McEwen (NYSE, TSX: MUX) has confirmed the potential of its Gray Fox project, located near Timmins, Ontario, to add significant gold production and extend the life of its Fox complex.
The Canadian mining company on Monday released the results of a preliminary feasibility study (PFS) for the project, forecasting annual gold production of 87,000 ounces. from 2028 until 2041, effectively extending the life of its Fox complex by another 15 years. It also showed that in 2029, production could reach 100 thousand ounces.
The new report confirms the project’s position as a long-term growth engine for McEwen and its Fox complex. The complex, one of Canada’s most prolific gold camps, currently relies on production from the Frome Mine, supplemented by processing at the Stock Mill.
McEwen says Gray Fox’s production profile is expected to support the company’s near-term goal of increasing its total annual production to 250,000-300,000 gold equivalent ounces (GEOs) by the end of this decade.
McEwen shares fell slightly during early trading hours, with the company’s market cap floating above $1 billion in New York.
The cost is $181 million
The PFS report also explained that the Gray Fox mine will have an initial capital cost of $181 million. Based on current gold prices of more than $4,000 per ounce, this is expected to be primarily funded internally, McEwen said.
Under a base case scenario of $3,000 per ounce. Gold, the project will have an after-tax net present value (at a 5% discount rate) of $282 million, an internal rate of return of 25% and a payback period of 4.6 years. The total cost of maintenance over my lifetime is estimated at $2,212 per ounce.
The PFS is based on the current indicated resource of approximately 2 million ounces. (18.8 million tons grading 3.28 grams per tonne gold) for the Gray Fox deposit. Nearly half of those (980,000 ounces) were reserves included in the mine plan.
McEwen highlighted that the reserve represents only 40% of Gray Fox’s total resources. As such, there is a positive trend for developing the reserve through resource diversion, adding that it plans more drilling with a total expenditure of $5 million.
Construction in 2027
The company noted that the next steps in the project include detailed engineering, long-term procurement, a revised water permit, and a closure plan. Construction is expected to begin in the spring of 2027, followed by underground development in the second half of the year.
If completed on schedule, commercial production would begin in 2029, as outlined in the PFS mine plan.
Mining at Gray Fox is expected to be a combination of two independent underground operations accessed from separate gates. The ore will be taken to surface and transported to McEwen’s operating stock mill, where it will be blended with Stock mine materials. Gold recovery was estimated at 87.5% based on laboratory testing, according to McEwen.
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