The share price of Cerrado Gold jumped 24% on Tuesday, as the South America-focused junior announced “extremely robust” results for its Monte do Carmo gold project, in Brazil.
The preliminary economic assessment (PEA) calculates that the project has an aftertax net present value, at a 5% discount, of $617-million and an internal rate of return of 94.8% at a gold price of $1 600/oz.
The project economics are based on a potential eight-year mine life with a 1.3-year payback period. Upfront capital costs are estimated at $125.9-million.
Over the mine life, Monte do Carmo will produce an average of 131 000 oz/y, although output will average 150 000 oz/y in the first five years. Cash costs are expected to average $582/oz over the life-of-mine, but only $404/oz over the first fie years. All-in sustaining costs will be $612/oz over the mine life and $431/oz in the first five years.
Cerrado said that a development programme, including a feasibility study would begin immediately. An environmental impact assessment is also under way.
The company traded at C$1.62 a share on Tuesday, up from the previous day’s closing price of C$1.31 a share.