EXPLORATION & DEVELOPMENT

Kiena restart offers after-tax IRR of 102%: study

Wesdome Gold Mines (TSX: WDO) says a rapid restart at its Kiena complex in Quebec is viable as it released a preliminary economic assessment pointing to an after-tax internal rate of return of 102%.

Staff reporter
 Wesdome Gold Mines’ Kiena complex in Quebec

Wesdome Gold Mines’ Kiena complex in Quebec

"We are pleased with the results of the PEA that clearly illustrates the viability to restart production at the Kiena Mine in a very short-term horizon," president and CEO Duncan Middlemiss said.

The study put preproduction capex at C$35 million (US$25.4 million) and the after-tax NPV5 at $416 million (US$302 million), with a 1.7-year payback, using a base case gold price of US$1,532/oz.

It envisaged an eight-year mine with an average diluted grade of 10.65g/t gold, producing an average annual 85,931oz.

The production plan was based on starting up the mill in the second half of 2021.

Wesdome said additional drilling results would feed into an updated resource estimate before year-end, which would be used a basis for a prefeasibility study.

"The company is well-financed to advance the project to the next level with a cash position as of the end of the first quarter of C$49.4 million," Middlemiss said.

He expected a restart decision in the first half of 2021.

Drilling resumed at Kiena this month after a break due to the province's COVID-19 restrictions.

Longer-term, Middlemiss said Wesdome would turn its focus to remaining resources at the property which totalled 788,000 ounces measured and indicated and 798,000oz inferred, saying there was no lack of prospective targets.

Kiena had produced 1.75 million ounces of gold at 4.5g/t between 1981-2013, when it was put on care and maintenance due a declining gold price and lack of developed reserves.

Wesdome had acquired Kiena in 2003.

It also has the Eagle River gold complex across the border in Ontario and recently reiterated 2020 production and cost guidance, despite reduced activities due to COVID-19 measures.

Its board last week approved Edie Thome, previously president and CEO of the Association for Mineral Exploration, as a new independent director nominee for election at its annual meeting set for June 2.

Wesdome shares were trading about $4.33 a year ago and rose to $13.50 last week.

They closed down 0.17% yesterday to $11.72 to capitalise it at $1.6 billion (US$1.1 billion).

A growing series of reports, each focused on a key discussion point for the farming sector, brought to you by the Kondinin team.

A growing series of reports, each focused on a key discussion point for the farming sector, brought to you by the Kondinin team.

editions

Mining Journal Intelligence Investor Sentiment Report 2024

Survey revealing the plans, priorities, and preferences of 120+ mining investors and their expectations for the sector in 2024.

editions

Mining Journal Intelligence Mining Equities Report 2023

Access an exclusive, inside look on the quarterly mining IPOs and secondary raisings data and mining equities performance tables with an annual Stock Exchange Comparisons supplement.

editions

Mining Journal Intelligence World Risk Report 2023 (feat. MineHutte ratings)

A detailed analysis of mining investment risks across 121 jurisdictions globally, built on 11 ‘hard risk’ metrics and an industrywide survey.

editions

Mining Journal Intelligence Global Leadership Report 2023: Social licence

Gain insights into social licence trends and best practices from interviews with 20+ top mining company executives and an industrywide survey.