KORE Mining (TSXV: KORE; US-OTC: KOREF) has reported a preliminary economic assessment (PEA) for its wholly-owned Imperial gold deposit in the desert region of southeastern California, 14 km from Equinox Gold’s (TSX: EQX; NYSE: EQX) Mesquite mine.
The PEA forecasts an average annual production of 146,000 oz. gold over a mine life of eight years for a total production of 1.2 million oz. at all-in sustaining costs (AISCs) of US$852 per ounce. The early-stage study estimates pre-production capital costs of US$142 million, a post-tax net present value of US$343 million at a discount rate of 5%, and a 44% internal rate of return (using a gold price of US$1,450 per ounce.).
The PEA demonstrates Imperial’s potential to be a good mid-tier gold mine with attractive economics, Scott Trebilcock, the company’s CEO, said in a telephone interview.
“What stands out for me from the PEA is that Imperial is a simple, shallow open-pit, run-of-mine heap leach gold project with a very low-cost of production, which positions it as one of the lowest capital intensity projects on the market,” he noted. “And although the PEA estimates strong returns for a gold price of US$1,450 per ounce, at today’s prices of around US$1,600 per oz., the project has the potential to deliver returns as high as US$450 million at a 5% discount rate.”
The Imperial deposit extends over a strike length of 2.4 km and is up to 750 metres wide and remains open.
Imperial has indicated resources of 46 million tonnes grading 0.59 gram gold per tonne for 0.9 million oz. contained gold and inferred resources of 91 million tonnes grading 0.46 gram gold per tonne for 1.3 million oz. contained gold. The resource estimate used a cut-off grade of 0.01 gram gold per tonne.
Trebilcock points out that Imperial would be attractive to mid-tier miners looking to grow and benefit from being located in the company’s 100% owned Mesquite-Imperial-Picacho district, and 28 km along strike from the Mesquite mine, which is forecast to produce between 120,000 and 130,000 oz. gold this year.
“We also see significant potential to increase the value of Imperial through regional exploration and resource expansion drilling planned for later in 2020.”
To achieve this, the company will apply for drilling permits for high-priority exploration targets on the property, resource expansion targets, and several infill holes to increase confidence in the geotechnical, metallurgical and resource estimate data. It will also continue to explore the Mesquite-Picacho district claims to generate additional drill targets.
Engineering work completed for the PEA will also help to update the plan of operations for Imperial. The company intends to submit its plan to the Bureau of Land Management in mid-2020 to restart the permitting process and aims to decide on mine construction within three years from submission of the Plan of Operations.
KORE Mining was founded in 2016 and went public in November 2018 through a reverse takeover of Eureka Resources. It attracted a strategic investment from Macquarie Bank in May 2019 and investment from mine financier Eric Sprott in August last year.
“KORE is a new company on the market,” Trebilcock says. “However, with management and board holding 50% of the equity, Macquarie Bank holding 5% and Eric Sprott 11%, we believe we have the credibility to move forward and successfully apply for further permitting for the project and eventually construct a great gold mine at Imperial.”
At press time in Toronto, KORE Mining was trading at 40¢ per share within a 52-week trading range of 15¢ and 42¢.
The company has 88.84 million common shares outstanding for a $35.98-million market capitalization.