Sunridge Gold in the news and on the move


Grandich Client Sunridge Gold

Sunridge just announced the results of the Prefeasibility Study on the Asmara North Projects in Eritrea. The Study shows an NPV of the project to be to be $555 million, with a 10% discount applied ($1.642 Billion with 0% discount)! I believe this has far exceeded everyone’s expectations. It’s hard to imagine (but in this grueling bear market in junior resource stocks who knows) that this can’t result in a re-rating of the stock over the coming months as both buy and sell side analysts are able to digest this news. Also, this should catch the attention of major mining companies (if it hasn’t already), as Sunridge’s current market cap is less than a tenth of the NPV at ~$50 million. Here are the highlights from the news release:

  • Net Present Value (“NPV”) of $555 million at a 10% discount (pre-tax base case)                        (NPV @ 0% discount – $1,642 million)
  • Internal rate of return (IRR) – 27%
  • Payback – 3.5 years
  • Base Case metal prices used – US$3.28/lb copper, US
    .99/lb zinc, US$1,111/oz gold, US$21.00/oz silver
  • Initial capital cost estimate – $489 million including a contingency and owners costs
  • On site operating costs – $25.78 per tonne average through life of mine
  • Average annual metal production -
      • 56.9 million pounds (25,900 tonnes) of copper
      • 136.0 million pounds (61,800 tonnes) of zinc
      • 26,000 ounce of gold
      • 695,000 ounces of silver
  • Total metal production –
      • 804 million pounds (365,000 tonnes) of copper
      • 1.789 million pounds (812,000 tonnes) of zinc
      • 415,000 ounces of gold
      • 11 million ounces of silver
  • Life of Mine – 15.25 years

Now this is 100% my “bias” opinion only but given what the Chinese have been doing in Eritrea and their large appetite for metals, it would come as no surprise that they enter some sort of arrangement with SGC in the coming months.

I wouldn’t focus on the next 24 hours of trading but rather what this type of news can lead to in the next 24 weeks. At just $.40 a share (and $50 million market cap), SGC is indeed one of the most compelling speculative/gambling juniors in the market today!