FREE ARTICLE PREVIEW: You are enjoying a free sample of exclusive
subscriber content. There is a limit of three free articles per week.

TABLE OF CONTENTS Nov 19 - 25, 2012 Volume 98 Number 40 - 0 comments

Magellan's bright outlook at Coringa

TEXT SIZE bigger text smaller text
2012-11-19

Magellan Minerals (MNM-V) has completed a preliminary economic assessment (PEA) of its Coringa gold deposit in Brazil’s Tapajos province. It concludes that strong economics justify moving the project to the feasibility stage, with a construction decision expected late next year.

The PEA envisions Coringa as a 750-tonne-per-day underground operation, producing nearly 50,900 oz. gold a year at costs averaging US$531 per oz. over the mine’s 8.5-year life. The project would cost US$64.5 million to build. Sustaining capital over the mine’s life is estimated at US$50.6 million, for a grand total of just US$115 million.

The project boasts an after-tax internal rate of return (IRR) of 33% and a net present value (NPV) of US$109.9 million, using a 5% discount rate and US$1,350 per oz. gold price. Payback is expected in less than three years.

The anticipate returns are even better when the current gold price of US$1,720 per oz. is applied, lifting the after-tax IRR to 52% and the NPV to US$206 million at a 5% discount rate.

“The robust economics shown in the PEA indicate the Coringa is a project of merit, and worth advancing expeditiously,” the company’s vice-president of project development John Kiernan says.

Based on the study, prepared by Global Resource Engineering, Magellan plans to jump straight to feasibility, which will include a drilling program to upgrade the existing resources. Once the study is complete, the junior will make a construction decision, slated for next year’s fourth quarter. 

Using a 1 gram gold cut-off, Coringa hosts 3.2 million indicated and measured tonnes grading 5.5 grams gold per tonne for 561,000 oz.. It has another 5.5 million inferred tonnes grading 3 grams for 534,000 oz. gold.

Magellan plans to mine the shear-vein Coringa project from underground, using an overhand cut-and-fill method that it says will provide some grade control and lower start-up costs. 

Once the ore is extracted, it will be treated in a conventional Merrill-Crowe milling circuit. Gold recovery is estimated at 93.5%. Total operating costs should average US$106 per tonne milled.

The project is in a mining-friendly jurisdiction near infrastructure, including a paved road and a 138-kilovolt power line, Kiernan says, adding that the project has “potential to generate significant cash flow and earnings for shareholders in the near-term.”

On the PEA news, the stock gained 12.5% to close at 36¢, on more than half a million shares traded.



© 1915 - 2014 The Northern Miner. All Rights Reserved.

Related News
Sandstorm gets cashed-up
Royalty, streaming companies blossom
Magellan grows Coringa in Brazil
Related Press Releases
Magellan Announces Shares for Debt Agreement
Magellan Completes Third and Final Tranche of $3,000,000 Private Placement
Magellan Recommences Feasibility Study at Coringa Project, Brazil
 

Companies in This Story

Magellan Minerals Ltd

Properties in This Story

Coringa Property



Horizontal ruler
Horizontal Ruler

Post A Comment

Disclaimer
Note: By submitting your comments you acknowledge that Northern Miner has the right to reproduce, broadcast and publicize those comments or any part thereof in any manner whatsoever. Please note that due to the volume of e-mails we receive, not all comments will be published and those that are published will not be edited. However, all will be carefully read, considered and appreciated.

Your Name (this will appear with your post) *

Email Address (will not be published) *

Comments *



* mandatory fields