Matador Mining Ltd’s (ASX:MZZ) scoping study for the Cape Ray Gold Project in Newfoundland, Canada, provides a solid platform for future growth as a standalone mining and processing operation.
The preliminary economics indicate the project has positive financial metrics over an initial mine life of seven years with capital payback during the first 1.75 years of the project’s life.
This decreases to 1.5 years based on the current gold spot price of US$1,700 and the first year of production includes a 6-month ramp-up to full throughput capacity.
Expectations exceeded
Executive director Keith Bowes said: “The results of the scoping study were an excellent achievement for the company and exceeded expectations in many regards.
“The most important outputs we believe for any resource project is a strong IRR (post-tax - 51%), rapid payback (1.75 years) as well as low operating costs (US$776/ounce)."
Base case summary of project’s economics.
He said: “With excellent outcomes in each of these areas, which strengthen further when the current spot gold price is applied, we believe the Cape Ray Project is well on track to become a gold operation in the future.
“The key driver for these robust returns is the exceptional high-grade open pit ore that is mined and processed during the first two years (2.72 g/t gold) and first four years (2.5 g/t gold) of production, meaning the Cape Ray Project ranks as one of the highest grade open pit operations.
Bowes continued: “Following the scoping study, the board has approved the advancement of the project towards a pre-feasibility study, with a number of key areas already identified that have the potential to further improve the project’s economics.
“While the scoping study has provided a strong underlying platform, we believe the exploration potential at Cape Ray remains the long-term driver for the company.
"With 80 kilometres of strike making the company the largest continuous landholder in this under-explored gold region, the company is close to finalising an exploration strategy, that will outline the pathway towards increasing the mine life.”
Next steps
The primary objective for the company is to expand the resource base in order to then extend the life of mine, with a focus on shallow open pit deposits that support the overall objective of being one of the highest-grade open cut operations in the world.
The next field season is expected to include:
- Extensional drilling around the current deposits (specifically Window Glass Hill and Isle aux Mort) to expand the know resources (brownfield);
- Infill drilling to upgrade the inferred resources to measured and indicated status;
- Greenfield target development utilising ground magnetic surveys, soil sampling, mapping and trenching; and
- Assuming successful greenfield targets are identified, drilling will be undertaken.