Minera IRL is continuing project financing discussions for the Ollachea gold project in Peru.
A post-definitive feasibility study optimisation study has reduced the payback period for the project from 3.7 years to 3.1 years. This is because annual production in the first two years has been increased from 70,500 ounces to 100,000 ounces. The NPV is $181m – based on a gold price of $1,300 an ounce and a discount rate of 7%. Changing the discount rate to 10% reduces the NAV to $135m.
Further drilling could extend the resource, which is currently 930,000 ounces, to the east.
At 8.27p a share, Minera IRL is valued at £18.9m. Net debt is currently $24.5m. The capital cost of the project is $220m, although pre-production capital expenditure is $165m.
Construction is likely to take 21 months and the final construction permit has not been issued. Construction will not start until project financing and a debt restructuring is secured.
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