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The Turkey-based project’s post-tax NPV sits at US$1.1 billion at a discount rate of 5 percent, and its post-tax IRR comes in at 50 percent.
Sandstorm Gold’s (TSX:SSL,NYSEAMERICAN:SAND) Hod Maden prefeasibility study (PFS), released on Tuesday (June 26), shows that the project has the capability to produce more than 2.6 million gold equivalent ounces over 11 years.
The PFS outlines proven and probable mineral reserves of 2.61 million ounces of gold and 129,000 tonnes of copper. Average annual mill throughput is pegged at 900,000 tonnes and yearly average output is expected to come in at 266,000 gold equivalent ounces.
“Hod Maden was discovered only three years ago and has since made remarkable progress towards production, at a pace that few projects in the mining industry could match and Sandstorm is pleased to be partnered with one of the best Turkish mining operators,” said President and CEO Nolan Watson.
“The current financing plan is 65 percent debt financing, leaving Sandstorm’s capital contribution at less than US$30 million. I look forward to continued development at Hod Maden and as further exploration and technical work is completed, we expect this resource base to grow even larger,” he added.
According to the PFS, the main area of Hod Maden will be mined from the bottom up in primary and secondary stopes. As mentioned, mine production is seen coming in at 900,000 tonnes per year and a total of 9.1 million tonnes of ore will produced during the mine’s 11-year life.
On the back of the new PFS, Sandstorm has increased its production guidance to 140,000 gold equivalent ounces by 2023.
Hod Maden has an upfront capital cost estimate of US$272 million, which includes a contingency of more than US$32 million. Its post-tax NPV sits at US$1.1 billion at a discount rate of 5 percent, and its post-tax IRR comes in at 50 percent.
A mill will be built in the nearby Saliçor Valley. Grid power will be available and a tailings storage facility will be located on surface. Also on the surface of the mine will be a main office, a 120-person camp, a laboratory, a storage area and water treatment facilities.
“Ore processing contemplates a single stage crush, various stages of milling, bulk floatation roughing, various stages of copper cleaning and regrind to produce a single copper concentrate containing gold. That concentrate will be transported to the Hopa port located on the Black Sea in Turkey for shipment to smelting facilities,” the company said.
Now that the PFS has been released, Sandstorm will begin a feasibility study for Hod Maden; it is expected to start by the end of 2018. As of 3:36 p.m. EST on Wednesday (June 27), Sandstorm was trading at US$5.94.
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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.
