Pre-Tax NPV Of US$1.1 Billion And IRR if 35%
Chesapeake Gold Corp. (TSXV:CKG, OTCQX:CHPGF) is pleased to report the positive results of the Preliminary Economic Assessment (PEA) for the Phase 1 mine plan of the Metates gold-silver project in Durango, Mexico.
Phase 1 evaluates the initial development of Metates as a low cost, scalable heap-leach operation. The PEA demonstrates robust project economics with optionality for expansion into a significantly larger operation.
The PEA was prepared by M3 Engineering & Technology of Tucson, Arizona (M3) with input from other prominent industry consultants.
- Compelling Project Economics: Pre-tax NPV of C$1.43 billion (US$1.14 billion) and 35% IRR at $1,600 per ounce gold and $22 per ounce silver at a 5% discount rate, over a 31-year mine life (“LOM”).
- Production Metrics: Average annual production of over 110,000 ounces of gold and 2.5 million ounces of silver during the first 15 years. All-in sustaining cost (“AISC”) of $748 per gold ounce with a LOM low stripping ratio of 2.2:1.
- Significant Cash Flow: Average annual pre-tax free cash flow of $113 million in the first 15 years, and cumulatively $2.7 billion LOM.
- Initial Capital Cost and Payback: The PEA contemplates an initial capital cost of $359 million, including $64 million in contingency costs. Payback 2.5 years.
- Scalable Operation: Phase 1 15,000 tpd mine is expandable to 30,000 tpd, to bring production forward and reduce the 31-year LOM.
- Resource Optionality: The PEA only focuses on the higher-grade intrusive hosted portion of the Metates orebody, which represents less than 20% of the total mineral resource.
- Highlights Sulphide Heap-Leach Technology Potential: Management believes there is a strategic opportunity for Chesapeake across the precious metals industry to enhance the project economics of sulphide orebodies globally.
CEO, Akan Pangbourne, said the PEA demonstrates strong financial performance and rapid capital payback developing Metates as a sulphide heap leach operation. The site’s simplified process flowsheet, compact footprint and proximity to key infrastructure contribute to the project’s low initial capital cost. The PEA forecasts early cash flow generation which supports future expansions that can be developed by the Company. Excellent upside optionality exists to scale up future production to potentially take advantage of the entire resource.
“The Metates PEA is a key milestone towards Chesapeake’s larger vision of becoming a mid tier gold and silver producer. I’d like to thank our technical team for the progress to date. We look forward to providing additional updates as we continue to de-risk and develop Metates,” Mr Pangbourne said.
Chairman, Randy Reifel, said the PEA demonstrates Metates as large, scalable Tier 1 project with excellent economics.
“I believe the revised approach to Metates is a potential “game changer” for Metates and the gold mining industry at large. Alan has the track record to build Chesapeake into an innovative, successful gold producer in the coming decade,” he said.
The Metates project located in Durango State, Mexico, is one of the largest, undeveloped disseminated gold and silver deposits in Mexico. The property comprises 12 mineral concessions totalling 14,727 hectares. The Metates deposit is hosted by Mesozoic sedimentary rocks that have been intruded by a quartz latite body up to 300 metres thick and 1,500 metres long. The gold-silver mineralization occurs as sulphide veinlets and disseminations in both the intrusive and sedimentary host rocks.
For further information please visit: https://chesapeakegold.com/