Nova Minerals Ltd (ASX:NVA, OTCQB:NVAAF) has revealed an 11-month payback period and an internal rate of return (IRR) of 53% (pre-tax) in a scoping study for the flagship Estelle Gold Project in Alaska, US.
The economics of the project appear to be in good shape, offering a net present value (NPV5) of US$654 million (pre-tax), undiscounted net free cashflow of US$945 million (pre-tax) and annual free cashflow after the payback period of about US$56 million.
Pre-production capital expenditure of US$385 million is targeted for the construction of a central processing plant and mine infrastructure, and some 363,000 ounces of gold production for the first year of operation.
Nova is expecting an all-in sustaining cost (ASIC) in the first year of production of US$510 per ounce, rising to US$1,149 per ounce over the life of the mine.
Scoping study marks major milestone
“Completion of the Phase 2 Scoping Study marks a major milestone for the company, providing a robust foundation as we move towards the pre-feasibility study (PFS) and exceeded our expectations in many regards with a from surface high-grade starter pit at RPM offering a quick 11-month payback period and a 53% internal rate of return that we aim to continue to improve with further optimisation,” Nova Minerals CEO Christopher Gerteisen said.
“With such a positive outcome and baseline to work from, we are now targeting additional near-surface mineable resources to increase the average life of mine (LOM) mill feed grade, where the slightest increase should improve the project’s economic metrics.
“We have those resource targets ready to drill this year, particularly at RPM. It’s all upside from here.”
Estelle’s mineral resource estimate sits at 9.9 million ounces of gold, with some 340,000 ounces at a 2.3 g/t gold cut-off originating from the RPM North deposit, which also holds a shallow, measured-category component of 180,000 ounces at a 4.1 g/t gold cut-off.
Read: Nova Minerals boosts Estelle resource to 1.1 billion tonnes; establishes 340,000-ounce starter pit at 2.3 g/t in M&I categories
According to Nova, this represents some $700 million in easily accessible, low-strip ratio and generally cheaper to mine gold, which generally offers a much quicker payback.
RPM South, nearby, also holds an additional 430,000 ounces of gold.
Further improvements to come
“Key drivers for these robust returns are the geometry and nature of mineralisation within these massive Intrusive-Related Gold Systems (IRGS) ore bodies, which start at surface to allow open pit mining with a very low strip ratio, particularly important in the early payback, as well as being readily amenable to ore sorting in the later years allowing for significant upgrading of ore feed to the mill,” Gerteisen continued.
“This combined with excellent metallurgy where our proven flowsheet can easily liberate and recover gold.
“Following the initial high-grade early years, particularly the 11-month starter pit at RPM, additional key areas and opportunities have already been identified that have the potential to further improve the project’s economics.
“With the project now essentially de-risked from a capital perspective with the 11-month payback period, Nova can be viewed as having a two-tier upside.
“Development, and most importantly exploration as any new discoveries and increases to the resource base, will now go straight to the bottom line improving the projects economic metrics.”
From here, Nova Minerals intends to complete the following milestones:
- Material PFS test work and trade-off studies as they become available.
- Drill planning for 2023, focusing on the RPM and Train areas.
- Drilling and assay results from the 2023 drill program.
- Updated global mineral resource estimate (MRE) following the assay results return.
- Analyse results from the ongoing geological exploration program.
- Continue ongoing metallurgical test work.
- Continue ongoing environmental test work.
The company says it is fundamentally running on schedule to unlock the Estelle Gold Project, which sits within the much larger Estelle Gold Trend, in a Tier 1, safe mining jurisdiction.