After a few years of additional drilling, Pacific Ridge Exploration (PEX.V) recently published a maiden resource calculation on its flagship Kliyul project. The inferred resource contains 334 million tonnes at an average grade of 0.15% copper, 0.26 g/t gold and 0.95 g/t silver for a total of 1.1 billion pounds of copper, 2.7 million ounces of gold and 10 million ounces of silver. The average copper-equivalent grade is 0.33% while the total amount of copper-equivalent pounds in the inferred resource is 2.4 billion pounds, using a 0.20% CuEq cutoff grade. We had hoped the higher grade intervals such as 317 meters of 0.79% CuEq and 328 meters of 0.64% CuEq would have had a higher impact on the overall grade of the Kliyul resource.
Applying the recovery rates of 80% for the copper and 65% for the gold and silver, the net recoverable value per tonne of rock based on the aforementioned grades is approximately US$30 using $4.25 copper, $3,250 gold and $35 silver. The main deciding factor on Kliyul will be the initial capex to build a mine. While US$30/t in recoverable rock value should definitely be sufficient to cover the anticipated operating expenses (based on the known data from similar open pit mines in British Columbia), the main question will be related to the IRR and payback period.
Meanwhile, the company has kicked off a new 2,500 meter drill program focusing on infill and expansion drilling at the Main Zone, which hosts the resource.
Disclosure: The author has a long position in Pacific Ridge Exploration. Pacific Ridge currently isn’t a sponsor of the website, but has been a sponsor in the past 12 months. This post is for educational purposes only; be mindful investing in junior mining stocks is risky and you may lose your entire investment if things go wrong. Please read the disclaimer.
