Latitude 66 reveals strong economics for Finland gold-cobalt project

KSB economics clear a high bar

Latitude 66 Limited (ASX:LAT) has put a substantial number on its Finnish gold-cobalt ambition: a post-tax NPV8 of US$485 million and an 85% internal rate of return under its base case for the KSB Project. The study assumes US$3,500 per ounce gold and US$40,000 per tonne cobalt, alongside a relatively modest initial project capital requirement of about US$130 million.

The proposed operation would run for 7.5 years, processing 750,000 tonnes of ore a year to produce an average 65,000 ounces of gold and 475 tonnes of cobalt in concentrate. Latitude says the modelled operation would generate a 12-month capital payback, while a sensitivity using spot prices of about US$4,500 per ounce gold and US$55,000 per tonne cobalt produces a post-tax NPV8 of US$753 million and an eight-month payback.

That sensitivity is useful, but it is not the base case. The company’s own model says gold revenue has the greatest effect on value, while cobalt pricing has the lowest impact among the tested variables. The distinction matters because the project is being marketed as a dual-commodity development, yet its economics remain principally exposed to gold.

A conventional mine with expansion built into the plan

The proposed mine combines open pits at K2 and K3 with an open pit at K1 before transitioning into underground mining. Ore would be trucked about 48 kilometres to a planned processing facility near Kuusamo, using gravity recovery, flotation and conventional carbon-in-leach processing. Latitude says the project has access to grid power, established roads and regional services, although the plant site remains subject to arrangements with the Kuusamo Municipality.

The production target is underpinned by 90% Indicated and 10% Inferred Mineral Resources. The company says the financial case remains viable when Inferred Resources are excluded and that the Inferred component is not significant early in the mine plan. That provides some support for the initial schedule, but it does not remove the geological uncertainty attached to the later production target.

Latitude plans to move directly into a Prefeasibility Study, with the next phase focused on resource expansion, processing improvements and possible plant enlargement. The study estimates that increasing processing capacity from 750,000 tonnes per year to 1 million tonnes would require about US$13 million in additional capital. Near-mine drilling will target extensions down-dip and along strike from the K1 resource, including conductors identified by electromagnetic surveys.

The headline returns still rest on preliminary assumptions

This is a Scoping Study rather than a development approval or Ore Reserve statement. Latitude gives the estimates an accuracy range of plus or minus 30%, and no Ore Reserve has been declared. The study also relies on preliminary underground geotechnical assumptions, a Class 5 capital estimate, further environmental work and approvals that are not yet in place.

Funding is the immediate commercial hurdle. The company estimates about US$152 million will be needed to cover pre-production costs, including the US$130 million of pre-production capital, but concedes that financing is not secured and could involve equity, debt, hybrids or a project-level transaction. Any equity component could dilute existing shareholders, while a sale or joint venture could reduce Latitude’s ownership of KSB.

There are also some presentation differences within the release: headline materials cite gold-only AISC of US$1,283 per ounce and post-tax free cash flow of US$782 million, while the detailed tables show US$1,285 per ounce and US$801 million respectively. Those discrepancies do not erase the study’s broad conclusion, but they are the sort of details that should be resolved as the project advances from an attractive concept to a financing proposition.