In 1996, Placer Dome's engineering group
completed a preliminary economic evaluation of the project whereby both deposits were
incorporated into one mining operation. Placer applied a 90% recovery rate and 10%
dilution at zero grade to arrive at 139.4 Mt at 0.33 g/t Au and 0.68% Cu of material
at Kerr in an open-pit configuration. Using the same recovery dilution assumptions
for the Sulphurets deposit yields a total of 54.3 Mt at 0.93 g/t Au and 0.29% Cu.
Combining the Kerr and Sulphurets deposit provides potential material in an open-pit
configuration of 193.6 Mt at 0.49 g/t Au and 0.57% Cu.
For the purpose of their study, two mining rates were investigated, 30,000
and 60,000 tonnes per day (t/d). The 30,000 t/d milling rate would see the Kerr
deposit mined in 12.6 years. The 60,000 t/d milling rate would see the combined
Kerr-Sulphurets deposits mined in 8.9 years.
Commodity prices used in their preliminary
evaluation were US$375 per ounce gold, US$0.95 per pound copper and an exchange rate
of Cdn$1.00 equal to US$0.763.
Capital costs for the 30,000 t/d operation were estimated at $518.7 million, while
the 60,000 t/d scenario would require $779.2 million in start-up capital and $40
million in year 8 to develop the Sulphurets property. Operating costs estimated based
on industry standards with additional expenses added due to remote location of the
deposits. The operating costs were estimated at $7.83 per tonne milled for the 30,000
t/d case and $6.14 per tonne milled for the 60,000 t/d case.
Utilizing these input parameters, both production scenarios resulted in negative net
present values at a 7% discount rate. Placer Dome estimated that a 10% increase in metal
prices would be required to generate a positive net present value at a 7% discount rate.
The profitability estimates of the economic evaluation described above are based on
numerous assumptions which, while perhaps reasonable and appropriate at the time,
are presently out of date. Accordingly, the estimates should not be relied upon at this
time, in particular reliance should not be placed on estimates of profitability at a
particular gold price.
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