Star Gold Completes Scoping Study on Longstreet Property
COEUR D'ALENE, ID--(Marketwired - Jun 2, 2014) - Star Gold Corp.
("Star Gold" or the "Company") (OTCQB: SRGZ) reported a Scoping
Study ("The Study") of the Main Zone which is part of
the Longstreet deposit completed by A-Z Mining
Professionals of Ontario, Canada. The full version of the
Scoping Study will be available on the Star Gold website at
www.stargoldcorp.com .
Highlights of the Scoping Study Include:
Net Present Value (NPV): $13.3m at a 10% discount rate,
pre-tax.
Internal Rate of Return (IRR): 29%.
Payback Period: 2.7 years.
Capital Cost: $25.4 Million, including a contingency provision
and working capital.
Gold and Silver Pricing Assumptions: Gold at $1350/oz and Silver
at $24/oz.
Mining Rate: 2,800 tons per day (TPD).
Net Recoveries: 86% gold and 15% silver.
Heap Leach Processing Technology: conventional technology
utilizing leach pads.
Mine Life: 4.4 years
Direct Employment: 11 employees.
Royalty: Includes a 3% Net Smelter Royalty (NSR) owed to
Minquest.
"The Study of the Main Zone of the Longstreet deposit shows that
a small, at-surface pit using heap leach recoveries could be an
attractive project at $1350 gold. The Study highlights that a
modest $25m CAPEX would be required for the outlined pit and this
could be leveraged by further expansion and /or the discovery and
development of other satellite deposits on Longstreet. The
Longstreet project displays great optionality especially to the
gold price" said David Segelov, President & CEO of Star
Gold Corp. "The Study also importantly details the risks associated
with the project."
Overview of the Longstreet Project and PEA The tonnage
incorporated into the Study includes a pit containing 4.4 million
tons, with an average gold grade of 0.02 oz/ton. Gold recoveries
are estimated at 86%. Silver would be a by-product and would add
approximately 7% to the project value. Operating costs would be
$808oz for gold and with the gold and silver combined would be
$760oz.
The Base Case of the Study was constructed using $1350 per/oz
gold price. The two variables which show the most sensitivity for
the IRR of the project are gold price and grade mined.
A summary of the operating assumptions and financial model for
the project is as follows:
|
|
|
|
|
Item |
|
TOTAL |
|
|
Tonnes Mined |
|
4,400,000 |
|
|
|
|
|
|
|
Mined
Grade (oz/t) |
|
0.022 |
|
|
Strip
Ratio (waste to ore) |
|
0.70:1 |
|
|
|
|
|
|
($million) |
Life
of Mine Total Revenue |
|
|
|
$119 |
Initial Capital Expenditure |
|
|
|
$25.4 |
Life
of Mine Sustaining Capital |
|
|
|
$0 |
Total
Before-Tax Cash Flow (undiscounted) |
|
|
|
$28.5 |
Before-tax NPV @ 10% |
|
|
|
$13.3 |
Before-tax IRR (%) |
|
|
|
29
% |
|
|
|
|
|
|
|
|
|
|
|
|
Capital Cost
Estimate |
Initial
capital cost estimates for the project are as follows: |
|
|
|
Item |
|
Total
Cost ($million) |
Permitting |
|
$2.0 |
Mine |
|
$0.2 |
Heap
Leach Pad & Processing Plant |
|
$10. |
Surface Infrastructure & Mobile Equipment |
|
$4.0 |
EPCM,
Contractor O/H & Owners Costs |
|
$2.5 |
Contingency |
|
$2.6 |
Working Capital |
|
$3.7 |
Total
Capital Cost |
|
$25.4 |
|
|
|
Initial capital costs include all costs required to bring the
facility to production. The ongoing life of mine sustaining capital
costs are estimated to be nil over the 4.4 year mine life.
|
|
Operating
Cost Estimate |
|
|
|
Item |
|
Average Unit Cost ($/ton mined) |
Mining |
|
$9.09 |
Processing |
|
$3.65 |
G&A |
|
$2.13 |
Total
Operating Cost |
|
$14.87 |
|
|
|
|
|
|
|
|
Sensitivity
Analysis |
A sensitivity
analysis was performed. The two most volatile assumptions to the
project are gold prices and gold grade. |
|
|
|
|
|
Changes to selling price of GOLD |
|
NPV
at 10%, $million |
|
IRR,
% |
|
|
|
|
|
Increase of 15% ($1552 oz) |
|
$26.0 |
|
46% |
Base
Case ($1350 oz) |
|
$13.3 |
|
29% |
Decrease of 15% ($1147 oz) |
|
$1 |
|
12% |
|
|
|
|
|
|
|
|
|
|
About Star Gold Corp.
Star Gold is a gold exploration/development company with 115
unpatented claims and located within the historically prolific
Walker Lane belt. The Company is currently focused on developing
its flagship property, Longstreet Project. The Longstreet
Project is located in Nye County, Nevada.
Cautionary Note to Investors
The United States Securities and Exchange Commission ("SEC")
limits disclosure for U.S. reporting purposes to mineral deposits
that a company can economically and legally extract or produce.
The SEC normally only permits issuers to report mineralization
that does not constitute SEC Industry Guide 7 compliant "reserves"
as in-place tonnage and grade without reference to unit measures.
Under SEC Industry Guide 7 standards, a "final" or "bankable"
feasibility study is required to report reserves, the three-year
historical average price is used in any reserve or cash flow
analysis to designate reserves and all necessary permits and
government approvals must be filed with the appropriate
governmental authority. This study is not a final or bankable
feasibility study and our project currently does not contain any
known proven or probable ore reserves under SEC Industry Guide 7 reporting
standards.
We advise U.S. investors that various terms used in this report
are not recognized under the SEC's Industry Guide 7 and are
normally not permitted to be used in reports and registration
statements filed with the SEC. Mineral resources in these
categories have a great amount of uncertainty as to their economic
and legal feasibility. "
The results of this study disclosed in this press release are
preliminary in nature and material that are considered too
speculative geologically to have the economic considerations
applied to them that would enable them to be categorized as mineral
reserves and there is no certainty that the results of the this
study will be realized.
U.S. investors are urged to consider closely the disclosure in
our latest reports and registration statements filed with the SEC.
You can review and obtain copies of these filings at
http://www.sec.gov/edgar.shtml. U.S. Investors are cautioned not
to assume that any
defined resource will ever be converted into SEC Industry Guide 7
compliant reserves.
Forward-Looking Statements This press release contains
forward-looking statements within the meaning of the U.S.
Securities Act 1933, as amended, and U.S. Securities Exchange
Act of 1934, as amended, including, but not limited to, statements
regarding the potential development of the Longstreet project,
estimates and projections regarding the economic feasibility of the
Longstreet project from the Study, including, NPV, IRR, payback
period, capital cost, pricing assumptions, mining rate, average
recoveries, oxide production amounts and methodologies, mine life,
employment requirements, resource amounts and grades, projected
revenues, initial capital costs, life of mine sustaining capital,
cash flow projections, capital and operating cost estimates and
projections, and sensitivity analysis.
When used in this press release, the words "potential,"
"indicate," "expect," "intend," "hopes," "believe," "may," "will,"
"if, "anticipate," and similar expressions are intended to identify
forward-looking statements. These statements involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by such statements.
Such factors include, among others, uncertainty of mineralized
material and mineral resource estimates, risks to projected and
estimated economics not reflecting actual economic results due to
the uncertainty of mining processes, potential non-uniform sections
of mineralized material, potential mining hazards and accidents,
changes in equipment and labor costs, changes in projected gold and
silver prices and demand, competition in the industry, risks
related to project development determinations, the inherently
hazardous nature of mining-related activities, potential effects on
the Company's operations of environmental regulations, risks due to
legal proceedings, liquidity risks and risks related to uncertainty
of being able to raise capital on favorable terms or at all, as
well as those factors discussed under the heading "Risk Factors" in
the Company's latest annual report on Form 10-K.
Except as required by law, the Company assumes no obligation to
publicly update any forward-looking statements.
Company Contact: David Segelov CEO Office: 208-664-5066 Cell:
646-626-3356 dsegelov@stargoldcorp.com info@stargoldcorp.com
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