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PROJECT FENIX

About Project Fenix

Located in Mexico

Project Fenix is a proposed redevelopment plan for McEwen Mining’s El Gallo Complex in Mexico. Through a new Preliminary Economic Assessment (PEA) study, Project Fenix evaluates the potential extension of production in the Complex, based on a 2-phased transformation of the processing from the El Gallo mine, innovative in-pit tailings disposal, and sourcing from the El Gallo heap leach pad, El Gallo Silver, Palmarito, Carrisalejo and El Encuentro deposits.

Key outcomes of Project Fenix include a 12-year life-of-Mine (LOM) at average annual production rate of 47,000 gold equivalent (AuEq) ounces, low initial capital cost and a 28% after-tax Internal Rate of Return (IRR) at gold and silver prices of $1,250 and respectively $16 per ounce. The PEA report can be accessed here.

About Diagram About Diagram

 

Silver pille

RESOURCES
& RESERVES

MEASURED & INDICATED

32.3 M Oz

INFERRED

5.0 M Oz
For more details click here.

Highlights of the PEA


  • Estimated initial capital: $41 million for Phase 1 and $30 million for Phase 2;

  • 4.1 years pay-back period;

  • 28% after-tax IRR and $60 million net Present Value (NPV) @ 5% discount rate;

  • 47,000 ounces average annual AuEq production;

  • Cash cost: $704 and $857 per ounce AuEq for Phases 1 and 2 respectively;

  • AISC: $704 and $877 per ounce AuEq for Phases 1 and 2 respectively;

  • 12-year LOM;

  • Updated resource estimate totaling 13 million tonnes at an average grade of 0.39 g/t gold and 77 g/t silver (Measured and Indicated) containing 591,000 oz AuEq, and 5.7 million tonnes at average grades 0.81 g/t gold and 27 g/t silver (Inferred) containing 214,000 oz AuEq.

  • $12.7 million of average annual cash flow from operations from Year 2 onwards;

BASE CASE ANNUAL & CUMULATIVE CASH FLOW

PEA Base Case Cumulative Cash Flow Chart

Capital and Operating Costs

The project offers low upfront capital requirements by:
  • Utilizing existing infrastructure at El Gallo Gold Mine;
  • Commissioning an in-pit tailings storage facility in an existing open pit; and
  • A significant reduction in required leach tank volumes for El Gallo Silver processing in comparison with previous studies.

Phase 1 capital expenditure is estimated at $41 million, additional capital expenses for Phase 2 and the mining infrastructure, haul roads and closure obligations bring the total LOM capital required to $81 million.

Mining and operating costs were estimated based on process design criteria, equipment lease rates, labor, reagent, grid power supply, diesel fuel, explosives, maintenance, and other miscellaneous costs. All costs are in Q1 2018 dollars.

  Phase 1
($M)
Phase 2
($M)
Sustaining
($M)
Process Plant Direct Costs $28.9 $16.6 -
Infrastructure & Owners $1.4 $0.8 $4.5
Indirect Costs $7.4 $6.0 -
Contingency $3.2 $2.0 -
Mining - $5.0 $5.0
Total $40.9 $30.4 $9.5

Mining and Processing

The Fenix Project involves a two-phase development process. The process plant would use conventional and proven mineral processing and precious metals recovery technologies.

Tailings produced during the operation would be stored in a mined-out open pit at the El Gallo Gold Mine. As part of this process, tailings deposition would include a delivery system designed to maximize tailings consolidation and water recovery.

Phase 1 includes the reprocessing of material on the gold heap leach pad at the existing El Gallo Gold Mine, with a throughput rate of 5,000 tonnes per day (tpd).

Phase 1 operation would target gold recovery from the heap leach pad material using a conventional ball grinding mill and a hybrid carbon-in-leach (CIL) circuit to recover gold onto activated carbon. Industry standard elution, electrowinning and smelting circuits would be used to produce a doré product.

PRODUCTION SUMMARY

Over the mine life, production would total 17.2 million tonnes of mineralized material at 1.20 g/t AuEq average head grade, containing 667 K oz AuEq, and recovering a total of 563 K oz AuEq.

Source Gold
Grade
(G/T)
Silver
Grade
(G/T)
Production
Model
(Ktonnes)
Strip
Ratio
Contained
Metal
(Koz AuEq)
Recovered
Metal
(Koz AuEq)
El Gallo
Heap Leach Pad
0.64 0 9,024 N/A 185 163
El Gallo
Silver
0.11 117.2 5,413 3.8 291 249
Palmarito 0.37 149.9 1,796 3.1 137 105
Carrisalejo 0.60 95.0 263 5.6 16 13
El Encuentro 1.56 2.2 737 7.7 38 34
Totals 17,233 N/A 667 563

FUTURE WORK
AT FENIX

The current operation at the El Gallo Gold Mine is a fully permitted open pit mine with a heap leach and ADR process facilities. El Gallo Silver and Palmarito are fully permitted for the construction of a CIL mill and drystack tailings facility. Some amendments to the permits are required for Project Fenix.

Phase 1 requires amendment of the current permits to include the construction of a mill and leach circuit at the location of the existing El Gallo Gold Mine for the reprocessing of the heap leach pad material. The permit amendment will also include the backfilling of the Samaniego pit with mill tailings as part of an integrated concurrent closure plan for the El Gallo Gold Mine. Phase 2 permitting will require authorization to augment the tailings volume to be stored in the Samaniego pit, and El Gallo Silver permits require amendments to change the processing location to El Gallo Gold.

The Fenix Project has Comision Nacional del Agua(CONAGUA) approval for the extraction of groundwater and for the construction of wells. Advancing the project will require permit amendments and approval by the Federal Environmental Authority (SEMARNAT) for Phase 1 and subsequently for Phase 2.

The Company seeks to obtain approval of the Phase 1 El Gallo permit modifications by Q4 2018 and Phase 2 approvals by Q3 2019. Further project advancement in 2019 is subject to permit approvals.

Further Potential
at Fenix

The Company believes there are opportunities to further improve the economics of the Fenix Project through continued testing and trade-off studies that will be continued throughout 2018.

Capital cost estimates for the project are to a level of accuracy that is consistent with a PEA technical report. During the 14 months following the July 2018 filing of the PEA, we will continue to review mineral processing, mine sequencing, material transportation and tailings storage options; and the flow sheet will be optimized by undertaking trade-off studies, updating cost models and additional metallurgical testwork.