As expected, Renaissance Minerals (ASX:RNS) has released the outcome of its scoping study on the Okvau project in Cambodia, South East Asia. The pit outline results in a mine life of approximately 8 years to recover just a little bit less than 700,000 ounces of gold. The initial capital expenditures are estimated at $133M which is pretty low, thanks to the relatively high grade (2.4g/t) of the project.
As the AISC is expected to be less than $800/oz, the economics of the Okvau project look compelling as the post-tax IRR using a gold price of $1250/oz is still an okay-ish 25%. The pre-tax NPV5% of $127M is a bit disappointing though, but Renaissance has started a 15,000 meter drill program in order to increase the resources on the Okvau project. Additionally, only 72% of the indicated resources were converted into in-pit ounces, so depending on finding more mineralization, the structure of the pit might still change to maximize the total amount of recoverable ounces of gold.
At a market capitalization of A$20M Renaissance isn’t particularly cheap, so investors should be hoping for either a higher gold price or an increased amount of in-pit resources to increase the NPV of Okvau.
Disclosure: The author holds no position in Renaissance Minerals. Please see our disclaimer for current positions.
