NPV Implications of operating/ capex savings
2022 Feasibility Study....see new CP
$128M NPV @ US$1850/oz, (1 )
$273M NPV @ US$2700/oz spot gold price (113% IRR) (2 )
50k oz annual gold production for 5 years ,$75M in Capex
The $92.6 million cad in operating savings by replacing Nuggett with Pine Cove mill would boost (1) to $220 milliin and (2 ) to $365 million.
These are , in comparison to similar peers for just a 5 year mine LOM, remarkable asset values, driven largely because the open pit grade is in the top decile of open pit mines in the world whose average grade is just below 1.5 grams per ton and because high grades and mining costs are inversely related, hence AISC in the lowest decile .
Going foreward within the updated FS, I see a 4 year HD mine @75,000 ounces per year and the back 6 years at 50,000 ounces per year.
Double the LOM and LOM production and you more than double the NPV.
Typically, Gold producers trade at about 0.75 times NPV.
This is a conservative peek ahead as it does not include expanding HD by infill drilling of 3 new discoveries , nor Orion similarly , nor any new discoveries from its 10-12 prospects , nor acquiring 1,5 m ounces from Big Ridge.
AIMHO
GLTA