Brazilian Gold (BGC.V) has released a very robust PEA on their 100% owned Sao Jorge gold deposit in northern Brazil which contains 1.7 million ounces of gold at an average grade of 1.32g/t (weighted average of the indicated and inferred resources).
The PEA outlines an operation producing on average 98,000 ounces of gold per year at an all-in cash cost of approximately $635/oz, which is a very competitive production cost in this market. As the capex comes in at a very acceptable $125M (which includes a very conservative 25% contingency), the after-tax NPV5% is a very respectable $407.5M based on a $1500/oz gold price and the capital payback is expected to be less than 3 years.
We would have loved to see a more detailed sensitivity analysis, but the undiscounted NPV based on a gold price of $1200/oz would still be a very respectable $375M versus the $600M in the base case scenario.
Disclosure: The author holds no position. Please see our disclaimer for current positions.
