O3 Mining (TSXV: OIII) has released the results of a preliminary economic assessment on its Garrison gold project in Ontario’s Kirkland Lake region. The study suggests a ‘low capital intensity’, 12-year, 11,000 tonne per day open pit operation with carbon-in-leach (CIL) processing.
The proposed mine would generate an average of 121,000 gold oz. annually in its first eight years, with life-of-mine all-in sustaining costs pegged at US$818 per ounce. The pre-production capital estimate stands at $267 million, including $29 million estimated for indirect costs and $38 million allocated as a contingency.
The resulting after-tax net present value estimate, at a 5% discount rate, stands at $321 million with a 33% internal rate of return and a 2.3-year payback, based on US$1,450 per oz. gold.
Jose Vizquerra, O3’s president and CEO, noted the potential of the Garrison project associated with its low capital intensity.
“Garrison has been in the shadow of our Marban and Alpha properties in Quebec but as this PEA shows, it is an integral part of the value proposition of O3 Mining,” he stated in a news release. “Garrison came from Osisko Mining, which completed first-class exploration work that defined the initial resource. We have worked with Ausenco to produce a high-quality PEA that focuses on capital efficiency and demonstrates the value of Garrison to O3 Mining. The corporation is ready to maximize Garrison’s value by advancing the studies to further de-risk the project.”
The PEA mine plan envisions the mining of the site’s three deposits – 903, Jonpol and Carrcon – which would generate a total of 47.3 million tonnes of mill feed at 0.82 gram gold per tonne. The proposed process plant would use CIL processing with gravity concentration to recover gold.
The early-stage study has also defined additional opportunities to improve project economics. These include additional infill work to upgrade resources, geologic studies and step-out drilling to extend resources and metallurgical test work to potentially reduce mill equipment sizing.
In addition, the PEA identified additional field work and trade-off studies to complete ahead of more advanced mining studies on the asset.
The Garrison project is located 40 km north of Kirkland Lake, along the Porcupine-Destor break in the Abitibi greenstone belt.
Total indicated resources across the three deposits at the site total 66.3 million tonnes grading 0.86 gram gold, for a total of 1.8 million gold ounces. Additional inferred resources stand at 45.3 million tonnes at 0.73 gram gold, for a further 1.1 million gold ounces.
This latest study follows the September release of a PEA on O3’s Marban project in Quebec.
Vizquerra also highlighted how these two studies position O3 to emerge as a new player in the gold development space.
“Together these PEAs mark the transition of O3 Mining from an explorer to an up-and-coming gold developer with a total NPV of $744 million of fundamental value.”
This article first appeared in the Canadian Mining Journal, part of Glacier Resource Innovation Group.