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The main points of the PFS are summarized in the table below on an after-tax basis (all dollar figures are in US dollars unless otherwise stated):
Three independent Qualified Persons from Howe participated in the completion of the PFS. Project Economics Howe developed a cash flow valuation model for the Project based upon the geological and engineering work completed. The Base Case was developed using a long term forecast gold price of $450 per ounce. This price forecast is considerably lower than current price of gold which was $869.20 per ounce as of June 12, 2008. The following table shows the NPV of the Base Case at various discount rates:
The following table demonstrates the sensitivity of the Project to the price of gold:
Resources and Reserves The following table shows the current NI 43-101 resource estimate developed by Howe that forms the basis for the PFS.
Howe used the Gemcom(r)-developed measured and indicated resource blocks as the basis for the reserve calculations. The block model was employed to develop a mine plan and production schedule for the Project using Whittle optimizations of potential economic pit limits on the Measured and Indicated Resource. The reserve estimate was developed on an open pit design that incorporated an overall pit slope of 45o, a main ramp with an 8% grade and a road allowance of 24 m, and bench height of 6 m. Several optimum pit shells and production schedules were generated for several different gold prices ($325, $350, and $375/oz Au) and cost scenarios. Tonnages of ore and waste were then calculated from the optimized pit shells. Howe's base-case ROM scenario at $325/oz Au contained 17.7 million tonnes of proven and probable ore grading 0.88 g/t Au and 26.8 million tonnes of waste rock (6.1 million tonnes of rhyolite waste and 20.7 million tonnes of oxide waste) resulting in an average stripping ratio of 1.52 tonnes of waste per tonne of ore. Mining and Milling The project utilizes open-pit mining and heap-leach processing techniques. Contract mining is being employed as it minimized pre-production capital costs. Production is expected to deliver 1.4 million tonnes per year of oxide ore to the heap-leach pads for 12 years. The processing plant is forecast to produce, on average, 29,000 ounces of gold per year, beginning in late 2008. Average LOM gold recovery is estimated at 65%. These project estimates are based on the October 2006 Pre-Feasibility Study however with the dramatic increase in the price of gold since that time a new NI 43-101 reserve/resource estimate study based on a lower cut off grade has been commissioned. In addition a revised mine plan has also been commissioned. It is expected that the revised NI 43-101 reserve/resource estimate in conjunction with a revised mine plan will lead to higher gold production beginning in late 2009 or early 2010. The studies are expected to be delivered by July 2008. Capital Costs The following table summarizes capital cost estimates in the PFS for the Project:
Operating Costs The PFS estimates that the cash costs over the life of the mine will average $337 per ounce of gold sold. Cash costs include mining, processing, G&A, and all treatment and refining charges. Howe recommends that Castle Gold consider "purchasing capital equipment for mining and the impact this would have on reducing the mine operating costs." Infrastructure The Project is located 100 km, by highway, from the City of Durango. Electrical power for the Project will be provided by on-site generators. Water will be sourced locally from bored wells. Environmental The Project is fully permitted for all aspects of operating a mine including mining of ore, operation of a heap leach pad, a recovery pond and a recovery facility. Current Operations and Growth Opportunities Currently the El Castillo gold mine is operating in "pre-production" status. This means that ore is being mined and placed on the heap leach pad and gold is being produced form the leach pad. The mine will remain in "pre-production" status until gold production has achieved an average of 1,250 ounces per month (15,000 ounces annualized) for a period of three to four months at which time the mine will be declared to be "in production" or commercial operations. Currently mining operations are meeting the mine plan with an average of 120,000 tonnes of ore being mined and placed on the leach pad every month. A delay in optimizing the volume of regent (leach solution) applied to the leach pad resulted in gold production not meeting the mine plan projections. However, as of March 2008 the regent volume has been optimized and it is expected that gold production will increase over the course of 2008. The mine plan calls for gold production to reach an average of 25,000 to 30,000 ounces by late 2008. Click here to view: Pre-feasibility Report - September 2002 Pre-feasibility Report - January 2003 Pre-feasibility Report - October 2006 Pre-feasibility Report Summary - October 2006 |
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View El Castillo mine in Google Earth