Canada-based Erdene Resource Development said that the Bayan Khundii gold project in southwest Mongolia will require a total life of mine capital expenditures (capex) of $109m, based on the findings of an updated independent feasibility study (FS).
The estimated capital cost comprises construction costs and associated engineering and indirect costs of $88m, pre-production costs of $2m, and an additional 12% contingency of $10m.
Besides, the capex includes sustaining capital of $4m in the mine plan and net mine closure costs of about $7m.
The all-in sustaining cost for the Bayan Khundii project is approximately $869 per ounce.
According to Erdene, the total recovered gold over the life of the Bayan Khundii project is 476,000 ounces. This is an increase of 25% compared to the 2020 feasibility study from an average gold recovery rate of 93%.
It also said that the annual gold production at the Mongolian project is estimated to be 86,900 ounces during years two through five with an annual average production of 74,200 ounces of gold for the life of mine.
The updated FS also estimates a post-tax net present value (NPV) of $170m for the Bayan Khundii project at a gold price of $1,800 per ounce.
It also projects a post-tax internal rate of return of 35.3% for the Mongolian open-pit project with an after-tax payback period of 2.4 years.
Erdene president and CEO Peter Akerley said: “The Bayan Khundii Gold Project will be one of the highest grade open-pit gold mines in the world, and Mongolia’s largest primary gold producer, when it comes on stream in 2025.
”This updated Feasibility Study confirms the Project’s strong economics, supported by a 25% increase in recovered gold due to the incorporation of additional resources from Bayan Khundii and the Dark Horse Mane deposit.”
The resource exploration company said that an independent environmental and social impact assessment (ESIA) for the Mongolian gold project has been completed.
Erdene has also secured approvals for the 12 project facilities that it will own and operate. The construction permits for nine of these facilities have been issued.
According to the terms of a previously announced strategic alliance, the equity capital for the Bayan Khundii gold project will be provided by Mongolian Mining (MMC).
MMC will invest $40m for a 50% equity interest in Erdene’s Mongolian subsidiary, Erdene Mongol through a three-stage transaction.
Erdene Mongol holds the Khundii and Altan Nar mining licenses and the Ulaan exploration license.
