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Minefinders Corp receives positive assessment of mill addition at Dolores gold mine mi

Minefinders Corp (TSX: MFL, AMEX: MFN) has said that an independent draft pre-feasibility study assessing the addition of a mill to its Dolores gold mine in Mexico has added 6,500 tpd (tonnes per day) mill to the existing 18,000 tpd heap leach operation. It also put the combined mill and heap leach production from the open pit mine at 1.7 Moz (million ounces) of gold and 74.24 Moz of silver over an 11 year mine life.

The mill addition scenario contemplated in the study represents one of a number of mill options under consideration by Minefinders. The results of the study support, and the board of directors has approved, progression to a detailed feasibility study on a mill addition at Dolores, the group said in a statement, adding it plans to review and evaluate additional mill options before making a construction decision.

Other findings of the study included life of mine average cash operating costs (excluding royalties) estimated at US$348 per ounce of gold equivalent and initial capital costs of US$163.3 million with total life of mine sustaining capital costs for both the mill and heap leach operation estimated at US$42.5 million.

In the base case scenario with mill addition with an assumed gold price of US$825/oz and silver price of US$14/oz, the NPV (net present value) would stand at US$1.18 billion with an IRR (internal rate of return) of 17%, while the spot case scenario with assumed prices of US$1,100/oz and US$17/oz for gold and silver respectively, makes for an NPV of US$1.86 billion with an IRR of 48%.

“We are very satisfied with the results of the study which has confirmed our expectation that the addition of a mill would be of benefit to the operation... Minefinders is in the enviable position of having a profitable heap leach operation at Dolores which allows us to be thorough in investigating and considering a number of mill options. These include scenarios with lower initial capital costs that both capture the high grade ore in the open pit and provide the infrastructure necessary to develop a new underground mine at Dolores in the future if it is prudent to do so,” said president and chief executive Mark Bailey.

A number of promising exploration targets were previously identified on the 27,000 hectare Dolores mine concessions. Minefinders has refocused on exploration and testing of mineralized deposits adjacent to the main deposit. An 18,000 metre drilling program is presently underway with the goal of expanding resources and reserves.

In addition, Minefinders is investigating options to commence exploration of the underground mineralization below the current open pit. With the limited work to date, there appear to be significant opportunities to potentially increase current reserves at Dolores, it said.

The mill addition in the study does not take into account the significant high-grade gold and silver mineralization already identified and reported that lies below and up to one kilometre peripheral to the pit. "Taking these drill results into consideration, it is expected that the addition of a mill at Dolores would unlock this upside by providing the infrastructure necessary to process high-grade material from potential future underground operations in addition to the higher-grade ore in the existing open pit resource," Minefinders added.

Disclosure: The author holds no positions in the company