As expected, Integra Gold (ICG.V) has released an updated Preliminary Economic Assessment on its Lamaque gold project in Québec. This update was commissioned after the company acquired the nearby processing plant out of a bankruptcy procedure for cents on the dollar. Instead of having to truck the ore from the Lamaque property to other mills in the Val D’Or region, Integra will now be able to shave a substantial part of its operating costs as it now owns its own mill.
The initial capital expenditures have dropped by approximately C$7.2M (which means Integra is already covering the acquisition cost of the mill through a lower initial capex), but what’s more important is that Integra was able to reduce the all-in sustaining cost per ounce of gold to just C$731/oz or US$612. This is a remarkably low number and shows how robust the economics of the Lamaque project will be. The after-tax NPV5% of Lamaque is now $113.5M, an increase of 28% compared to the first PEA. That sounds good but it’s actually an impressive result considering the updated PEA was based on a gold price of $1175/oz versus $1275/oz in the original PEA.
Also keep in mind that the updated PEA still doesn’t take any of the drilling into consideration which occurred in the past 20 months. Once the roughly 70,000 meter of drilling will be incorporated in an updated resource estimate, we expect the mine life to increase by several years, leading to a higher net present value which could easily increase to $200M. Integra will continue to drill at Lamaque as it has recently raised C$8.2M in a flow-through and super flow-through financing, so we are expecting a lot of news to come out over the next weeks and months.
> Click here to read the press release
Disclosure: The author holds a long position in Integra Gold. Integra is a sponsor of the website. Please see our disclaimer for current positions.
