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Centerra Gold's Kemess Preliminary Economic Assessment Highlights Strong Economics that Support the Company's Long-Term Growth Pipeline

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Expanded mineral resource and strong exploration upside support long-term production potential Strea...

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Centerra Gold's Kemess Project showcases a preliminary economic assessment with a $1.1 billion NPV and 16% IRR, driven by significant projected gold and copper outputs at a competitive all-in sustaining cost. At current metal prices, these figures could increase dramatically, emphasizing its value and positioning Centerra for organic growth in the coming years.

Sentiment Rationale

The robust PEA results signal strong operational potential and increased valuation under higher metal prices. Historically, projects with favorable economics and clear resource potential lead to share price appreciation.

Trading Thesis

CGAU is a bullish buy based on positive PEA results and strong commodity leverage.

Market-Moving

  • Kemess project's updated resource could boost shares significantly on positive commodity prices.
  • The transition to production planned for late 2031 positions CGAU favorably for future cash flow.
  • A successful pre-feasibility study is anticipated to enhance valuation further.
  • Market reactions to gold and copper price fluctuations will directly impact shareholder value.

Key Facts

  • CGAU's Kemess Project report shows a $1.1 billion NPV and 16% IRR.
  • Estimated gold production: 171,000 ounces annually over 15 years.
  • Cost profile highlights AISC of $971 per ounce sold.
  • Spot prices could elevate NPV to $2.8 billion and IRR to 29%.
  • Streamlined operations plan improves execution risk and capital efficiency.

Companies Mentioned

  • Centerra Gold (CGAU): Strong PEA results position CGAU favorably for investments.
  • Triple Flag Precious Metals Corp. (TFPM): Engaged regarding silver revenue from the Kemess project.

Corporate Developments

This news fits into 'Corporate Developments' which discusses the growth trajectory of Centerra Gold and explores significant operational projects. The updates indicate a strong likelihood of increasing production and financial performance due to advanced planning and continued exploration efforts.

Centerra Gold's Kemess Project Shows Robust Economics in Preliminary Economic Assessment

Centerra Gold Inc. (NYSE: CGAU) has announced promising developments concerning its Kemess project in British Columbia. The latest preliminary economic assessment (PEA) reveals a strong growth potential, highlighted by an after-tax net present value (NPV5%) of $1.1 billion and an after-tax internal rate of return (IRR) of 16%. These calculations are based on long-term gold pricing of $3,000 per ounce and copper pricing of $4.50 per pound.

Robust Economic Indicators for Kemess Project

According to Centerra Gold's President and CEO, Paul Tomory, the PEA represents a critical advancement in the company’s organic growth strategy. He emphasized that the study capitalizes on the project’s substantial mineral endowment, setting forth a de-risked restart plan that integrates existing infrastructure with conventional mining techniques.

  • Average annual production projected at 171,000 ounces of gold and 61 million pounds of copper
  • All-in sustaining cost (AISC) estimated at $971 per ounce on a by-product basis
  • Value of Kemess could surge to $2.8 billion at current market prices

Expanded Resource Estimates and Strategic Opportunities

The updated mineral resource estimate at Kemess includes 3.3 million ounces of gold and 1.1 billion pounds of copper classified as indicated, alongside 3.6 million ounces of gold and 1.2 billion pounds of copper categorized as inferred. The study exclusively evaluates the Kemess Main and Kemess Underground areas, which constitute roughly 47% of the total indicated and inferred resource.

Paul Tomory noted the expanded resource reflects a meticulous analysis of geological data, which includes drilling in the Nugget zone and the historical Kemess South deposit. He stated, “The PEA also demonstrates the strategic opportunity Kemess represents as Centerra continues to advance its self-funded organic growth pipeline.”

Projected Development and Execution Strategy

The Kemess PEA outlines an integrated development strategy, commencing with open pit mining followed by underground production approximately two years thereafter. This approach aims to enhance project execution, optimize plant feed, and utilize existing infrastructure while adhering to a timeline projecting first production by late 2031.

  • Initial capital expenditures estimated at $771 million for open pit production
  • Additional $277 million in capital required for underground operations

Potential Economic Impact and Future Growth

British Columbia Premier David Eby remarked on the economic implications of the Kemess project, anticipating that its potential reopening could create thousands of jobs while contributing significantly to the local economy. He stated, “Centerra’s continued interest reflects the incredible momentum we’re building in British Columbia’s mining sector.”

Conclusion and Ongoing Exploration

The updated assessment positions Kemess as a vital asset in Centerra Gold's portfolio, with exciting prospects for exploration and development. The company plans to advance ongoing exploration efforts and technical work, targeting a Pre-Feasibility Study anticipated in 2027. Investors and stakeholders are encouraged to stay informed as Centerra Gold continues to tap into the promising potential of the Kemess property.

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