PERTH (miningweekly.com) – An independent review of gold miner Resolute Mining’s prefeasibility study for the development of an underground operation at the Syama project, in Mali, has extended the project’s expected mine life, while improving project economics.

The 2014 feasibility study estimated that at a base case production of 1.1-million ounces, the underground operation would require a capital investment of $85.6-million and would deliver a pre-tax internal rate of return (IRR) of 28%.

The initial feasibility study also estimated that the underground operation would allow the Syama mine to remain operational until 2025.

However, Resolute announced on Wednesday that an update to the ore reserve, which had increased ore reserves to 25.5-million tonnes, grading 2.8 g/t gold for 2.3-million ounces of gold, could extend mining until at least 2028.

Furthermore, total production from the underground operation had been increased to 1.9-million ounces, while preproduction capital expenditure dropped to $74.1-million.

Based on a gold price of $1 300/oz, the project’s estimated IRR had also increased to 50%.

“Completion of the updated feasibility study validates our confidence in the underground development at Syama and delivers a capital efficient outcome with strong long-term cash flows until at least 2028,” said Resolute CEO Peter Sullivan.

“Our activities over the past 12 months have significantly boosted the Syama underground reserve and established it as a robust and long-life gold mine. Excitingly, the study also identified further project upside as the orebody remains open at depth, which with additional drilling, should lead to further resource and reserve increases.”

Resolute was hoping to start the underground operation by 2016, with decline development starting from within the Stage 1 openpit mine from a portal some 200 m below the surface.

This was expected to allow for easy access to underground ore, for the development of initial production stopes, while continuing to extend the decline to the surface for long-term access to the underground orebody.

Resolute would maintain mill feed from Stage 1 ore, sulphide ore from the satellite pits, Syama underground development ore and existing lower grade stocks through to 2017, when full production stoping from underground mining was expected to be ramped up.