PINL:VLTAF - Post by User
Post by
eebleron Jun 11, 2010 8:53am
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Post# 17180013
Comparison
Comparison
If we want to look at a comparable advanced exploration project in Ghana and see where VTR might be in the next year or two, here is a snippet from Keegan's recent Esaase economic feasibility report:
Keegan is continuing infill and development drilling as well as metallurgical, environmental and engineering studies to advance the Project to the feasibility stage and ultimately production. Over the first three years, on average, Esaase will produce 243,300 ounces of gold per year at a head grade of 1.4 g/t Au, with direct cash costs (excluding royalties and refining charges) of $389 per ounce. Over a projected 10-year mine life the current deposit would produce an average of 198,200 ounces of gold per year at an average direct cash cost of $452 per ounce, generating earnings before interest, taxes and capital recovery (EBITDA) of $721 million and earnings before interest and taxes (EBIT) of $381 million. For the first three years of production, the pre-tax operating cash flow is $311.7 million (EBITDA). The Study shows a pre-tax Internal Rate of Return of 19.5% (17.2% after tax) and a Payback Period of 3.33 years (3.34 years after tax).
If you assume VTR is going to be anywhere from 1.1 g/t to 1.5 g/t, it offers a good glimpse into potential. Esaase has 2.28M oz (grading 1.2 g/t with 0.4 g/t cutoff) in the Indicated category, and 1.65M Inferred (grading 1.2 g/t and 0.4 g/t cutoff). Kiaka looks on track to be reasonably comparable from that standpoint. Cash costs should be relatively consistent due to proximity to water and electricity. They may even be lower if the strip ratios at Kiaka are "better" than at Esaase, The price of gold in the Keegan study is based on $850/oz so with current prices expected to rise, the economics will obviously be better.
Some other "low" grade open pit mines include:
- Detour - 1.02 g/t - obviously much bigger at >10M ozs
- Greystar - 1.09 g/t - bigger, but spread out over 3 or 4 different pits and still residual risk due to environmentals
- Andina (Volcan) - 0.62 g/t - big, but even lower grade
- Osisko - 1.13 g/t - >9M ozs, but they still have the mayor of the town refusing to move his house!
Open pit mines all over the place in the 1.0 g/t - 1.5 g/t range that are going forward and will make LOTS of money.
eebler