US GoldMining soars on Whistler project economics

US GoldMining (NASDAQ: USGO) soared by almost a quarter on Monday after the company released encouraging results of an initial economic assessment for its flagship Whistler project in Alaska.

The report highlighted a $2 billion after-tax net present value (at a 5% discount rate), an internal rate of return of 33% and an initial payback of 2.1 years. These economics were calculated using a base case scenario of $3,200/oz. gold, $4.50/lb. copper and $37.50/oz. silver.

At spot prices, however, the NPV would more than double to nearly $4.9 billion, with an improved IRR of 62% and a shorter payback of 1.2 years.

Construction is anticipated to take two years with an initial capital expenditure of $1.28 billion. 

“With the recent record-setting metal prices in gold, copper and silver, the project economics set out in the PEA significantly improve at current spot prices, which strongly positions Whistler as a meaningful project located in a top-tier mining jurisdiction,” stated Tim Smith, CEO of US GoldMining.

Shares of the company surged as much as 25% to $15.94 in New York, within $2 off its all-time high set in January. The Vancouver-based gold-copper developer has a market capitalization of $196.4 million.

14.6-year mine life

According to US GoldMining, its initial economic assessment is based only on indicated resources at the Whistler deposit, which represents one of the three known gold-copper deposits at the broader project.

Based on the current resource estimates, the report outlined a potential open-pit operation mining at a rate of 126,000 tonnes per day. During a projected 14.6-year life of mine, it would produce a total of 2.6 million oz. of gold, 6.9 million oz. of silver and 592 million lb. of copper, or 3.6 million oz. in gold equivalent. Average annual production is expected to reach 345,000 oz. in gold equivalent during the first three years.

“The higher-grade core of the Whistler deposit comes to surface and helps drive the strong production contemplated in the PEA, particularly in the initial years of mine life, with a low strip ratio to deliver a relatively short after-tax payback,” Smith said in a press release.

He noted that the base case model delivers approximately 75% of the value from gold and 25% from copper and minor amounts of silver. “These results provide a solid foundation for us to continue to enhance potential future value by seeking to incorporate nearby resources through additional work in the future, including at the Island Mountain and Raintree deposits,” he said.

The company is currently in the process of determining whether to go ahead with a pre-feasibility study. It is currently in the early stages of planning, with a 2026 exploration program and budget expected to be announced in due course.