RE: RE: Wasamac drill results - AWESOME! The value of a PEA is obvious in this case.
Even though cash costs ( $688 per oz ) were at or below that of the average Canadian gold producer, the very high capex ( $503 million ) meant that the payback time was extended, which produces a low IRR.
If, instead of building a full underground mine with all of the associated costs, they built a ramp down to the high grade zones, Capex costs would be much lower.
Depending on the depth and rock types, ramp costs tend to fall in the $25 million to $75 million range.
In addition, as you point out, grades would be much higher ( 5- 7 gms per ton ) which will drive cash costs downward, as more gold would be recovered per ton mined.
All of a sudden, even though production may be 70,000 oz instead of 140,000 oz/year, cash costs will probably be sub $500 per oz and annual cash flows of about $60 or $70 million would mean a payback time of 2 years or less.
This will boost the IRR to the 50 % or much which is very very good.
Plus, the deposit can be mined earlier and the cash flows used to build the rest of the mine.
In other word, the next PEA is going to look very attractive.