Carlisle Goldfields (CGJ.TO) has finally released the results of a Preliminary Economic Assessment on its 100% owned Lynn Lake Gold camp. As expected, Carlisle opted for a central milling facility (10,000 tpd) which will be fed with ore from the surrounding deposits. This will result in an average annual gold production of 175,000 ounces per year, with a peak production of 277,000 ounces in the second year of operation, which immediately explains the relatively short payback period.
The initial capex is just $274M which already includes a contingency of 18%, and the after-tax IRR is 25.5% based on a gold price of $1300/oz. The after-tax NPV5% of the project is $377M and as it’s a gold asset in a safe region, the Lynn Lake Gold Camp might spark some interest from more senior producers.
The CEO holds approximately 10% of the outstanding shares, and one can be certain he’ll do his very best to protect the shareholder value. Bruce Reid also voluntarily slashed his own salary by 33% and deferred a large part of the remaining salary until the markets improve. This move has reduced the cash burn by C$120,000 per year. As the CFO and VP Exploration also reduced and partly deferred their salaries, Carlisle Goldfields definitely isn’t one of the ‘life-style companies’ on the TSX-V.
> Click here to read the press release
Disclosure: The author holds no position in Carlisle Goldfields. Please see our disclaimer for current positions.
