Ascendant Resources Inc has hailed a preliminary economic assessment (PEA) for its Lagoa Salgada volcanogenic massive sulphide (VMS) project in Portugal, which showed a low-cost, high-margin underground mining operation.
The NI 43-101 report is based on exploiting ore from both the North Zone and the South Zones at the Venda Nova area and is based on current resources but the company reckons resources and the scale of the project can be expanded with future exploration.
The study will also form the basis of a feasibility study, which is earmarked to start in the fourth quarter this year and be completed by the end of 2022.
"This PEA is transformative and one of the most significant milestones for Ascendant to date, demonstrating a high-quality project with strong economics and a progressive environmentally conscious mine design," said Mark Brennan, CEO of the company.
READ: Ascendant Resources says it has completed Phase II test work at Its Lagoa Salgada VMS project in Portugal
"We look forward to completion of the Feasibility Study by the end of 2022, which should provide a solid foundation for the start of the build phase."
Brennan noted it was "important to reiterate that Lagoa Salgada is still in its infancy from a geological understanding perspective and is still in the discovery stage of the total resource endowment we believe is present on the property".
"There has been less than 40,000 meters drilled to date on the property and geophysical studies indicate that our qualified resources are just the beginning of the resource potential on the property. We believe this highlights the world-class potential of the Lagoa Salgada property.”
For a mine life of 14 years, the after-tax net present value (NPV) of the project was pegged at US$246 million with an after-tax internal rate of return (IRR) of 55%.
Initial (pre-production) capital costs, including contingency, were put at US$132.3 million, while all-in sustaining costs (AISC) were pegged at US$52.83 per tonne. The post-tax payback period was 1.5 years.
The average earnings before interest, tax, depreciation and amortization (EBITDA) were put at around US$117 million, with post-tax-free cash flow of around US$82 million per year for the first five years.
In terms of design, the mine will use a single access ramp from surface and will target the extraction of ore from both the north and south zones at a rate of 2 million tonnes per annum (tpa).
Lagoa Salgada contains over 10.33 million tonnes of measured and indicated (M&I) resources at 9.06% zinc-equivalent and 2.50 million tonnes of inferred at 5.93 % zinc-equivalent in the North zone.
In the South Zone at Venda Nova, there are 4.42 million tonnes of indicated resources at 1.50 % copper-equivalent and 10.83 million tonnes of inferred resources at 1.35 % copper-equivalent.
The deposit demonstrates typical mineralization characteristics of Iberian Pyrite Belt VMS deposits containing zinc, copper, lead, tin, silver and gold, the Toronto-based firm said.
Ascendant holds a 21.25% interest in the Lagoa Salgada project through its 25% position in Redcorp - Empreendimentos Mineiros, Lda, and has an earn-in opportunity to increase its interest in the project to 80%.
Mineral & Financial Investments owns the other 75% of Redcorp, while the remaining 15% of the project is held by Empresa de Desenvolvimento Mineiro, S.A., a Portuguese Government-owned company.
Contact the author at giles@proactiveinvestors.com