Orbis Gold (ASX:OBS) has released a positive scoping study on its Natougou project in Burkina Faso. The scoping study outlined two potential production scenarios, with a 1.5Mtpa operation and a 2Mtpa throughput. Even though the capex for the 2Mtpa operation is just $21M higher than for the 1.5Mtpa operation, the benefits from economies of scale are large, as the IRR would increase from 43% to 60%, and the after-tax NPV10% would increase from A$259M to A$356M.
As such, we think Orbis Gold will definitely use the 2Mtpa scenario as its base case, and the near-term focus will very likely be to find additional resources as under the current scenario the life of mine would be very limited to just 6 years. Drilling is expected to re-commence in the next few weeks, and every added ounce of gold will obviously be beneficial for the whole project.
> Click here to read the press release
Disclosure: The author holds no position in Orbis Gold. Please see our disclaimer for current positions.
