The economics look good to bring a former Red Lake gold mine back into production.
A 14-year mine life is being projected for Pure Gold Mining’s Madsen Gold Project in northwestern Ontario, according to a preliminary economic assessment (PEA) released on Sept. 14.
The Madsen Mine complex has been on care and maintenance since 1999.
The PEA, prepared by Nordmin Engineering, indicates Madsen can be economically viable with the possibility of further enhancing the project’s bottom line through resource expansion.
The base case parameters use a gold price of US$1,275 an ounce, a head grade of 10.3 grams per tonne and gold recovery of 92 per cent.
The capital cost to develop upgrade and refurbish the past-producing mine is $50.9 million, with a 15 per cent contingency built in. Most of those costs involve mill upgrades and ramp and surface development.
The Madsen project is host to two former gold mines, including the Madsen Mine which once produced 2.4 million ounces. Located southwest of Red Lake, the property has 27 levels of underground workings, a 1,275-metre deep shaft, headframe and a 550-tonne per day mill.
The plan is to use as much of the old workings as possible by rehabilitating and widening sections where possible.
A ramp has been dug down 150 metres and will continue to be driven down to a depth of 1,430 metres.
Operating costs over the mine’s life are estimated at $134.7 million. The mining costs are $155 per tonne.
The PEA suggests Madsen’s economics can be further improved by discovering more gold on the property.
The current resource base is 1.6 million ounces of gold in the indicated category and 178,000 ounces inferred.
The PEA indicates there’s more gold to be found with exploration drilling taking place above and below ground to follow gold extensions off the main resource, to find new gold zones on the property, and in calculating the resource within some satellite deposits.
The Vancouver company expects to release an updated resource estimate later this year from its Russet South and Fork deposits.
“With a significantly expanded resource, access to infrastructure, and exceptional growth potential, Madsen is one of the outstanding gold deposits in Canada,” said Darin Labrenz, president-CEO of Pure Gold in a news release.
“The completed study provides a measure of these attributes, outlining a long life, high-margin mine, with low initial capital requirements and a fast timeline to production. In addition, we have identified specific exploration targets and potential optimization opportunities that could further enhance the economics of the project. We look forward to rapidly advancing the Madsen Gold Project to become Ontario’s next gold mine.”
A contract miner will be selected for Madsen and will use their own equipment, which will be a combination of diesel equipment at the upper reaches of the mine and battery-powered vehicles at the lower levels to eliminate emissions.
Over the next few months, the company said there’s more metallurgical work to be done, along with fine-turning of the details in the mining methods, gold recovery optimization, and in converting inferred resources to the indicated column. A more detailed project schedule will come out over the next few months.