In a letter to shareholders, McEwen Mining (TSX: MUX; NYSE: MUX) updated its progress at the Gold Bar project in central Nevada and confirmed commercial production is expected to begin in the first quarter of next year.
The company completed the heap leach pad and installed crushing, conveying and agglomeration systems this month. For the rest of the year, its focus will be on finishing the process plant, which is 70% complete, commissioning, and starting to load the heap leach pad.
The mine is expected to produce an average of 62,000 ounces of gold a year over a seven-year mine life at cash costs of $770 per oz. and all-in sustaining costs of $843 per oz.
A feasibility study in February estimated capex of $81 million, and a payback of three years based on a gold price of $1,250 per oz. The study forecast a post-tax internal rate of return of 23% and an after-tax net present value at a 5% discount rate of $54 million.
McEwen Mining is drilling to target additional oxide mineralization to extend the mine life and to explore for deeper Carlin-type gold.
In September, the company outlined a new phase of exploration drilling at three targets on its land package: Cabin Creek, ML, and Gold Bar South.
Cabin Creek lies along an anticline cut by a large fault zone and is one of many targets along the anticline, which extends for more than 8 km across the Gold Bar property.ML, about 1.2 km southeast of Cabin Creek, is a new and untested, shallow, oxide gold target area, and Gold Bar South, formerly known as Afgan, is about 5.7 km southeast of Cabin Creek.
Gold Bar is situated within Nevada's Battle Mountain-Eureka-Cortez gold trend.
Waterton Global's Ruby Hill mine is about 40 km to the southeast.