Metates Sulphide Heap Leach Project (Phase 1) PEA: $1.14B NPV, 35% IRR
Chesapeake Gold Corp.'s Metates Sulphide Heap Leach Project (Phase 1) 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 (Yr 1-15) per year.
Chesapeake Gold Corp.'s Metates Sulphide Heap Leach Project (Phase 1) has reported Preliminary Economic Assessment (PEA) results for the gold 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 USD/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 (sulphide heap leach) operation. Life of mine is 31 years. Average annual production is approximately 147 koz AuEq (Yr 1-15). Average head grade is 0.76 g/t Au, 15.71 g/t Ag. Metallurgical recovery averages 70%. The open-pit strip ratio is 2.22:1.
Resources and ownership. The company holds a 100% interest in the project. Royalties and streams: 0.5% NSR & 7.5% Government 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, 1.10 g/t AuEq | 0.86 Moz Au, 18.1 Moz Ag |
| Indicated | 890.1 Mt | 0.75 g/t Au, 14.2 g/t Ag, 0.75 g/t AuEq | 15.91 Moz Au, 405.1 Moz Ag |
| Measured & Indicated | 921.2 Mt | 0.57 g/t Au, 14.3 g/t Ag, 0.76 g/t AuEq | 16.77 Moz Au, 423.2 Moz Ag |
| Inferred | 139.5 Mt | 0.47 g/t Au, 13.2 g/t Ag, 0.65 g/t AuEq | 2.13 Moz Au, 59.0 Moz Ag |
Our Analysis
- IRR pre-tax
- 35%
higher than 47% of 118 projects we track
- NPV pre-tax
- $1.14B
higher than 68% of 186 projects we track
- Initial capex
- $359M
31% of NPV
costlier than 65% of 171 projects we track
- Payback
- 2.5yrs
slower than 65% of 100 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
- $4,173.30/oz
A US$359M build against a US$155M market capitalisation is the whole story here. The company cannot fund this from its own balance sheet, and it cannot fund it quietly: the cheque is roughly 2.3 times the value of the entire business, and this is one of three projects it carries. That leaves a short list of realistic payers, a partner or acquirer who takes a large equity stake or operatorship, a stream or royalty package sold against future production, or a heavily dilutive raise at a micro-cap valuation. Each path transfers value away from existing holders, and the sequencing matters as much as the amount: a partner brought in before permitting and study de-risking gives away more of the asset than one brought in after.
The economics are genuinely supportive, but they are the supporting act. Pre-tax NPV of US$1.14B ranks above 68% of the 186 gold projects we track, and the 35% pre-tax IRR sits above only 47% of the 118 we track, with payback of 2.5 years below 35% of the 100 we track. Against the practical hurdle, roughly 15% after-tax for project finance and 20%-plus for a junior with little else in the portfolio, the return clears but does not leave obvious room for the dilution the funding gap implies. The 31-year mine life is the counterweight: a long-lived asset can absorb a partner's share and still leave something for shareholders, and it is what makes the project financeable at all.
Two things temper the read. This is a PEA, scoping-level, potentially carrying inferred material and a capital estimate with a plus or minus 50% band, so US$359M could move materially in either direction. And the study prices gold at US$1,600/oz against a live spot of US$4,173.30/oz, a wide gap that cuts both ways: it suggests headroom, but it also means the headline numbers were never stress-tested at today's market. Durango is a working mining jurisdiction, which helps. The question that decides this: who writes the US$359M cheque, and what do they take for it?
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.