Mexico’s proposed higher mining royalties could block nearly $7bn in investments
The Mexican government proposed raising mining royalties under the argument that metal prices have risen in recent years.
A new study for G Mining Ventures’ (TSX: GMIN) Oko West gold project in north-central Guyana outlines a net present value (NPV) of $1.4 billion over a 12.7-year mine life. Shares rose.
Initial capital costs are forecast at $936 million, while the internal rate of return (IRR) is pegged at 21%, according to a preliminary economic assessment (PEA), released Monday. The payback period for the project, located about 95 km southwest of the capital, Georgetown, is 3.8 years and at a $1,950 per oz. spot gold price scenario.
The NPV, which is at a 5% discount rate, rises to $2.5 billion, with an IRR of 31% and payback of two years in a $2,500 per oz. spot gold price case, close to gold’s historic high $2,532 per oz. three weeks ago.
“Oko is ideally sequenced to benefit from G Mining’s regional footprint, development expertise, anticipated free cashflow from our in-production Tocantinzinho gold mine in Brazil and historically high gold prices,” president and CEO Louis-Pierre Gignac said in a release. “This exceptionally positive PEA only captures a snapshot of the potential value of Oko.”
G Mining shares gained 3.8% to C$8.20 apiece on Monday morning in Toronto, valuing the company at C$1.7 billion. Its shares traded in a 52-week range of C$1.67 and C$10.83.
The company plans a feasibility study by next June and to submit its environmental and social impact assessment by the end of this year.
The PEA comes during a productive period for G Mining after it declared commercial production at Tocantinzinho last week. In April, it acquired Reunion Gold and Oko West in an C$875 million deal. The report gives the open pit and underground Oko West mine average annual output of 350,000 oz. at an all-in sustaining cost of $986 per oz. and sustaining capital costs of $537 million over the mine life.
Ore is to be processed on-site in a conventional circuit through carbon-in-leach, carbon elution and gold recovery circuits.
Oko West hosts 64.6 million indicated tonnes grading 2.05 grams gold per tonne for 4.3 million oz. and 19.2 million inferred tonnes grading 2.59 grams gold for 1.6 million oz., according to a resource update last February.
Greenheart Gold (TSXV: GHRT), spun out from G Mining and Reunion in July, is now focused on regional assets outside of Oko West in the Guiana Shield, such as the Abuya and Majorodam projects in Guyana and neighbouring Suriname, respectively.
The shield’s Marowijne belt in Suriname holds Zijin Mining’s Rosebel and Newmont’s (NYSE: NEM; TSX: NGT) Merian gold mines.
