Stavely Minerals (SVY.AX) has released the results of a scoping study on its Thursday’s Gossan project. This is a copper-gold-silver project and the 4 million tonnes per annum scenario that’s currently on the table will cost A$333M to build (including a 30% contingency), but will produce 45M pounds of copper, 6,700 ounces of gold and 325,000 ounces of silver per year in the first three years of the 13 year mine life. The production profile will decline in the subsequent ten years to 25 million pounds of copper, 4,650 ounces of gold and 235,000 ounces of silver per year. The AISC is estimated at US$3.76 per pound of copper-equivalent during the 13 year mine life, while the first three years will be the most important to support the economics as the 53 million pounds of copper-equivalent will be produced at an AISC of US$2.75.
The NPV7% comes in at A$818M pre-tax and A$543M post-tax, but the company used rather high commodity prices (US$6.01 copper, US$4,500 gold) to run its numbers. A 10% lower copper price would reduce the pre-tax NPV7% by A$215M to around A$600M while a 10% lower gold price would have a smaller impact of just about A$27M. So at $5.40 copper and $4050 gold, the pre-tax NPV7% would come in at just under A$600M.
Disclosure: The author has no position in Stavely Minerals. This post is for educational purposes only; be mindful investing in junior mining stocks is risky and you may lose your entire investment if things go wrong. Please read the disclaimer.
