Big River Gold has eliminated its last outstanding debt, with major shareholder, the Copulos Group – controlled by the company’s Chairman, Stephen Copulos, electing to convert a $1.5m Note and accrued interest into shares.
The conversion of the Notes leaves Big River in a strong position to fund the definitive feasibility study, or “DFS”, for its flagship Borborema gold project, which is due the hit the streets later this year.
Big River Executive Director Andrew Richards said: “The conversion of the Notes removes the last remaining debt of Big River Gold and strengthens the balance sheet of the company, allowing us to focus on the DFS and making the company more attractive to investors and potential project financiers.”
“The Copulos Group has been a long-term supporter of the company and recognises the underlying value of the company’s assets, and in particular the Borborema gold project”.
Last month, the company raised $1.5m via a share placement for exploration and evaluation of its prospective project ground holdings in Brazil and left the company with a strong cash balance of $4.3m as of 27 August to finalise its DFS.
Borborema currently holds a JORC-compliant mineral resource of 68.6 million tonnes grading 1.1g/t gold for 2.43 million ounces, from which Big River has derived an ore reserve of 42.4 million tonnes at 1.18g/t gold containing 1.6 million ounces.
An optimisation study produced in February 2018 outlined a post-tax net present value of USD$118m and an internal rate of return of 31%, with free cash flows of USD$243m from a two million tonne per annum project over an initial mine life of 10 years.
Upfront capital costs were estimated at USD$93m, while the all-in sustaining production costs were estimated at just over USD$900 per gold ounce, based on a forecast gold price of USD$1,300 per ounce.
With gold prices now 15% higher than that used in last year’s study, the project’s economics will now be looking rosier too.
Big River is targeting a reduction in capital expenditure and production cost estimates for Borborema, as part of its ongoing DFS.
The project consists of three mining leases covering a total area of 29 square kilometres including freehold title over the main prospect area of interest, with two permits already granted to allow mining to commence.
Construction of the gold mine is planned to kick off in 2020 and the company is in discussions with potential project financiers, according to management.
The higher-grade, lower strip ratio, Stage 1 open-pit mining scenario for Borborema is forecast to produce 2 million tonnes per annum and will churn out about 700,000 gold ounces over the initial decade long mine life, at high recoveries of 93%.
With earlier cashflows now predicted from the mine – particularly at the elevated gold prices – the company should be in the position to pump some of this back into exploration, in an area vastly underexplored by 21st Century standards.
In addition, the project’s large mineral resource inventory could also allow the operation to ramp-up to 4 million tonnes per annum at a later stage, Big River said.
With debt burden lifted, cash in the bank and gold prices shining on its emerging South American project, the clouds have parted for the company and it is now well-placed to bring Borborema to fruition over the next couple of years.
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By Matt Birney
