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Matheson-area gold mine complex has more ounces to give

McEwen Mining releases economic study that builds case for expansion at Fox Complex
McEwen Fox Complex aerial
(McEwen Mining photo)

McEwen Mining is contemplating an underground expansion at its Fox Complex, near Matheson, that could extend its gold production life for a few more years.

The Toronto mining company released a preliminary economic assessment (PEA) this week which outlines a mine life of more than 12 years, with a phased expansion that could tack on nine more years.

The Fox Complex is a string of gold properties extending along Highway 101, east of Timmins. There's already is an active mine on site. The company brought its Froome deposit into commercial production last September. 

Through exploration drilling, other nearby satellite gold deposits on the company's almost 7,000-hectare property have been discovered - Stock West, Grey Fox and Fuller - that could add to its operational life.

The PEA also includes boosting processing capacity at the company's Fox mill to 2,400 tonnes per day to adjust for processing material from multiple deposits. 

The Froome Mine is viewed by the company as 'bridging the mine life' towards the future expansion at the Fox Complex. 

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The PEA evaluates the economics at Fox in two ways: 

Case A for the Fox Complex, which includes the Froome Mine, spells out a mine life of 12.3 years with gold production over that span at 885,400 ounces. The average annual gold production is pegged at 71,980 ounces.

Case B for Fox, excluding Froome's production and making the case for expansion, forecasts an additional 9.3 years of mine life with gold production during that timeframe of 751,700 ounces. Average annual mine production would be 80,800 ounces.

The total capital for the life of mine is $358 million, a good chunk of which can be generated internally from cash flow to follow through with the expansion project.

The company said exploration will continue at Stock Main and Stock West to develop more gold resources that may provide opportunities for revenue and a quicker payback period. Drilling is also anticipated at Grey Fox to further define and evaluate gold extensions there.

A PEA is an important first-pass economic analysis that a mineral project is potential viability. Once posted, mining companies generally move on to a more in-depth pre-feasibility study.

McEwen Mining states it hasn't  made a decision on the expansion. As the PEA name indicates, the study results are too preliminary in nature to make a development decision.

In a statement, Chairman Rob McEwen called the release of the PEA "an important step forward for us."

"It translates our exploration success into a business case that increases mine life and production rates and lowers costs per ounce. It also provides a clearer picture of where future exploration should be focused to add value.

"Our commitment and investment in exploration has provided the foundation for this study, and ongoing exploration success continues to further enhance the expansion potential at Fox. While the PEA is an encouraging first iteration, continuing exploration success, improved economics, and a shorter payback period is required before we decide to advance the project."

McEwen added the Froome mine is "performing as planned, and is expected to continue for at least another three years while our expansion plans and drilling progress."

McEwen Mining is a gold and silver producer and explorer with operating mines in Nevada, Canada, Mexico and Argentina where it owns a large copper deposit.