Kaminak Gold's (TSX:V.KAM, Stock Forum) wholly-owned Coffee Gold project, located 130 kilometres south of Dawson City, Yukon, is smelling pretty sweet after the company announced the results of its NI 43-101 compliant preliminary economic assessment yesterday.
According to the news release, said results show that Coffee possesses a robust, high-margin, rapid payback 11-year open pit mining project using current gold prices.
The PEA was carried out by JDS Energy & Mining, an established Yukon mine builder, with assistance by Kappes Cassiday and Associates, Knight Piesold and Co, and SIM Geological.
Utilizing a gold price of US$1250/oz with a 95% Canadian to US exchange rate, Coffee rakes in a net present value (NPV) at a 5% discount of $522 million and an internal rate of return (IRR) of 33%.
The company feels the mine has every possibility of becoming a major producer in the Yukon, yielding close to 450,000 ounces in the first two years with an average 167,000 ounces being produced annually over the life of the mine at an all-in sustaining cash cost of US$688 per ounce of gold.
The PEA outlines an owner-operated, estimated 11-year open-pit mine targeting 53 million metric tonnes of primarily oxide facies material at an average diluted grade of 1.23 g/t gold and also reveals opportunities for further economic enhancement as well as indicating the current resource remains open along strike and to depth.
There is also 20 kilometres of untested gold in soil anomalies that remain to be evaluated and the company is confident that additional near surface oxide resources can be identified in the near term.
Company CEO, Eira Thomas, commented, “The recently completed Coffee PEA has delivered a high value, high margin, low risk gold project in one of the World's safest, pro-mining jurisdictions, Yukon Canada, and marks a significant milestone for our Company.”
He went on to illustrate, “At a US $1250 gold-price, Coffee will generate more than $2 billion in gross revenue, deliver total life of mine, pre-tax, free cash of $800 million and payback capital in under 2 years. Further upside to this evaluation is anticipated through optimization studies and continued exploration. All of the deposits in the current resource remain open along strike and to depth.”
Fred Lightner, Director of Mine Development at Kaminak, added, “With the completion of the PEA, we now have an initial look at the economic potential of the Coffee Project. The grade of the deposit and strip ratio, metallurgical response, and relatively low operating costs are strong factors which create value.”
He then concluded, “We believe that with additional exploration, delineation drilling, and project engineering the project will be further enhanced.”
Kaminak was in the news recently when the company announced voting results for its annual general meeting almost two weeks ago.
Shares jumped 20.83% on the news to $0.87 per share.
Currently there are 93.4m outstanding shares with a market cap of $81.2 million.