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.
Integra Resources (TSXV: ITR) plans to update the resource estimate and complete a prefeasibility study on its DeLamar project before the end of the fourth quarter and in the meantime continues to release high-grade results from the project in southwestern Idaho.
The project, 160 km from Boise, consists of two past-producing mines, DeLamar and Florida Mountain, which shut down in 1998 due to low precious metal prices after producing 1.6 million oz. gold and 100 million oz. silver.
Highlights from ten drill holes, which cover a strike length of 400 metres and occur on multiple high-grade gold-silver shoots and veins within and outside the bulk tonnage resource at the Florida Mountain deposit, include 24.64 grams gold per tonne and 295.31 grams silver per tonne (28.44 grams per tonne gold-equivalent) over 5.18 metres starting from 164 metres downhole in drill hole FME-21-127, including 103.94 grams gold per tonne and 1,202.39 grams silver per tonne (119.41 grams gold-equivalent per tonne) over 1.22 metres.
Drill hole FME-21-125 returned 31.24 metres grading 3.13 grams gold per tonne and 104.08 grams silver per tonne (4.47 grams gold-equivalent per tonne) starting from 12.35 metres downhole, including 6.17 grams gold and 87.60 grams silver (7.30 grams gold-equivalent), and drill hole FME-21-130 cut 9.39 metres of 12.50 grams gold and 156.92 grams silver (14.52 grams gold-equivalent) starting 17.22 metres from surface, including 1.52 metres of 73.25 grams gold and 427 grams silver (78.75 grams gold-equivalent).
The company calculates that it has intercepted 92 drill hits over 4 grams gold-equivalent per tonne with a minimum width of 1.52 metres at Florida M0untain, the majority of which are outside the deposit’s bulk-tonnage resource.
“The significance of this deeper drilling continues to demonstrate the resource expansion potential below Florida Mountain,” president and CEO George Salamis stated in the news release. “Our targeted high-grade hit rate in drilling is now 70% and is indicative of a thorough and increasing understanding of structural and geological controls of these veins and shoots.”
“It is evident that high-grade gold-silver resource potential occurs below the existing bulk tonnage, low-grade, pit-constrained gold-silver resource that is currently the focus of the PFS expected in Q4 of this year,” he continued. “Integra will continue to pursue high-grade exploration from surface; however, if warranted and supported by additional internal studies and further drilling, the company may seek to evaluate the possibility of transitioning to underground exploration at Florida Mountain if it appears strongly advantageous. The concept of potentially adding high-grade resources to a larger, bulk-tonnage mining scenario like the one presented in the [2019] PEA, could have the potential to further complement and possibly enhance the future economics and/or production profile of the project.”
The 2019 PEA outlined an open-pit/heap leach production rate of 27,000 tonnes per day sourcing oxide and transitional mineralization from both the Florida Mountain and DeLamar deposits over an initial mine life of ten years. The early stage study forecast average annual production from year one to ten of 103,000 oz. gold and 1.66 million oz. silver (124,000 gold-equivalent ounces) for life of mine total payable production of 1.03 million oz. gold and 16.60 million oz. silver (1.24 million oz. gold-equivalent). Life-of-mine all-in sustaining costs were estimated at $619 per oz. net of silver by-product or $742 per oz. on a gold-equivalent co-product basis.
The PEA outlined pre-production capex of C$213 million ($161 million) and an after-tax payback period of 2.4 years. The study outlined an after-tax internal rate of return of 43% and after-tax net present value at a 5% discount rate of C$472 million ($358 million).
Integra Resources’ management team is made up of the former executive team at Integra Gold, which was sold to Eldorado Gold (TSX: ELD; NYSE: EGO) in July 2017 in a deal worth C$590 million. The chairman of the board is Stephen de Jong, who served as president and CEO of Integra Gold between 2012 and 2017, and the board of directors includes C.L. “Butch” Otter, who was the 32nd governor of Idaho from 2007 to 2019.
(This article first appeared in The Northern Miner)
