www.alliednevada.com
Allied Nevada has reactivated the Hycroft Mine and expects to begin gold production in the fourth quarter of 2008, reaching full production capacity in the second quarter of 2009. Once at full capacity, the Mine will produce approximately 100,000 ounces of gold per year.
Allied Nevada`s updated scoping study for Hycroft forecasts production rate of 610,000 ounces of gold per year
Gold and silver producer Allied Nevada Gold (TSX: ANV) (NYSE Amex: ANV) has released an updated milling scoping study for its Hycroft project in Nevada, which forecasts a 174,000 ore ton per day (tpd) milling and heap leach operation, with an average annual production of approximately 610,000 ounces of gold and 27.0 million ounces of silver.
In August, Allied Nevada announced measured and indicated resources of 8.0 million ounces of gold and 259.2 million ounces of silver (573 million tons grading 0.014 opt Au and 0.45 opt Ag). Life of mine production in the updated study is 7.2 million ounces of gold and 318 million ounces of silver. Annual cost of sales is now expected to average approximately $350 per ounce of gold sold.
"Management expects that ongoing drilling should continue to expand the resource, which could further improve the robust economics of this project. If this project is developed as outlined in the scoping study, Hycroft has the potential to be among the largest gold mining operations in the world," said president and CEO Scott Caldwell.
The updated sulfide scoping study, prepared by Scott E. Wilson Consulting, outlines an initial development scenario for the large oxide and sulfide resource at Hycroft.
The report suggests that the most economic mining method is a large scale bulk tonnage open pit mining operation, with an estimated capital cost of $1.1 billion for the milling and flotation process facility, additional leach pads, mining equipment and other ancillary infrastructure.
Lower grade oxide mineralization would be processed as run of mine heap leach material, and higher grade oxide mineralization along with sulfide mineralization, would be processed at the 100,000 tpd milling facility.
According to the study, the expanded project would, on average, produce approximately 5,000 tons of concentrate per day, containing approximately 1,400 ounces of gold and 78,000 ounces of silver.
The company is currently reviewing options for constructing an on-site oxidation circuit, so as to complete final processing at the site of the project, rather than shipping the concentrate elsewhere, said Allied Nevada.
The annualized mining rate is expected to be approximately 136 million tons, including approximately 59 million tons of ore, and approximately 77 million tons of waste.
The study indicates that the sulfide project has a NPV of approximately $890 million at a 6% discount rate, a pre-tax IRR of 24% and pays back the initial project capital in 2.9 years.
The company intends to finance the project with existing cash, future operational cash flows, equipment leases, selling all or a portion of the anticipated silver production, and project financing.
Based on the results of the updated scoping report, the company expects to perform additional drilling and metallurgical work in order to upgrade inferred resources, which could further improve the parameters of the project, it said.
A feasibility study related to the sulfide measured and indicated resources is anticipated for mid-2011.
The project described in the scoping study will require federal and state environmental permits, as well as a site wide Environmental Impact Statement. The company expects that construction and commissioning of the plant could take two years.
An NI 43-101 compliant technical report on the Hycroft project is due soon.
Allied Nevada Gold is a US-based, gold and silver producer with a large slate of early-stage and advanced exploration properties located throughout Nevada.
Its wholly owned flagship property the Hycroft Mine, located near Winnemucca, Nevada, completed its first full year of operations in 2009. Hycroft is currently producing at a rate of approximately 100,000 ounces of gold and 300,000 ounces of silver per year.
The company`s share price has tripled in the past year, hovering around $9 in November 2009 to $27.16 as of 10:10 ET on Wednesday. The company was up almost 1% this morning.
