New Found Gold has more than doubled the projected value of its Queensway gold project in central Newfoundland in a revised preliminary economic assessment released on Thursday. The after tax net present value at a 5 percent discount rate is 1.73 billion Canadian dollars, about 1.23 billion United States dollars, up from 743 million Canadian dollars in last year’s study. Shares gained 3 percent to 2.27 Canadian dollars on Friday morning in Toronto, for a market capitalisation of about 872 million Canadian dollars.
The valuation jump needs its caveat stated plainly. The revised study assumes a gold price of 3,600 dollars an ounce, 44 percent above the 2,500 dollar assumption in the earlier study, and the two headline values are not directly comparable on price alone. Initial capital is estimated at about 150 million Canadian dollars, with a further 832 million in growth capital and 971 million in sustaining capital over the life of the project. The study projects an after tax internal rate of return of 126 percent, payback in under a year and all in sustaining costs of 1,375 dollars an ounce.
The resource is the harder news. Measured and indicated resources rose 38 percent to 27.3 million tonnes grading 2.19 grams of gold per tonne, containing 1.92 million ounces, including a contribution from the new Dropkick zone. Inferred resources total 12.5 million tonnes at 1.51 grams, containing 606,000 ounces. The mine plan would produce 1.74 million ounces over 15 years, averaging 116,000 ounces a year and peaking at 190,000 ounces in 2032, with first processing targeted for late 2027.
The plan routes initial feed from the Keats and Iceberg open pits to the company’s Pine Cove plant, which is being converted to a gravity and carbon in leach circuit, before a new 4,900 tonne a day plant at Queensway starts in 2031. Underground mining would begin in 2030, earlier than previously planned, with underground ounces up 86 percent. Queensway still requires environmental clearance and further permits beyond the current assessment, which covers only the Keats, Iceberg, Dome and Jackpot pits.
Queensway sits alongside the recently commissioned Hammerdown mine, which reached commercial production on August 19 and produced 4,863 ounces in the third quarter. The company held about 167 million Canadian dollars in cash at September 30 against 70 million in debt. In the market tables gold fell 1.29 percent to 4,007.90 dollars and gold miners fell 1.82 percent, so Queensway’s economics are being set against a metal price well above the study assumption but a falling tape.