North Island Copper and Gold Project (Hushamu & Red Dog) PEA: C$550M NPV, 14.3% IRR
NorthIsle Copper and Gold Inc.'s North Island Copper and Gold Project (Hushamu & Red Dog) in Northern Vancouver Island, British Columbia, Canada has a Preliminary Economic Assessment (PEA) outlining an after-tax NPV of C$550M, an after-tax IRR of 14.3%, and initial capital of C$1.34B.
NorthIsle Copper and Gold Inc.'s North Island Copper and Gold Project (Hushamu & Red Dog) has reported Preliminary Economic Assessment (PEA) results for the copper, gold, molybdenum, pyrite project in Northern Vancouver Island, British Columbia, Canada. The study headlines an after-tax net present value of C$550M at a 8% discount rate. It reflects NorthIsle Copper and Gold Inc.'s (NCX.V) latest disclosed economics for the asset.
Economics. The after-tax NPV is C$550M using a 8% discount rate. After-tax IRR is 14.3%. Initial capital expenditure is estimated at C$1.34B. The study models a payback period of 5.1 years. Economics are based on Base Case: Copper US$3.10/lb, Gold US$1300/oz, Molybdenum US$9.00/lb, Pyrite US$86/t; Exchange rate 0.75 US$/1CAD. Also SEC price case and Spot Price case (spot Sep 6, 2017)..
Production and mine plan. The project envisions an open-pit operation. Average annual production is approximately 2.7375e+07 mtpy. Average head grade is Design ore grade averaging 0.19% Cu, 0.24 g/t Au, and 0.008% Mo. Metallurgical recovery averages 77%.
Resources and ownership. Royalties and streams: Mineral Tenures, Surface Rights and Royalties (section references); specifics not extracted..
These figures are extracted from NorthIsle Copper and Gold Inc.'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.
Our Analysis
- IRR after-tax
- 14.3%
higher than 5% of 319 projects we track
- NPV after-tax
- C$550M
higher than 50% of 417 projects we track
- Initial capex
- C$1.34B
244% of NPV
costlier than 86% of 407 projects we track
- Payback
- 5.1yrs
slower than 93% of 255 projects we track
- Discount rate
- 8%
- Study price assumption
- Base Case: Copper US$3.10/lb, Gold US$1300/oz, Molybdenum US$9.00/lb, Pyrite US$86/t; Exchange rate 0.75 US$/1CAD. Also SEC price case and Spot Price case (spot Sep 6, 2017).
The viability question is not academic here: a 14.3% after-tax IRR sits below the roughly 15% threshold developers typically need to secure project finance, and it ranks in the bottom quartile of the 319 projects we track. Payback stretches to 5.1 years, slower than 93% of peers. This is a project that, as designed, likely does not get built. The NPV of C$550M is respectable on paper, but it is the wrong lens; the build cost of C$1.34B is what matters, and at 244% of NPV and roughly equal to the company's entire US$938M market cap, this is not a balance sheet a diversified, nine-project portfolio can quietly absorb.
The study is a PEA, scoping-level, with capital estimates carrying a typical plus or minus 50% band. That band alone could push the IRR meaningfully lower, or, if costs come in at the favorable end, nudge it over the financing line. The base case assumes copper at US$3.10/lb, gold at US$1300/oz, molybdenum at US$9.00/lb and pyrite at US$86/t, with an exchange rate of 0.75 US$/1CAD. Those are the assumptions that produce a sub-15% return; the project's fate hinges on whether prices, costs, or the currency move favorably from here. A partner bringing equity could also de-risk the funding gap, though it would dilute the NPV-to-market-cap relationship that already looks stretched.
The jurisdiction, Northern Vancouver Island in British Columbia, is a developed mining region, which helps on permitting risk, but it does not solve the arithmetic. The single question that decides this project is whether the capital comes back fast enough to justify the risk: at 5.1 years, it currently does not. Higher prices, a lower capex estimate from a more detailed study, or a strategic partner are the only credible paths to a build decision. Absent one of those, this remains a development-stage asset that the market may be correctly discounting rather than ignoring.
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.