Case study 03 / Mining, gold tailings retreatment
The promoter said it cost US$1,050 an ounce. Honeycomb found US$4,527.
An investor was weighing a gold tailings retreatment project presented with comfortable economics. Honeycomb rebuilt the recovery and cost assumptions from the ground up and found the real cost per ounce was more than four times the promoter's figure.
What Honeycomb found
The model ignored the metallurgy
The promoter booked a 1 g/t feed as if every ounce was recovered. Real gravity recovery was about 46%, and even the pilot only targeted 60%.
The processing cost could not exist
The stated US$250/oz processing cost worked out to under US$17 per tonne at real recovery, less than the diesel power bill alone in the region.
The plant had no feed
Only about 80 kt of tailings were drill-supported, enough for less than two years at the modelled plant rate, not ten.
The shift
US$4,527/oz once recovery and power are real
Before: AISC of US$1,050/oz
About 46%, overstating output by more than half
Before: 100% recovery on a 1 g/t feed
Under two years of drill-supported feed
Before: A 40 ktpa plant running ten years
Outcome
What the promoter presented as a low-cost producer was uneconomic as modelled. The investor priced it on real metallurgy instead of the spreadsheet.
An anonymised example of work done with Honeycomb. Figures describe this case and are not a general performance guarantee.
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