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Corvus Gold released a new preliminary economic assessment for its North Bullfrog project in Nevada, and the results appear to be largely positive. The company also put out a mineral resource update that incorporates all drill results through 2014 from its recently discovered high-grade YellowJacket deposit.
Overall, the oxide, drill and blast surface mine will require initial capex of $175 million for an after-tax NPV of $246 million and an IRR of 38 percent with a 2.2-year payback period.
Those numbers are for a gold price of $1,200 per ounce, a level that gold has had trouble staying above over the past three months. However, the PEA also includes results for a gold price of $1,000 — in that scenario, the after-tax NPV would shift to $102.9 million, while the IRR would still be sitting at a respectable 20.5 percent with a three-year payback period.
Additionally, WhittleTM based the mine pit on a gold price of $900 for the purposes of PEA analysis. “By using a conservative US$900 gold price driven WhittleTM pit to define the PEA base case pit design the project demonstrates potential to perform well in the current gold price environment,” said Jeff Pontius, Corvus Gold’s CEO, in Tuesday’s release.
North Bullfrog is expected to have a mine life of 10 years and a very low strip ratio of 0.6 to 1. Operations are expected to produce 149,000 ounces of gold annually for the first six years before dropping to 68,500 ounces per year for the remaining four, all at an average cash cost of $635 per ounce of gold. North Bullfrog will also put out life-of-mine silver production of 2.49 million ounces.
“The results from this initial analysis of the North Bullfrog deposits have clearly illustrated the economic potential of this new and emerging Nevada Gold District,” said Pontius. “The unique mix of a high-grade vein/stockwork deposit surrounded by oxide heap leach deposit has resulted in a potentially exceptional, low strip, open pit, mining project in one of the best jurisdictions in the world.”
To be sure, a 10-year mine life isn’t incredibly long, but Corvus believes that there’s plenty more potential in the region. “The new YellowJacket mineral resource model and its exceptional continuity and structural association is an important ‘proof of concept’ for the occurrence of other large, high-grade, vein systems in the North Bullfrog project area,” the company’s release explains. “This new detailed understanding of the deposit has formed the basis for an expanded new discovery exploration initiative in the District which started in May of this year. “
Pontius also said that pre-existing project infrastructure, advanced permitting and plans for a simple oxide processing operation will make for a “high margin operation with near term production potential,” but stated that the company is also looking to conduct more exploration and to expand the project. “Utilizing the new high-grade YellowJacket deposit as our proof of concept, we have begun a District wide exploration and development program to identify other large vein systems as well as follow-up resource expansion drilling of the YellowJacket deposit, both of which could add significant potential to the North Bullfrog project and Corvus as a whole,” he stated.
Corvus started drilling at North Bullfrog again on April 14, and investors will no doubt be watching to see what results it comes up with. At close of day on Tuesday, Corvus’ share price was up nearly 12 percent, at $0.75, on the TSX.
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Corvus Gold is a client of the Investing News Network. This article is not paid-for content.
Related reading:
Corvus Gold: Targeting Further Discoveries at North Bullfrog in 2015