IAU x 2, EDV
After releasing a remarkable three PEAs in 10 days last month, Nevada gold miner i-80 Gold aka IAU gave us almost a two week break to recover before releasing two more PEAs in two days, the first one for the Granite Creek Underground Project.
Based on an updated Indicated Resource of 261k oz @ 10.5 g/t Au and and an Inferred Resource of 320k oz at 13.0 g/t Au, the PEA envisages an 8-year mine life with production of 60k oz Au per year at a cash cost of $1,366/oz. Mine construction is already complete, so there is no capex, and the after-tax IRR is estimated at a robust 84% using a gold price of $2175/oz/
But that is just the start, as the PEA does not include any of the drilling IAU has carried out over the last two years. Together with an extensive drill programme this year, that drilling will feed into a PFBS expected before the end of 2025. You can expect much higher numbers in the PEA. The PFBS will also evaluate various processing alternatives for the increased ore production to come.
As well, Granite Creek Underground, as the first of 4 mines to be brought into production over the coming years, is expected to produce 20-30k Au in 2025, a welcome injection of cash flow. Granite Creek Underground is expected to reach commercial production in 2026.
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FWIW, in response to this PEA Scotia released a new analyst report on IAU. Citing the robust numbers in the PEA, plus Granite Creek Underground;s ability to generate funds necessary to developing their other mine projects, Scotia called it a Mild Positive but kept IAU at Sector Outperform with a target of $1.50.
Another day, another PEA released by IAU, this time for the Granite Creek open pit. At first glance the numbers are not as robust as those for Granite Creek Underground, but its larger size means it will also be an important source of cash flow for IAU.
The updated Resource Report that comes with the PEA tells us that the open pit now contains an indicated Resource of 1.44M oz at 1.18 g/t Au, plus an Inferred Resource of 8ok oz at 1.09 g/t Au. The PEA envisages a 10-year mine life, producing 130k oz.year at an estimated LOM cash cost of $1185/oz.
At the base case of $2175/oz Au, at a 5% discount rate, the IRR is acceptable at 30%, but it rises to 50% at $2900 gold. Construction capex is estimated at $200M. An on-site CIL plant will be used to process the ore.
Although the underground operation at Granite Creek is already fully permitted, reviving surface production is not, IAU estimates it will take three years to get the necessary permits.
Next up is a PFBS with an updated Resource Report to be completed by the end of 2025,
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West African gold miner Endeavour Mining aka EDV had promised a very strong Q4 after two mine start-ups earlier this year, and they certainly delivered. Q4 production was way up at 363k oz Au with cash costs way down at $979/oz Au, allowing them to just barely meet 2025 guidance for both numbers. Consequently, cash flow and net profits were also way up for Q4, allowing EDV to declare 2024 a success.
That increased cash flow allowed EDV to pay out a record $140M in dividends and another $8M in share buybacks in Q4. In spite of all the money spent on mine builds early in the year, EDV was able to end 2024 with a cash stash of $397M, which is expected to grow substantially in 2025.
In 2025, EDV's main focus will be on maximizing cash flow from their producing assets, but they will also be working on a PFBS for their next build Assafou, which is expected to be released in early 2026.
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