Mayfair Gold (TSX-V:MFG) has delivered a Prefeasibility Study (PFS) for the Fenn-Gib Gold Project in Canada, outlining a post-tax net present value of US$1.37 billion ($2.04 billion) with an internal rate of return of 38% based on a US$4,500 per ounce spot gold price.
Fenn-Gib is expected to process an average grade of 1.47 grams per tonne gold over the first six years of operation for an average annual gold production of 71,336 ounces at an all-in sustaining cost (AISC) of US$1,171 per ounce.
Mayfair reports that an average grade of 1.29g/t gold is expected over the 14.3-year reserve life for an average of 64,096 ounces produced annually, at an AISC of US$1,292 per ounce.
The PFS also outlines a free cash flow of more than US$1.43 billion in the first six years of operation, at the same spot gold price.
Based on a base case gold price of US$3,100 an ounce, Fenn-Gib is expected to have a post-tax net present value of US$652 million with an internal rate of return of 24%. Free cash flow is forecast to be over US$896 million in the first six years of operation at the same base case price.
Mayfair adds that the study revealed an initial development capital cost of US$450 million.
CEO Nick Campbell says the PFS shows “strong economics” and free cash flow potential associated with developing the Fenn-Gib Project as a targeted, “high-grade” operation.
“This strategy allows Mayfair to advance Fenn-Gib without requiring excessive up-front capital with substantially lower execution risk as compared with a large-scale development within the current gold cycle,” Campbell says.
“Importantly, this mine plan targets only 24% of the total indicated gold resource at Fenn-Gib, leaving significantly longer term optionality associated with the larger resource should market conditions be supportive.”
COO Drew Anwyll says the plan is straightforward – Mayfair intends to build the mine and bring it into operation in the near-term.
“The next phase is clear: finalise engineering and design work, and advance environmental approvals in preparation for a construction decision within two to three years,” Anwyll says.
The Fenn-Gib Project, located in the Timmins Gold District of Ontario, has an indicated resource of 4.3 million ounces of gold and 100,000 ounces in the inferred category.
Mayfair Gold is an emerging Canadian gold developer focused on advancing Fenn-Gib into production.
Write to Aaliyah Rogan at Mining.com.au
Images: Mayfair Gold
