It is a shame how politics can ruin one of the best, best managed and structured, and most environmentally sound mining projects in the Western Hemisphere by deciding against the approval of the Environmental Impact Assessment (EIA) for the Salave Gold project, based on opaque grounds last week. The company in question here is Astur Gold (OTC:ATRGF), a Vancouver junior mining outfit which was in the difficult process of developing its 100% owned flagship Salave Gold Project in Asturias (northern Spain).
Salave project; location map
Salave is one of the largest undeveloped and most profitable gold deposits (2M oz gold) in Western Europe at a relatively high average grade (3.1g/t). As a matter of fact, the main issue of this project for the last 2 years was the long awaited approval of the EIA, necessary for the subsequent granting of the full mining permit by the government of Asturias.
The company released its Preliminary Economic Assessment (PEA) on Salave on February 12, 2011, and had almost completed its Feasibility Study, some final adjustments were depending on the outcome of the final verdict on the EIA. The numbers were impressive on all scenario's for a gold price of $1100/oz, ranging from an after tax NPV5 of $357M to $553M, and an IRR from 30.0% to 47.7%. I recalculated the project extensively in my last articleafter integrating all adjustments the company would make for the upcoming FS, and this resulted in an after tax NPV6 of $95M and an IRR of 32.2%. A discount of 5% would result in an after tax NPV5 of $101M.