Thesis Gold (TAU.V) announced the results of an updated PEA on its Lawyers-Ranch project in British Columbia’s Toodoggone Mining District earlier this year. The PEA outlines a mine life of 14 years with an average annual gold production of 165,000 ounces per year whil the silver production thould add about 4 million ounces per year, resulting in a total gold-equivalent output of around 215,000 ounces per year. The all-in sustaining cost is estimated at $1013 per gold-equivalent ounce which means that if you would apply the silver revenue as a by-product credit to the pure gold production, the AISC pe produced ounce of gold would of course be lower than that.
The initial capex comes in lower than we had expected, at just under C$600M and the additional sustaining capex of around C$550M is obviously included in the AISC per produced ounce.
Using a base case gold price of $1930 per ounce, the after-tax NPV5% comes in at C$1.28B while the IRR is a very respectable 35%. While the company is proud of the NPV increase versus the 2022 PEA which had an after-tax NPV5% of C$589M (shown below), let’s not forget the $1930 gold price used in the 2024 PEA undoubtedly also boosted the total NPV.
The main improvement appears to be the addition of the underground mining resource into the mine plan, which pulled forward some of the ounces thanks to the higher grade nature of the underground resources, which was established at 6.5 million tonnes at an average grade of 3.17 g/t gold-equivalent (containing 502,000 ounces of gold and 14.1 million ounces of silver). Despite this, the PEA still contains just under 65 million tonnes versus the 82 million tonnes in the indicated resource and 12.4 million tonnes in the inferred resource category.
Disclosure: The author has no position in Thesis Gold. Please read the disclaimer.
