Red Eagle Mining (RD.V) has announced a very interesting PEA on the San Ramon zone which is part of its Colombian Santa Rosa project.
In the base case assumption which uses a gold price of $1300/t the post-tax NPV5% comes in at $113M with an IRR of 38%. Even after applying a lower gold price of just $1100/oz, the project remains viable with a NPV of $58M and IRR of 23%. The all-in sustaining cash cost is a very respectable $982/oz.
However, we feel a discount rate of just 5% for a Colombian project is a bit too optimistic, and we would love to see the numbers when using a 8% or 10% discount rate as we think only first-tier mining destinations such as Canada or some states in the USA deserve a low discount rate as base case.
> Click here to read the press release
Disclosure: The author holds no position in Red Eagle Mining. Please see our disclaimer for current positions.
