Allied Nevada Announces Hycroft Mill Expansion Prefeasibility Study Results With 26.5% IRR(1) and $1.7 Billion NPV(1)
On-Site Oxidation and Staged Construction Schedule Reduce Construction and Operating Risks
RENO, NEVADA--(Marketwired - April 22, 2014) - Allied Nevada Gold Corp. ("Allied Nevada", "we', "us", "our" or the"Company") (TSX:ANV)(NYSE MKT:ANV) is pleased to provide a summary of the prefeasibility study results for the Hycroft mill expansion, completed by M3 Engineering and Technology ("M3") in association with the Company. M3 developed the process flow sheet, capital cost estimate, operating cost estimate and financial model, while Allied Nevada developed the mineral reserves and mine plan. The prefeasibility study assumes a two-phase construction plan for the mill expansion. With the successful completion and positive results of the Ambient Alkaline Oxidation ("AAO") pilot plant, we have incorporated the onsite oxidation of the sulfide concentrate into the prefeasibility study, which should allow us to produce doré on-site for sale (as compared with the previous plan of selling concentrate).
Key Highlights of the Prefeasibility Study
Results of the prefeasibility study, based on a $1,300 per ounce of gold price and a $21.67 per ounce of silver price, include the following:
Average annual production for the first five years of full production (2018-2022) of approximately 450,000 ounces of gold and 21.0 million ounces of silver (approximately 800,000 ounces gold equivalent(2))
Average adjusted cash costs per ounce(3) for the first five years of full production of $478 annually (with silver as a byproduct credit)
Mining and processing life of 20 years
Two phase construction schedule reduces construction risk and moderates capital spending program; 60,000 tons of ore per day ("tpd") capacity in Phase 1 and increasing to 120,000 tpd in Phase 2
Addition of on-site AAO circuit to oxidize and process sulfide concentrate to produce doré on-site
Phase 1 capital of $900 million(1) to deliver annual production of 550,000 ounces gold equivalent in 2017
Phase 2 capital of $422 million to increase average annual production to approximately 800,000 ounces gold equivalent beginning in 2018
Life-of-mine ("LOM") after tax internal rate of return ("IRR")(1) of 26.5%
LOM net present value ("NPV")(1) of $1.7 billion (at a 5% discount)
"I have stated repeatedly since joining Allied Nevada that I believe that the Hycroft mill expansion is a project that needs to be built," commented Randy Buffington, President and CEO. "There aren't many large projects today located in politically stable jurisdictions with complimentary infrastructure like this one. The ability to produce doré on-site using the AAO process is a significant step toward derisking the project. I believe this prefeasibility study addresses many of the risks associated with the previous plans, while maintaining robust financial returns."
The following summarizes LOM assumptions for the mill expansion project:
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