Solitario Exploration and Royalty (SLR.TO, NYSEMKT:XPL) and Ely Gold (ELY.V) have announced the results of an updated feasibility study on the Mt Hamilton project in Nevada which is 80% owned by Solitario. This study was based on a gold price of $1300/oz and a silver price of $20/oz and is now planned to produce 73,000 gold-equivalent ounces per year over an initial 6.1 year mine life at a cash cost of $558 per gold-equivalent ounce and an AISC if $833/oz. The initial capex is quite reasonable at $92M with an additional $30M needed as sustaining capital expenditures.
These cost improvements were the result of a fine tuned mine plan and it now looks like the Mt Hamilton project will be one of the lowest cost heap leach projects in Nevada. And there’s definitely additional upside potential as the company had to leave roughly 300,000 ounces of gold out of the mine plan as the heap leach site is only permitted up to 22.5 million tonnes of ore. This means that the after-tax NPV8% of $42M at a gold price of $1200/oz could still be considerably improved.
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Disclosure: The author holds no position in Solitario Exploration or Ely Gold. Please see our disclaimer for current positions.
