Kay Mine PEA: $-6M NPV, 4.9% IRR
Arizona Metals Corp.'s Kay Mine in Arizona, USA (45 min north of Phoenix) has a Preliminary Economic Assessment (PEA) outlining an after-tax NPV of $-6M, an after-tax IRR of 4.9%, and initial capital of $609M. The mine plan runs 10 years at about 0.7 Mtpa (average milling throughput) per year.
Arizona Metals Corp.'s Kay Mine has reported Preliminary Economic Assessment (PEA) results for the copper, gold, zinc project in Arizona, USA (45 min north of Phoenix). The study headlines an after-tax net present value of $-6M at a 5% discount rate. It reflects Arizona Metals Corp.'s (AMC.TO) latest disclosed economics for the asset.
Economics. The after-tax NPV is $-6M using a 5% discount rate. After-tax IRR is 4.9%. Initial capital expenditure is estimated at $609M, with life-of-mine sustaining capital of $87M. The study models a payback period of 5.5 years. Economics are based on Base Case: US$4.70/lb Cu, US$1.27/lb Zn, US$3,100/oz Au, US$38/oz Ag; Spot Case: US$6.05/lb Cu, US$1.57/lb Zn, US$4,745/oz Au, US$77.48/oz Ag.
Production and mine plan. The project envisions an underground operation. Life of mine is 10 years. Average annual production is approximately 0.7 Mtpa (average milling throughput).
Resources and ownership. The company holds a 100% interest in the project. Royalties and streams: NO Royalties.
These figures are extracted from Arizona Metals Corp.'s technical disclosures and reflect the most recent PEA on file. Compare this project against other developers and producers in our project economics database, and always verify the numbers against the original technical report before making any investment decision.
Reserves & Resources
| Category | Tonnage | Grade | Contained |
|---|---|---|---|
| Indicated | 9.28 Mt | Au 1.39 g/t, Ag 27.6 g/t, Cu 0.97%, Pb 0.33%, Zn 2.39%, CuEq 3.18% | Au 415 koz, Ag 8,253 koz, Cu 197.9 Mlbs, Pb 67.3 Mlbs, Zn 490.1 Mlbs, CuEq 650.6 Mlbs |
| Inferred | 0.86 Mt | Au 1.06 g/t, Ag 15.4 g/t, Cu 0.87%, Pb 0.2%, Zn 1.68%, CuEq 2.44% | Au 29 koz, Ag 423 koz, Cu 16.4 Mlbs, Pb 3.8 Mlbs, Zn 31.8 Mlbs, CuEq 46.1 Mlbs |
Our Analysis
This project fails the basic economic test for a mine. The 4.9% after-tax IRR sits in the bottom quartile of our tracked peer set and falls well short of the ~15% threshold developers need for project financing. The after-tax NPV is negative at -$6M, meaning the asset destroys value at the study’s own 5% discount rate—a low rate that flatters the headline number. A 5.5-year payback on a 10-year mine life leaves a narrow window for free cash flow, amplifying downside risk from any operational hiccup.
The $609M initial capex is massive relative to the negative NPV and the company’s market cap, creating severe funding risk. The NPV-to-market-cap gap is negative, so there is no valuation discount to debate—the market is correctly pricing in the project’s inability to generate a return. Arizona is a low-jurisdiction-risk location, but that cannot rescue a fundamentally uneconomic study. The single most important risk is that the project cannot attract financing at these returns; without a material improvement in the commodity price assumptions used, this asset is unlikely to advance.
Our take, benchmarked against the project economics in the Mining Stocks database. Figures are estimates drawn from company technical reports — not investment advice; always verify against the source filing.