SOMBA K'E/YELLOWKNIFE - The Yellowknife Gold Project could be fast-tracked if the project's current economics hold their footing, says Tyhee Development Corp.

The strong price of gold, declining oil costs and a weak U.S. dollar are combining to create an ideal economic climate for eventual production at the gold project – conditions so good they may make a feasibility study unnecessary, said David Webb, president and CEO of Tyhee.

"We expect the pre-feasibility study in the first half of 2010," said Webb. "Now, it doesn't necessarily follow that we go to a full feasibility study. If the economics are so outrageously good, then you can start moving toward development and production right away."

Most mineral exploration projects go through a series of three economic assessments, each discussing in increasing detail the project's financing, construction and operation: the preliminary assessment (also known as the scoping study), the pre-feasibility study and the bankable feasibility study.

With gold prices recently hovering above $1,000 an ounce, the cost of production at $384 per ounce, and fuel prices down by half since the project's preliminary assessment was completed last year, the feasibility study may be unnecessary, said Webb.

"If your cost to produce an ounce of gold is $100 an ounce, and for a $150 million investment you make half a billion dollars, then it's likely the bankers that are supplying you the cash will go, 'Even if you're off by five, 10 or 15 per cent in your estimate of manpower or power costs, there's enough slack in there that this is a viable project,'" said Webb.

"There's no rules or regulations. It's just, 'Will the bankers buy it?'

"They'll tell you what they need in order to get comfortable to give you (money)."

The cost of building the Yellowknife Gold Project is pegged at approximately $150 million, added Webb.

Whether the project can proceed without a feasibility study depends on the timing of its permitting process, he stressed.

The project is currently undergoing environmental assessment by the Mackenzie Valley Environmental Impact review Board.

This summer, the company spent over $500,000 on additional exploration at the property, increasing its knowledge of the size of a showing first discovered last year in an area 30 km south of the project's main zone.

"It was 400 metres long; now it's 1,300 metres long," said Webb.

The Yellowknife Gold Project is estimated to contain 1.85 ounces of gold, with a potential mine life of nine years.

Webb said he hopes the project will enter construction in 2012.