Centerra OKs Goldfield mine in Nevada

[Redator]

Centerra Gold (TSX: CG)(NYSE: CGAU) said it’s moving ahead with development and construction of its Goldfield project in Nevada after rising gold prices boosted estimated returns.

Using a long-term gold price of $2,500 per oz. and a discount rate of 5%, Goldfield now has an after-tax net present value of $245 million (C$338 million) and an internal rate of return of 30%, Centerra said late Wednesday. Since gold’s 30% surge this year “has enhanced project returns,” detailed engineering and early procurement activities for construction will begin immediately, the company added.

Toronto-based Centerra is counting on Goldfield – which it predicts will become a “strategic” asset once production starts by the end of 2028 – to boost total output and offset natural declines at Turkey’s Öksüt gold mine. Execution risks associated with the mine’s construction are low due to the presence of a conventional open pit, Centerra says.

The move to proceed with Goldfield, which reverses a decision last year by the company, “further leverages Centerra’s deep project pipeline,” National Bank Financial mining analyst Don DeMarco said in a note.

Idaho, BC

Other Centerra projects include Idaho’s Thompson Creek molybdenum mine, which is targeting first production in 2027, and British Columbia’s Kemess gold-copper mine, where a preliminary economic assessment is in the works.

Initial capital costs are pegged at about $252 million, including about $40 million in pre-production stripping and other costs, while the all-in sustaining cost is projected to be about $1,392 per ounce. Centerra expects to fund the mine’s construction with existing liquidity, Tomory said.

Centerra envisions a seven-year mine life for Goldfield, with average annual gold production of around 100,000 oz. in peak production years. It acquired the project in 2022.

Hedging

To lock in the benefits of elevated gold prices, Centerra has signed hedging agreements covering half of the mine’s production in 2029 and 2030. Terms include a gold price floor of $3,200 per oz. and an average gold price cap of $4,435 per oz. in 2029 and $4,705 per oz. in 2030, at no cost to the company, Centerra said.

“Goldfield is well positioned to deliver strong returns,” CEO Paul Tomory said in a statement. “Over the last several months, Centerra has undertaken additional technical work and project optimizations that have significantly enhanced Goldfield’s value proposition and have de-risked the project. Favourable gold prices combined with these recent developments have improved the project’s economics, enabling us to move forward with execution.”

There are four deposits at the site: Goldfield Main, Gemfield, Jupiter and McMahon Ridge. Centerra’s most recent resource, dated June 30, shows proven reserves of 9.94 million tonnes grading 1.04 grams gold per tonne for contained metal of 334,000 oz. and 23.4 million tonnes of probable reserves grading 0.49 gram gold for contained metal of 372,000 ounces.

Permits

As it prepares for the start of construction, Centerra is continuing to advance permitting activities for Goldfield. Existing permits for the Gemfield deposit will require minor amendments, while permit applications for Goldfield and McMahon Ridge will be submitted later.

Centerra’s announcement came as the company reported quarterly results. Second-quarter net income jumped 82% to $68.6 million as revenue rose 2% to $288.3 million.

Shares of Centerra fell 1.4% to C$10.14 Thursday afternoon in Toronto. That gave the company a market value of about C$2.1 billion.