Santana Minerals' Bendigo-Ophir Gold Project: A Promising Pre-Feasibility Study
SMI (SMI) Share Update November 2024 Thursday 14th
Santana Minerals Announces Robust Pre-Feasibility Study for Bendigo-Ophir Gold Project
Santana Minerals Ltd has unveiled the results of its pre-feasibility study for the Bendigo-Ophir Gold Project, highlighting strong financial metrics and significant potential for growth.
Instant Summary:
- Project yields 147,000oz per annum in first 3 years, averaging 125,000oz over 9.2 years.
- Probable Mining Reserve of 15.5Mt at 2.37g/t Au for 1.18Moz of gold.
- Total production of 1.15Moz at an average All-in-Sustaining-Cost (AISC) of A$1,416/oz.
- Project generates A$4.60 billion in revenue at current gold prices.
- After-tax NPV of A$1.06 billion with an IRR of 68% at current gold prices.
Project Overview
The Bendigo-Ophir Gold Project, located in New Zealand, is set to become a significant player in the gold mining industry with its promising pre-feasibility study results. The project is expected to produce 147,000 ounces of gold annually during its first three years and average 125,000 ounces annually over a 9.2-year reserve life. The reserves are primarily from the Rise & Shine and Srex deposits.
Financial Metrics
The pre-feasibility study reports a Probable Mining Reserve of 15.5 million tonnes at a grade of 2.37 grams per tonne, amounting to approximately 1.18 million ounces of gold. The project is designed to operate with an All-in-Sustaining-Cost of A$1,416 per ounce, which is competitive given the current gold price of A$4,000 per ounce. The project is expected to generate A$4.60 billion in revenue, with an EBITDA of A$3.05 billion and a free cash flow of A$1.78 billion after tax and royalties.
Economic Viability
At the current gold price, the project’s after-tax Net Present Value (NPV) is estimated at A$1.06 billion, with an Internal Rate of Return (IRR) of 68% and a payback period of less than one year from the start of production. Even at a base case gold price of A$2,894 per ounce, the NPV remains strong at A$0.535 billion with an IRR of 42%.
Environmental and Social Impact
The project includes a conventional 1.5Mtpa CIL process plant with a high metallurgical recovery rate of 92.4%. Environmental considerations include a neutralized tailings storage system and closed-circuit water recirculation. The project is expected to contribute significantly to the local economy, with substantial tax and royalty payments to the New Zealand government.
The positive pre-feasibility study results are likely to boost Santana Minerals' stock, as the project demonstrates strong economic potential and aligns with favorable market conditions. The high IRR and quick payback period make it an attractive investment opportunity, especially given the current high gold prices.
Investor Reaction:
Analysts are optimistic about the project's potential, citing the robust financial metrics and low production costs. The project's inclusion in New Zealand's Fast-track Approvals process further enhances its attractiveness, indicating strong governmental support.
Conclusion:
Investors should consider the Bendigo-Ophir Gold Project as a promising addition to their portfolios. With its strong financial metrics and strategic location, the project is poised to deliver significant returns. Continuous monitoring of gold prices and project developments will be essential for maximizing investment potential.