New Found Gold (TSX, NYSE-A: NFGC) has more than doubled the projected value of its Queensway gold project in Newfoundland to C$1.73 billion ($1.23 billion) while expanding measured and indicated resources by 38%, according to a revised preliminary economic assessment (PEA).
Last year’s study estimated an after-tax net present value of C$743 million at a 5% discount rate. The revised PEA assumes a gold price of $3,600 per oz., 44% above the earlier $2,500 assumption, while estimating initial capital costs at C$150 million, the company said Thursday in a release.
“Our flagship Queensway asset is uniquely attractive, with a high-grade core that starts at surface. It is located in central Newfoundland, close to infrastructure and a skilled workforce,” CEO Keith Boyle said in the release.
Queensway would give New Found a much larger production base than its recently commissioned Hammerdown mine, with projected average output of 116,000 oz. annually over 15 years. The company says the initial stage is fully funded and expects cash generated from mining to pay for later expansion, although permits and further development work remain.
Shares in New Found gained 3% to C$2.27 apiece on Friday morning in Toronto, for a market capitalization of C$872.4 million. The stock has traded in a 12-month range of C$1.88 to C$4.89.
Larger resource
Measured and indicated resources total 27.3 million tonnes grading 2.19 grams gold per tonne for 1.92 million oz., including a contribution from the new Dropkick zone. Inferred resources total 12.5 million tonnes grading 1.51 grams gold for 606,000 ounces. The estimate is effective July 6.
The revised mine plan would produce 1.74 million oz. of gold, with annual output peaking at 190,000 oz. in 2032. It projects an after-tax internal rate of return of 126%, payback in less than a year and all-in sustaining costs of $1,375 an ounce. First processing is targeted for late 2027.
The earlier study projected about 1.5 million oz. over the same mine life, a 56.3% return and all-in sustaining costs of $1,256 an ounce. The higher gold-price assumption prevents a direct comparison of the two studies’ headline valuations.
Plant changes
The revised plan sends initial feed from the Keats and Iceberg open pits to New Found’s Pine Cove plant, replacing the earlier proposal to use Nugget Pond. Pine Cove is being converted to a gravity and carbon-in-leach circuit, with expansion to 1,400 tonnes a day planned. Queensway would initially supply 700 tonnes a day, averaging 13.41 grams gold.
Underground mining would begin in 2030, earlier in the development sequence than previously planned. The revised plan increases underground gold ounces by 86%, partly to reduce waste stripping and partly because of a high-grade shoot identified at Dropkick.
A new plant at Queensway would begin operating in 2031 at 4,900 tonnes a day, ending shipments to Pine Cove. Separate circuits would process higher-grade feed and lower-grade or refractory material. A subsequent expansion would lift total capacity to 7,000 tonnes a day.
Beyond the C$149.8-million initial investment, the study includes C$832.1 million in growth capital and C$970.8 million in sustaining capital. New Found expects operating cash flow to fund the later stages at the study’s assumed gold price.
The company held about C$167 million in cash at Sept. 30 against C$70 million in debt. A further C$35-million debt facility is available subject to conditions.
Queensway still requires environmental clearance and subsequent permits. The current environmental assessment covers the Keats, Iceberg, Dome and Jackpot open pits; later deposits, underground development and processing expansions would require their own regulatory approvals.
Hammerdown ramps up
At Hammerdown, which reached commercial production on Aug. 19, third-quarter output totalled 4,863 oz., bringing year-to-date production to 10,670 oz., New Found said in its Oct. 15 operating update. Full third-quarter financial results are scheduled for Nov. 11.
Quarterly production fell 13% short of SCP Resource Finance’s estimate, mainly because processed grades were lower than expected as crusher and sorter commissioning shifted into early 2027. Even so, year-to-date output exceeded its forecast by 5%, while mining and processing volumes were ahead of expectations, SCP analyst Eleanor Magdzinski said in an Oct. 15 note.
“We view today’s first quarterly results as positive, with YTD26 gold production of 10,670 oz (+5% vs SCPe) and mining activity materially ahead of expectations, highlighting a strong ramp-up,” Magdzinski said.
The firm maintained its buy rating and C$5 share-price target. Its assessment preceded the revised Queensway study.
New Found expects Hammerdown to produce at an annual rate of 20,000 to 25,000 oz. over its mine life at all-in sustaining costs of about $2,500 per ounce. The crusher and sorter are intended to lower crushing costs and improve grades delivered to Pine Cove.
“More importantly for investors, in under a year, New Found Gold has built a successful operations team in central Newfoundland,” Boyle said in the production release. “We will now use the knowledge and experience gained from bringing Hammerdown into production and focus on advancing our fully funded flagship Queensway Gold Project to production.”
Source: https://www.mining.com/new-found-gold-doubles-queensway-valuation-to-1-2b/
