Minera Alamos Inc. (TSXV: MAI, OTCQX: MAIFF) is strategically positioned to revive its Copperstone Mine in Arizona, USA, leveraging a restated Preliminary Economic Assessment (PEA) that demonstrates the project’s financial viability. The PEA outlines a plan for a high-grade underground gold mining operation that utilizes existing infrastructure to minimize initial capital expenditures. The company’s stock trades on the TSXV under the symbol MAI.
The Copperstone project is projected to yield an average of 40,765 ounces of gold annually over an initial 5.6-year mine life. A crucial factor contributing to the project’s economic appeal is the utilization of existing infrastructure, including pre-existing tailings and partial processing facilities, surface buildings, and previously rehabilitated underground development. This reduces upfront construction costs and lowers the overall capital intensity per payable gold ounce produced over the mine’s life.
The restated PEA showcases a strong financial outlook for the Copperstone project. Some key financial highlights include:
- After-tax NPV (5%): $65.98 million, based on a gold price of $1,800 per ounce.
- After-tax IRR: A robust 53.6%, indicating a high rate of return on investment.
- Payback Period: An attractive 1.7 years, driven by early access to high-grade ore.
- Initial Capital: A manageable $36.2 million, inclusive of contingency and working capital.
- LOM Cash Cost per oz gold payable: $985, reflecting efficient operations.
- LOM All-in Sustaining Cost per oz gold payable (AISC): $1,259, encompassing all costs associated with gold production.
Minera Alamos has taken steps to bolster the project’s financial attractiveness. The elimination of an existing 1.5% Net Smelter Royalty (NSR) enhances the project’s potential profitability. Moreover, the company’s existing tax assets offer a significant advantage, reducing the tax impact on cash flow and improving overall returns.
The Copperstone property is located 125 miles west of Phoenix, Arizona, with convenient access via Interstate I-10. The site benefits from existing infrastructure, including office facilities, maintenance shops, an assay laboratory, and a power substation. Water is sourced from three on-site water wells, stored in a 375,000-gallon tank, and authorized for use by the Arizona Department of Water Resources.
The mining method proposed for Copperstone is mechanized cut and fill, utilizing cemented rock fill (CRF). This method provides flexibility in mining low vein dip angles while minimizing dilution through careful geological and management control. The production rate at full capacity is planned for 600 tons per day, following a 3-month ramp-up period. The mine design incorporates a cut-off grade of 3.34 grams per tonne (0.107 opt), and the resource base is composed of 46% Measured, 18% Indicated, and 36% Inferred Mineral Resources.
The processing plant is designed for a 544-tonne-per-day capacity, using a flowsheet that incorporates two-stage crushing and grinding, followed by whole ore leaching with Merrill Crowe recovery to produce doré bars.
The Copperstone Project has a history of prior production, with open-pit mining operations from 1987 to 1993 yielding approximately 514,000 ounces of gold. Underground mining commenced in 2012, with approximately 16,900 ounces of gold produced before operations were suspended. Minera Alamos now owns 100% of the Copperstone Project.
The PEA includes a sensitivity analysis that considers gold prices ranging from $1,000/oz to $3,000/oz. The after-tax NPV and IRR are most sensitive to fluctuations in gold prices, with capital and operating expenditures having a lesser impact.
Minera Alamos plans to rapidly advance the Copperstone project towards production. The company will continue to optimize mining operations, reduce capital expenditures, and explore opportunities to extend the mine life beyond the initial 5.6 years. Management is evaluating the current PEA as well as looking to optimize the mine plan to take advantage of the existing infrastructure to create value for shareholders. Government permits are already in place, facilitating a smooth transition towards renewed mining activities.
