Metates PEA: $1.14B NPV, 35% IRR
Chesapeake Gold Corp.'s Metates in Durango, Mexico has a Preliminary Economic Assessment (PEA) outlining a pre-tax NPV of $1.14B, a pre-tax IRR of 35%, and initial capital of $359M. The mine plan runs 31 years at about 147 K oz AuEq per year.
Chesapeake Gold Corp.'s Metates has reported Preliminary Economic Assessment (PEA) results for the gold & silver project in Durango, Mexico. The study headlines a pre-tax net present value of $1.14B at a 5% discount rate. It reflects Chesapeake Gold Corp.'s (CKG.V) latest disclosed economics for the asset.
Economics. The pre-tax NPV is $1.14B using a 5% discount rate. Pre-tax IRR is 35%. Initial capital expenditure is estimated at $359M, with life-of-mine sustaining capital of $176M. The study models a payback period of 2.5 years. All-in sustaining costs are pegged at 749 US$/oz Au. Economics are based on Gold US$1,600/oz; Silver US$22/oz.
Production and mine plan. The project envisions a heap leach (open-pit/underground not specified) operation. Life of mine is 31 years. Average annual production is approximately 147 K oz AuEq. Average head grade is 0.76 g/t Au, 15.71 g/t Ag. Metallurgical recovery averages 70%. The open-pit strip ratio is 2.22.
Resources and ownership. The company holds a 100% interest in the project. Royalties and streams: 0.5% NSR & 7.5% Gov't EBITDA Royalty.
These figures are extracted from Chesapeake Gold 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 |
|---|---|---|---|
| Measured | 31.1 Mtonnes | 0.86 g/t Au, 18.1 g/t Ag | 0.86 Moz Au, 18.1 Moz Ag |
| Indicated | 890.1 Mtonnes | 0.75 g/t Au, 14.2 g/t Ag | 15.91 Moz Au, 405.1 Moz Ag |
| Measured & Indicated | 921.2 Mtonnes | 0.57 g/t Au, 14.3 g/t Ag | 16.77 Moz Au, 423.2 Moz Ag |
| Inferred | 139.5 Mtonnes | 0.47 g/t Au, 13.2 g/t Ag | 2.13 Moz Au, 59.0 Moz Ag |
Our Analysis
- IRR pre-tax
- 35%
higher than 58% of 317 projects we track
- NPV pre-tax
- $1.14B
higher than 72% of 415 projects we track
- Initial capex
- $359M
31% of NPV
costlier than 59% of 402 projects we track
- Payback
- 2.5yrs
slower than 47% of 253 projects we track
- Mine life
- 31yrs
- Discount rate
- 5%
- Study price assumption
- Gold US$1,600/oz; Silver US$22/oz
- Spot gold today
- $4,319.10/oz
The financing question is the project. At US$189M, this company is a micro-cap trying to write a US$359M initial capex cheque, roughly 1.9x its entire market value. That is not a build a junior quietly funds from cash flow or a modest equity raise; it implies substantial dilution, a strategic partner, or a stream-and-debt package that will heavily dilute or subordinate existing holders. The NPV running about 6.1x market cap cuts both ways: either the market is ignoring a genuine asset, or it is correctly pricing the risk that the equity gets crushed to pay for it. The two-project portfolio does nothing to cushion that.
The economics are the supporting act, and they are credible but not exceptional. The 35% pre-tax IRR ranks in the upper half of the 317 projects we track, and the 2.5-year payback is moderate. The US$1.14B pre-tax NPV ranks higher than 72% of the 415 projects we track. But this is a PEA, scoping-level, with a capital estimate that typically carries a plus or minus 50% band. The study's 5% discount rate is at the low end of convention and flatters the headline NPV, so treat the absolute numbers as directional, not definitive. The gold price assumption of US$1,600/oz sits far below today's spot of $4,319.10/oz, which is a genuine tailwind, but silver at US$22/oz offers less obvious upside.
Durango, Mexico is a mining-friendly jurisdiction, which helps the permitting story for a 31-year mine life, but does not solve the capital problem. The single question that decides whether this works is who writes the cheque. If a partner or financier steps in on reasonable terms, the low capital intensity (31% of NPV) makes this a viable development. If the company must fund it alone, the dilution math for current holders is brutal, and the headline returns will not matter.
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.