Gold Canyon Resources (GCU.V) has announced the results of a PEA on their 100%-owned Springpole project in Ontario, Canada.
The numbers look very decent as the PEA outlines an annual output of 240,000 ounces gold-equivalent at a cash cost of $636/oz AuEq and an all-in cost of $860/oz AuEq. Based on a long-term gold price of $1300/oz, the pre-tax NPV5% comes in at approximately $579M with an IRR of 25.4%.
The big issue is that although the Springpole project has a resource estimate of in excess of 5 million ounces of gold, only 2.2Moz seems to be recoverable according to the PEA, meaning approximately 2M ounces are outside the whittle pit shells. So the main challenge will be to allow additional ounces to be recovered to make the project even more attractive.
Although the project isn’t extremely cheap based on an enterprise value/recoverable ounce valuation of $23/oz, we hope the management team will be able to fine-tune the project further in order to increase its economics.
Disclosure: The author holds a long position in Gold Canyon Resources Inc. Please see our disclaimer for current positions.