Allied Nevada Gold Corp. has received offers from three entities for $300 million in mobile equipment financing for the big expansion of its Hycroft gold/silver mine in Nevada.
It also said this afternoon that it has begun ordering long-lead mobile and fixed equipment.
Allied Nevada said it has received offers from Caterpillar Financial Services Corp., Komatsu Financial and a major U.S. financial institution for a total of $300 million in mobile equipment financing.
The proposed equipment financing is expected to be secured by the mobile equipment with terms generally in the range of 60-72 months and an effective interest rate of between 5-6%, which varies based on the lender. The financing proposals are subject to customary closing conditions, the company said.
It said it has placed orders for three CAT 7495, 72-yard wire rope shovels from Caterpillar, 33 930E 320-ton haul trucks from Komatsu and other mobile equipment with a total value of about $300 million. Delivery for this equipment is expected to coincide with the continued implementation of the heap-leach expansion and the future implementation of the milling expansion, the company said.
Allied Nevada also has ordered the primary gyratory crusher for the initial crushing system to be installed at Hycroft. Allied Nevada is purchasing the primary gyratory crusher, which is the first stage of the three-stage crushing system, from FL Smidth of Salt Lake City. The primary crusher, a 60 inch x 113 inch, 1,000 hp Fuller-Traylor gyratory crusher, is the longest-lead item for the system.
Total committed price for this component of the crushing system is $8.6 million, including critical spares. The company said it is in the process of securing the secondary and tertiary crushing units screens and a conveyance system.
“Low-risk” gold opportunity
“Securing this critical equipment and associated financing are essential to meeting our expansion objectives,” said Scott Caldwell, president and CEO. “The financial support of our equipment partners further validates our belief that this project is a low-risk growth opportunity with significant potential.”
The addition of the larger mining equipment will continue to lower operating costs, the company said. The crusher is expected to be delivered by the end of 2012 and the plant is expected to be in operation by mid-2013.
Installing the crusher will allow the mine to crush 100% of the heap leach ore for one year, improving average recovery of gold and silver to 65% and 23%, respectively. Once the mill is constructed, the crusher will be transitioned to feed material to the mill.
The total capital cost for the gyratory crushing project, including engineering, is $73.3 million and is expected to support an internal rate of return of over 30%. The rate of return was calculated based on recovery improvements alone; operating cost savings were not accounted for.
Detailed engineering and permitting are well under way, Allied Nevada said. Modifications to the existing air quality permit and reclamation bonding are required to construct and operate the crusher. The company said it expects to secure these in a timely fashion.
The company reported Sept. 16 that it had received a positive feasibility study to increase milling production at Hycroft to complement the heap-leach expansion now under way.
The day before, the Reno-based company’s board had approved funding for a gyratory crusher for the heap-leach expansion.
