JOHANNESBURG (miningweekly.com) – US precious metals miner Allied Nevada Gold has lowered the cost of the first phase of its Hycroft mill expansion project by reviewing the construction sequence of infrastructure and other components.

The company said on Wednesday that it could begin operation of the first line of the mill for a capital outlay of about $768-million, which was an 18% decrease from the Phase 1 costs of $934.5-million estimated in the feasibility.

A detailed capital cost estimate of the optimised initial phase of the two-phased expansion project, which would increase output to 120 000 t/d, would be completed in early 2015.

Allied Nevada said it would delay building certain infrastructure and components that would not deliver significant cash flow in the current market environment, or that were not going to be fully used until the mill was operating at its full capacity of 120 000 t/d.

“We reviewed the construction sequence as presented in the feasibility study and determined that, in this gold price environment, we needed to identify which components delivered the maximum cash flow, while spending the minimum upfront capital. We believe this plan achieves that goal and also provides flexibility in our financing efforts while still delivering growth at Hycroft,” said CEO Randy Buffington.

The first phase of the mill construction would still have a nominal processing capacity of 60 000 t/d, with a potential to process up to 70 000 t/d, depending on ore hardness.

Average yearly sales for the combined heap leach and single line mill during the initial five years were anticipated to be 340 000 oz of gold and 15.1-million ounces of silver at adjusted cash costs of between $575/oz and $600/oz. The first line was anticipated to become operational in 2017, subject to securing the necessary financing.

“We believe this is a more intelligent approach to the construction sequence, which will reduce the financing and execution risk associated with a large expansion in this market,” Buffington added.

The Hycroft openpit, gold and silver mine is located near Winnemucca, Nevada.