A preliminary economic assessment (PEA) of Orvana Minerals' (TSX: OR) Taguas gold project, 25 km north of Barrick Gold's (TSX: ABX; NYSE: ABX) Veladero mine in Argentina, envisions a conventional open-pit, heap leach operation, which would produce for a decade.
Orvana announced in May it was acquiring the project from Fabulosa Mines, its 51% shareholder, in a related party transaction. Under the deal, Orvana will pay Fabulosa a net smelter return royalty of 2.5% on any future production from the property.
Taguas, on the eastern flank of the Andes in the province of San Juan, stretches across 15 mining concessions over an area of 33 square kilometres.
The PEA was based on inferred resources of 38.6 million tonnes grading 0.40 gram gold per tonne and 14.6 grams silver per, or 0.51 gram gold-equivalent per tonne, for 494,000 oz. gold and 18.11 million contained oz. silver. The inferred resource used a cut-off grade of 0.25 gram gold-equivalent per tonne.
The study estimates initial capex of US$92.8 million and life-of-mine capital of US$106 million. Average life-of-mine direct cash costs were put at US$498 per oz. gold payable equivalent and US$519 per oz. gold payable equivalent.
The project's estimated after-tax net present value at an 8% discount rate is US$37.8 million and its after-tax internal rate of return is 17.3%.
Taguas is a high-sulphidation epithermal gold-silver system hosted in altered rhyolite volcaniclastic rocks.
The PEA refers only to near-surface oxidized gold-silver mineralization. Oxidation extends from surface to 200 metres depth.
The study, which uses a gold price of US$1,300 per oz. and a silver price of US$17 per oz., envisions a plant running at 12,000 tons per day with gold and silver recoveries of 87% and 52%, respectively.
In addition to Taguas, Orvana owns the producing El Valle and Carles gold-copper-silver mines in northern Spain and the producing Don Mario gold-silver operation in Bolivia.
Orvana's shares have traded in a 52-week range of 12 ? to 32 ? and at press time were trading at 29 ? apiece.
The company has 137 million common shares for a $40-million market capitalization.