Artemis says expanded Blackwater gold mine would generate $370m annual cash flow

Artemis Gold (TSXV: ARTG) has completed the expansion study for its Blackwater gold mine in central British Columbia, concluding that a larger mine would produce 500,000 g/t gold equivalent in each of its first 10 years. Production at that level would generate annual free cash flow of about C$500 million ($370m) at an all-in sustaining cost of $712 per oz.

Development of the first phase is nearing completion, with the project expected to pour its first gold bar in the second half of 2024. The processing plant will be capable of treating 6 million tonnes per year. With completion of phase two, throughput would rise to 15 million t/y in year three and in phase three to 25 million t/y in year seven. The expansion could be funded from operating cash flows.

Artemis based its expansion study on the existing reserves and resources. The project has proven and probable reserves of 334.3 million tonnes grading 0.75 g/t gold (8 million oz.) and 5.8 g/t silver (62.2 million oz.) That equates to a gold equivalent of 0.78 g/t.

Using a 0.20 g/t gold equivalent cut-off, the measured and indicated resources are 596.8 million tonnes grading 0.61 g/t gold (11,7 million oz.) and 6.4 g/t silver (122.4 million oz.) The gold equivalent grade is 0.65 g/t, and it contains 12.4 million oz. gold equivalent. There is also an inferred portion of 16.9 million tonnes grading 0.45 g/t gold and 12.8 g/t silver, or 0.53 g/t gold equivalent.

Early in 2023, Artemis announced it was optimizing several facets of the mineral processing plant that will allow fast-tracking of phase two.

These changes included additional structural steel and increased conveyor belt widths, as well as variable-speed drives for the ball mill. Selected electrical components were upgraded, as were the oxygen plant and down-shaft-sparging for the pre-leach and carbon-in-leach circuits, along with creating a CIL layout that facilitates non-intrusive expansion. A full conversion of the detoxification process removed the need for tanker-supplied liquid sulphur dioxide.

The after-tax net present value with a 5% discount of the expanded Blackwater project is C$3.25 billion over its life, when a gold price of $1,800/oz. is used.

The calculation of the after-tax NPV included a BC mining tax minimum of 2% after the effective rate of 13% calculated on operating profit less applicable capital cost deductions. The provincial mining tax is deductible in computing provincial and federal income tax. The BC provincial income tax rate is 12% after deductions, and a federal income tax of 15% after deductions was considered.

The expansion study did not speculate on several additional opportunities that Artemis continues to evaluate – an increased mine life, exploration of resource extensions, alternative methods of transporting waste material, electrification of the haulage fleet, automation of hauling operations, and process engineering initiatives.