Dual-listed Serabi Gold on Friday published the results of a preliminary economic assessment (PEA) for its Coringa gold project, the results of which the company said “fully supported” its plans for a high-grade, underground mining operation in Para state, Brazil, where it already operates the Palito Complex.
The PEA estimates that the Coringa gold mine will have an average grade of 8.34 g/t and that it will produce a total of 288 00 oz over its nine-year mine life. On average, the mine will produce 38 000 oz/y at an all-in sustaining cost of $852/oz.
With Coringa located in relatively close proximity to the existing Palito Complex operations, Serbai had been able to provide GRE with significant cost data based on actual operational experience of the past few years.
“This means that from a cost perspective the data used in compiling this PEA is significantly more robust than might normally be the case with similar studies and I have every confidence that we will be able to achieve or even improve on the capital and operational costs estimates that GRE have forecast,” said CEO Mike Hodgson.
The initial capital requirement for the mine will be $24.7-million and sustaining capital expenditures are estimated at $9.2-million.
The base case has been produced using a three-year trailing average gold price of $1 275/oz and still produced a “very healthy” internal rate of return (IRR) of 31% and a net present value (NPV), using a 10% discount rate, of $31-million, commented Hodgson.
Using a scenario in which the gold price is $1 450/oz, the IRR improves to 46% and the NPV (at 10%) to $56-million.
The base case project payback period is estimated at 2.25 years of first gold production.
The board expects based on the current expected time-line for the award of licences, that construction could start at the end of the second quarter of 2020, with first gold production being achieved about nine months later.
The next steps for the project would be to assess financing options and to complete the permitting and licencing process necessary for the development of Coringa.
Hodgson said that it had approached a variety of financing groups, which had indicated interest in providing debt or other similar financing options to advance the project. “They are awaiting the results of the PEA to start to assess the level of finance that could be made available. We will be vigorously pursuing these options over the coming months.”