Fortune Bay’s Goldfields project in Saskatchewan jumps in value

[Redator]

Fortune Bay (TSXV: FOR) said an updated economic study for the company’s Goldfields project in Saskatchewan shows rising gold prices have resulted in a quadrupling of the past-producing mine’s expected value. The stock soared.

At spot gold prices of $3,650 an oz., Goldfields has an after-tax net present value (NPV) of C$1.25 billion ($906 million), an after-tax internal rate of return (IRR) of 74% and a payback of less than a year, Fortune Bay said Tuesday in a statement. The base case, which rests on gold averaging $2,600, would result in an NPV of C$610 million, an IRR of 44% and a payback of 1.7 years.

A November 2022 preliminary economic assessment (PEA), which factored in average gold prices of $1,650 per oz., outlined an after-tax NPV of C$285 million, an IRR of 35% and a payback period of 1.7 years.

“The updated PEA demonstrates the exceptional economics of Goldfields, establishing it as a significant development asset within Canada’s gold mining sector, while underscoring the disconnect between the project’s intrinsic value and Fortune Bay’s market valuation,” CEO Dale Verran said in the statement.

Shares of the company rose 11% to C$0.89 apiece Tuesday morning in Toronto, boosting Fortune Bay’s market capitalization to about C$52 million. The stock has traded between C$0.21 and C$0.90 in the past year.

Processing facility

Fortune Bay’s updated study envisions an open-pit mine with a 14-year life producing 896,000 oz. of payable gold at an all-in sustaining cost of $1,330 an ounce. A 4,950 tonne-per-day processing facility – whose environmental impact statement has already been approved by Saskatchewan – would also be built.

Initial capital expenditures for Goldfields are pegged at C$301 million, including a C$51 million contingency. Sustaining capital is projected to be C$142 million over the mine’s life.

The current mine plan is designed to speed up production, Fortune Bay says. Maintaining throughput below 5,000 tonnes per day would allow the project to proceed without the need for a federal impact assessment, according to the company.

Goldfields lies 13 km south of Uranium City in northern Saskatchewan, an historic mining district with road and hydro access, nearby fuel, contractors and a commercial airport.

High grade

If the project does go ahead, Goldfields would rank among the highest-grade open-pit developments in the Americas, according to Fortune Bay.

Goldfields hosts 24 million indicated tonnes grading 1.28 grams gold per tonne for 989,600 oz. of gold, with 7.4 million inferred tonnes at 0.9 gram gold per tonne for 214,200 oz., according to the updated PEA. About three-quarters of the mineable ounces come from the Box deposit.

With 97% of ounces in the mine plan classified as indicated, Goldfields “is comparatively de-risked for a PEA-stage project and is uniquely positioned for near-term development,” Verran said. “We are now focused on securing additional permits, advancing key de-risking (pre-feasibility) studies and preparing for resource-growth drilling. We are also evaluating alternative options for an accelerated production pathway.”

Baseline studies and permitting are underway, and initial meetings with Indigenous Nations and local municipalities are scheduled to begin in the fourth quarter, the company said.

“At this time, no material environmental or social risks have been identified that cannot be reasonably mitigated,” the company said in an investor presentation posted on its website.

Exploration drilling at Box and the Athona, Frontier Lake, Golden Pond and Triangle targets has the potential to expand the current resource, Fortune Bay said. A 2,000–3,000 metre drilling program is planned to test the growth potential beyond the current mine plan.