounce and an AISC of $1,292 an ounce, Initial capital costs are estimated at $450 million, while sustaining capital is pegged at $61 million and closure costs sit at $49 million.
“This Pre-Feasibility Study is a realistic representation of the estimated operating and capital costs, production profile, and overall economics of the Fenn-Gib Project. Our plan is straightforward: we intend to build this mine and bring it into operation in the near term,” commented Drew Anwyll, COO of Mayfair.
A final investment decision is expected to be made on the project within the next 3 years, while commercial operations are expected to commence within the next five years. More near term, Mayfair intends to begin front end engineering later this year, followed by detailed engineering and long lead procurement activities.
Mayfair Gold last traded at $5.55 on the TSX Venture.
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