Stock Investing - Does a positive feasibility a guarantee of a good investment?

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Does a good feasibility study guarantee ROI? For instance, this article from a mining company, do you think this is worth investing based on the numbers and initial studies?

Positive feasibility study for sleeping giant mine modest investment of only $5M high yield rate

Here is a summary of this technical report(1):

General and History

The Sleeping Giant mine is located 80 km north of Amos in north-western Quebec, Canada. It is accessible via road 109 that connects Amos to Matagami. This is a paved road and it passes less than 1 km from the mine site. Material and services are available at competitive prices. The mine was exploited from 1988 to 2014. It has been maintained dry since its temporary closing in 2014 and no infrastructure has been taken out or added. Currently, the Sleeping Giant mill treats ore from the Elder mine owned by Abcourt Mines Inc. and occasionally, some custom ore. The mill capacity is 700 to 750 tonnes per day. The activated carbon process is used to recover gold. Historically, the gold recovery on the Sleeping Giant ore, at that mill is 97.5%. The tailings pond complies with all governmental regulations and the dykes and the quality of water are checked every year by an external expert. The tailings pond has enough capacity to receive the tailings from Elder and those from the Sleeping Giant mine as indicated in section 16 of the technical report. The setting pond at the discharge of the tailings pond is used to treat the discharged water according to the rules and to control the quality of the water.

Geology and Mineralization

The Sleeping Giant property is located in the central part of the north volcanic zone affected by major E-W and NW-SE corridors of deformation. The geological units in the mine area consist of basalt, andesite and volcano-sedimentary rocks. Mineralization is in disseminated sulfides, in veinlets or in small massive bands parallel to bedding. The best veins contain four types of sulfides: pyrite, pyrrhotite, chalcopyrite and sphalerite, which make up from 5 to 60% of the vein fillings. Beside gold, the veins contain silver and small amounts of copper and zinc. Note 1: For more information, see Sedar. Mineral Resources The mineral resources used in the feasibility study are extracted from a technical report prepared by Mr. Valère Larouche entitled “Estimation des ressources minérales de la propriété Géant Dormant”, May 2019. The Sleeping Giant ore body contains 10,900 tonnes of measured resources grading 12.20 g/t of gold (4,300 ounces of gold) and 475,625 tonnes of indicated resources with a grade of 11,20 g/t of gold (171,275 ounces of gold) and 93,100 tonnes of inferred resources grading 11.85 g/t of gold (35,400 ounces of gold). Abcourt Mines inc. has identified some substantial exploration targets on existing levels of the mine, ignored in the past. The company is planning an important exploration program and hopes to increase considerably its resources and reserves. Mineral Reserves The mineral reserves are estimated at 339,221 tonnes grading 7.9 g/t of gold (85,690 ounces). These mineral reserves are probable.

Mining Method

A mining plan has been prepared to extract 325,000 tonnes of reserves over a 4-year period including one year of pre-production (25,000 tonnes) followed by the three years with an annual production of 100,000 tonnes per year. The remaining 14,221 tonnes of reserves, not extracted by this mining plan, will be extracted later in subsequent operations following additional exploration and development work. There are good possibilities of extending the production period by doing additional exploration work on the indicated resources excluded from the mining plan and on the inferred resources and converting the latter into measured or indicated resources and eventually into reserves. The mineralization is typically in narrow veins. The dip varies between 30o and 80o. The mining methods will be shrinkage and room and pillars. The long-hole method is not favored but will be used where the other methods are not adequate.

Project Infrastructures

The access to the Sleeping Giant is facilitated by road 109 that passes through the property at less than 1 km from the mine site. All surface installation necessary for the opening of the mine are available on the site. The mill and tailings pond are functional. Electricity is provided by HydroQuebec. Mine water is used for the mine and mill. Water from a well is used in lunch rooms, toilets and showers. Telephone and internet services are provided by Telebec.

Mill

The process used in the mill to treat the gold ore is carbon in pulp. The mill capacity is 700 to 750 tonnes per day. This capacity is sufficient to treat the Elder and the Sleeping Giant ores. Historically, the gold recovery in this mill has been 97,5%. Environment, Permits, Social Impacts and Closing Plan Mining leases and certificates of authorization are valid. Studies are done regularly to comply with exigencies of the provincial and federal environmental laws and regulations. The waste rock is not acid generating and do not leach heavy metals. The re-start of the Sleeping Giant mine will have a positive economic impact on the region by creating about 100 jobs and by the local purchase of material and services. A closing plan was updated and filed with the ministry of “Energie et Richesses Naturelles du Québec” in October 2018. The estimated cost of restoration and closing by Abcourt is $3.6M. An amount of $4M has already been deposited in trust with the ministry of “Energie et Richesses Naturelles du Québec”. Hence, no additional amount is needed and it is not necessary to include this amount in the financial analysis.

Capital and Operating Costs

The capital cost for the pre-production of the Sleeping Giant mine is estimated at $4.6M, including operating costs of $8.5M, royalties for $0.125M, capital expenditures of $3.4M, a working capital of $1.3M and revenues of $8.7M. The pre-production period is 12 months. During the production period, the sustaining costs are $2.7M including on going capital expenditures of $4.0M and a refund of $1.3M in working capital. Total operating costs during the production period are $52.4M for an average of $174.84 per tonne treated. Royalty payment of $1.375M are not included in this amount.

 

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