International Tower Hill Mines (TSE:ITH) (AMEX:THM) said Wednesday that its subsidiary has acquired certain mining claims and related rights near the company's Livengood project, located close to Fairbanks, Alaska.
The assets were purchased for US$24.5 million in cash, and relate to land that was previously vacant, or was used for placer gold mining, the company said.
The acquisition allows International Tower Hill to consider additional site facility locations, and to look at other land use opportunities, including the potential for placer gold extraction in the near-term, it said.
The transaction comprises consideration of roughly US$13.5 million to various individual vendors for certain assets, plus an additional contigent payment based on the five-year average gold price, as well as the exercise of an option to purchase mining claims currently leased by the company for around US$11 million.
The deal was funded by the company through cash on hand, it said, and has sufficient working capital to meet its budget through 2012.
"The acquisition of additional land surrounding our Money Knob gold deposit affords us much greater flexibility for selecting future site facility locations as well as other land use opportunities that may create significant shareholder value,” said CEO, Jim Komadina.
"Given the robust gold price environment for the foreseeable future, we are actively looking at any and all opportunities to ensure the successful development of the Livengood Gold Project into one of North America’s newest – and largest – gold mines.”
International Tower Hill controls a 100 percent interest in the Livengood project, which is accessible by paved highway 70 miles north of Fairbanks, Alaska.
The company is focused on the rapid development of the project, while it continues to expand its current resource and explore its 145 square kilometre district for new deposits.
In late November, the company said the prefeasibility study for the property will be published in the first half of 2012. The study will incorporate the mineral resource estimate of 933 million tonnes at an average grade of 0.55 grams per tonne (g/t) gold (at a cutoff grade of 0.22 g/t gold) for 16.5 million ounces of contained gold in the measured and indicated categories, as well as the results of geotechnical studies, metallurgical testing, updated capital and operating cost estimates.
Earlier this year, International Tower Hill announced the results of an updated preliminary economic assessment (PEA) for the Livengood project, with a base case net present value (NYSE:NPV) of a whopping $1.2 billion, alongside a significantly expanded surface mine resource.
At a processing rate of 91,000 tonnes per day, the mine was estimated to have average annual production of 664,000 ounces of gold over the first five years, and 562,000 ounces over the 23-year life of the operation, making it potentially one of the largest single gold mines in North America.
This compares with the last PEA in August 2010, which estimated average annual production of 504,000 recovered ounces of gold over 21 years.
Cash flows from the updated mine model, on a pre-tax basis, were calculated at $3.1 billion, lending to a net present value of $1.2 billion, at a 5% discount rate, and a 14.1% internal rate of return, with a payback period of 4.9 years. The base case scenario, which also yielded a life-of-mine cash cost of $703 per ounce of gold, assumed a gold price of $1,100 per ounce.