Basis: mine plan and grades
Valuation basis: POG 1800 usd, AG 25 USD
stage1 (15k tpd)
NPV5 1800 posttax: 1.45b CAD
Cash costs (y1-y15): approx. 500 USD
FCF (15k ptd) pretax (y1-y15) = approx. 2b USD, approx. 130m p.a.
5% discount rate sure for Mexico and risk of recovery inadequate, 0.08 at least appropriate
average production 90k oz gold over 31y lom, first 15 yrs highgrading
NPV8 1800 posttax: 1.1b cad
Current rating: MC / NPV8 = approx. 0.22
stage2 (30k tpd) and expansions
from y10, extension to 30t tpd
at 0.4 g / t Au and the residual grades of Stage1, this results in an approximate production of a total of approx. 160k oz on average over the next 13 yrs up to y23 where the next upgrade would take place.
In sum, the plan will be to produce around 200k oz in the long run. Would make a LOM of around 60 yrs :)
Cash Costs Stage2: approx. 850-950 usd
FCF stage2 (30k-tpd): approx. 140m USD p.a. pretax
Stage ++
Cash costs rest LOM: approx. 1100 usd
at (45kt tpd) approx. 160k oz pa.
FCF (45k tpd) approx. 120m USD p.a. pretax
FCF (60k tpd) approx. 150m USD p.a. pretax
My conclusion:
Risk/opportunity is very promising. Even if the alkaline method does not work, the 20m+ AuEq are still in the ground. If Panga delivers and manages 70-75% recovery, we will have our joy at Precious metal prices around 1800 usd and CGK will become a multi-bagger. The ultra-long LOM would give a very nice FCF rating. The leverage in falling / rising Metal prices would be very large due to the relatively high cash costs. Therefore, the prices will play an important role, especially in the next few years until Stage1 is financed. After the ramp-up of Stage1 at the latest, CGK would become a sure-fire success. The dilution would remain extremely low with this stage approach. I expect steady production around 200k oz in the long term.
peter