London-listed Hochschild Mining has dusted off plans for the Volcan project, which it acquired more than a decade ago when it bought Andina Minerals in 2012.

The project, located in the Maricunga region of Chile, remained dormant until early 2022, when work was initiated to re-evaluate the project scope and social economics in the current gold price environment.

During the last year-and-a-half, Hochschild has created a new Canadian company, Tiernan Gold and restructured the project to be owned by Tiernan, completed an updated mineral resource estimate (MRE) and completed a positive preliminary economic assessment (PEA).

The PEA details plans for a 22-million-tonne-a-year openpit, heap leach operation with a 14-year mine life. The mine will produce an average of 332 000 oz/y of gold for the first ten years of operations with 3.8-million ounces produced over the estimated mine life.

Cash costs equate to $921/oz and all-in sustaining costs to $1 002/oz.

Volcan will require an initial capital investment of $900-million and a life-of-mine sustaining capital of $276-million.

The PEA is based on a MRE of 463.3-million tonnes of measured and indicated resources at 0.66 g/t for 9.8-million ounces of gold contained and 75-million tonnes of inferred resources at 0.516 g/t at an additional 1.2-million ounces of gold contained.

"The updated MRE and PEA confirm that Volcan is a large resource capable of generating significant annual gold production with substantial margins at today's gold prices,” said CEO Ignacio Bustamante.

The net present value is calculated at $826-million and the internal rate of return at 21%, using a $1 800/oz gold price.

Hochschild has executed an agreement for a $15-million financing with the sale of a 1.5% net smelter return royalty on the project to Franco-Nevada.

It has also engaged Canaccord Genuity to evaluate strategic options for Tiernan.

“Tiernan is now fully funded independently to carry out the next phases of project de-risking and, with gold prices remaining strong, we believe there is significant value in this project.

“By engaging a financial adviser, we are looking at a number of options to unlock this value for the company while we focus our resources on the development of high-grade reserves and resources close to Immaculada, Mara Rosa construction in Brazil and the recent Royropata discovery near Pallancat,” said Bustamante.