Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Atac Resources’ (CVE: ATC) stock closed at $0.18 per share, down 7.9% on Thursday after the Vancouver-based junior unveiled a new preliminary economic assessment (PEA) for its Tiger deposit in Canada’s Yukon territory.
Investors pushed the stock down in double the usual trading volume, affording Atac a market value of $28 million on the TSX Venture Exchange. Gold was trading higher on Thursday at $1,644 per ounce.
The PEA envisions a smaller, higher grade operation with better economics compared to a previous assessment completed in 2016.
The new PEA outlines an open pit operation with a life of seven years (including one year of construction) and average annual production of 45,000 ounces of gold.
The project’s after-tax net present value is $63.9 million (at a 5% discount rate) and its internal rate of return, 42.6%.
Total production would be 267,000 ounces at an average diluted grade of 3.82 g/t, with production peaking at 72,860 ounces in the first year of operations.
Capital costs are pegged at $82.3 million with a payback period of 1.4 years.
The project’s after-tax net present value is $63.9 million (at a 5% discount rate) and its internal rate of return is 42.6%. The updated study used a gold price of $1,400 per ounce and an exchange rate of $0.77. All-in sustaining costs are projected at $661 per ounce of gold.
Tiger is located at the western end of its 1,700-sq.-km Rackla project, 55 km northeast of Keno City, in east-central Yukon, and is the most advanced of several gold deposits on the property.
“The updated geological model and PEA envision a smaller but higher grade operation than contemplated by the 2016 resource and PEA,” said Graham Downs, CEO of Atac.
“The updated deposit model has also identified strong high-grade trends which are open along strike and at depth. Tiger’s high grades and margins, coupled with nearby satellite targets, provide a compelling case for advancement.”
The project would be a conventional truck-and-shovel open pit operation with a 1,500 t/d carbon-in-pulp gold processing plant. Year-round operations would be supported by a 68-km tote road connecting the project to the Yukon highway system near Keno.
Atac has also updated resources at the project. Tiger contains a mixture of oxide and sulphide ore in both open pit and underground categories, although only open pit resources are considered in the PEA.
Total measured and indicated resources (combining both types of ore and mining methods) are 4.5 million tonnes averaging 3.19 g/t gold for 464,000 ounces.
Open pit indicated oxide resources contribute the most ounces at 238,000 ounces of gold contained in 2 million tonnes grading 3.74 g/t and a cutoff grade of 0.75 g/t gold.
(A version of this article first appeared in the Canadian Mining Journal)
