The Boumadine project in eastern Morocco. Credit: Aya Gold & Silver
Canada’s Aya Gold & Silver (TSX: AYA) said a preliminary economic assessment (PEA) for its Boumadine polymetallic project in Morocco shows the company would need barely a year to recoup its investment if gold prices remain elevated.
At spot gold prices of $4,000 an oz., Boumadine has an after-tax net present value (NPV) of $3 billion, an internal rate of return (IRR) of 77% and a payback period of 1.2 years, Montreal-based Aya said Tuesday in a statement. The base case, which rests on gold averaging $2,800, would result in an NPV of $1.5 billion, an IRR of 47% and a payback of 2.1 years.
Aya, which owns 85% of Boumadine, envisions building six open pits and three underground mines over a projected mine life of 11.1 years. The overall strategy is to achieve an average production rate to maintain a processing throughput of 8,000 tonnes per day.
“The long-awaited PEA lends de-risking and valuation support, with an elevated NPV vs. analyst consensus values, a buoyant IRR that readily clears hurdle rates and development capex lower-than-expected for an eminently fundable project,” National Bank Financial mining analyst Don DeMarco said Tuesday in a note.
Two-year construction
About two years will be necessary to build the project, Aya said. Initial capital expenditures are pegged at $446 million, including a contingency of $96 million, while sustaining capital over the life of mine is estimated to average $30 million a year, including underground mine development costs.
The PEA outlines an average cash cost of $109 per ton milled, or $928 per gold-equivalent oz. produced. All-in sustaining costs are estimated at $1,021 per gold-equivalent oz. produced.
The PEA includes only the known mineralized zones on the Boumadine mining license, representing “a small portion” of the company’s land package, CEO Benoit La Salle said.
Boumadine is located near the border with Algeria in Morocco’s Errachidia province, about 220 km east of the city of Ouarzazate. Aya’s land area covers 339 sq. km, with another 600 sq. km under exploration authorization.
Resource expansion
Aya in February boosted the property’s indicated resource by 160% and the inferred resource by 24% over a 2024 report. Boumadine holds 5.2 million indicated tonnes grading 91 grams silver per tonne, 2.78 grams gold, 2.8% zinc and 0.85% lead, the company said.
Inferred resources now total 29.2 million tonnes grading 82 grams silver, 2.63 grams gold, 2.11% zinc and 0.82% lead. Contained metal includes 76.8 million oz. silver, 2.4 million oz. gold, 615,000 tonnes zinc and 237,000 lead.
Aya is planning to drill 360,000 metres at Boumadine over the next two years in a bid to convert inferred resources into indicated resources. A feasibility study, targeted for release by the end of 2027, may outline upside from further exploration and the inclusion of a roaster.
Shares of Aya fell 0.7% to C$14.81 Tuesday morning in Toronto amid a decline in the benchmark S&P/TSX Composite Index, cutting the company’s market value to about C$2.1 billion.