Atlantic Gold Releases Feasibility Study for MRC

Atlantic Gold (TSXV:AGB) certainly seems to be moving quickly with its Moose River Consolidated (MRC) gold project in Nova Scotia. The company released a preliminary economic assessment (PEA) for MRC this past October, and now has put out a feasibility study for the project. The results hold up well at a $1,200 gold price per ounce.
The MRC project consists of two of Atlantic’s four deposits in Nova Scotia, the Touquoy and Beaver Dam projects. Beaver Dam is located 37 kilometers from Touquoy, and will be developed as a satellite deposit. Together, both deposits hold proven and probable reserves of 16.45 million tonnes at a cut-off grade of 0.4 g/t gold and a diluted grade of 1.44 g/t gold (i.e., referring to “mining dilution factors applied to the in situ resource grade estimates” for the project).
The study points to an initial capital cost of $137 million for a post-tax NPV of $168 million and a post-tax IRR of 30 percent with a payback period of two years. Those numbers are for a $1,200 gold price per ounce and an exchange rate of C$1 to US$0.80. However, given that MRC features a life-of-mine AISC of C$690 per ounce, there’s a bit of wiggle room for the project.
With a $1,000 gold price per ounce, the NPV would come in at about $98 million with an IRR of 21 percent. Atlantic’s release also provides sensitivity analysis for scenarios with a stronger and weaker Canadian dollar.
“Since the acquisition of the Nova Scotian gold properties in 2014, we have fast–tracked the development of the MRC Project through to the 2 project financing stage with the delivery today of a strong feasibility study,” said Steven Dean, chairman and CEO of Atlantic Gold. “The results of the feasibility study serve to reinforce the project’s viability in a mining friendly jurisdiction, with continued support from local stakeholders and government.”
Both the Touquoy and Beaver Dam deposits will be developed as open-pit operations, with material from Beaver Dam being crushed and transported to a processing plant at Touquoy. Notably, the metallurgical characteristics of material at both deposits are “very similar,” meaning that no modifications to the Touquoy plant will be necessary for processing Beaver Dam material.
Thursday’s release doesn’t directly discuss the mine life for MRC, but does look at expected production for years one to nine; the PEA outlines a project with a minimum eight-year mine life. There’s also further potential production upside for the project with Atlantic’s Cochrane Hill and Fifteen Mile stream deposits.
All major environmental permits are already in place for mining and processing operations at Touquoy, and discussions regarding permitting at Beaver Dam are currently underway.
To be sure, with a $1,164 gold price per ounce and the resource markets still putting out a rather lackluster performance, plenty of junior resource companies are having a difficult time. However, in a recent video with the Investing News Network, Dean spoke about the importance of looking for management teams that have successfully built companies during down cycles in the mining industry. Some of his thoughts echoed those of industry expert Brent Cook, who often stresses the importance of admitting when projects won’t work.
“We as mining professionals have looked at in excess of 130 companies and projects over the last two and a half years, and less than a handful of those have met our technical and economic criteria,” Dean said. “In fact over 90 percent of them failed to meet our technical criteria.”
Formerly Spur Ventures, Atlantic Gold merged with ASX-listed Atlantic Gold last August, securing the Beaver Dam and Fifteen Mile Stream projects through the acquisition of Acadian Mining last September.
At close of day on Thursday, Atlantic Gold’s share price was up just under 2 percent, at $0.26. Throughout the day 152,000 shares traded hands, about 13 times the daily average for the company. Atlantic Gold is up about 6 percent year-to-date, and has traded within a 52-week range of $0.17 to $0.33.
 
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article. 
Related video:
Atlantic Gold CEO Steven Dean Talks Unique Exploration Approach