I-80 Gold resource positions Nevada’s FAD project for sale

[Ben Graham]

I-80 Gold (TSX: IAU; NYSE-A: IAUX) has released a new high-grade polymetallic resource at its FAD project in Nevada to help sell the non-core asset.

The resource totals 594,000 indicated tonnes grading 4.51 grams per tonne gold, 209.7 grams silver, 4.3% lead and 6.8% zinc for 86,000 oz. of contained gold, 4 million oz. silver, 57 million lb. lead and 89 million lb. zinc i-80 said late Thursday. FAD also hosts 2.74 million inferred tonnes at 5 grams gold, 188.6 grams silver, 3.7% lead and 4.4% zinc for 446,000 oz. gold, 16.6 million oz. silver, 223 million lb. lead and 267 million lb. zinc.

“As part of the recapitalization plan, i-80 is contemplating selling the FAD deposit in support of advancing its core assets,” Canaccord Genuity Capital Markets mining analyst Peter Bell said Friday in a note. In his view, the update “enhances marketability of [the] non-core asset” as i-80 advances its multi-asset development plan.

I-80 wants to transform itself into a Nevada-based mid-tier gold producer around several projects: Lone Tree, Granite Creek, Cove and Ruby Hill, which is near FAD. Financing

The company wants to raise $350–$400 million for financing, offer royalty sales and sell FAD. Feasibility work in support of these goals run across the projects through early next year, according to company documents. Peers and processing options nearby include Nevada Gold Mines’ Turquoise Ridge complex, 10 km from Granite Creek, which is owned in a roughly 60-40 split by Barrick Gold (TSX: ABX; NYSE: GOLD) and Newmont (NYSE: NEM) on the Battle Mountain–Eureka–Getchell trends.

I-80’s Toronto-traded shares gained nearly 1% to C$1.29 on Friday afternoon, but were down 12% over the past 12 months. It has a market capitalization of C$1 billion ($712 million).

Oxide cap

I-80 has also confirmed near-surface oxide gold occurs at Gold Hill, the historical Ruby Hill mine that sits above the FAD Main zone. The material could be sold through the Ruby Hill heap-leach facility, with preliminary tests returning 85% gold recovery.

A cross-sectional view of the FAD and Gold Hill deposits. Credit: I-80 Gold

At base assumptions, the study pegs net smelter returns – a measure of the value of payable metals after selling costs, before mining and processing – at about $430 per tonne indicated and $442 per tonne inferred.

Meanwhile, i-80 in September reported initial infill results at Granite Creek Underground from the South Pacific zone returning 2.9 metres at 33.6 grams gold from 616.6 metres depth and 3.6 metres at 29.7 grams gold from 634.1 metres depth. The holes were part of a 40-hole, 14,000-metre program aimed at upgrading resources ahead of a first-quarter feasibility study.

Feasibility

Dewatering upgrades completed earlier this year have flows tracking the model and the mine plan targets a ramp-up to steady-state output in the first half next year, the company said.

At Ruby Hill’s Archimedes underground, development is underway in parallel with infill drilling on the upper zone and early next year to target the lower zone. The plan also schedules feasibility-level studies for Granite Creek underground and Cove early next year, and advanced engineering for a Lone Tree autoclave refurbishment by year-end.

Key hurdles remain such as securing long-lead permits, including an environmental impact statement for the Granite Creek open pit, managing dewatering and completing the autoclave refurbishment at Lone Tree.