Integra Gold: Encouraging PEA for Lamanque Gold Project

Quebec-focused Integra Gold (TSXV:ICG) released promising results from the preliminary economic assessment( PEA) for its Lamanque gold project, located in the prolific Val d’Or gold-producing district. Integra’s project is not to be confused with the adjacent past-producing Lamaque and Sigma mines, which were operated by Teck Resources (NYSE:TCK) and Placer Dome, respectively, and produced more than 9 million ounces historically.

Integra compiled its PEA using a base-case scenario of US$1,275 per ounce of gold and a 1.05 Canadian-to-US exchange rate. In Canadian figures, that translates to C$1,339 per ounce of gold and a pre-tax internal rate of return (IRR) of 51 percent with a payback in capital of 1.5 years. Net present value (NPV) sits at $146 million with a 5-percent discount rate. After tax, those figures become an IRR of 38 percent with a payback of 1.8 years and a life-of-mine NPV of $88.5 million, still with a 5-percent discount rate.

The company is looking at a relatively low pre-production capital cost of $69.2 million over a period of two years. It expects to produce an annual average of 112,400 ounces of gold with peak annual production of 143,300 ounces per year. In total, Lamanque should produce 505,600 ounces of gold and have a life-of-mine cash cost of $665 per ounce of gold and cash costs, plus sustaining costs, of $805 per gold ounce.

Integra is using an initial mineral resource estimate dated September 25, 2013 and an assumed a 3 g/t gold cut-off grade diluted to a 2-meter minimum true thickness, with resource figures also provided using a 5 g/t gold cut off. The PEA assumes a variable cut-off grade of between 4 and 5 g/t gold. Per the initial resource, the project has a total indicated 1,525,100 metric tons (MT) of gold at a grade of 10.2 g/t for a total of 499,210 contained ounces. Lamanque also holds 488,500 MT of inferred gold with a grade of 15.1 g/t for a total of 236,540 contained ounces.

Not included in Integra’s PEA are the results of the updated resource estimate that the company provided to investors in January 2014.

For the PEA, Integra also assumed a toll milling or contract milling scenario in which the materials produced from the project will be processed in the immediate vicinity. The company has applied a transportation cost of $45.69 per MT to the PEA.

Moving forward, Integra aims to further its exploration and definition drilling at the Parallel, Triangle and Fortune zones in the hope of updating the resource estimates for all the deposits included in the PEA and evaluating their impact on the project’s economics as a whole. Integra also plans to commence its prefeasibility study and start the permitting process for an underground exploration program.

Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned.