Yukon’s Coffee gold project gets new push with quick payback

Newmont (NYSE: NEM)-backed developer Fuerte Metals (TSXV: FMT) says it would need barely a year at current gold prices to recoup the C$983 million initial capital costs of building the Coffee gold project in Yukon.

Based on a 5% discount rate and $3,620 per oz. gold price, a new preliminary economic assessment shows Coffee has an after-tax net present value (NPV) of $2.3 billion with an internal rate of return (IRR) of 47.8% and a payback period of 1.7 years, Fuerte said in a statement dated Sunday. At a spot gold price of $5,000, reflective of current levels, the NPV jumps to $4 billion with a 67% IRR and a payback period of 1.2 years.

Newmont, Canada’s Agnico Eagle Mines (TSX, NYSE: AEM) and former Franco Nevada (NYSE: FNV) CEO Pierre Lassonde are among the major investors backing Fuertes’s efforts to develop the central Yukon property that’s been around for about 15 years and is considered one of Canada’s 10 largest heap-leach projects. Some 40,000 metres of resource conversion and exploration drilling is planned this year ahead of a fourth-quarter feasibility study, while a construction decision is targeted for early 2027.

Fuerte acquired the 700-sq.-km Coffee from Newmont in October in a deal worth up to $150 million. Newmont now holds about 19% of the company, plus a 3% net smelter royalty, while Agnico’s stake is 8%. Fuerte will have the right to repurchase the NSR from Newmont for $100 million at any time up to one year after the announcement of commercial production.

White Gold

Coffee was discovered by Shawn Ryan, one of the more important prospectors in Canada over the past two decades. His work helped to open up the White Gold district in the Yukon, which later drew in majors like Newmont.

Fuerte’s PEA envisages a conventional, open-pit, heap-leach operation with a 13-year mine life, producing an average of 249,000 oz. of saleable gold annually over the first five full years and 217,000 oz. per year over life of mine at an all-in sustaining cost of $1,274 per ounce.

Tim Warman, Fuerte’s CEO, brings roughly three decades of experience across exploration, development and mine building, with a track record tied to several high-profile transactions.

He was previously CEO of Fiore Gold, which built and operated a Nevada gold mine before its roughly $151 million all-share sale to Calibre Mining in 2022, and earlier held senior roles with Aurelian Resources, part of the team behind the Fruta del Norte discovery that was sold to Kinross Gold for about $1.2 billion in 2008.

Access route

Capital costs for Coffee include C$71.3 million to build the so-called Northern Access Route, which will provide road access to the site from Dawson City.

When sustaining capital is included, Coffee’s estimated capital requirements rise to about C$1.72 billion. Annual average cash operating costs over the mine life are estimated at $1,136 per ounce. Coffee holds 80 million measured and indicated tonnes grading 1.15 grams gold per tonne for contained metal of 2.96 million oz., according to a 2025 resource. Inferred resources are pegged at 21.2 million tonnes grading 1.17 grams gold for 800,000 oz. of contained metal.

Early works could begin upon receipt of permits later this year, Fuerte said Sunday. Remaining mine licenses are expected by Dec. 31.

Fuerte shares rose 1.1% to C$9.05 Tuesday morning in Toronto, giving the company a market value of about C$1.1 billion ($800 million).