Mining Options

All three options have benefits and possible problems. We must decide which option is the best to process the deposit.

Large Open Pit

This mining option has the highest capital cost at $225 million. It will require some of the industry's largest mining equipment including 200 tonne haul trucks,

The massive size of this mine will have a large impact on the local environment over the 5 to 10 year life of the mine. Local contracts would be used for clearing and grubbing the minesite prior to removal of overburden.

This option is the best financially with a base rate of return of 20%. The low stripping ratio and surface exposure of this deposit means that gold production could begin immediately upon mine development. There is a good possibility of mine expansion as ore is delineated at depth.

Small Open Pit

The use of a small number of commonly available highway construction equipment results in this option having the smallest capital cost ($85 million) of any of the mining options. Unfortunately, the smaller size of the equipment and the small numbers in the fleet do not present the economies of scale seen in the large open pit option.

This option will have a moderate impact on the local environment over the life of the mine. The area required to be cleared and grubbed is significantly smaller than in the large open pit option.

The smaller resource base, lack of economies of scale, and lower milling rate result in a base rate of return of 12%. The large strip ratio at the end of the pit's life would make expansion of this small pit uneconomic.

Small Underground Mine

The small size of the proposed underground mine would require large numbers of small, labour intensive items of equipment. Significant underground workings would need to be made before actual ore production could take place, and this pre-development pushes the capital cost up to a moderate $124 million.

Due to the workings being located underground, there will only be minimal impact on local environment at the portal and workshop facilities.

The underground development required prior to ore production have a large impact on the overall project cash flow. The base rate of return for the underground option is 8%. There is a good possibility of expanding the underground operations if more ore is delineated at depth; however, the present geologic model of the deposits suggests that the high grade zone tapers off significantly below the presently delineated deposit.