Pasofino Gold (TSXV: VEIN) has completed a preliminary economic assessment (PEA) on the Dugbe gold project in Liberia, demonstrating a good business case for mine development.
The report outlines substantial production potential underpinned by the Dugbe F and Tuzon deposits. The mine is rated to produce 2.5 million oz. gold over a 14-year mine life. Steady-state production will average about 188,000 oz., with a peak output of about 226,000 oz. in year eight of the mine plan.
The company said the project has strong financial metrics, with a post-tax net present value (5% discount) of $627 million and a 31% post-tax internal rate of return.
At spot prices of around $1,800 per oz., the project generates a post-tax NPV of $874 million.
Pasofino expects pre-production capital of $391 million to be repaid in about 2.9 years from the start of operations.
Pasofino is earning a 49% economic interest from the asset’s 51% controlling owner, London-based Hummingbird Resources (AIM: HUM) before the Liberia govern is issued with a 10% carried interest.
“We are extremely pleased with the set of outcomes from this PEA exercise. It underscores the potential of the project to deliver significant value to all stakeholders going forward,” says CEO Ian Stalker in a news release.
The PEA sets the basis for a feasibility study in progress and will incorporate the encouraging recent infill and step-out exploration results the company has recently announced. Stalker says plans remain on track for a start of the build phase by 2023.
The Dugbe deposit is in south-eastern Liberia, about 60 km east of Greenville and 240 km south-east of the capital Monrovia.
Both the Dugbe F and Tuzon deposits are shallow and so amenable to open-pit mining. The project hosts 2.3 million oz. gold in 47.7 million tonnes grading 1.51 gram per tonne gold, and 1.26 million oz. held in 26.7 million tonnes grading 1.47 grams per tonne inferred.
The market received the PEA with muted reaction, with Pasofino’s Toronto-listed shares advancing half a cent to C9c apiece. With about 312.4 million shares outstanding, the company has a market capitalisation of C$39.69 million.