New Found Gold considers toll mill to cut years from Queensway project timeline
New Found Gold (TSXV: NFG; NYSEA: NFGC) is preparing for a decision early next year on whether to truck ore from Newfoundland and Labrador’s leading exploration project to an existing mill, an option that could shave four years from getting to market.
If the Vancouver-based company goes ahead, it will aim to file a preliminary economic assessment by mid-year, CEO Collin Kettell said by phone on Tuesday. The study would evaluate sending truckloads from the Queensway project in central Newfoundland to the idled Maritime Resources (TSXV: MAE) Pine Cove mill 250 km away, he said.
“We’re exploring the internal scoping study right now,” Kettell said. “We’re looking at an initial few years of mining, limited throughput, but potentially something that could have significant impacts for New Found on a cash flow basis and move us in the direction of full-scale mining.”
New Found Gold has been reporting double-digit gold grams per tonne in scores of news releases all year as it wraps up an initial 500,000 metre drilling program. Its Keats West and Iceberg zones at Queensway are the nexus of a gold surge along the Appleton fault in Newfoundland. The region has attracted Sprott Asset Management, Labrador Gold (TSXV: LAB), Exploits Discovery (TSXV: NFLD) and Marathon Gold (TSX: MOZ) among others.
Studies and a permit for using the mill might take two years, Kettell said. That compares with a normal industry timeline taking three years to get a permit to build a project plus two more years to construct it, he said.
“Time is money,” Kettell said. “That’s a big difference between a five-to six-year timeline and potentially a couple year timeline on the phased approach.”
Drill results
In October alone, the company reported Keats West drill hole NFGC-22-931 intersected 17.1 grams gold per tonne over 11.35 metres and 1.82 grams over 40 metres, while Monte Carlo drill hole NFGC-23-1690 cut 91.9 grams over 2 metres.
New Found and Maritime signed a preliminary agreement. The mill handled gold about a year ago. Queensway’s high grades protect the trucking option, the CEO said.
“A lot of toll milling operations don’t work because the grade doesn’t support it and we’re in a unique situation where we tend to have some very high grades,” he said. “Even if it was farther, we don’t think it would probably impact the economics that much.”
Maritime’s mine has a 1,400-tonne-per-day capacity that would be enough to handle Queensway’s initial production in a first phase, Kettell said. The phased approach to the potential concept could see New Found eventually building its own mill on site at some point, but that would be determined by further economic studies, the CEO said.
Last week, New Found raised C$56 million in a share offering. It has C$71 million in cash on hand, it said. Shares in New Found Gold fell C$0.03 on Tuesday afternoon in Toronto to C$5.09 apiece, valuing the company at C$914.2 million.
The company says it plans to continue drilling next year with a focus on targets of prospective mineralization identified by this year’s 3-D seismic surveys.
“The hope is that that is going to outline several targets, deeper down and potentially periphery to the faults,” Kettell said. “We most certainly will not stop drilling.”