Canamex Gold Corp (CVE:CSQ, OTCBB:CNMXF) saw shares advance in Toronto as it unveiled a positive preliminary economic assessment (PEA) for its Bruner gold project in Nevada, which should kick start the property into development.

The report is based on an open pit scenario, which allows for a ten year operation with an after tax value of US$69.6mln with a 5% discount rate.

The average annual production would be 42,500 ounces of gold and 44,250 ounces of silver, with a low pay-back period of 1.65 years at $US 1,280an ounce of gold.

There would be low initial capital expenditures of US$37.81mln, the report showed,  including contingency of US$ 4.8 million, not including US$ 6.8mln of working capital.

The internal rate of return (IRR)  is 31% at US$1,280 per ounce gold price and 51.5% at US$ 1,500 per ounce of gold.

“Completion of this updated PEA significantly advances the Bruner Gold Project,” said Greg Hahn.

“This updated PEA extends the life of the conceptual mine life from six to eight years and adds 93,000 ounces of indicated resources of gold and 826,000 ounces of indicated resources of silver to the resources referenced in the previous 2016 PEA,” he added.

“It also tightens the capital and operating cost estimates by reference to recently experienced actual costs on another gold development project in Nevada.

“I believe we will be able to move the Bruner Gold project forward into permitting and development on the strength of this positive PEA.

“The project includes the fundamental elements we consider important to investors when building a mine, including low capital and operating costs, and an attractive rate of return in the current price environment. We can now move ahead with permitting and engineering the project for development.”

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The 2016 PEA also put the capital payback period at 15 months.

The latest report assumes contract mining, using average rates for similar sized projects in Nevada.

Notably, Canamex said there was considerable room for improving unit costs by properly engineering and quantifying haul road distances and grades and considering owner operated mining in further studies.

As a caveat, the firm noted there was no certainty that this PEA will be realized and that mineral resources  that are not reserves do not have demonstrated economic viability.

Canamex Gold shares added 2.33% to stand at C$0.22 each.

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