Equinox Gold Reports After-Tax NPV of $640 Million For Proposed Castle Mountain Phase 2 Expansion
Equinox Gold (TSX: EQX) this morning announced the results of a feasibility study for its phase 2 expansion of its Castle Mountain Gold Mine in California. The expansion is expected to produce 3.2 million gold ounces at an all-in sustaining cost of $858 per ounce, resulting in an after-tax NPV of $640 million utilizing a 5% discount rate.
The results of the feasibility study are viewed as positive by the company, with the study being based on US$1,500 per ounce gold. The expansion study follows the launch of commercial production in November, with the mine presently producing between 30,000 to 40,000 ounces of gold per year via a heap leach facility processing 12,7000 tonnes of ore per day.
The proposed expansion is set to see the facility increase annual production to 218,000 ounces a year for a period of 14 years, with the expansion to expand heap leaching operations while also bringing milling operations to the site for higher grade ore. The life of the mine is currently expected to produce 3.4 million ounces of gold.
The feasibility study has pegged the NPV of the project at $640 million, a figure which grows to $1.1 billion at $1,800 ounce gold, resulting in an IRR of 18%. Average annual after-tax net cash flow is pegged at $114.1 million, or $1.3 billion on a cumulative basis. The expansion is expected to see $389 million in initial capital costs, which doesn’t include $121 million for leasing of the mining fleet, as well as $147 million in sustaining capital costs.
The property currently has 4.2 million ounces of proven and probable mineral reserves at 0.51 g/t gold, and 1.5 million ounces of measured and indicated resources at 0.62 g/t gold.
Equinox Gold last traded at $10.45 on the TSX.
Information for this briefing was found via Sedar and Equinox Gold. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.
