Gold miner Alacer Gold’s stock closed nearly 6% up on Wednesday in Toronto, following the sale of its 50% nonoperating interest in the Gediktepe project, in Turkey, to its joint venture (JV) partner.
Alacer, which also maintains a secondary listing on the ASX, said that it retained a 10% net smelter royalty (NSR) on all oxide ore production, a 2% NSR on all sulphide ore production and it would receive $10-million in cash as various milestones were met.
“Gediktepe is a high-quality development asset with attractive returns. However, the asset’s scale, nonoperatorship position and majority base metal ore composition, resulted in the asset becoming secondary to Ardich in our project development sequencing. The transaction will enable our JC partner to advance the development of Gediktepe at an accelerated rate, providing both parties with near-term, attractive economic exposure to the asset,” said CEO Rod Antal.
An updated prefeasibility study (PFS), published in April determined that the Gediktepe project would produce some 345 000 oz of gold, more than eight-million ounces of silver, 254-million pounds of copper and 626-million pounds of zinc over a mine life of 11 years.
The study estimated a capital investment of $164-million for the oxide ore phase, and an additional $71-million for the sulphide ore flotation plant and related infrastructure.
Gediktepe has an after-tax net present value of $252-million and an internal rate of return of 27%, with the project estimated to generate gross life-of-mine revenues of about $1.88-billion, and an after-tax free cash flow of $412-million over the mine life.
Should JV partner Lidya Madencilik Sanayi ve Ticaret abandon the Gediktepe project, Alacer would retain an option to take back the project for no additional consideration. Also, should first production at Gediktepe not occur within ten years of closing the transaction, Alacer would be able to regain its 50% ownership interest in the asset in exchange for relinquishing its NSR.
Alacer owns the Çöpler mine and its exploration efforts in the district have delivered the Ardich deposit, about 6 km from the operating mine.
Shares in Alacer closed 5.99% up at C$4.78 apiece on the TSX on Wednesday, and up 4.51% to A$5.10 a share on the ASX on Thursday.