Gold Bar is the gold and silver producer's fourth mine.
The low-grade openpit and heap leach operation was slated in a 2015 feasibility study to produce an average 65,000ozpa at a US$728/oz cash cost and deliver a 20% after-tax IRR at a $1,150/oz gold price, and 36% at $1,300/oz, on the $60 million initial capital.
The company said this week its revised FS, prepared by M3 Engineering & Technology Corp, has Gold Bar costing $81 million to commission ($9.7 million already spent). Commercial production is scheduled to start next year and average 62,800ozpa at a cash operating cost of $770/oz. The M3ET study factors in an after-tax IRR of 23% at $1,250/oz gold and 32% at $1,350/oz gold.
"Key changes were made to the implementation strategy of the Gold Bar mine with the primary goal of reducing overall project risk while maintaining the highest possible capital efficiency," said McEwen Mining president Xavier Ochoa.
"The installation of a crushing and agglomeration plant increased the capital costs by about 30% over our 2015 estimate. However, this is offset by a 20% increase in total gold production. We believe the increase in the capital investment is prudent, and will result in improved gold recoveries and reliable ore leaching on the pad."
An updated reserve of 16.5 million tons at 1g/t is projected to yield 397,700oz of gold over seven years. McEwen Mining has also posted revised resources of 629,000oz measured and indicated, and 115,000oz inferred.
The company's chairman and major shareholder Rob McEwen said with the lengthy permitting path behind it and production near, the focus would return to exploration.
"Exploration is advancing since the mine permits were received, and is already delivering encouraging results, which supports our belief that sustained exploration can extend the mine life," he said.
A "property-wide exploration program" that started last November had the primary objectives of expanding the mineral inventory around planned open pits, and testing at least three new targets, north-west of the planned Gold Pick openpit, north-west of the planned Gold Ridge openpit, and in-between Gold Pick and Gold Ridge.
Seventeen of 37 RC holes completed had so far encountered "significant mineralization", with a weighted average grade and thickness of 1g/t gold over 15.2m "comparable to the average grade of the deposit".