TSX-V- and NYSE America-listed New Found Gold has published its inaugural preliminary economic assessment (PEA) for the Queensway project in Newfoundland and Labrador, outlining a phased development plan aimed at fast-tracking early cash flow.

The PEA confirms the company’s strategy to prioritise high-grade material in the early years, a move CEO Keith Boyle says underpins the project’s strong economics.

"The PEA reinforces our conviction that Queensway can become a low-cost, high-margin, cashflow generating mine. This is a significant step in achieving our goal of building and operating a gold mine in central Newfoundland," said Boyle on Monday.

The study outlines a three-phase, 15-year mine life with total recoverable gold production of 1.5-million ounces at a total cash cost estimated at $1 085/oz and an all-in sustaining cost (AISC) of $1 256/oz.

“Since day one, the objective of the new management team at New Found Gold has been to advance Queensway to cash flow. The PEA outlines a phased approach with an initial small high-grade openpit mine with toll milling, followed by the construction of a larger on-site operation, which will include both openpit and underground mining,” Boyle added.

THREE-PHASE DEVELOPMENT STRATEGY
Phase 1 entails site preparation and infrastructure installation for a small openpit operation, targeting high-grade ore. Mined material will be crushed and transported to an off-site toll milling facility in Newfoundland, processing 700 t/d)over the first five years. Lower-grade ore will be stockpiled for later use once an on-site processing facility is operational. The initial phase carries a capital cost of C$155-million and is expected to yield average production of 69 300 oz/y of gold at an AISC)of $1 282/oz during Years 1 to 4.

Phase 2 involves a growth capital investment of C$442-million to construct a 7 000 t/d on-site processing plant, with construction starting in Year 3 and commissioning in Year 4. Milling operations are slated to begin in Year 5 and continue for nine years, followed by two years of reclaiming low-grade stockpiles. This stage will optimize grade sequencing by prioritizing higher-grade material from both the openpit and future underground operations. In-pit tailings deposition is planned throughout the project life. Phase 2 is expected to average 129 000 oz/y of gold, with an AISC of $1 206/oz. During the initial five years of plant operation, output is projected to rise to 172 200 oz/y with an AISC of $1 090/oz.

Phase 3 will see the development of an underground mine, scheduled to begin construction in Year 5. The operation will use cut-and-fill mining to extract high-grade ore at a nominal rate of 700 t/d from Year 6 through Year 10.

The project exhibits significant leverage to gold prices. At a base-case price of $2 500/oz, the after-tax net present value (NPV) is estimated at $743-million, with an internal rate of return (IRR) of 56.3%. At a gold price of $3 300/oz, the after-tax NPV nearly doubles to $1.45-billion, while the IRR soars to 197%.