EXPLORATION & DEVELOPMENT

New PFS improves on marginal economics for ITH's Livengood

Another updated prefeasibility study for Livengood has improved on marginal economics for the gold project in Alaska, which International Tower Hill Mines describes as one of the largest, highly leveraged gold projects in North America.

Staff reporter
 Hauling drill platforms via helicopter at International Tower Hill Mines’ Livengood gold project in Alaska

Hauling drill platforms via helicopter at International Tower Hill Mines’ Livengood gold project in Alaska

The new PFS turns a negative net present value positive, and increases the internal rate of return from near-zero to more than 5%, but otherwise has similar metrics to a 2017 PFS.

ITH also said Livengood's increased resource of 13.6 million ounces, grading 0.6g/t gold, solidified its standing as the largest independent gold-only resource in North America.

The company said the latest PFS was based on the updated resource, using a different resource model to the one used in the 2017 report.

The PFS released last week outlined initial capex of US$1.93 billion for a mine producing an average annual 306,200oz over 21 years, or 6.4 million ounces, at all-in sustaining costs of $1,171/oz.

The after-tax NPV5 was put at $45 million and internal rate of return at 5.3%, using a base case gold price of $1,680/oz.

This was an improvement on the disappointing PFS announced in 2016, which had a negative project NPV5 of -$522 million and an IRR of 0.5% using a base case gold price of $1,250/oz.

The AISC was corrected in 2017 in line with World Gold Council guidance, from $1,247/oz to $976/oz.

An earlier 2013 PFS had outlined a higher price tag of $2.8 billion for a 14-year mine producing 7.9Moz.

The 2017 study had envisaged total production of 6.8Moz over 23 years, with initial capex of $1.84 billion.

The after-tax NPV5 improved in last week's study to $400 million and the IRR rose to 7.7% using an $1,800/oz gold price.

"We have now thoroughly evaluated, optimised and de-risked all major elements of the project and have an excellent foundation on which to build shareholder value," CEO Karl Hanneman said.

ITH had $10.6 million in cash and equivalents at June 30.

It expected to operate at a loss "for the foreseeable future" but said the funds would be sufficient to complete its anticipated 2021 work plan at Livengood and satisfy anticipated general and administrative costs through the next 12 months.

The company's share price (TSX: ITH) has fallen more than 50% this year.

It rose 3.5% on Friday to close at C89c, valuing it at $173 million (US$139 million).

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