WINNIPEG, Manitoba (miningweekly.com) – Ontario-focused project developer Treasury Metals has reported robust economics for its Goliath gold project, in North-Western Ontario, with an updated preliminary economic assessment (PEA) calculating a net present value of C$306-million and an internal rate of return of 25% at a base gold price of $1 225/oz.

The TSX-listed company on Wednesday said the updated PEA benefits from increased mineable resources and a higher-grade profile, while using a more conservative approach for all mining costs, capital costs and dilution, compared with a 2012 PEA.

“Treasury will confidently move forward with a feasibility study in addition to other development activities. The revised PEA is the result of all the considerable progress made at Goliath over the past five years and represents a key milestone in the path towards a production decision," stated president and CEO Chris Stewart.

Goliath lies 20 km east of the city of the Dryden. The project covers 49 km² and is fully owned by the company. The site benefits from excellent access to infrastructure and is directly next to the Trans-Canada highway and Canadian Pacific Railway. The project has access to electrical and natural gas power, rail and paved roadways to site.

The optimised mining plan used in the updated PEA envisions an initial openpit generating immediate revenues to fund underground development. Underground production begins in the second year with the openpit operating over a further seven years, at a reduced output, to supplement underground production to a total of 2 500 t/d over the course of a 13-year total mine life – a 37% longer mine life.

Total gold output is estimated at 1.14-million ounces of gold and two-million ounces of silver, with peak production exceeding 100 000 oz/y from years three to six. Initial capital to fund construction is estimated at C$133.2-million, with a further C$132.5-million in sustaining capital over the life of the mine, mainly to fund the underground expansion.

The mine is expected to produce an average head grade of 3.81 g/t gold and 10.55 g/t silver with openpit and underground mining producing average grades of 1.58 g/t and 4.87 g/t of gold, respectively. The infill diamond drilling programmes completed since the initial PEA completed by Treasury in 2012, have resulted in improved project economics and overall confidence in the mine plan.

The stripping ratio of waste rock to mill feed has been reduced to 6:1, which represents a 35% improvement over the 2012 PEA. This stripping ratio does not include pre-production stripping of about 1.3-million cubic metres of overburden.

All mined ounces in the openpit are within the measured and indicated categories. Seventy per cent of the mineable ounces within the underground operation are classified within the measured and indicated categories, which represent a significant increase from the 2012 PEA. Underground production is envisioned to be carried out at an average rate of 1 600 t/d using the long-hole stoping method on 30 m sublevels. Average underground operating costs have been estimated at $77/t, a 28% increase over the cost assumption in the 2012 PEA.

All-in sustaining cost, as defined by the World Gold Council, is estimated at $566 per gold-equivalent ounce.