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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) published in 2018, 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, innovative in-pit tailings disposal, and sourcing from several deposits.

The project envisions constructing a mill at the existing mine site that will initially reprocess the existing heap leach material, and further will transition to processing ore from open pits at the El Gallo Silver, Palmarito, Carrisalejo and El Encuentro deposits. At a base case using gold and silver prices of $1,250 and respectively $16 per ounce, key outcomes of Project Fenix include a 12-year Life-of-Mine (LOM), average annual production rate of 47,000 gold equivalent ounces (GEOs) using a 75 to 1 gold-to-silver ratio, low initial capital cost and a 28% After-Tax Internal Rate of Return (IRR) . The PEA report can be accessed here.

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;

  • 4.1 years pay-back period;

  • 28% After-Tax IRR and $60 million Net Present Value (NPV) @ 5% discount rate;

  • 47,000 GEOs average annual production;

  • Cash cost: $704 and $857 per GEO for Phases 1 and 2 respectively;

  • AISC: $704 and $877 per GEO for Phases 1 and 2 respectively;

  • 12-year LOM;

  • Updated resource estimate totaling 13 million tonnes at average grade 0.39 g/t gold and 77 g/t silver containing 591,000 GEOs Measured and Indicated, and 5.7 million tonnes at average grades 0.81 g/t gold and 27 g/t silver containing 214,000 GEOs Inferred.

  • $12.7 million average annual cash flow from operations from Year 2 onwards;

BASE CASE ANNUAL & CUMULATIVE CASH FLOW

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 in comparison with 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.

  Phase 1
($M)
Phase 2
($M)
Sustaining
($M)
Process Plant Direct Costs $28.9 $16.6 -
Infrastructure & Owners $1.4 $0.8 $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-phase development process. The process plant would use conventional and proven mineral processing and precious metals recovery technologies.

Tailings produced during the operation would be stored in a mined-out open pit at the El Gallo Gold Mine. As part of this process, tailings deposition would include a delivery system designed to maximize tailings consolidation and water recovery.

Phase 1 includes the reprocessing of material on the gold heap leach pad at the El Gallo Gold Mine, with a throughput rate of 5,000 tonnes per day (tpd).

Phase 1 operation would target gold recovery from the heap leach pad material using a conventional ball grinding mill and a hybrid carbon-in-leach (CIL) circuit to recover gold onto activated carbon. Industry standard elution, electrowinning and smelting circuits would be used to produce a doré product.

PRODUCTION SUMMARY

Over the mine life, production would total 17.2 million tonnes of mineralized material at 1.20 g/t average head grade, containing 667 K GEOs, and recovering a total of 563 K GEOs.

Source Gold
Grade
(G/T)
Silver
Grade
(G/T)
Production
Model
(Ktonnes)
Strip
Ratio
Contained
Metal
(K GEOs)
Recovered
Metal
(K GEOs)
El Gallo
Heap Leach Pad
0.64 0 9,024 N/A 185 163
El Gallo
Silver
0.11 117.2 5,413 3.8 291 249
Palmarito 0.37 149.9 1,796 3.1 137 105
Carrisalejo 0.60 95.0 263 5.6 16 13
El Encuentro 1.56 2.2 737 7.7 38 34
Totals 17,233 N/A 667 563

FUTURE WORK
AT FENIX

The current operation at the El Gallo Gold Mine is a fully permitted open pit mine with a heap leach and ADR process facilities. El Gallo Silver and Palmarito are fully permitted for the construction of a CIL mill and drystack tailings facility. Some amendments to the permits are required for Project Fenix.

Phase 1 requires amendment of the current permits to include the construction of a mill and leach circuit at the location of the El Gallo Gold Mine for the reprocessing of the heap leach pad material. The permit amendment will also include the backfilling of the Samaniego pit with mill tailings as part of an integrated concurrent closure plan for the El Gallo Gold Mine. Phase 2 permitting will require authorization to augment the tailings volume to be stored in the Samaniego pit, and El Gallo Silver permits require amendments to change the processing location to El Gallo Gold.

The Fenix Project has Comision Nacional del Agua (CONAGUA) approval for the extraction of groundwater and for the construction of wells. Advancing the project will require permit amendments and approval by the Federal Environmental Authority (SEMARNAT) for Phase 1 and subsequently for Phase 2.

Work on the Fenix Project permitting is progressing. The Company has submitted the application for the Phase 1 El Gallo permit modifications and expects to receive the approval during the third quarter of 2019.

Exploration Potential
at El Gallo Complex

In recent years, exploration efforts at the El Gallo Complex have focused on both near-mine and property-wide targets. A property-wide soil geochemical survey completed in 2018 identified multiple additional targets and indicated the potential for extensions of known zones of sulfide mineralization.

Near-mine drilling efforts have been successful in delineating and extending mineralization near the Samaniego and Sagrado Corazon pits. The new gold mineralization generally contains sulfides that could be processed in the Phase 2 process plant.

At the property scale significant mineralization has been confirmed at Encuentro South, located 7 miles (11 km) southwest of the El Gallo Mine. The project area lies on an important 4 mile (7 km) long, regional NW-SE mineral trend that also hosts two other exploration targets, Las Milpas and Twin Domes. Extensive exploration along this trend has identified favorable alteration signatures and abundant anomalous gold and silver mineralization in surface rock and soil samples.

The 42 core holes (7,522 meters) drilled at the Encuentro South prospect indicate that the favourable gold assays occur in at least three distinct zones that are either shallow dipping NW, or sub-vertical NS structures and are still open along strike and at depth. The mineralization zone has a strike length of approximately 230 meters and was identified from surface to a depth of 130 meters.

Mineralization at Encuentro South is characterized primarily by structurally controlled, multi-event quartz breccias and stockwork zones hosted by propolytically altered meta-andesites. Minor silicification and hematisation alteration is also seen locally. The mineralization is considered of the low-sulphidation, epithermal style as seen elsewhere on the property.

Highlights of drill results from Encuentro South are presented below. For all drill results click here.

ENCUENTRO
SOUTH DRILL
RESULTS

Latest exploration drilling at the El Gallo Complex has been concentrated primarily on three prospective areas; one area called Encuentro South has returned particularly encouraging results at shallow depths.

Highlights are summarized on the right:

Hole ID Gold
Grade (gpt)
Intercept
Width (m)
ENX-032 9.59 9.1
including 126.50 0.5
and 2.94 38.2
including 27.30 1.2
ENX-043 7.82 5.4
including 28.70 1.1
ENX-009 16.09 2.1
ENX-041 16.27 1.9
ENX-051 1.30 19.5
and 6.13 4.8
ENX-019 1.85 15.2
including 3.99 5.0
ENX-021 1.66 12.7