Golden Arrow Resources (GRG.V) has released its updated Preliminary Economic Analysis today and the outcome is much better than we were expecting. In our original report we released yesterday we were expecting the after-tax Net Present Value (8%) to increase by at least $55M, and we were positively surprised to see this estimate was way too low as the updated NPV is a very impressive $225.5M using a silver price of $22/oz. We have updated the report which was released yesterday, and you can download the updated version here.
What’s even more remarkable is the fact that even at a low silver price of $17/oz, the project remains viable as the PEA shows an after-tax NPV8% of $90M in this bear case scenario. Golden Arrow’s initial capital expenditures for an 8,000 tonnes per day processing facility will remain relatively low at $237M (which includes a 20% contingency, which is rather high). The cash cost of the silver is estimated at $9.22/oz for an 8Mozpa operation, but this is before by-product credits. As Golden Arrow will produce roughly $700M of by-product credits on top of its 90 million ounces of silver, we do expect the cash cost after by-product credits to be substantially lower at $2.5-3/oz. Another positive takeaway is the limited sustaining capex which will add only $1 per produced ounce of silver to the operating cost.
This is an extremely robust PEA and we are now quite confident Golden Arrow has the attention of all mid-tier and senior silver producers. We will provide a more detailed update after the technical report will have been filed.
Disclosure: The author holds a long position in Golden Arrow Resources. Golden Arrow is a sponsor of the website. Please see our disclaimer for current positions.