A new prefeasibility study on Lumina Gold’s (TSXV: LUM, OTCQX: LMGDF) Cangrejos gold-copper project in El Oro province, southwest Ecuador, substantially improves the project’s economic metrics and positions it as a prime development candidate.
The Ausenco Engineering Canada-led prefeasibility calculated a 43% improved after-tax (5% discount) NPV of $2.2 billion over the two prior prefeasibility assessments completed for the project, with the latest being a preliminary economic assessment in 2020.
On the same basis, the IRR is up 1% to 17.2%, using gold and copper price assumptions of $1,650 per oz. and $3.75 per lb., respectively, compared with the previous $1,400 per oz. and $2.75 per lb. At $1,9080 per oz. gold, the NPV rises to $3.5 billion.
On a RedCloud Securities-hosted webinar, Lumina president and CEO Marshall Koval suggested the company wants to start the winding process toward project permitting and construction as soon as possible.
“This study not only confirms the tremendous value of the Cangrejos project but also allows the company to commence negotiating terms for its investment protection agreement and begin the permitting process required for Cangrejos to begin construction,” he said in the statement. “We believe this is one of the best gold and copper development assets globally based on its surrounding infrastructure, scale and multi-decade mine life.”
Throughput will rise to 60,000 tonnes per day in year four and 80,000 in year seven.
Highlights of the study include a 26-year mine life with a revenue mix of 79% gold, 20% copper and 1% silver, the Vancouver-based company said in an after-markets release Monday.
The average yearly payable output is pegged at 371,000 oz. gold and average payable by-product copper is estimated at 42 million lb. per year.
Remarkably, the capital expenditures component only rose marginally to $925 million to build a 30,000 tonne per day phase one operation, compared with the previously contemplated 40,000 tonnes per day.
The planned processing plant for Cangrejos is a conventional copper-gold flotation concentrator and hybrid leach-carbon-in-leach circuit (L/CIL).
Over the life of the mine, the output will average 469,000 oz. of gold-equivalent metal.
Cash operating costs came in at $602 per oz. gold and all-in-sustaining costs at $671 per oz., net of by-product credits.
The study incorporates a resource update seeing a compliant probable gold reserve established at 11.6 million oz. grading 0.6 gram gold per tonne and the indicated resource increasing to 16.8 million oz. from 10.4 million oz., held in 1 billion tonnes grading 0.48 gram gold per tonne. It also has an inferred resource of 3.7 million oz. in 296.3 million tonnes grading 0.4 gram gold.
The mineral resource expansion makes Cangrejos the 26th largest primary gold asset in the world by contained gold in mineral resources, according to S&P.
The resource estimate includes the nearby Gran Bestia deposit, 1 km away.
Trading at C61¢ per share in Toronto on Tuesday, Ross Beaty-backed Lumina’s equity has gained about 70% in value since the beginning of the year, despite being down 5% over the past 12-month timeframe. The share price has touched a low of C23¢ and a high of C66¢ over the year. It has a market capitalization of C$229.6 million ($171.4m).
