Their scoping study is not exactly flash – at 1750 gold the post tax irr is 29%, NPV is $160 million for a 5 year payback at $110 in capex and an AISC of $1200/oz. The average grades milled look like they are low 3s to high 2s. (3.1 average?) So some bad conversions here. Lots of dilution?? Considering this is in South Africa the numbers would have to be a lot better to excite me. Even if this were in WA the payback is the killer here. I think there are just better projects out there.
The Scoping Study utilises a narrow reef breast mining method in the upper sections of the conceptual mine plan, which was the same mining method used when the historical mine ceased in the early 2000s. This method is still being used extensively in South African gold mining today.
I’ll note that a lot of the competent South African mining professionals moved to Australia since the early 2000s. Looks like this will be a hot, deep, low tonne operation requiring skilled labor that probably is harder and harder to find.
Bara’s view, which is shared by the Company, is that there is sufficient capacity and quality of processing in the region to secure a suitable toll treating arrangement with one of the local process plant operators, as opposed to allocating CAPEX for the construction and operation of a new process facility.
Hmm… Ok. Maybe not a bad idea, but toll treating doesn’t always work out well. Just more risk added to a risky jurisdiction.
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