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 koz 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 Base Case: Gold US$1,600/oz, Silver US$22/oz.
Production and mine plan. The project envisions an open-pit (heap leach) operation. Life of mine is 31 years. Average annual production is approximately 147 koz AuEq. Average head grade is 0.76 g/t Au, 13.3 g/t Ag (target higher grade intrusive). The open-pit strip ratio is 2.22.
Resources and ownership. 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 Mt | 0.86 g/t Au, 18.1 g/t Ag | 0.86 Moz Au, 18.1 Moz Ag |
| Indicated | 890.1 Mt | 0.75 g/t Au, 14.2 g/t Ag | 15.91 Moz Au, 405.1 Moz Ag |
| Measured & Indicated | 921.2 Mt | 0.57 g/t Au, 14.3 g/t Ag | 16.77 Moz Au, 423.2 Moz Ag |
| Inferred | 139.5 Mt | 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 344 projects we track
- NPV pre-tax
- $1.14B
higher than 71% of 441 projects we track
- Initial capex
- $359M
31% of NPV
costlier than 59% of 444 projects we track
- Payback
- 2.5yrs
slower than 48% of 280 projects we track
- Mine life
- 31yrs
- Discount rate
- 5%
- Study price assumption
- Base Case: Gold US$1,600/oz, Silver US$22/oz
- Spot gold today
- $4,471.40/oz
The first question this project answers is not what it returns, but who pays for it. Initial capex is $359M against a company market cap of roughly US$201M, meaning the build costs about 1.8x what the entire equity is worth. That is not a financing gap a micro-cap quietly bridges with internal cash flow or a modest debt facility. Realistically, the cheque gets written through substantial equity dilution, a strategic partner taking a large stake, or a stream-and-debt package that layers claims ahead of current holders. Each path transfers meaningful value from existing shareholders to new capital. The NPV sits at about 5.7x market cap, which can read as deep undervaluation, but the more sober interpretation is that the market is pricing in the dilution and execution risk required to capture it.
The economics are the supporting act, and they are legitimate but preliminary. This is a PEA, scoping-level, with a capital estimate that typically carries a wide error band, and the study assumes gold at US$1,600/oz while spot sits at $4,471.40/oz. That price gap is not a flaw; it is conservative, and it means the returns could improve if the project moves forward under current conditions. The pre-tax IRR of 35% ranks above 58% of tracked peers, and the pre-tax NPV of $1.14B ranks above 71%. Against the practical hurdle, a junior with little else in the portfolio needs 20%+ after-tax returns to attract project finance, and this clears that bar on a pre-tax basis. The 31-year mine life and 2.5-year payback are moderate positives, but the 5% discount rate flatters the headline NPV, and the study's capital estimate at this stage deserves skepticism.
Durango, Mexico is a known mining jurisdiction, which helps, but it does not solve the funding math. The project is one of three this company tracks, so it is not a single-asset bet, yet the portfolio does not change the scale mismatch. The decisive question is whether a financing partner appears who values the gold-silver upside at current prices enough to write a cheque that dwarfs the company's own worth, and at what dilution. Until that happens, the IRR is a theoretical number.
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.