PROJECT UPDATE: Geologix Pops on Promising Prefeas

Geologix Explorations (TSX:GIX) gained on Tuesday after announcing the results of a prefeasibility study on its Tepal gold-copper project in Mexico. The stock closed up 3.45% on the Toronto main board to $0.15, trading at over triple average volumes.

According to the prefeasibility study, Tepal has a pre-tax net present value of $925 million with no discount, with a 36 percent internal rate of return paid back over 2.7 years.

The mine would produce 117,000 ounces of gold and 49 million pounds of copper over its first seven years of operation. The mill would process 38,700 tonnes a day for a minelife of 11.5 years, with cash costs of production estimated at $170/oz for gold and $0.62 a pound for copper. Pre-production capex is pegged at $354 million. 

The deposit, a combination of oxide and sulphide ores, contains 3.247 million gold-equivalent ounces, and 1.311 billion pounds of copper-equivalent.

The report has been several months delayed due to the redesign of the mill, but Geologix says the delay was well put to use because it allowed the company to acquire vendor, contractor, and supplier quotations for all major equipment, construction costs, and supplies. “The benefit of these refined quotations is a significant increase in the accuracy of our operating and capital cost estimates,” said Geologix CEO Dunham Craig.

Geologix said it has begun work on a feasibility study for Tepal which it expects will be completed this year. The company will also begin securing the funds necessary for meeting its $354 million capital expenditures budget. Geologix says it is in active discussions with potential funding sources including a consortium of metal traders and streamers, smelters, equipment financiers, and commercial bank syndicates.

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