As outlined in an updated preliminary economic assessment (PEA) released in September, Gold Mountain expects to build an 11-year open pit and underground operation at Elk Gold. Production would start off at 19,000 oz. per year for the first three years, with an increase to 65,000 oz. per year for the remainder of the mine life.
Thanks to an ore purchase agreement with New Gold (TSX: NGD), whose New Afton mill is only 133 km away and operating below capacity, the project has a low initial capital cost of $9 million.
The 211.9-sq.-km Elk gold project is located between Merritt and Kelowna in southern B.C.
Previously a private company named Bayshore Minerals, Gold Mountain listed on the Venture Exchange at the end of December, after completing a reverse takeover with Freeform Capital. Bayshore acquired the Elk Gold project from Equinox Gold (TSX: EQX) in May 2019 for $10 million.
“Aggressive timelines of getting into production are something we have committed to since coming to trade in December of 2020,” said Kevin Smith, CEO of Gold Mountain, in a release. “With the company receiving its early works permit and waste rock mining already underway through our gravel borrow, operations will be in full stride once we receive our mining permit amendment. All the while our drill team continues to hit mineralization and we anticipate receiving a steady stream of results from the lab in the coming weeks.”
A final mining permit will allow the company to begin large-scale waste rock mining operations in July and August, and mining of the high-grade 1300 vein at Elk. Some construction and site preparation work, as well as pit dewatering, has already been authorized and is underway.
The company has hired Nhwelmen-Lake as its construction and mining contractor.
A prefeasibility study is also being conducted by JDS Mining & Energy with results anticipated in the third quarter.
According to the September PEA, the Elk Gold project has a post-tax net present value of $231 million, using a 5% discount rate. All-in sustaining costs, based on US$1,600 per oz. gold, are projected at US$554 per oz.
The project, which hosts a mesothermal, intrusive related, gold vein system, has 127,000 metres of historic drilling and production via bulk sampling programs going back to the 1990s.
Gold Mountain completed an additional 8,739-metre drill program in January, and started a second-phase, 10,000-metre program in May.
The company released an updated resource for Elk Gold in May that boosted measured and indicated ounces by 43% and inferred ounces by 67%.
In the measured and indicated categories, combined open pit and underground resources stand at 3.3 million tonnes grading 6.1 g/t gold equivalent (5.9 g/t gold and 11.1 g/t silver) for 651,000 gold equivalent oz. Inferred resources add 1 million tonnes grading 4.8 g/t gold equivalent for 159,000 oz.
For more information, visit: www.gold-mountain.ca.