Take physic, pomp

The Cerro Casale 43-101 technical report

Cerro Casale is the big gold project 75% owned by Barrick (ABX) and 25% owned by Kinross (K.to) (KGC). Yesterday Kinross published its 43-101 compliant technical report on the project. After a brief scan, here are a few line items:

  • Capex is put at a cool $4.184Bn
  • Base case ($800 gold and $2/lb copper) IRR comes in at a horrid 5.5%
  • IRR using U$960/oz gold and U$2.40/lb copper is still at meagre 9.9%
  • If you want to go with current spot prices as your base (a very dangerous hobby), then $1,200/oz gold and $2.80/lb copper gives you a 14.7% IRR…feeling lucky, punk?
  • The project is very opex-sensitive. Annual operating costs are slated at an impressively large $778m with the 43-101 model indicating a 10% rise in opex taking a third away from net cash flow.
People, don’t hold your breath on a build decision for this thing. It might give Exeter (XRC.to) holders food for thought, too.

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