Hedge funds slash bullish wagers on gold over Trump election win
The precious metal has fallen about 8% from a record high on Oct. 31, with losses accelerating after Trump’s election victory last week.
Vista Gold (TSX, NYSE American: VGZ) has released an updated feasibility study for its Mt Todd gold project in Northern Territory, Australia, to reflect the changes in project economics as well as long-term outlook on gold prices and USD/AUD exchange rates and the company’s new royalty deal.
In late 2023, Vista sold a 1% gross revenue royalty on the project to Wheaton Precious Metals (TSX: WPM, NYSE: WPM; LSE: WPM) for $20 million. The Mt Todd project is considered to be one of the country’s largest undeveloped gold ventures, capable of producing 479,000 oz. a year.
Compared to its previous study filed in February 2022, the new report shows an improved after-tax net present value (discounted at 5%) of $1.13 billion, up $131.5 million, and a similar internal rate of return at 20.4%.
The figures are calculated using a gold price of $1,800/oz. gold price and foreign exchange rate of 0.69, versus $1,600/oz. and 0.71 used two years ago.
At a higher gold price of $2,100 and a 0.66 foreign exchange rate, which the company believes are more reflective of current market conditions, the after-tax NPV of the project would rise to $1.88 billion, with an IRR of 29.6%.
The average all-in sustaining cost over an estimated 16-year mine life rose to $1,034/oz., compared to $928/oz. previously. Average cash costs also increased to $913/oz. from $817/oz.
Initial capital requirements of $1.03 billion are $138 million higher, which Vista says continues to reflect the use of a third-party owner/operator of the power plant at Mt Todd.
“Mt Todd is a robust project with strong leverage to the gold price. Project economics are approximately the same or slightly better than reported two years ago, inclusive of cost increases that have affected the entire gold mining sector,” Vista Gold CEO Frederick Earnest said in a news release.
He added that “these results do not change our strategy for Mt Todd,” and the company will continue to work with CIBC Capital Markets to identify and advance interest in the project.
Shares of Vista Gold jumped 6.4% to $0.50 by 3:15 p.m. ET in New York, for a market capitalization of $61 million.
