Positive PEA proves Gold Reach could develop BC project

TORONTO (miningweekly.com) – TSX-V-listed Gold Reach Resources this week announced the results of a preliminary economic assessment (PEA) on its 100%-owned Ootsa copper/gold/molybdenum project, located in west-central British Columbia, pointing to a profitable operation despite the depressed gold-price environment.

Gold Reach advised that the conceptual study demonstrated the potential to develop the Ootsa project by making use of contract mining and toll milling at a low initial capital cost to deliver a base case after-tax net present value of C$186-million and an after-tax internal rate of return (IRR) of 81%.

The report, compiled by P&E Mining Consultants, assumed a copper price of $3/lb, $1 260/oz for gold and $10.3/lb molybdenum, while silver was priced in at $17/oz.

"The company is very encouraged with the outcome of the PEA. The results of the PEA support the concept that the Ootsa project can be developed as a potential profitable, low-cost investment with an anticipated future upturn in metal prices,” stated president and CEO Dwayne Melrose.

The project was expected to produce 324-million pounds of copper, 185 000 oz of gold, 15.8-million pounds of molybdenum and three-million ounces of silver over its 12-year lifetime, and would cost C$64-million to construct.

The conceptual operating plan was based on the sequential, openpit development of three deposits located close to each other by a mining contractor. Crushed mill feed would be transported from Ootsa to the next-door Huckleberry mill, operated by Imperial Metals, using an overland conveyor system.

Preliminary metallurgical testwork had indicated that the Ootsa feed could be processed at a rate of 5.6-million tonnes a year, achieving copper recoveries of 90% to 92%. Processing would be conducted on a toll basis at the facility, where Imperial, in January, suspended operations. 

The company noted that the project was resistant to price movements and still returned an IRR of 31% at a low copper price of $2.25/lb. However, copper prices on Thursday hovered around $2.01/lb, a level comparable to mid-2009 when the global economy was dealing with a deep recession. Gold spot prices on Thursday closed at $1 244.90/oz and silver spot prices closed at $15.77/oz.