Paramount Gold and Silver Corp. (TSX:PZG) filed the final NI-43-101-compliant Preliminary Economic Assessment report, prepared by Scott E. Wilson Consulting Inc. (SEWC) for the Sleeper Gold Project in Nevada.
As quoted in the press release:
SEWC has concluded that the most attractive development scenario at this stage for Sleeper consists of a large-scale open pit mining operation with a heap leach processing plant handling both oxide and sulphide material, producing a gold-silver dore. A “heap leach only” base case scenario was developed for the project incorporating an 81,000 tonnes per day operation (approximately 30 million tonnes per year throughput), resulting in a projected 17 year operation with average annual production of 172,000 ounces of gold and 263,000 ounces of silver. Projected life of mine average cash operating costs are US$767 per ounce of equivalent gold recovered. Start-up capital costs for this project scenario are estimated at US$346 million. Sustaining capital costs over the project’s life are estimated at an additional $278 million. Total capital cost contingencies over the project life are estimated at an additional $64 million, bringing the total life of mine capital costs to $688 million. The total cost of equivalent gold production (including cash operating costs and total capital and contingency costs over the life of the mine) is estimated at US$996 per ounce.
At a gold price of US$1384 per ounce and a silver price of $26.33 per ounce (the 3 year trailing average of gold and silver prices as at July 3, 2012), the base case has a US$1.2 billion pre-tax net cash flow, a US$695 million net present value at a 5% discount rate and an internal rate of return of 26.8%. At US$1618 gold (the spot price on July 3, 2012), the total pre-tax net cash flow increases by 160% over the base case to US$1.9 billion, the net present value at a 5% discount rate almost doubles to US$1.2 billion and the internal rate of return improves to a robust 40%.
Paramount’s CEO Christopher Crupi commented:
This PEA demonstrates that the Sleeper Gold Project can once again be a successful gold and silver producer. The PEA estimates relatively low start-up capital and unit operating costs which make Sleeper a valuable opportunity, especially in the present gold price environment and considering our proximity to existing infrastructure. Paramount is now focused on improving the project`s economics. We are proceeding with additional drilling in close to the designed pit where we are confident we can find higher grade material to generate higher estimated cash flows and extend mine life. We are also planning further metallurgical test work which could enable us to include the West Wood higher grade deposit as in-pit resources in the next engineering study which could be at the Preliminary Feasibility level required for reporting reserves.