The COSE gold and silver deposit in Argentina has a net present value of US$63.7 million and will cost US$33 million in operating and capital expenditure, according to a preliminary economic assessment commissioned by owner Patagonia Gold (LON:PGD).
The company also said today that a mineral resource estimate has defined a 34,395 tonnes at 60.06 grams per tonne of gold and 1,933.07 grams of silver for 106,393 ounces of gold equivalent.
The COSE project is part of the El Tranquilo property block, which also hosts the Cap-Oeste gold and silver resource as well as a number of other prospects. COSE and Cap-Oeste are around two kilometres apart.
Patagonia has so far delineated resources totalling 1.14 million gold equivalent ounces on the Cap-Oeste, COSE, Lomada and Manchuria deposits in Argentina’s Santa Cruz Province.
The NPV figure was calculated by independent contractors Chlumsky, Armbrust & Meyer (CAM) using a gold price of $1,204 over a mine life of just 23 months. The value of the project rises to US$93.8 million using a price over $1,400 an ounce.
As 68 per cent of contained gold and silver will be mined within the first four months of production, payback on the project will take just 14 months from commencement of the decline.
The COSE deposit is located 150 metres below surface and will therefore be mined using underground methods and a decline access.
“CAM has suggested a mechanised cut and fill mining method be adopted for the extraction of the COSE deposit,” the company said in a statement.
“This style of mining method, although initially requiring greater quantities of sublevel development, is more appropriate for mining of narrow vein structurally controlled deposits such as COSE as dilution and ore-loss can be far better controlled.
“A total ore movement of 120 tonnes per day or 3,600 tonnes per month has been used as the base case production forecast for the mine."