Kay Mine PEA: $-6M NPV, 4.9% IRR
Arizona Metals Corp.'s Kay Mine in Arizona, USA 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 1918 tpd per year.
Arizona Metals Corp.'s Kay Mine has reported Preliminary Economic Assessment (PEA) results for the copper-gold-zinc project in Arizona, USA. 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. All-in sustaining costs are pegged at 138.47 USD/t milled. Economics are based on Base Case: US$4.70/lb copper, US$1.27/lb zinc, US$3,100/oz gold and US$38/oz silver. Spot Case: US$6.05/lb copper, US$1.57/lb zinc, US$4,745/oz gold and US$77.48/oz silver. MRE: US$4.10/lb Cu, US$1.00/lb Pb, US$1.35/lb Zn, US$2,200/oz Au and US$26/oz Ag.
Production and mine plan. The project envisions an underground operation. Life of mine is 10 years. Average annual production is approximately 1918 tpd. Average head grade is 3.18% CuEq (Indicated).
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 | 1.39 g/t Au, 27.6 g/t Ag, 0.97% Cu, 0.33% Pb, 2.39% Zn, 3.18% CuEq | 415 koz Au, 8,253 koz Ag, 197.9 Mlbs Cu, 67.3 Mlbs Pb, 490.1 Mlbs Zn, 650.6 Mlbs CuEq |
| Inferred | 0.86 Mt | 1.06 g/t Au, 15.4 g/t Ag, 0.87% Cu, 0.2% Pb, 1.68% Zn, 2.44% CuEq | 29 koz Au, 423 koz Ag, 16.4 Mlbs Cu, 3.8 Mlbs Pb, 31.8 Mlbs Zn, 46.1 Mlbs CuEq |
Our Analysis
- IRR after-tax
- 4.9%
higher than 0% of 330 projects we track
- NPV after-tax
- $-6M
higher than 0% of 429 projects we track
- Initial capex
- $609M
costlier than 70% of 425 projects we track
- Payback
- 5.5yrs
slower than 94% of 266 projects we track
- Mine life
- 10yrs
- Discount rate
- 5%
- Study price assumption
- Base Case: US$4.70/lb copper, US$1.27/lb zinc, US$3,100/oz gold and US$38/oz silver. Spot Case: US$6.05/lb copper, US$1.57/lb zinc, US$4,745/oz gold and US$77.48/oz silver. MRE: US$4.10/lb Cu, US$1.00/lb Pb, US$1.35/lb Zn, US$2,200/oz Au and US$26/oz Ag
- Spot copper today
- $6.57/lb
A 4.9% after-tax IRR and a negative after-tax NPV of -$6M do not clear the practical financing hurdle for a project of this size. Developers typically need roughly 15% after-tax IRRs to attract project finance, and 20% or more for a junior with little else in the portfolio. This study, a scoping-level PEA with a capital estimate carrying a plus or minus 50% band, does not come close. At a build cost of $609M against a US$17M market cap, the company cannot finance this on its own balance sheet; the equity raise required would be transformational and highly dilutive. The 5.5-year payback and a rank in the bottom quartile of the 330 projects we track reinforce the point: as designed, this does not get built.
What would have to change? The study's own Spot Case, using copper at $6.05/lb against today's live spot of $6.57/lb, points to the obvious lever: higher metal prices. But relying on a spot-price spike to rescue a PEA is not an investment thesis. The other levers are a material reduction in the $609M initial capex, or a partner willing to fund the build in exchange for a stake. The asset sits in Arizona, a mining-friendly jurisdiction that lowers the political risk embedded in the numbers, but that does not compensate for the fundamental economics.
The negative NPV versus a market cap roughly 0.4x that figure cuts both ways. It could mean the market has already written this off, or that it is skeptical the company can ever finance a build worth 35.6x its equity value. Either read points to the same conclusion: this is one of two projects in a nano-cap portfolio, and the single question that decides whether it works is whether a partner or a sustained price rally can close a gap the current study cannot. Nothing in this PEA suggests that answer is yes.
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.