Meridian confirms $2.09bn value of Cabaçal project even at base case prices
London-and Toronto-listed Meridian Mining has confirmed a net present value (after tax) of $2.09-billion for the Cabaçal project in Brazil, even at base case prices of $3 570/oz of gold, $5.03/lb of copper and $50.17/oz of silver.
Having published a definitive feasibility study (DFS) on the project on September 22, Meridian says the project can deliver an internal rate of return of 108% and has a payback period of ten months.
In a spot price scenario of $ 4 394/oz gold, $6.53/lb copper and $64.14/oz silver, the project's NPV increases to $2.9-billion, the IRR widens to 134% and the payback period reduces to eight months.
The DFS confirms Cabaçal can viably produce 183 526 gold-equivalent ounces a year over the first five years, at an all-in sustaining cost of $1 056/oz, for an initial capital investment of $322-million.
The project is expected to generate free cashflow (after tax) of $2.9-billion over its 14-year lifetime.
"Our NPV-to-capital expenditure ratio of 6.5 times is a testament to the compelling economic potential of the Cabaçal project. Using spot prices these all get better again. Reading these numbers, it elevates Cabaçal to potentially be the next “near-term” volcanogenic massive sulphide gold/copper mine developed globally.
"Importantly, the study is based on a conservatively engineered mine design, that can be financed and built," says CEO Gilbert Clark.
He confirms that pre-construction investments are already underway with committed capital contracts of $15.9-million, while installation licence permitting and financing activities for construction are progressing.
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