Dundee’s prefeasibility bumps Čoka Rakita gold project NPV by 25% in Serbia

Dundee Precious Metals’ (TSX: DPM) new pre-feasibility study for its Čoka Rakita gold project in Serbia raises the after-tax net present value (NPV) by a quarter and the internal rate of return (IRR) by 8% over the preliminary economic assessment (PEA) from May.

The new NPV (at a 5% discount) stands at US$735 million, and the IRR is 41%, assuming a base gold price of US$1,900 per oz., with a payback period of 1.7 years, according to the report released on Wednesday. At a base price of US$2,500 per oz., the NPV rises to US$1.2 billion and the IRR to 58%.

“In less than 24 months since announcing the initial discovery of Čoka Rakita, we have outlined a very robust, highly value accretive project with the potential to add high-margin gold production growth to our portfolio,” David Rae, Dundee president and CEO said in a release. “We are immediately proceeding to a feasibility study while advancing permitting activities in parallel, with the goal of commencing construction in mid-2026 to support first production of concentrate in 2028.”

The company’s plans to fast-track Čoka Rakita are ahead of schedule, after it said in May it was targeting the PFS for the first quarter of next year. The project is about 160 km southeast of the capital Belgrade.

Dundee also operates the Chelopech and Ada Tepe gold-copper mines in neighbouring Bulgaria, and the Čoka Rakita and Timok projects in Serbia, where it has been operating since 2004.

PFS bumps output

The PFS boosts average gold production in the mine’s first five years to 170,000 oz. per year, from 164,000 oz. in the same period in the PEA, while it lowers the all-in sustaining cost to US$644 per oz. from US$715 per ounce. 

Total production over the underground mine’s 10-year life would come to 1.2 million oz. grading 6.38 grams gold per tonne.

Initial capital costs are estimated at US$379 million.

Resource to reserve upgrade

The study also updates the resource estimate at Čoka Rakita, pegging probable reserves at 6.6 million tonnes grading 6.38 grams gold for 1.3 million oz. of contained gold; 1.4 million indicated tonnes at 3.3 grams gold for 154 million oz., and 110,000 inferred tonnes at 3.11 grams gold for 11,000 contained ounces.

The construction of an 850,000-tonne-per-year processing facility using existing infrastructure from the Ada Tepe mine will help de-risk the project, Dundee said.

For its next steps, Dundee plans to complete a feasibility study by the end of next year, advance permitting, and drill about 40,000 metres to increase resources and extend copper-gold mineralization. 

Company shares were down almost 1% to at $13.40 apiece in Toronto on Wednesday morning, giving it a market capitalization of $2.4 billion. Its shares traded in a 52-week range of $7.79 to $14.81.