Key indicators show PNX’s Fountain Head and Hayes Creek projects will generate good profits
Figures from a preliminary feasibility study on PNX’s Fountain Head and Hayes Creek gold-silver-zinc gold projects show that this will be a profitable operation in the long term.
Emerging producer PNX Metals (ASX: PNX) has completed a Pre-Feasibility Study (PFS) on a two-stage mining development in the Northern Territory which provided overwhelmingly positive steps and confirmed the technical and financial viability of a multi-project. -products.
The plan is to bring the Fountain Head Project into production first, with the near-surface oxide and free-milling gold and silver from the Mt Bonnie, Glencoe and Fountain Head surface mines to be processed. in a factory of 750,000 tonnes per year. during the first five years.
The Hayes Creek gold-silver-zinc project would then come into production in year four. The processing plant has a potential capacity of up to 900,000 tonnes per year.
The combined operation, which would have an initial mine life of 10 years, is expected to have a pre-tax net present value (NPV) of $ 171 million and a pre-tax internal rate of return (IRR) of 63%.
NPV and IRR are measures used to assess the profitability of a project – the more the number is greater than 0, the more profitable it will be.
Those high-end numbers could see the project pay off in just 18 months.
A two-stage operation would produce 250,500 ounces of gold, 11.4 million ounces of silver and 116,300 tonnes of zinc over its lifetime, generating net income of $ 352 million and giving PNX net cash of $ 276 million after tax.
This would be achieved at an all-inclusive life-of-mine sustaining cost of $ 1,119 per ounce, net of zinc by-product credits.
This is based on an assumed gold price of US $ 1,733 ($ 2,275) per ounce, but it could be an even more profitable trade, with gold currently selling for around US $ 1,819 per ounce. .
PNX estimates that it will cost $ 46 million to finance the development of the Fountain Head mine and processing plant and an additional $ 58 million to modernize the plant to process the sulphide ore from Hayes Creek.
“Much of the past year has been devoted to a comprehensive assessment of the various options for developing our considerable gold, silver and zinc resources at Fountain Head and Hayes Creek, in order to determine the best outcome for them. shareholders, ”said CEO James Fox.
“The positive PFS results provide strong validation for a phased development process and an accelerated timeline to achieve a short-term gold production target of mid-2022. “
Fox said that in parallel with the project’s development activities, PNX will continue to actively explore its extensive exploration lease in the Northern Territory, where many opportunities to further define additional resources that can improve project returns have been found. identified.
“We are looking forward to being on the ground and starting drilling shortly,” he said.
Major exploration on the rise
At the end of April, PNX announced a first inferred resource for the Glencoe deposit. PNX currently has a total resource inventory of 470,000 ounces of gold, 16.2 million ounces of silver and 177,000 tonnes of zinc across all of its projects.
Glencoe is located on an already granted mining lease just 3 km north of the Fountain Head project and is the first of many opportunities PNX has identified in the Pine Creek area of the Northern Territory to dramatically increase the scale of Fountain Head.
Reverse circulation drilling is expected to take place from mid-June 2021 to test new mineralized positions, with the potential to increase the mineable gold contained in existing pit shells at Fountain Head and Glencoe.
PNX has submitted its environmental impact statement to the Government of the Northern Territory and expects to receive environmental approval later this year.
The company has already received government approval to dewater the Fountain Head pit.
The project’s environmental impact assessment is now open for public comment, with approvals slated for late 2021, and the company is working with its engineers to finalize the scope of work for the plant and the plant. infrastructure, ”Fox said.
“The move to production will be an exciting and important step for the company and we look forward to keeping stakeholders informed as the project progresses. “
This article was developed in conjunction with PNX Metals, a Stockhead advertiser at the time of publication.
This article does not constitute advice on financial products. You should consider getting independent advice before making any financial decisions.