Funding and Permitting Risks Loom Over Theta Gold’s Optimised TGME Feasibility Study

Optimised Feasibility Study Highlights

The latest feasibility study for Theta Gold Mines Limited’s TGME Gold Mine Project in South Africa marks a significant leap forward in the project’s economic outlook. The study outlines a robust 14.5-year life of mine (LOM) with a production target of 1.14 million ounces of gold at a recovered grade of 4.81 grams per tonne. This translates into an impressive US$1.2 billion in free cash flow post-tax, underscoring the project’s potential as a long-life, high-margin gold operation.

Key financial metrics include a post-tax net present value (NPV) of US$504 million at a 10% discount rate and an internal rate of return (IRR) of 71%. The project’s capital intensity is relatively modest, with peak funding requirements estimated at US$79 million and a payback period of just 30 months from the start of mining, reflecting strong capital efficiency.

Mining and Operational Plans

The TGME project encompasses four primary underground mines, Beta, Rietfontein, Frankfort, and Clewer-Dukes Hill-Morgenzon (CDM), alongside surface ore sources such as historic rock dumps and tailings storage facilities. Mining operations are scheduled to commence with Beta Mine, followed by staggered ramp-ups at the other sites. The processing plant, currently under construction, is designed to handle 540,000 tonnes per annum, with modular construction enabling future expansion.

The study incorporates detailed mine designs and schedules, supported by comprehensive geotechnical assessments and metallurgical testwork. Recovery rates are projected at 87%, with tailored processing circuits for free-milling and refractory ores, ensuring optimized gold extraction.

Funding and Project Execution

The company has secured initial funding through a US$35 million loan facility agreement with the Industrial Development Corporation of South Africa and a US$4 million private placement. Debt syndication efforts are underway, with strong lender interest anticipated following the release of the feasibility study. The project execution plan features a phased ramp-up, leveraging existing infrastructure and a skilled local workforce in the Mpumalanga province.

Environmental, social, and governance (ESG) considerations are embedded throughout the project design, including commitments to reduce carbon emissions, sustainable water and waste management, and community engagement programs. The project benefits from existing permits and is progressing through the necessary regulatory approvals.

Upside Potential and Risks

The feasibility study highlights significant upside opportunities, including resource expansion from over 40 historical mines in the region, potential increases in reserve tonnage and grade, and modular plant scalability. However, the project’s economics are sensitive to gold price fluctuations, exchange rates, and operational factors. Funding remains a critical milestone, and permitting approvals are pending, introducing some execution risk.

Theta Gold’s chairman, Bill Guy, emphasised the project’s transformative potential, noting that once fully operational with up to seven mines, the company could become one of South Africa’s leading mid-tier gold producers with annual output exceeding 160,000 ounces.