The Kiena complex, in Quebec.
The preliminary economic assessment (PEA) for the Kiena project shows that a restart of the mining complex in Val d’Or, Quebec, is viable in a “very short-term horizon”.
The study, released by TSX-listed Wesdome Gold on Wednesday, pointed to an aftertax internal rate of return of 102% and an aftertax net present value, at a 5% discount, of C$416-million.
Preproduction capital is estimated at C$35-million and the project has a payback period of 1.7 years.
The Kiena complex will produce 687 449 oz of payable gold, with a yearly average of 85 931 oz at an all-in sustaining cost of $512/oz.
“The PEA demonstrates a low-cost and high margin operation, with low capital requirements and a short payback period, while minimising risks and maximising shareholders' return,” said president and CEO Duncan Middlemiss.
He added that Wesdome was well-financed to advance the project to the next level with a cash position as of the end of the first quarter of C$49.4-million.
The PEA is based on the mineral resource estimate of September 2019 and includes only those resources proximal to the mine infrastructure, specifically the A Zone, B Zone, S50, VC Zones and the South Zone.
Diamond drilling activities at Kiena restarted on May 11, focusing on the continuation of converting inferred into indicated resources, exploring the A Zone up-plunge potential and expanding the resources at depth in the Kiena Deep A Zone.
“The success of this drill programme and drilling post-September 2019, will further enhance the project economics outlined above,” said Middlemiss.
An updated resource estimate is planned early in the fourth quarter, followed by a prefeasibility study (PFS) and a production restart decision in the first half of 2021.
“The Covid-19 pandemic has impacted our abilities to drill and develop at our full capacity, therefore this timeline includes contingencies until further information is available regarding the pandemic and necessary protocols going forward.”
Over the longer term, Wesdome would turn to the remaining resources on the property, which together total 2.83-million tonnes at 8.7 g/t for 788 000 oz in the measured and indicated category, and 2.92-million tonnes at 8.6 g/t for 798 000 oz in the inferred category.
“There is certainly no lack of prospective targets.”