- Positive NPV (US$49m) on conservative USD POG assumptions of US$1,120.
- At current USD POG the NPV rises to c. US$74m
- Low pre-production capex of c. US$18m which will not be a significant drain on the balance sheet (unlike some were predicting). For example, the rest of Duckhead (20k oz) to be mined in Q3 would pay for this capex.
- This is only the first stage of going UG. This development will pay for all infrastructure to get underground (and make profit) allowing further exploration upside to be developed/ mined at much more profitable rates (there is lots more gold down there to find).
- Entire mine plan being redesigned to maximise profit. My interpretation is that we may process less ore each year but make more money. Yesterday's announcement was also important in that it highlighted how much oxide ore is being found and how deeply weathered the rock is.
- Interesting to see that 'potential exploration drives' go both north and south - i.e. back toward the TAP open pits where yesterday's announcement indicates that there is lots more gold as well as heading north into new ground.
- Analysts will now be able to incorporate the first stage of Urucum UG into their valuation models
All up a very encouraging start to extending the LOM and the first step. I wouldn't be surprised if some 'headline' readers are underwhelmed by this PFS. The upside, however, is to be found in the detail.
Cheers
John
BDR Price at posting:
27.5¢ Sentiment: None Disclosure: Held
