Spanish Mountain PEA lifts both NPV and capex

[Redator]

Spanish Mountain Gold’s (TSXV: SPA) rescoped preliminary economic assessment (PEA) for its eponymous project in British Columbia’s Cariboo region boosts early cash flows but doubles upfront costs.

Based on a 5% discount rate and a $2,450 per oz. gold price, the Spanish Mountain project now has an after-tax net present value (NPV) of C$1.03 billion ($756.5 million) and an internal rate of return (IRR) of 18.2%, according to a statement issued late Thursday.

At the spot gold price of $3,300 per oz., the NPV increases to C$2.32 billion with an IRR of 32% and payback of two years. That compares with the 2021 prefeasibility study that pegged the after-tax NPV at C$655 million, the IRR at 22% and capex at C$607 million.

The Vancouver-based company estimates it now needs about C$1.25 billion to fund construction of the mine with a 3.4-year payback at the base-case gold price. The updated assessment is a critical step in the company’s transition from exploration to development, president and CEO Peter Mah said Friday.

“With over 235,000 metres of drill information, our confidence in the resource quality and proposed mine confirm our strategy to advance the project towards feasibility and ultimately a build decision by 2027,” Mah said in a press release.

The project is in the Cariboo region, 70 km northeast of Williams Lake, with existing infrastructure, including the nearby Gibraltar and Mount Polley base metals mines. Osisko Development (TSXV, NYSE: ODV) late last year secured permits for its Cariboo gold project in the same region.

Although they dropped 5.6% to C$0.17 apiece Friday in Toronto, giving the company a market capitalization of C$76 million ($55.8 million), Spanish Mountain shares have still gained 55% since early January.

Sizeable operation

The open-pit mine would produce 3 million oz. gold over a 24.5-year mine life, averaging 203,265 oz. annually in the first five years at an all-in sustaining cost of $1,024 per ounce. The life-of-mine annual production averages 122,041 oz. at AISC of $1,338 per ounce.

The deposit hosts measured and indicated resources making up 98.4% of the mill feed, totaling 292.1 million tonnes grading 0.44 gram gold per tonne for 4.2 million oz. gold. Inferred resources add 14.8 million tonnes grading 0.33 gram gold per tonne for 155,000 oz. of metal.

Spanish Mountain adopted dry-stack tailings with coarse free-draining tailings to reduce environmental impacts. This approach addresses feedback from local communities and First Nations, reducing disturbance near Cedar Point Provincial Park and fish-bearing waters, the company said.

Recent exploration identified gold mineralization extending over 3 km, indicating potential for resource expansion at targets like Phoenix, the company said.