VANCOUVER – Tarachi Gold Corp. [TRG-CSE, TRGGF-OTCQB, 4RZ-Frankfurt] on Monday tabled results of a preliminary economic assessment (PEA) for its Magistral mill and tailings project in Durango, Mexico.
Tarachi is a company that offers investors a rare window on exploration upside and near-term cash flow from gold production in Mexico.
The company is well financed with $8 million in cash and led by CEO Cameron Tymstra, a mining engineer with previous experience in tailings recovery projects. The company has been working to advance the Magistral mill and tailings project to the production stage. It aims to use the cash flow to fund exploration at the company’s other key asset – the Tarachi Project in Sonora State.
Magistral features a fully permitted 1,000 tonne-per-day Merrill-Crowe tailings reprocessing plant and tailings disposal facility and access to an estimated (non-NI-43-101-compliant) resource of 1.3 million tonnes of tailings material with an historic average grade of between 2.06 and 2.11 g/t gold. That grade is considered high by industry standards as the average grade of most open pit gold mines today is around 1.0 g/t.
Under a deal with Manto Resources S.A. de C.V. reached in February, 2021, Tarachi holds the option to acquire a 100% stake in the project for US$4.75 million in cash and 7.5 million shares through March, 2025.
The mill was originally constructed in 2014 to reprocess gold tailings at a rate of 1,000 tonnes per day with an agitated cyanide leach and Merrill-Crowe recovery system. However, previous operators were challenged by the existence of some copper which requires the extraction process to be modified.
On Monday, Tarachi said the PEA pegs the initial capital costs at $11.1 million with a development timeline of 12 months. The life of mine is forecast at 3.4 years with total production of 53,900 ounces of gold, 75,800 ounces of silver and 1.9 million pounds of copper.
The all-in-sustaining cost is pegged at US$705 an ounce gold, net of copper and silver credits.
The PEA was completed by Ausenco Engineering Canada Inc. and envisages pre-tax annual free cash flow of $19.3 million ($14.3 million after tax) during years of full production.
It provides an attractive preliminary economic case for the development of the Magistral Project, the company said in a press release. The PEA report outlines a potential low capex, low operating cost, and low environmental impact tailings reprocessing operation that can be brought into production in a 12-month time frame, the company said.
On December 10, 2021, Tarachi shares closed at 16.5 cents and trade in a 52-week range of 46 cents and 13.5 cents, leaving the company with a market cap of $13.6 million, based on 71 million shares outstanding.