RE:PEA published PEA
IRR of approx. 35% posttax at POG1800 is very good; especially when you assess 31 yrs LOM. The the starter pit should be financeable at stable precious metal prices and recovery of about 70%. That is the most important thing. TPD expansion via FCF; 2.7b pretax at starter pit over LOM.
Economics:
AISC of 750usd net product means about 2.7m FCF at 1600 pog. It gets more difficult for scaling. If I remove the high grading in the starter pit, there are still around 16m oz AU at 0.4g / t in situ. Cut off would be 0.26g / t AuEq for POG1600, the rest of Metates has approx. 0.5g / t AueQ.
The strip ratio of 1: 2.22 for the starter pit will be much lower with the upgrades. According PFS 2016 the whole metates has about 1: 1.1. Therefore, the mining costs should be roughly halved. If you take into account the somewhat lower AG credits, this would result in approx. 1000-1100 usd cash costs net AU and about 1200-1300 AISC net gold.
ressource update
The resource update resulted in a deterioration in the M&I grade from 0.519 g / t AU to 0.47 g / t AU, AG from 13.8 g / t to 12.9 g / t because of the lower cut off due to higher metal prices. Grades down; tonnage up with about 1m oz AU more insitu.
My assumptions are of course very vague. Recovery studies will be decisive. Recovery of zinc as higher grade through new infill drilling in the high grade block could be an additional driver.
peter