Hycroft mine in Nevada assessed $10B value, 51-year life

Hycroft Mining’s (Nasdaq: HYMC) proposed gold-silver mine in Nevada has the potential to become the industry’s next multi-generational asset, with a half-century mine life and a post-tax value of $10 billion, a new technical summary shows.

An S-K 1300 report released on Tuesday outlined what the company calls “compelling economics” of a large-scale, long-life precious metals mine operation, leveraging rising prices of gold and silver.

In addition to the $10 billion after-tax net present value (discounted at 5%), it also gave the project an internal rate of return of 30.1% and a payback period of just under three years. These were calculated on spot prices of $4,569/oz. for gold and $77.94/oz. for silver.

The report also presented a base-case scenario of $3,600/oz. gold and $48/oz. silver, under which the NPV would be approximately halved at $4.3 billion, with an IRR of 16.9% and payback of 4.7 years.

“The project delivers strong economics and significant leverage to rising gold and silver prices, reinforcing Hycroft’s position as one of the sector’s most compelling large-scale development opportunities, located in a Tier 1 jurisdiction,” executive chairman and CEO Diane Garrett stated in a press release.

Hycroft Mining’s shares declined by as much as 4% during the early hours of trading, falling in tandem with precious metals prices. The company, backed by Canadian mining billionaire Eric Sprott, has a market capitalization of nearly $3 billion.

51-year, $2.4B mine

The Hycroft project, located in the Sulfur Mining District of Nevada, would center around a milling operation utilizing conventional pressure oxidation (POX) and heap leach processing. The mine is currently permitted for both and already has extensive infrastructure on site, including three-stage crushing facilities, leach pad capacity, and two Merrill Crowe plants with refinery.

According to the technical summary, the plant is designed to process 57,100 tonnes of mineralized material per day, at an all-in sustaining cost of $2,147/oz. of gold equivalent. The initial capital cost of the mine is estimated at $2.4 billion, with a further $3.1 billion pegged for sustaining capital.

As outlined in the report, the Hycroft mine plan is based on a current resource estimate of 16.4 million oz. of gold and 562.6 million oz. of silver in the measured and indicated category. This would be enough to support a 51-year mine operation, with average annual production of 204,000 oz. of gold and 6.8 million oz. of silver, or 295,000 oz. of gold equivalent.

The company sees further production upside from upgrading the inferred resources — totalling 5 million oz. of gold and 132.8 million oz. of silver — that were excluded from the mine plan. It also plans to further advance the Brimstone and Vortex discoveries, with a view of combining an underground mine option alongside the open pit to bring forward high-grade ounces earlier in the life of mine.

“By advancing the high-grade Brimstone and Vortex silver systems, we see a clear path to further improving project economics and unlocking additional value,” Garrett said.

In addition, new oxide targets have been identified for potential heap leach early in the mine life, and the processing of stockpiled low-grade mill feed material is also being considered, Hycroft said. Currently, the mineral resource estimate covers just less than 15% of the 64,000-plus-acre land position in Nevada, it added.