Amarillo Gold Corp. [AGC-TSXV; AGCBF-OTCQB] has announced the results of a positive definitive feasibility study (FS) for its Posse gold project on its Mara Rosa property in Goias state, Brazil.
The FS supports an open pit mine and carbon-in-leach (CIL) operation with dry stack tailings that has low capital and operating costs and a strong financial return.
Highlights (all dollar figures are in U.S. dollars, unless otherwise noted):
• Mine life of 10 years.
• Gold production of 102,000 oz/year in the first four years, average annual gold production of 84,000 oz.
• After-tax net present value 5% (NPV 5%) of $183 million, increasing to $360 million using current market rates.
• After-tax internal rate of return (IRR) of 25%, increasing to 50% using current market rates.
• Cash cost of $706/oz, decreasing to $631/oz using current market rates.
• All-in sustaining cost (AISC) of $738/oz, decreasing to $656/oz using current market rates.
• After-tax payback of 2.6 years, decreasing to 1.5 years using current market rates.
• Initial capital cost of $145 million, decreasing to $125 million using current market rates.
• Gold resources of 1.2 million contained ounces, based on 32 million tonnes grading 1.1 g/t.
• Gold reserves of 902,000 contained ounces, based on 24 million tonnes grading 1.18 g/t.
• The company has a strong social license to operate. It has received the Preliminary License and a Protocol of Intent to build the Posse Gold Project was signed with the governor of the State of Goias on May 25, 2020.
“We are very pleased to complete this important milestone in the development of our flagship Posse Gold Project,” said Mike Mutchler, CEO. “We expect to receive our License to Install in the third quarter of 2020 and complete our construction financing then as well. Our goal is to break ground in April 2021.
“Our recently completed regional exploration program showed the potential to find more near-surface gold deposits, so we hope to extend our mine life in due course,” Mutchler continued. “With strong support from the Mara Rosa community, the Goias State government, and the federal government of Brazil, we are excited to build and operate the Posse Gold Project for the benefit of all of our stakeholders.”
Summary of key results and assumptions in the definitive feasibility study:
• Life of mine – 9.6 years
• Mill throughput – 7,000 TPD
• Contained ounces – 902,434
• Average grade (years 1-4) – 1.43 g/t gold
• Average grade (life of mine) – 1.18 g/t gold
• Total gold produced (oz) – 811,023
• Av. annual gold production (years 1-4) – 102,023
• Av. Annual gold production (life of mine) – 84,482
• Average strip ratio (life of mine) – 4.3:1
The feasibility study shows that the Posse Gold Project is highly leveraged to the price of gold. A 10% increase in the price of gold generates a 30% increase in the after-tax NPV 5%.
SRK Consultores do Brasil Ltda (SRK) compiled the definitive feasibility study with input from other engineering companies and consultants.
The Posse Gold Project (Posse or the Project) is located on the Mara Rosa Property in the State of Goias, central Brazil, approximately 6 km north of the town of Mara Rosa. The Project encompasses a land area of 2,552 hectares across three mining concessions plus numerous exploration leases in areas surrounding the Posse mine area.
A recently completed regional exploration program on the Mara Rosa Property showed potential to find near-surface gold deposits along the Posse North Trend. Mineralization was discovered up to 4 km northeast of the Posse Gold Deposit, which remains open at depth to the southwest. These mineralized targets to the northeast provide additional opportunities to expand the resources at Mara Rosa.
With the definitive feasibility study now complete, Amarillo can work with its financial adviser, Auramet International LLC, on financing the Project. Preliminary discussions have already begun with various interested parties.
The company has applied for its License to Install, which it expects to receive in the third quarter of 2020.
Amarillo plans to start acquiring bids for a contract to provide engineering and procurement support for the Project.
Construction-level engineering and procurement will begin shortly, with the goal of starting construction in April 2021, commissioning in the third quarter of 2022, and targeting commercial production in the fourth quarter of 2022.