BlogSin categoríaSolGold slashes Cascabel PFS capex

SolGold slashes Cascabel PFS capex

SolGold (LSE:SOLG) has published a PFS for its Cascabel Cu-Au project in Imbabura, Ecuador, for a phased block cave mine with a much lower initial capital cost than the April 2022 PFS. The new study details the average production of 123ktpa Cu, 277koz/y Au & 794koz/y Ag for an initial 28-year mine life at an AISC of 69c/lb, with peak copper production of 216ktpa. The project would yield an after-tax NPV of US$3.2B and an IRR of 24%, with a four-year payback after an initial capital investment of $1.55B at $3.85/lb Cu, $1,750/oz Au & $22.50/oz Ag. The initial 28-year mine plan will exploit a resource of 540Mt @ 0.6% Cu, 0.54g/t Au & 1.62g/t Ag containing 3.2Mt Cu, 9.4Moz Au & 28Moz Ag. Some 85% of the reserves are in the proven category in the updated estimate. This mine plan includes exploiting only 18% of the Alpala M&I resource. The new PFS features more than $1B in initial capital expenditure savings compared to the previous estimates, which the company said reflects efficient project development strategies and lower technical risk due to the phased approach. Some $2.6B would be invested in subsequent phases. While happy with the results, SOLG CEO Scott Caldwell further optimisation is possible. “We could have done more on the capital aspects, as we took a very conservative approach to assumptions, and there was some testing we couldn’t do because of the time constraints. … The lower initial capex should increase the number of companies potentially interested in developing it,” Caldwell told CGS. Examples include the underground ventilation system being designed for a diesel fleet with the potential to use battery-electric, the assumption that every tonne of secondary breakage in the block cave would have to be crushed, and further marketing for a pyrite concentrate with high Au content.

SOLG said that after a two-year ramp-up period, the initial block cave would achieve a production rate of 12Mtpa to extract high-grade ore, grading about 1.45%CuEqq for the first 10 years of production, which would not sterilise the surrounding lower-grade ore.  Mining would be expanded by an additional 12Mtpa in year six, to be funded from cash flow. It said the phased approach allows for scaling other capital items over time, such as the TSF, the camp and mining equipment. Production of each metal would be lower and AISC higher than detailed in the 2022 study, which stated Cu production of 132kt/y, 358koz/y Au & 1Moz/y Ag at an AISC of 6c/lb following pre-production capital expenditure of $2.7B. The phased approach would see the development of twin processing trains, each with a SAG mill and ball mill and a flotation circuit. Development of the second line would commence in year five and enter production in year six. In addition to reducing the initial capital cost, this approach reduces capital, execution and operational risk. “There are 75 smaller size SAG mills in the world as opposed to the one big one previously proposed. The overall capital is lower, and the development schedule is shortened by a year. We would have a medium-size block cave, so the risk there is less, and the column height of the cave is not extremely aggressive at 450m,” said Caldwell. Block cave development would start at Alpala, which carries higher grade, and then develop the second cave adjacent to it. “There would be no column, and any dilution in the first cave would be from medium grade from the second cave, like at Chuquicamata [Codelco’s copper mine in Chile],” said Caldwell. SOLG could supply ore from the TAM, 6km from the mill site, to provide starter mill feed to get the plant up and running before putting the higher-grade Alpala ore through.

SOLG launched a strategic process a year ago, and the feedback obtained, together with that of strategic investors BHP and Newmont, supports a lower capital approach and provided insight that helped shape some parts of the PFS design. “The groups that came through included experienced block cavers, and they commented on things like the cave height, which we incorporated to make it less aggressive than previously,” said Caldwell. A limited balance sheet will see SOLG focus on inexpensive derisking activities this year and further reduce its US$2M monthly cash burn rate. These include working with the government to secure a right-of-way for a concentrated pipeline to the coast rather than using trucks, as contained in the PFS. “There is a disused railway like that we are talking with the government about,” said Caldwell. Permitting will be a key focus, with the company keen to advance before Ecuador enters the next presidential election cycle. “We estimate it will take 2.5 years to permit. We are proceeding with the new administration and hope to get many permits agreed,” said Caldwell. SOLG expects that the smaller footprint the PFS features and its inclusion of renewable energy to achieve low-carbon production will help with environmental permitting. “We have signed agreements to explore the viability of securing hydro or solar power supply. The contractor that did Lundin Gold’s (TSX:LUG) declines [at Fruta del Norte], used electric jumbos, so we will explore an electric fleet,” said Caldwell.

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