Notably, the results demonstrate a significant increase in the production target, free cash flow generation and net present value (NPV) of the project.
Key project metrics
The updated DFS builds on the DFS released in July 2018, delivering a 16% increase in projected gold production to 289,000 ounces over an initial 7-year mine life, together with a 16% increase in undiscounted pre-tax project cash-flow to $116.1 million.
This update which has been achieved following a modest infill and extensional exploration investment of $1.1 million, further demonstrates that the Rothsay Project has the potential to generate strong cash-flows underpinned by high-grade, high-margin gold production, with significant upside.
Importantly, a well-credentialled project management team has been established, as a result, the major work packages have been advanced and are either in contract or at a ready-to-execute stage.
The style of agreement is either fixed price design & construct (D&C) or fixed price build, own, transfer (BOT) contracts. This significantly de-risks the capital cost for the Rothsay Gold Project.
EganStreet continues to advance project finance discussions and an independent technical expert (ITE) report has been completed, with all material assumptions from the DFS confirmed and no material risks identified.
This has been provided to the preferred financiers that provided non-binding offers of conventional debt ranging up to $35 million.
It is expected construction will commence immediately following project financing and receiving all necessary environmental approvals.
Egan Street is targeting first gold production in Q1 2020.
EganStreet managing director Marc Ducler said the updated definitive feasibility study showed that significant value could be added for very modest sums of exploration expenditure.
Ducler added: “With the project estimation achieving further maturity and all our main work packages either in contract or “ready to execute”, the financial metrics of the Rothsay Gold Project continue to strengthen despite the slight increase in capital costs.
“Coupled with the future potential to deliver more growth once in production and the buoyant gold price – it’s certainly an exciting time to be developing the Rothsay Gold Project.”