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Financial Analysis
The financial analysis for the Base Case (gold at US$1,472) indicates a pre-tax NPV at a 5% discount rate of $382 million, with an IRR of 19.5% and a payback period of 4.2 years. At a gold price of US$1,700, the pre-tax NPV of the project at a 5% discount rate, is 621M$, the IRR is 27.6%, and the payback period is 2.95 years.
SENSITIVITY ANALYSIS
============================================================================ % Change in Before-tax NPV, M$,PRE-TAX Value Variation IRR (5% discount)---------------------------------------------------------------------------- + 10% US$1,619 24.8% 546----------------------------------------------------------------------------Gold Price - Base Case- $US - US$1,472 19.4% 382---------------------------------------------------------------------------- - 10% US$1,325 13.8% 218============================================================================ + 10% US$799 16.9% 303----------------------------------------------------------------------------Average Operating Cash Costs per Ounce - Base Case - US$726 19.4% 382---------------------------------------------------------------------------- - 10% US$653 22.0% 462============================================================================ +10% $407 17.3% 347----------------------------------------------------------------------------Initial Capital Costs - Base Case ($ Million) - $370 19.4% 382---------------------------------------------------------------------------- -10% $333 22.1% 416============================================================================
Recommendations of the PEA:
Following the positive outlook of the PEA, InnovExplo recommends that the Duparquet Project be advanced to the next phase, which would consist of the preparation of a Pre-Feasibility Study.
In order to advance to the pre-feasibility stage, additional definition drilling is recommended to continue to upgrade the resource categories.
Additional metallurgical bulk tests are also recommended to further define the flow sheet of the ore treatment, and to also examine the possibility of producing a saleable concentrate. This concentrate could be sold to smelters, thereby eliminating the POX part of the milling, could imply significant Capex and Opex reduction for the project, and increase the rate of returns.
Additional geotechnical and hydrogeological studies should be undertaken for the proposed site buildings, tailing management facility, and to better define and ideally steepening the pit wall slopes from those presented in the report.
As well, Stavibel recommends starting permitting and social outreach to present the project to the communities, while at the same time characterizing fully the mining project environment.
It is recommended that negotiations with Hydro-Quebec be initiated to advance the work for installation of the power line.
The budget for the proposed program is presented in the following table. It covers the period 2013 and 2014, in order to deliver a Pre-Feasibility report in the first quarter of 2014, and to continue community outreach and permitting in 2014.
----------------------------------------------------------------------------Cost Estimate - Pre-Feasibility Study CostItems ($)----------------------------------------------------------------------------Budget for 2013---------------------------------------------------------------------------- Definition drilling 2,500,000---------------------------------------------------------------------------- Metallurgical test work 1,100,000---------------------------------------------------------------------------- Geotechnical and hydrogeological testwork 1,125,000---------------------------------------------------------------------------- Community Presentationsand permitting 518,000---------------------------------------------------------------------------- Resources update & Pre-feasibility report (2013) 300,000---------------------------------------------------------------------------- Sub-total 5,543,000---------------------------------------------------------------------------- Contingency 20% 1,107,000---------------------------------------------------------------------------- Total 2013 6,650,000----------------------------------------------------------------------------Budget for 2014---------------------------------------------------------------------------- Resources update & Pre-Feasibility report 200,000---------------------------------------------------------------------------- Community Presentations+ permitting 904,000---------------------------------------------------------------------------- Sub-total 1,104,000---------------------------------------------------------------------------- Contingency 20% 246,000---------------------------------------------------------------------------- Total 2014 1,350,000----------------------------------------------------------------------------TOTAL 2013-2014 8,000,000----------------------------------------------------------------------------
