A preliminary economic assessment (PEA) for Selkirk Copper Mines’ (TSXV: SCMI)(US-OTC: SKRKF) brownfield Minto project in Yukon gives it a $494 million value, almost three times higher than its $186 million in initial capital costs.
Discounted at 7%, the after-tax net present value (NPV) comes with a post-tax internal rate of return of 47.8% and a relatively low payback period of 1.9 years due to the modest costs of restarting operations at the existing mine, Selkirk reported Tuesday. The capex excluded such expenditures as dewatering, rehabilitation and re-servicing of underground workings.
“The positive economics described in the PEA create the platform for the company to pursue a restart decision at the completion of a feasibility study and permit amendment receipt in H2-2027 with targeted first concentrate production by H2-2028,” Selkirk CEO M. Colin Joudrie said in a release.
Study momentum
The PEA comes weeks after Selkirk released a resource update for Minto that nearly tripled contained metal over last year’s estimate, and about two years after Yukon’s Supreme Court approved Selkirk First Nation’s purchase of Minto, a rare example of Indigenous ownership of a mine in Canada. The First Nation became the legal owner of Minto just over a year ago and now holds an 18.2% stake in the company.
Minto is about 240 km northwest of Whitehorse.
The mine could produce 18.4 million tonnes over a 13-year life from open pit and underground operations. That equates to 434 million lb. copper, 271,000 oz. gold and 2.4 million oz. silver.
Shares fall 18%
However, despite the PEA’s base case economics, Selkirk shares dropped more than 18% to C$1.41 apiece on Tuesday morning in Toronto, valuing the company at about C$223.6 million. The stock has traded in a 12-month range of 42¢ to C$2.24.
The base case NPV assumes metal prices of $5 per lb. copper, US$3,600 per oz. gold and US$50 per oz. silver, which although below current spot levels, show that Minto’s economics are particularly sensitive to copper prices.
Investors may also have noted that the PEA excluded certain pre-capital expenditures. Selkirk must still secure permit amendments and project financing before restarting Minto and has yet to sign concentrate offtake agreements. The company says it is advancing permitting with support from the Selkirk First Nation and Yukon government and plans to conduct a formal concentrate-marketing process alongside its next technical studies and financing evaluation.
940M lb copper
Minto hosts 47.8 million measured and indicated tonnes grading 0.89% copper, 0.34 gram gold per tonne and 3.2 grams silver for 940 million lb. copper, 530,000 oz. gold and about 4.8 million oz. silver, according to the resource update from July. Inferred resources total 16.9 million tonnes at 0.76% copper, 0.26 gram gold and 2.7 grams silver for 281 million lb. copper, 142,000 oz. gold, and 1.5 million oz. silver.
Most of the resources in the update are underground and about 45% are in the open pit.
Selkirk has almost finished a stage-two, 50,000-metre drill program for Minto, which will be incorporated into a resource update targeted for the first quarter of 2027.
The mine was put up for sale in September 2023 after owner Minto Metals shut it down due to financial difficulties and PricewaterhouseCoopers put the mine into receivership. Minto produced about 500 million lb. copper between 2007 and 2023.
Source: https://www.mining.com/selkirk-coppers-minto-posts-494m-value-nearly-triple-its-build-costs/
