A consultant for First Mining Finance said there’s good potential to build an open-pit gold and silver mine under a lake in northwestern Ontario.
The Vancouver mine developer released a preliminary economic assessment (PEA) for its Springpole Project that shows a 12-year mine life for its deposit located 110 kilometres northeast of Red Lake.
The report’s authors, SRK Consulting, recommend moving to a pre-feasibility study.
The Springpole project is located in a remote area and covers 32,448 hectares. It’s regarding by First Mining as “one of Canada’s largest undeveloped gold projects.”
The deposit contains 139.1 million tonnes of gold and silver-bearing rock in the indicated category at a grade of 1.04 grams per tonne (g/t) of gold and 5.4 g/t of silver.
The PEA maps out a single pit shovel-and-truck operation with a milling, crushing, grinding and carbon-in-pulp leaching operation.
Building a mine and processing mill complex will be $586-million endeavour with $117 million in spending over the mine’s life.
The development is based on prices of $1,300 per ounce of gold and $20 per ounce of silver.
First Mining picked up Springpole from Gold Canyon Resources in 2015, which had performed a PEA back in 2013 and conducted much of the project’s exploration drilling.
The recoveries are projected to be 80 per cent for gold and 85 per cent for silver.
The average annual production is projected at 296,500 ounces of gold and 1,632,000 ounces of silver.
Before carving out the pit, a portion of Springpole Lake would have to be drained since the deposit is under a bay.
Approximately 21.7 million cubic metres of water – or six per cent of the lake’s surface area – would have to be pumped out over a year’s time using dewatering dykes.
The company said an environmental assessment will be filed in the first quarter of 2018.
Accessing the site requires building a road, starting at Highway 105 near Ear Falls, which would parallel a Hydro One power line for 90 kilometres. Various road options to get into the deposit are being considered.
“This updated PEA study represents a significant improvement in both economics and annual and total ounces of gold and silver produced when compared with the previous PEA completed for Gold Canyon in 2013,” said First Mining chairman Keith Neumeyer in a statement.
“The results of this PEA indicate that the Springpole Project may have economic viability. The PEA demonstrates that the project has excellent margins with low cash costs of US$619 per ounce of gold equivalent and an average annual payable production of 322,000 ounces of gold equivalent, over the life of mine. On that basis, once in production as contemplated by the PEA, Springpole would be one of the largest gold mines in North America.”
Springpole is one of five prospective gold properties First Mining maintains in northwestern Ontario.