Spanish Mountain Gold Project PEA: $2.16B NPV, 35.2% IRR
Spanish Mountain Gold Ltd.'s Spanish Mountain Gold Project in British Columbia, Canada (Cariboo District, ~70 km from Williams Lake) has a Preliminary Economic Assessment (PEA) outlining an after-tax NPV of $2.16B, an after-tax IRR of 35.2%, and initial capital of $1.05B. The mine plan runs 25.8 years at about 129 koz Au (LOM average); 207 koz/yr average over first 5 years; 173 koz/yr years 1-10 per year.
Spanish Mountain Gold Ltd.'s Spanish Mountain Gold Project has reported Preliminary Economic Assessment (PEA) results for the gold project in British Columbia, Canada (Cariboo District, ~70 km from Williams Lake). The study headlines an after-tax net present value of $2.16B at a 5% discount rate. It reflects Spanish Mountain Gold Ltd.'s (SPA.V) latest disclosed economics for the asset.
Economics. The after-tax NPV is $2.16B using a 5% discount rate. After-tax IRR is 35.2%. Initial capital expenditure is estimated at $1.05B, with life-of-mine sustaining capital of $539M. The study models a payback period of 1.8 years. All-in sustaining costs are pegged at 1450 USD/oz Au. Economics are based on Base case US$3,600/oz Au, US$50/oz Ag; Spot case US$4,400/oz Au, US$66/oz Ag; US$1.00 = C$1.35. M&I resource pit shell at US$3,400/oz Au..
Production and mine plan. The project envisions an open-pit operation. Life of mine is 25.8 years. Average annual production is approximately 129 koz Au (LOM average); 207 koz/yr average over first 5 years; 173 koz/yr years 1-10. Average head grade is 0.41 g/t Au (average LOM); rougher feed grade 0.41 g/t -> 0.86 g/t ahead of rougher flotation. Metallurgical recovery averages 88.6%. The open-pit strip ratio is 1.8 : 1 (waste:feed).
Resources and ownership. The company holds a 100% interest in the project. Royalties and streams: 1.5% NSR sold to Wheaton Precious Metals for US$55 million (two remaining instalments); no streams.
These figures are extracted from Spanish Mountain Gold Ltd.'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 | 111.4 Mt | 0.51 g/t Au; 0.66 g/t Ag | 1,831 koz Au; 2,356 koz Ag |
| Indicated | 230.6 Mt | 0.38 g/t Au; 0.66 g/t Ag | 2,832 koz Au; 4,863 koz Ag |
| Measured & Indicated | 342.0 Mt | 0.42 g/t Au; 0.66 g/t Ag | 4,663 koz Au; 7,219 koz Ag |
| Inferred | 42.4 Mt | 0.28 g/t Au; 0.86 g/t Ag | 382 koz Au; 1,174 koz Ag |
| Indicated | 0.09 Mt | 0.25 g/t Au | 0.7 koz Au |
| Inferred | 54.4 Mt | 0.36 g/t Au | 629 koz Au |
| Measured & Indicated | 342.1 Mt | 0.42 g/t Au | 4,664 koz Au |
| Inferred | 96.8 Mt | 0.32 g/t Au; 0.86 g/t Ag | 1,011 koz Au; 1,174 koz Ag |
Our Analysis
- IRR after-tax
- 35.2%
higher than 45% of 119 projects we track
- NPV after-tax
- $2.16B
higher than 89% of 169 projects we track
- Initial capex
- $1.05B
49% of NPV
costlier than 91% of 158 projects we track
- Payback
- 1.8yrs
slower than 39% of 101 projects we track
- Mine life
- 25.8yrs
- Discount rate
- 5%
- Study price assumption
- Base case US$3,600/oz Au, US$50/oz Ag; Spot case US$4,400/oz Au, US$66/oz Ag; US$1.00 = C$1.35. M&I resource pit shell at US$3,400/oz Au.
- Spot gold today
- $4,317.30/oz
A US$139M micro-cap proposing to spend US$1.05B to build a mine: that ratio, roughly 7.6 times the company's entire equity value, is the fact that governs everything else here. No conventional project-finance syndicate writes a cheque that size against a balance sheet that small without either a major partner taking a controlling interest, a streaming or offtake deal that sells forward a large share of the early years, or equity issuance on a scale that leaves existing holders with a small slice of a much larger company. The 35.2% after-tax IRR and the US$2.16B after-tax NPV are real, but they are the prize, not the plan. Until the funding structure is visible, the return belongs to whoever ends up paying for the build, not necessarily to today's shareholders.
The returns themselves are mixed once you look past the headline. That NPV ranks higher than 89% of the 169 gold projects we track, and payback of 1.8 years is quick, lower than 61% of the 101 projects we track. The IRR, though, ranks higher than only 45% of the 119 projects we track, which sits in the lower half. Against the practical hurdle, developers typically want roughly 15% after-tax to attract project finance and 20%+ from a higher-risk junior with little else in the portfolio, which fits a company with two projects. It clears that bar, but not by the margin the NPV suggests.
Two caveats temper the numbers further. This is a PEA, scoping-level, potentially built on inferred material, with a capital estimate that typically carries a plus or minus 50% band, and feasibility is still underway. The study also uses US$3,600/oz gold against a live spot of US$4,317.30/oz, so the economics carry some upward room, though a higher gold price does nothing to shrink the build. British Columbia is a favourable, well-regulated jurisdiction, which helps permitting and the odds of attracting institutional capital, but it does not change the arithmetic of who funds US$1.05B. The question that decides this: what does the financing package cost existing shareholders?
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.
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