Big River Gold is looking to lock down a finance package for its 100%-owned Borborema gold Project in Brazil that boasts a 2.43 million-ounce resource and a “stage-1” reserve of 780,000 ounces at a grade of 1.22 grams per tonne gold. The project is showing an initial projected mine life of ten years and solid economics at a gold price of US$1,400/oz and an all-in sustaining cost per ounce to produce of just USD$839.
The life of mine economic basics at Borborema are reasonably easy to grasp – the project takes in about a billion dollars in revenue and costs around half of that to mine.
It shows a solid 41.8% post-tax, internal rate of return and is said by the company to have uplifts in economics if the current gold price of US$1,550/oz is used. Life of mine EBITDA for the project is quoted at a healthy $527.3 million from gross revenue of over $1 billion.
According to the company, interest in the project from the finance community has reportedly been strong and indicative term sheets are anticipated to be received by Big River during February. The company is hoping to finalize funding during the second quarter of 2020 and commence mine construction during the third quarter of 2020.
The company says that local infrastructure is excellent and given that it actually owns the land that covers the initial pit development, stakeholder issues should be reduced. Importantly, the feasibility study includes dry tailings stacking which means that no tailings dams are required. All major regulatory approvals are now in place and the local community has shown strong support according to management.
Gold was first discovered in Brazil in the seventeenth century and this discovery led to a prolonged ‘gold rush’ as the Portuguese and Spanish sailed across the Atlantic Ocean to plunder South America. Indigenous miners have flocked to the Amazon rainforest in search of new gold wealth due to the strong gold price over the last two decades.
Big River Gold is in a strong financial position with funding secured until 2021. Management is now looking at opportunities to add efficiencies to the allocation of capital and time in the construction phase of the project. Initial ore mined will be stockpiled according to grade with higher-grade ores being processed preferentially in the early years of the mine development.
To prepare for its operational phase, the company has been stripped down, rationalized and restructured and is fit for the fight. Non-core assets have been divested and the corporate cash burn minimized ahead of project start-up.
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By Matt Birney
