Tonopah Gold Project PEA: $112M NPV, 17.6% IRR
Viva Gold Corp.'s Tonopah Gold Project in United States, Nevada (Walker Lane trend) has a Preliminary Economic Assessment (PEA) outlining an after-tax NPV of $112M, an after-tax IRR of 17.6%, and initial capital of $220M. The mine plan runs 7 years at about 50 koz Au per year.
Viva Gold Corp.'s Tonopah Gold Project has reported Preliminary Economic Assessment (PEA) results for the gold project in United States, Nevada (Walker Lane trend). The study headlines an after-tax net present value of $112M at a 5% discount rate. It reflects Viva Gold Corp.'s (VAU.V) latest disclosed economics for the asset.
Economics. The after-tax NPV is $112M using a 5% discount rate. After-tax IRR is 17.6%. Initial capital expenditure is estimated at $220M, with life-of-mine sustaining capital of $70M. The study models a payback period of 3.6 years. All-in sustaining costs are pegged at 1269 USD/oz. Economics are based on Base case gold price of US$2,400/oz (sensitivity range US$2,000–US$5,000/oz); MRE cut-off grade assumes gold price of US$2,200 with revenue factor of 1.2 (equivalent to US$2,640 gold price).
Production and mine plan. The project envisions an open-pit operation. Life of mine is 7 years. Average annual production is approximately 50 koz Au. Average head grade is Mill feed 1.75 g/t Au; heap leach feed 0.37 g/t Au. Metallurgical recovery averages 75%. The open-pit strip ratio is 3.9 : 1.
Resources and ownership. The company holds a 100% interest in the project. Royalties and streams: 2% NSR on 184 of 546 claims; NSR 1% buy-down for US$1.0M; no JV partner.
These figures are extracted from Viva 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 | 1,690 kt | 1.41 g/t Au, 3.11 g/t Ag | 77,000 oz Au, 169,000 oz Ag |
| Indicated | 25,000 kt | 0.53 g/t Au, 1.98 g/t Ag | 427,000 oz Au, 1,593,000 oz Ag |
| Measured & Indicated | 26,690 kt | 0.59 g/t Au, 2.05 g/t Ag | 504,000 oz Au, 1,762,000 oz Ag |
| Inferred | 6,905 kt | 0.37 g/t Au, 1.81 g/t Ag | 83,000 oz Au, 402,000 oz Ag |
Our Analysis
- IRR after-tax
- 17.6%
higher than 4% of 118 projects we track
- NPV after-tax
- $112M
higher than 16% of 186 projects we track
- Initial capex
- $220M
197% of NPV
costlier than 55% of 171 projects we track
- Payback
- 3.6yrs
slower than 89% of 100 projects we track
- Mine life
- 7yrs
- Discount rate
- 5%
- Study price assumption
- Base case gold price of US$2,400/oz (sensitivity range US$2,000–US$5,000/oz); MRE cut-off grade assumes gold price of US$2,200 with revenue factor of 1.2 (equivalent to US$2,640 gold price)
- Spot gold today
- $4,197.80/oz
A US$220 million build against a US$33 million market capitalisation is the whole story here. The company cannot fund this from its own balance sheet, and it cannot fund it from equity without handing over control: the capex is roughly 6.7 times what the entire business is worth today. That leaves a partner, a joint-venture carry, a royalty or streaming package, or a sale of the asset outright. Each of those routes transfers a large share of the project's value away from current holders, and each is a negotiation the company enters from a position of weakness. This is a nano-cap with one project we track, so there is no portfolio cash flow to bridge the gap and no second asset to fall back on.
The economics are respectable but not the deciding factor. After-tax NPV of US$112 million ranks above only 16% of the 186 gold projects we track, and the 17.6% after-tax IRR sits in the bottom quartile, ahead of just 4% of the 118 gold projects in our set. Payback of 3.6 years is moderate. Developers typically want about 15% after-tax to attract project finance, and 20%-plus where the developer is a higher-risk junior with little else in the portfolio, which describes this company precisely. On that hurdle, the return is thin.
Two things soften the picture and one sharpens it. The study assumes US$2,400/oz gold against a live spot of US$4,197.80/oz, so the modelled returns may understate what the current market would deliver, and Nevada's Walker Lane trend is a favourable jurisdiction. Against that, this is a scoping-level PEA with a seven-year mine life and a capital estimate that typically carries a plus or minus 50% band. The capex number that drives the funding problem could move materially in either direction. The question that decides this project is not the IRR: it is who writes the cheque, and what 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.
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