Vista Gold (NYSE:VGZ) announced the results of the feasibility study for the Mt Todd gold project property in the Northern Territory, Australia. Gold reserves increased 19% to 6.98 million ounces, totaling 479,000 ounces of gold per year over the first seven years of commercial activity.
Vista’s President and CEO, Frederick H. Earnest, commented, “The FS affirms the strength of Mt Todd’s gold production capacity and ability to deliver solid economic results at a time when inflationary pressures are having significant impacts on operating mines and development projects alike. Completion of the FS represents another major step in de-risking Mt Todd and readying the project for development. The scale, quality of work completed and location of Mt Todd, together with the completion of the FS and the fact that all major authorizations for development have been obtained, distinguish Mt Todd as a unique development opportunity. We believe the results of the FS will appeal to many potential partners, investors and lenders and allow us to evaluate a broad range of development alternatives as we continue to focus on maximizing shareholder value”.
The mine life is projected to be 16 years, during which time the project is expected to generate strong cash earnings. The reliability study (FS)was conducted for a 50,000 tonne per day project and some highlights of the results are:
- After-tax NPV5% of $999.5 million and IRR of 20.6% at a $1,600 gold price and a $0.71 Fx rate( one);
- After-tax NPV5% of $1.5 billion and IRR of 26.7% at a $1,800 gold price and $0.71 Fx rate;
- After-tax cash flow at a $1,800 gold price of $2.1 billion for years 1-7 of commercial operations;
- 19% increase in proven and probable mineral reserves, now estimated to be 6.98 million ounces of gold (280.4 million tonnes at 0.77 grams of gold per tonne (“g Au/t”)) at a cut-off grade of 0.35 g Au/ t; life of mine grade to the grinding circuit after ore sorting of 0.84 grams of gold per tonne;
- Average annual life of mine production of 395,000 ounces, including average annual production of 479,000 ounces of gold during the first seven years of commercial operations;
- Life of mine average gold recovery of 91.6%;
- Average cash costs of $817 per ounce (life of mine), including average cash costs of $752 per ounce during the first seven years of commercial operations(2);
- Average all-in sustaining cost (“AISC”) of $928 per ounce (life of mine), including average AISC of $860 per ounce during the first seven years of commercial operations;
- Mine life of 16 years (increase of 3 years); and
- Initial capital requirements of $892 million (8% increase), which reflects the use of a third-party owner/operator of the power plant.
Mr. Ernest added: “Our attention will now focus more intensely on increasing shareholder value and the realization of the intrinsic value of Mt Todd. We believe Mt Todd’s location, scale, economics, permitting status, and extensive technical work represent a unique near-term development opportunity and allow us to evaluate a broad range of development partners, structures and alternatives as we continue to focus on maximizing shareholder value. ”
The technical aspects of FS are backed by metallurgical testing and rigorous design standards that reflect Vista’s strict approach. Some of the design and operation specifications include: the use of modern technologies, and the use of large processing equipment that guarantees performance capacity.
A summary of the FS results is contained in the following table:
|50,000 tpd project (1)||Years 1-7 (2)||Life of mine (3)|
|Average plant food grade (g Au/t) (4 )||1.01||0.84|
|Average annual gold production (koz)||479||395|
|Average recovery (%)||92.2%||91.6%|
|Total gold payable (koz)||3,353||6,313|
|Cash costs ($/oz) (5)||$752||$817|
|AISC ($/ounce) (5)||$860||$928|
|Stripping ratio (waste:ore)||2.77||2.51|
|Initial capital (millions)||$892|
|Payback after taxes (months)||47|
|NPV after taxes 5% (millions)||$999.5|
|IRR (after taxes)||20.6%|
The FS uses a price of natural gas comparable to other energy facilities in the NT. Due to the project’s location, the company sees the advantage of being close to NT’s main natural gas transmission line. This would allow the company to achieve a lower price of natural gas with a long-term gas supply contract.