- Junior explorer Rex Minerals (RXM) has released results from a promising scoping study for its Bells Project at the Hog Ranch Gold Property in the U.S.
- The study highlighted the Bells Project's potential for low operating costs over an 8.5-year life of mine
- Key metrics from the study include an internal rate of return of 40 per cent and a net present value of roughly A$107 million after-tax at the Bells Project
- Managing Director Richard Laufmann says the results are "extremely encouraging" and Rex is now gearing up to take Bells to the next phase of development
- Rex shares are trading over six per cent higher after today's news, currently worth 8.5 cents each
Junior explorer Rex Minerals (RXM) has released results from a promising scoping study for its Bells Project at the Hog Ranch Gold Property in the United States.
The study comes less than one month after Rex upgraded the mineral resource estimate at the Hog Ranch Property to 97.6 million tonnes of mineralisation, with an average grade of 0.45 grams per tonne of gold for 1.4 million ounces.
Today's study suggests the Bells Project area of the Nevada-based property is a stand-alone low-cost start-up opportunity for the company.
The study was based on a 420,000-ounce mineral resource at the Bells Project. Based on the results of the study, Rex is predicting a production rate of 3.5 million tonnes per year over the project's 8.5-year mine life.
Low costs, smart extraction
Importantly, the project is expected to have a low operating cost of roughly US$10 (around A$14.29) per ore tonne and all-in sustaining costs (ASIC) of US$902 (about A$1288.75) per ounce.
Assuming a gold price of US$1,550 (approximately A$2214.59) per ounce, this gives Bells an internal rate of return (IRR) of roughly 40 per cent after tax and a net present value (NPV) of US$75 million (roughly A$107 million) with a five per cent discount rate.
One of the key drivers for the project's low operating costs is Rex's use of "heap leaching" for mineral extraction.
Simply, this process involves washing out a pile of crushed or with a solution designed to draw out the desired metals. The process quite literally "leaches" the gold from the ore for processing, and the once processed the solution can be reused on a different heap of ore.
The process is gaining popularity across Nevada, which has recently become one of the largest and most productive gold mining districts in the world.
Despite the news, Rex admitted there is a low level of geological confidence associated with Bell Project's inferred mineral resources, which make up 60 per cent of the life-of-mine production.
However, the company said the scoping study assumes that 70 per cent of production ounces will be from the indicated resources category for the first three years of operation.
As such, Rex Managing Director Richard Laufmann said the scoping study results are "extremely encouraging" and gives the company the confidence to move the Bells Project on to the next phase of development.
"Gold, Nevada, Heap Leach — we are continuing to unveil a game-changing opportunity at Hog Ranch for Rex Minerals," Richard said.
"The Bells deposit represents 30 per cent of our current mineral resource, which offers a separate start-up opportunity to provide early cash flow, allowing us to focus on the much larger Hog Ranch Property," he said.
Rex shares are trading 6.25 per cent higher following today's news, currently worth 8.5 cents each.