Site visit: Liberty Gold fast tracks past-producing Black Pine in Idaho

Shabestari, who’s touring visitors around the site in late September, is talking about the Rangefront Zone, one of Liberty’s most recent oxide gold discoveries on the brownfields site, and a key part of a prefeasibility study released Thursday.

Discovered in 2021, Rangefront hosts widespread, low-grade mineralization interspersed with high-grade shoots. Drilling at the zone, along with continued expansion and development at the Discovery Zone, has quickly grown the resource at Black Pine.

“We drilled a million ounces in just 14 months, and we’re only scratching the surface,” Shabestari said (watch the video attached below).

According to the prefeasibility (the company skipped the usual preliminary economic assessment stage), Black Pine will produce 2.2 million oz. of gold over 17 years, at average all-in sustaining cost of US$1,380. Initial capital costs are pegged at US$327 million.

The heap-leach mine plan frontloads the deposit’s higher-grade ore, boosting early cash flows and achieving payback in 3.3 years at a base case gold price of US$2,000 per oz. That could be shortened to 1.5 years US$2,600 per oz. gold.

The study forecasts Black Pine’s after-tax net present value (NPV), using a 5% discount rate), at US$552 million, and its internal rate of return of return (IRR) at 32% at the base price assumption. At spot, the NPV jumps to US$1.3 billion and the IRR doubles to 62%.

The past producing project churned out over 435,000 oz. of gold between 1992 and 1997.

Strategic investment likely

Liberty’s strategy to mine high-grade ore for early cash flow follows an industry trend where companies fast-track projects to capitalize on higher metal prices. With projected peak production of 231,000 oz., Black Pine stands to become one of the larger mines in Idaho.

“We knew there was something special here,” Shabestari said as the tour wound across the site. “The grades and the continuity of mineralization give us the confidence to push forward quickly.”

The simple mine plan and relatively low capex at Black Pine could make it a takeover target, analysts say, particularly as gold prices continue to hover around record highs.

Drawing comparisons to the US$242 million Orla Mining (TSX: OLA; NYSE: ORLA) – Gold Standard Ventures transaction of 2022, 3L Capital co-founder Mark Souvenir said the valuation multiples suggest the potential for a share price increase of up to 333% if the gold price stays strong.

“We believe a strategic investment by a producer or M&A is a near-term outcome,” Souvenir said Friday in a note to clients. “Finding a large-scale open-pit oxide project in one of the best mining jurisdictions globally is rare.”

Liberty shares traded at 37¢ apiece at press time giving it a market capitalization of $141.3 million. Shares are up about 44% over the past 12 months, having touched 23¢ and 43¢.

Study details

As part of the prefeasibility, Liberty released the first reserve estimate for Black Pine, outlining 299.4 million probable tonnes at 0.32 gram gold per tonne for 3.1 million oz. of metal.

Liberty also released an updated resource statement showing 402.6 million indicated tonnes at 0.32 gram gold for 4.16 million ounces. The inferred resource holds 97.7 million tonnes at 0.23 gram gold for 712,000 ounces.

The mining plan for the Black Pine Project involves moving an estimated 70 million tonnes of ore over the life of the mine to a centralized heap leach facility.

The heap leach pad is planned to have an initial capacity of 16 million tonnes, potentially expanding to 24 million tonnes per year.

Community support

Located only about three hours north of Salt Lake City, Black Pine is supported by well-established infrastructure, including all-season roads, full cell service coverage and nearby power access.

During the site visit, Liberty’s community relations coordinator, Elizabeth Campbell, noted local communities are generally supportive of the project and the prospect of well-paying jobs a mine would create.

Liberty has worked closely with local farmers, securing water rights through mutually beneficial agreements that ensure the project won’t negatively impact the region’s water supply.

Campbell also highlighted the company’s efforts to reduce the mine’s impact on the community, including plans for a central parking area and bussing workers to the site to reduce traffic through the local towns.

These measures help de-risk the project, Shabestari said.

“We’re confident in the project’s permitability,” he said. “We’ve established a positive working relationship with regulatory authorities, and the comprehensive baseline studies already in place to support our applications under the National Environmental Policy Act.”

Resource upside

While visiting the worked-out CD, A, B, and Tallman pits, Shabestari described the Black Pine geology as “a complex series of stacked thrusts and structurally controlled gold deposits,” noting how the interaction of structures and stratigraphy has created a rich but puzzling environment for exploration.

About 60% of the 47-sq.-km project area remains untested, Shabestari said. The site offers chances to expand the resource and further optimize the project before the feasibility study.

Infill and step-out drilling at Rangefront, the M-Zone and the important Discovery Zone aim to expand the resource and move inferred material into the measured and indicated categories.

For 2024, the program includes roughly 19,000 metres of drilling across these zones, focusing on further exploration and resource definition. The program targets seven high-priority areas, where new discoveries could impact the feasibility mine plan.

Shabestari also pointed out the potential of reprocessing the historic heap. “The old heap still holds gold, and we’re assessing how to further process it,” he said.

Liberty is also optimizing the mine design by exploring conveyor systems, haul road layouts, and expanding leaching capacity to 24 million tonnes per year.

As Liberty prepares to submit its ‘mine plan of operations’ in late 2024, the team is advancing baseline studies and technical work to reduce project risks. Shabestari expects a feasibility study to follow later next year, and a construction decision thereafter.

“We’ve only just begun to tap into Black Pine’s potential,” Shabestari said. “Every drill hole is another step closer to unlocking something even bigger.”