US$310m payday scoped for Latitude 66 Finland gold, cobalt project

Latitude 66’s share price reached as high as 7.8 cents a share, up 20 per cent after the company released a highly anticipated scoping study on its flagship Kuusamo Schist Belt (KSB) gold-cobalt project in northern Finland. 

The report confirmed the project as a high-grade, uber-low-cost standalone operation with serious upside potential. 

The study headlined an eye-opening net present value (NPV) of US$310 million (A$492m) after tax using an 8 per cent discount rate and a gold price of US$2500 (A$3968) per ounce. At current spot gold prices, the NPV balloons out to a massive US$433m (A$690m).

More remarkably, the all-in sustaining cost of production is expected to come in at US$1038 per ounce or US$996 after the company receives cobalt credits. 

Total up-front capital investment to build the plant and fully prepare the site for mining has been pegged at a reasonable US$101m and the project is expected to pay for itself within 16 months. At spot gold prices the payback period shrinks further to just 12 months.

KSB has an inventory of 7.3 million tonnes in the indicated and inferred category, running at 2.7 grams a tonne (g/t) for 650,000 ounces of gold and 5840 tonnes of cobalt, grading at 0.08 per cent. 

When fully operational, Latitude will kick off mining its K1 deposit to target an annual output of 65,000 ounces of gold and 465t of cobalt over a projected mine life of 7.2 years. Ninety per cent of the metal will come from the higher confidence indicated resource.

Latitude’s plan is to open-pit mine 750,000t of ore each year, which would then be refined using a simple free milling gravity and carbon-in-leach processing plant before floating off the cobalt. 

Latitude 66 managing director Grant Coyle said: “Latitude 66 is extremely pleased with the strong economics demonstrated by the KSB scoping study. The gold project has significant upside potential due to highly prospective nearby exploration potential and low capex expansion options. It also provides a unique opportunity to support a sustainable supply of cobalt that is underpinned by the high margin economics of the gold from the project.” 

Latitude will have a major natural advantage with KSB, benefitting from Finland’s world-class roads and water infrastructure together with access to the country’s ultra-low-emissions hydro-electrical grid. It is also in a jurisdiction screaming out for its own supply of critical metals. 

Under European Union law, cobalt is labelled as a strategic metal. KSB’s future output of the metal could account for as much as 25 per cent of Europe’s internal cobalt production, placing Latitude in the crosshairs of buyers looking to shore up a non-Chinese supply.

With such an important geopolitical bargaining chip in its possession, the company says it is also likely to benefit from some significant EU government funding to help with its construction costs.

Latitude is also planning an aggressive near-term drilling campaign at several near-mine targets, where previous rock chip sampling has picked up grades of up to 490g/t gold. 

Management is confident there is plenty of untapped potential waiting to be discovered near the existing resource, which if unearthed, could require a bigger operation in the not-too-distant future. 

Early studies have already uncovered a compelling, low-cost growth option to upgrade the plant by 33 per cent to 1 million tonnes per annum at a cost of US$13m. 

There is also potential for underground mining at the K1 pit, which will be explored within the prefeasibility studies that are due to start shortly. Ongoing metallurgical test work is being conducted to see how the company could further boost cobalt recovery and explore a rare earths upside.

The scoping study findings appear to have proved up KSB as a hugely promising project for the exploration minnow in a time of roaring gold markets and with cobalt back on the radar. 

By owning high-grade resources, strategic metals, solid economics and with plenty of exploration upside baked in, Latitude appears to be sitting in the right space at a perfect time.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au