Antilles Gold says it can make A$35m a year for at least 6 years before going underground for another 10 years at its 49 per cent owned La Demajagua Cuban gold and silver project. Notably the company says it can get the project into production for an equity contribution of just A$18m before debt and management is expecting to churn out 100,000 ounces of gold equivalent a year.
Antilles says the A$35m net profit after tax will be its 49 per cent share of the profits from the project that is 51 per cent owned by the Cuban Government’s GeoMinera.
A recent scoping study conducted on the project shows a total capital outlay of US$75m to build the mine, a figure Antilles says could be paid back in just 8 months.
The scoping study incorporates the recently estimated maiden JORC mineral resource of 7.7 million tonnes at an average grade of 2.9 grams per tonne gold and 38.6 g/t silver.
Annual metal production of 100,600 ounces of gold-equivalent is expected to generate US$700.5 million over the 6 year initial life-of-mine estimation assuming a gold price of US$1,650 per ounce and silver price of US$22 per ounce.
The life of mine cash surplus for the joint venture partners is forecast at US$325.4 million, or US$54.25 million a year, based on an initial six-year open pit mine life.
The study has estimated a net present value of US$218.1 million for the project and a healthy internal rate of return of 43.7 per cent.
As tension builds on global markets over Russian aggression towards Ukraine, investors are finding a haven in gold with the price of the precious yellow metal hitting a 10-month high, last night closing at just over US$1,900 an ounce.
Based on a gold price of US$1,950, the life of mine cash surplus for the project comes in at US$450.9 million and the project shows an NPV of US$308.7 million and an internal rate of return of 54 per cent.
Antillies and its Cuban joint venture partner are looking to fast-track La Demajagua into production with construction at the mine slated to commence early in 2023 with the first shipment of concentrate earmarked for the second quarter of 2024.
Completing the scoping study ticks yet another box on Antilles ever diminishing check list. A DFS is now due to be released later this year.
With initial life of mine ore production set to tip the scales at 4.87 million tonnes with very respectable average grades of 3.26 g/t gold and 41.5 g/t silver, the partners are eyeing a production target of 800,000 tonnes of ore per annum to produce almost 79,000 ounces a year of gold in concentrate and over a million ounces a year of silver in concentrate over an initial six-year open pit mine at La Demajagua.
Further down the development track the JV partners anticipate an underground mining operation that it says should have at least 10 years life in it.
With a pipeline of mature base and precious metals projects scattered over Cuba, Antilles says development of the La Demajugua project could be the catalyst for establishing itself as a substantial mining company in Cuba.
The anticipated surplus cash generated from La Demajugua will be used to fund any future developments thereby minimising future equity dilution.
As Antilles and GeoMinera continue to develop La Demajugua at ground-breaking speeds, their timing just might be bang on target as gold prices look set to strengthen on the back of international geopolitical uncertainty.
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