Minnova has set out a 53.4 million dollar plan, 76.2 million Canadian dollars, to bring the PL gold mine near Sherridon in Manitoba back into production in 2028, using the site’s existing mill and infrastructure to hold down upfront spending. The preliminary economic assessment envisages average production of 62,200 ounces a year over ten years, starting with high grade open pit ore before the operation leans on underground mining, a reversal of the underground first plan in the company’s 2017 feasibility study.
The resource behind the plan is 3.76 million measured and indicated tonnes grading 4.98 grams of gold a tonne, for 601,158 ounces, plus 1.67 million inferred tonnes at 3.78 grams. At a gold price of 3,000 dollars an ounce the study returns an after tax net present value of 180.6 million dollars at a 5 percent discount rate, an internal rate of return of 111 percent and payback in about eight months from production. All-in sustaining costs are estimated at 2,288 dollars an ounce.
The sensitivity is the honest part of the release. A 20 percent fall in the gold price, to 2,400 dollars, cuts the after tax value to 5 million dollars, and the open pits must move about 21 tonnes of waste for every tonne of ore. Minnova’s shares fell 3.2 percent to 15 Canadian cents on Thursday, valuing the company at about 19 million Canadian dollars, which frames the financing question: the restart costs roughly four times the company’s market value. The site, formerly Puffy Lake, last produced between December 1987 and March 1989, and its existing environmental licence covers underground mining, so open pit amendments are still needed before the 2028 date is firm.