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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 and sourced by the El Gallo heap leach pad, El Gallo Silver, Palmarito, Carrisalejo and El Encuentro deposits.

Key outcomes of Project Fenix include an average annual production rate of 47,000 gold equivalent (AuEq) ounces, low initial capital cost and a 25% after-tax Internal Rate of Return (IRR) at gold and silver prices of $1,250 and respectively $16 per ounce.

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;

  • 4.0 years pay-back period;

  • 25% after-tax IRR and $60 million net Present Value (NPV) @ 5% discount rate;

  • 47,000 ounces average annual AuEq production;

  • Cash cost: $598 and $797 per ounce AuEq for Phases 1 and 2 respectively;

  • AISC: $658 and $817 per ounce AuEq for Phases 1 and 2 respectively;

  • 10 to 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 million of average annual cash flow from operations from Year 2 onwards;

PEA BASE CASE CUMULATIVE CASH FLOW CHART

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 from 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.

Description Phase 1
($M)
Phase 2
($M)
Sustaining
($M)
Process Plant Direct Costs $28.5 $16.6 -
Infrastructure & Owners $1.4 $0.7 $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-stage development process. Phase 1 includes the reprocessing of material on the gold heap leach pad at the company’s existing El Gallo Gold Mine, and Phase 2 includes the processing of the open pit gold and silver ores from multiple deposits, including El Gallo Silver, Palmarito, El Encuentro and Carrisalejo.

The process plant would utilise conventional and proven mineral processing and precious metals recovery technologies. Phase 1 would have a throughput rate of 5,000 tonnes per day (tpd). During Phase 2, fresh mineralised material from higher grade silver deposits (El Gallo Silver primarily) would be processed at 3,250 tpd. The selected process recovery methods have been based on separate campaign retreatment of heap leach material (Phase 1) and treatment of fresh mineralised material from other deposits (Phase 2).

Phase 1 operation would target gold recovery from the heap leach pad material using a conventional ball mill grinding and a hybrid carbon-in-leach (CIL) circuit (hybrid means the first leach tanks are pure leach tanks and the remaining tanks are carbon in leach tanks), to recover gold onto activated carbon. Industry standard elution, electrowinning and smelting circuits would be used to produce a doré product. Soluble copper levels would be controlled and suppressed using established methods. Cyanide in the CIL tailings would be detoxified using the SO2 / Air process, and the detoxified tailings would then be sent to a tailings storage facility in an existing mined-out open pit.

Tailings produced during the operation, starting with Phase 1 would be stored in the mined-out Samaniego pit at the El Gallo Gold Mine. As part of this, in-pit tailings deposition would include a tailings delivery system designed to maximize tailings consolidation and water recovery. Water would be recovered via surface reclaim pumps, a basin underdrain collection sump and finger drain network and down gradient contingency pump back wells.

PRODUCTION SUMMARY

Over the mine life, production would total 17.2 million tonnes of mineralized material at 1.17 g/t AuEq average head grade, containing 679 K oz AuEq, and recovering a total of 573 K oz AuEq.

Source Gold
Grade
(G/T)
Silver
Grade
(G/T)
Production
Model
Strip
Ratio
Contained
Metal
(Koz AuEq)
Recovered
Metal
(Koz AuEq)
El Gallo
Heap Leach Pad
0.64 0 9,024 N/A 197 173
El Gallo
Silver
0.11 117.3 5,413 3.8 291 249
Palmarito 0.37 149.9 1,796 3.1 136 105
Carrisalejo 0.60 95.0 263 5.6 16 13
El Encuentro 1.56 2.3 737 7.7 38 34
Totals 17,233 679 573

Moving Forward at the Fenix Project

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 May 2018 announcement of the PEA, we will continue to review mineral processing, mine sequencing, material transportation and tailings disposal options; and the flow sheet will be optimized by undertaking trade-off studies, update cost models and undertake additional confirmatory testwork.

Project Fenix shows that El Gallo mine has the potential to be retooled to produce silver and gold for years into the future. The current heap leach gold mine would transform first to a mill and process the residual heap leach pad material, then additional mill modifications would enable processing of silver and gold ores from four other deposits. With the project based on innovative in-pit tailings disposal, over the coming quarters the Company will advance environmental permitting and will refine current plans with a feasibility study in order to make an investment decision in 2019.