International Tower Hill Mines Ltd TSX:ITH announced assays from its Livengood Project near Fairbanks, Alaska. Highlights include
1.56 g/t gold over 76.2 metres
(including 8 g/t over 4.6 metres)
1.31 g/t over 74.7 metres
(including 3.11 g/t over 12.2 metres)
3.34 g/t over 30.5 metres
(including 17.27 g/t over 4.6 metres)
0.87 g/t over 106.7 metres
1.04 g/t over 61 metres
0.71 g/t over 85.3 metres
1 g/t over 51.8 metres
Using a 0.7 g/t cutoff, the project has an August 2011 resource estimate of 149 million tonnes grading 1.09 g/t for 5.2 million ounces gold measured, 42 million tonnes grading 1.1 g/t for 1.5 million ounces indicated and 39 million tonnes grading 1.1 g/t for 1.4 million ounces inferred.
CEO James Komadina tells ResourceClips.com, “These results are a compilation of all the summer drilling work, and we wanted this included in the database for our prefeasibility study. That’ll be issued in roughly a month’s time.
“The results indicate that we have an opportunity during some period of the initial mining phase to have grades significantly higher than the life-of-mine grade. When you look at the higher-grade intercepts and the commodity prices, they really do reflect on your payback period and also on the internal rate of return.
“We can usually start drilling in late March or early April,” he adds. “Things tend to get weathered-out by mid-October, late October. We’ve got three rigs that are finishing up some work right now, and probably within the next 10 days or so they’ll de-mob. You don’t get a lot of snow there per se, not the three- or four-foot cover that other regions get.
The results indicate that we have an opportunity during some period of the initial mining phase to have grades significantly higher than the life-of-mine grade—James Komadina
“We’re 70 miles [113 kilometres] north of Fairbanks and roughly 150 miles [241 kilometres] south of the Arctic Circle. The road from Prudhoe Bay [an Arctic Ocean port] to the south has to be kept open 24-7, 365. It runs adjacent to our property. In terms of infrastructure, Fairbanks is a great city to work out of. It’s around 70,000 people, so almost anything we need we can access from there. Also we’re part of the supply chain for Kinross’ TSX:K Fort Knox Mine.
“I think most people underestimate the value of doing a prefeasibility study before feasibility,” Komadina says. “In a PEA, the accuracy is plus-minus 35%. Most PEAs are done on a factored basis—Mine A is of a certain size and costs this much, Mine B is different, and so on. When we issued our PEA in August, we changed our strategic direction. Instead of being a heap leach that gradually transfers into a mill, we decided to go directly into milling. There really aren’t any comparables for this size of operation. We went out and developed capital costs, we got bids for all our major pieces of equipment including the mine fleet. So the PEA was probably more accurate than people would normally expect.
“For a PFS, the accuracy is about plus-minus 25%,” he explains. “When you get to a feasibility study, it’s about plus-minus 15%. And it’s only when you finally issue construction contracts that you’re plus 10%, minus 5% on your estimates. So with the prefeasibility study, you find out what you don’t know. That’s the real benefit. When you walk through a PEA, you find the parameters you would expect to see. With the prefeasibility study, if you see some numbers you don’t like, you get more engineering and technical evaluation. When you finally get to the feasibility study with that plus-minus 15% accuracy, you’ve got hefty technology behind it to say the numbers are sound. I think the prefeasibility study is a necessary step in the development process.”
The company expects permitting to last from early 2013 to mid-2016.
“My entire career has been with seniors—AngloGold NYSE:AU, Gold Fields NYSE:GFI and Newmont TSX:NMC. Far too often the juniors say we’re drilling this year, and we’ll be in production next year. But that doesn’t turn out to be the case. We committed to do an environmental impact statement. It takes about a year to put together an application. It takes about three years to wind its way through the process. When you finally get the decision, that’s the important part. I don’t know if there’ll be many more mines, if any, that get permitted under the National Environmental Policy Act. Typically there are two routes to go, the environmental assessment and the environmental impact statement. If you follow the Romarco TSX:R story, they attempted to permit the mine in South Carolina through an EA. [Read more here.] That didn’t work. The agency told them to do an EIS. Their stock reflected that change in timing. I’d rather tell you what I think the timeline will be, given what we know now,” he says.
“We have a highly experienced management team. We just added Tom Yip. He’s got 25 years’ experience as a CFO. Most of his time has been with Echo Bay and Asarco. We recruited him out of Silver Standard TSX:SSO in Vancouver. Tom Irwin came to us out of Amax and the state of Alaska [Department of Natural Resources], so he knows the permitting side of the business. We brought on Hal Galbraith to be Manager of Mining. He came to us out of Asarco in southern Arizona. We’re about to announce a new general counsel in a couple of weeks’ time. He’ll also be a key individual in permitting. We bring on people who’ve done this work before, so the learning curve is short.
“The forecast is 2016 construction. You have to do detailed engineering before ordering a mine fleet, because a fleet this size is about a year’s delivery and there’s about 100 weeks’ delivery on grinding mills. This sector has such a tremendous demand for engineering skills and this type of equipment. You can’t buy used equipment of this size. Those are things that really impact the schedules.
In conclusion he says, “We’re really happy with the drilling results this year and we’ve also done some geophysical work. Over the course of the winter, we’ll analyze that geophysical package and come up with some new district-wide resource targets that we can drill early next spring. It’s a matter of examining the growth potential of the Livengood district. We’ve got a good handle on how big Livengood is, and now it’s a matter of finding out what else the district might hold for us.”
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VP of Corporate Communications
by Greg Klein