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Treasury used an average head grade of 3.05 g/t gold-equivalent for its July 2012 preliminary economic assessment update. After releasing an initial PEA two years earlier, the company had originally slated feasibility for 2012. Last May, however, Treasury decided to step back and update the PEA using the November 2011 resource update “to model an open pit and underground operation with a much higher production rate and increased scale in general,” the company stated at the time.
We want to keep the grade from two and a half grams to three grams, in that range. It just makes good business sense. When it comes to processing, you still have to pay for the same amount of tonnage.—Martin Walter,
Treasury Metals president/CEO
The updated PEA considered open pit operations that would eventually fund underground expansion. It used a 5% discount rate to project a net present value of $199 million and a 39.3% internal rate of return. Initial capital costs were estimated at $92.5 million, with payback in 2.2 years. Open pit and underground mining would total 10.3 years, producing gold and silver averaging 80,000 gold-equivalent ounces a year.
The PEA relied on 51% of the resource, which used a 0.3 g/t gold cutoff down to 150 metres and a 1.5 g/t gold cutoff below that. In total, the open pit and underground resources showed:
- an indicated category of 9.14 million tonnes averaging 2.6 g/t gold and 10.4 g/t silver for 760,000 gold ounces and 3.07 million silver ounces (or 810,000 gold-equivalent ounces)
- an inferred category of 15.9 million tonnes averaging 1.7 g/t gold and 3.9 g/t silver for 870,000 gold ounces and 1.99 million silver ounces (or 900,000 gold-equivalent ounces).
Since then Treasury picked up another 96 hectares of contiguous surface and mineral rights which the company said could add a potential 1.6 kilometres of strike length.
The 49-square-kilometre project sits on the Trans-Canada Highway, 20 kilometres from the town of Dryden, with gas and electricity infrastructure on site.
One benefit that’s helped Treasury “weather the storm,” as Walter puts it, is a 3% NSR on Goldgroup’s TSX:GGA Cerro Colorado gold mine in Sonora state, Mexico. “We get that $75,000 to $80,000 coming in every month,” he says. “It helps us keep our staff and develop the Goliath project in a timely manner.” Treasury’s 20-strong team includes its own engineers, he adds.
Last November the company announced a gold discovery at its newly acquired Goldcliff project, about 40 kilometres south of Goliath. As for the flagship, it’s one of only “seven gold projects in all of Canada” now in the federal permitting process, says Walter. “It’s full steam ahead for Treasury.”
March 18 saw the company’s stock open at $0.50, two cents above the previous close. Treasury then reached $0.53 before pulling back to a $0.50 close. With 61.25 million shares outstanding, the company has a market cap of $30.63 million. Its 52-week high and low are $1.17 and $0.37.
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