VANCOUVER — According to president and CEO Carl Hansen the scale of Atacama Pacific Gold’s (TSXV: ATM; US-OTC: ACPGF) proposed heap-leach mine plan at its Cerro Maricunga project in Chile — located 140 km by road northeast of the city of Copiapo — “will vault [the company] into the realm of mid-tier gold producers.” On Aug. 20 Atacama came one step closer to realizing that vision when it released a prefeasibility study (PFS) modelling an operating plan that appears to offer strong economic returns.
Mineralization at Cerro Maricunga is associated with black- and grey-banded veinlets and early chlorite–magnetite–quartz veinlets occurring in porphyry units, breccia and surrounding andesitic dikes and plugs, which are characteristics consistent with other regional Maricunga belt gold porphyry deposits.
It’s been well over a year since Atacama released its preliminary economic assessment (PEA) at Cerro Maricunga, and though mining variables haven’t changed much, the company has decreased its projected capital costs and increased mine life — while avoiding a sharp decline in gold output.
Atacama’s plan is rooted in a large-scale, open-pit mine that would operate at a nameplate capacity of 80,000 tonnes per day, with Cerro Maricunga’s oxide material trucked to a three-stage crushing circuit before being stacked on heap-leach pads with estimated 70% gold recoveries.
The operation is slated to process 294 million tonnes of ore at a grade of 0.4 gram gold per tonne, with an expected 1.76 life-of-mine strip ratio. This compares to 261 million tonnes at 0.4 gram gold at strip ratio of 1.6 under Atacama’s PEA plan.
Proven and probable reserves total 294 million tonnes grading 0.4 gram gold for 3.7 million contained oz., while measured and indicated resources — across the Lynx, Crux and Phoenix deposits — hold 433 million tonnes of 0.39 gram gold for 5.5 million contained oz.
The mine would crank out an average of 228,000 oz. gold annually over a 13-year life at average cash costs of US$683 per oz. Production would peak during an initial eight-year period when Cerro Maricunga’s output would be 281,000 oz. per year. This compares to annual life-of-mine production of 267,400 oz. under Atacama’s PEA at cash costs of US$652 per oz.
The biggest change lies in the project’s development costs, which are down 23%, or US$117 million, to US$398 million. Atacama has dropped its anticipated pre-stripping costs at the project, as well as appeared to have negotiated more favourable conditions on its mining fleet lease. Additional savings have also apparently been achieved in regards to infrastructure, with the quote down from US$99 million under the PEA to US$58 million in the PFS.
Water for the Cerro Maricunga operation would be supplied from a water-treatment facility located in Copiapo and owned by a Chilean water utility, with the company securing an agreement in July 2013 to buy 2.5 million cubic metres of water annually. An electrical supply line would follow the same right of way as the water pipeline, allowing grid electricity to be used for operating the pump stations, which would save on generator-supplied energy.
Because of this cost-cutting, the company has kept relatively appealing economics at Cerro Maricunga despite falling gold prices. At US$1,350 per oz. the mine would feature a US$409-million after-tax net present value (NPV) at a 5% discount rate, along with a 25% internal rate of return (IRR) and a three-year payback period.
The company’s original model had assumed a US$1,450 per oz. gold price and generated a US$531 million NPV and 27% IRR, with a payback on initial capital pegged at 3.1 years.
“The [PFS] clearly demonstrates the technical and commercial viability of a large-scale conventional open-pit mining and oxide heap-leach processing facility, which will be one of the largest new gold operations in South America,” president and CEO Carl Hansen stated.
Shares have traded within a 52-week window of 57¢ to $1.52, and closed at 77¢ at press time. Atacama reported working capital of US$2.7 million at the end of March, and has 55.3 million shares outstanding for a $14.6-million market capitalization.
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