North Bullfrog would be the initial mine development target due to its expected low initial capital requirements, potential high margins and potential free cashflow generation which could provide development capital for a second mining project at Mother Lode. Corvus previously completed a PEA for a combined North Bullfrog-Mother Lode project in November 2018.
The North Bullfrog PEA contemplates production of 147,000 ounces a year of gold and 400,000oz/y of silver for an initial seven-year period from an openpit operation run-of-mine, heap leach operation at an all-in sustaining cost of US$727/oz following a $167 million initial capital investment.
The project would yield an after-tax net present value (NPV) of $452 million at a 5% discount rate, a 47% internal rate of return (IRR) and 2.1-year payback at a $1,500/oz reference gold price. At a $1,900/oz gold price the metrics improve to $815 million NPV, a 70% IRR and 1.7-year payback.
The PEA does not take into account any potential synergies and cost savings North Bullfrog may be able to benefit from due to being about 10km from the Mother Lode deposit
The Mother Lode PEA contemplates production of 170,980oz/y gold and 79,600oz/y silver for eight years from an open pit, biological oxidation mill operation to treat the higher-grade sulphide mineralisation and a heap leach pad for oxide at an all-in sustaining cost of $677/oz following a $406 million initial capital investment.
The project would yield an after-tax NPV of $303 million at a 5% discount rate, a 23% internal rate of return (IRR) and 2.7-year payback at a $1,500/oz reference gold price. At a $1,900/oz gold price the metrics improve to $663 million NPV, a 42% IRR and 2.1-year payback.
"This analysis, in conjunction with our continued positive Mother Lode and district-wide exploration drill results, is encouraging for expanding and improving the economic model as our programmes move forward," said president and CEO Jeffrey Pontius.
Shares in Corvus Gold are trading at C$3.63, valuing the company at $461 million.