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O3 Mining set to further advance Garrison project as it delivers positive preliminary economic assessment

Last updated: 10:48 14 Dec 2020 EST, First published: 07:40 14 Dec 2020 EST

O3 Mining Inc -
Average annual gold production is 121,000 ounces in the first eight years with an average mill head grade of 1.04 grams per ton gold

O3 Mining Inc (CVE:OIII) (OTCMKTS:OQMGF) is poised to further advance its Garrison project in Kirkland Lake, Ontario, after a preliminary economic assessment (PEA) showed the asset to have robust returns and attractive costs.

"Garrison has been in the shadow of our Marban and Alpha properties in Québec but as this PEA shows, it is an integral part of the value proposition of O3 Mining," noted the explorer's CEO Jose Vizquerra in a statement.

READ: O3 Mining says drilling at Simkar zone at its Alpha property has potentially extended known resources 

The independent study was carried out by Ausenco and was based on an 11,000 tonnes per day (tpd) open pit mining with carbon-in-leach processing with production spanning 12 years.

Initial capital (CAPEX) costs were pegged at C$267 million for a 4 million tonne per year (mtpa) processing plant, including necessary infrastructure.

Average annual gold production is 121,000 ounces in the first eight years with an average mill head grade of 1.04 grams per ton (g/t) gold.

Based on a long term gold price of US$1,450 per ounce, the project boasts an after-tax net present value (NPV) of C$321 million at a 5% discount rate, with an after-tax internal rate of return (IRR) of 33%.  

The all-in-sustaining-costs (AISC) were US$818 per ounce and the payback period, after-tax, was put at 2.3 years.

This PEA follows 'hot on the heels' of the Marban project PEA in Québec, noted the company, which also demonstrated compelling project economics with an after-tax NPV of C$423 million, an IRR of 25.2% with a 15-year mine life and average annual gold production of 115,000 ounces.

"Together these PEAs mark the transition of O3 Mining from an explorer to an up-and-coming gold developer with a total NPV of $744 million of fundamental value," Vizquerra told investors.

Garrison has a higher confidence measured and indicated (M&I) resource of 66.3 million tonnes (Mt) at a grade of 0.86 g/t gold and the property lies along the Porcupine-Destor break in the Abitibi Greenstone Belt (AGB). It is also on the Highway 101 corridor, around 40 kilometres east of Matheson, 40 kilometres north of town of Kirkland Lake, and 100 kilometres east of Timmins.

O3 said it was looking forward to working with partners in the Timmins-Kirkland Lake area including the Matheson municipalities and the Wahgoshig First Nation community (Wahgoshig) as well with the support of the Ontario and federal governments, to advance the asset.

Shares in Toronto nudged up over 3% to C$3.05 on the day.

---Updates for share price---

Contact the author at giles@proactiveinvestors.com

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