Aya Gold & Silver (TSX: AYA) has released the results of a much awaited preliminary economic assessment on their Boumadine Project in Morocco.
The study has outlined an after tax net present value (5%) for the project of $1.5 billion, alongside an internal rate of return of 47% and a payback period of 2.1 years, which is based on $2,800 an ounce gold and $30 an ounce silver. At spot prices, which are defined as $4,000 an ounce gold and $48 an ounce silver, the NPV (5%) rises to $3.0 billion, alongside an IRR of 77% and a payback period of just 1.2 years.
Those estimates are based on an operation that would see average annual production of 328,000 ounces of gold equivalent over the 11.1 year life of mine, with production weighted to the first five years, when average production is anticipated to be approximately 401,000 ounces gold equivalent.
The operation itself is to be a mix of open pit and underground extraction, with an estimated 19.4 million tonnes of ore to come from the open pit at a strip ratio of 20.9, while 11.6 million tonnes is to come from the underground operation. Throughput capacity is targeted for 8,000 tonnes per day, with average processed grades of 2.43 g/t gold, 72.5 g/t silver, 1.91% zinc and 0.70% lead.
Average recoveries meanwhile are estimated at 96.1% for gold and 96.4% for silver, while zinc is estimated at 74.7% and lead at 82.0%. The current flowsheet calls for the production of three gold and silver bearing concentrates, which are zinc, lead, and pyrite.
As for costing, initial capital expenditures are estimated at $446 million, which includes $96 million in contingencies and $63 million in indirects. The largest expense here is the processing plant at $167 million, followed by open pit mining at $54 million. Sustaining capital meanwhile is estimated at $340 million over the life of mine, of which $250 million is associated with the underground mine.
Over the life of mine, cash costs are estimated at $928 per ounce of gold equivalent, while all in sustaining costs are slightly higher at $1,021 per ounce of gold equivalent.
“With industry-leading low initial capex of $446 million, a post-tax NPV of $3.0 billion at spot prices and $1.5 billion under our base case prices, both delivering industry-leading returns on invested capital, Boumadine ranks among the most attractive undeveloped precious metal projects globally. Importantly, this PEA includes only the known mineralized zones on the Boumadine mining license, which represents a small portion of our total land package,” commented Benoit La Salle, CEO of Aya Gold.
The study notably does not include 140,000 metres of ongoing drilling.
Aya Gold & Silver last traded at $15.47 on the TSX.
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