GoldMining PEA outlines $532M value, 10-year life for São Jorge project

A preliminary economic assessment (PEA) for GoldMining’s (TSX: GOLD; NYSE-A: GLDG) São Jorge project in northern Brazil positions it as a relatively small open-pit project with strong projected returns, with value more than double its costs.

At 5% discount, the PEA gives São Jorge a post-tax net present value of $532 million and an after-tax internal rate of return of 42.4%, with initial capital costs of $202.2 million, the company reported Thursday. The study assumes a gold price of $3,500 per ounce. São Jorge is about 2,330 km northwest of Rio de Janeiro.  

“We have outlined a highly efficient, construction-track asset on a regional-scale property that retains significant exploration potential for additional resource growth,” GoldMining CEO Alastair Still said in a release.

“With robust economics, we look forward to rapidly advancing and de-risking the project with permitting and pre-feasibility studies to unlock further value across our gold-focused multi-million ounce Americas portfolio.”

Gold lifts economics

With relatively modest capital requirements and strong projected returns, the São Jorge study highlights how higher gold prices are improving the economics of smaller development-stage projects. The PEA marks the third economic study GoldMining has published for its nine development projects across the Americas.

GoldMining shares gained 1% to C$1.23 apiece on Thursday morning in Toronto, valuing the company at C$258.9 million ($184.7 million).

By output, São Jorge could produce 51,250 oz. gold annually over a 10.6-year life, with peak production of 57,200 oz. per year in years two through four. All-in sustaining costs are pegged at $1,164 per ounce.

Infrastructure-connected project

The project’s relatively low costs are supported by its proximity to the town of Novo Progresso, as well as power lines, paved highways and a local skilled workforce, GoldMining said.

São Jorge hosts an existing resource of 19.4 million indicated tonnes grading 1 gram gold per tonne for 624,000 oz. and 5.5 million inferred tonnes at 0.72 gram gold for 129,000 contained ounces.